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Westpac plan for a $900M fine after AML/CTF breach

OPINION: Today Westpac indicated that it expects to suffer write-offs of $1.4bn against its first-half earnings, with $900m of this amount being what the bank expects to pay to settle its 23 million breaches of the anti-money laundering and counter-terrorism financing laws.  Westpac also indicated that $500m in write-offs would be for improving its compliance with financial crime legislation ($130m), customer remediation and litigation matters ($260m) and COVID-19 ($70m).

At this point it is hard to assess whether the $900m that has been provisioned for AML/CTF breaches will be sufficient as even if Westpac and AUSTRAC can agree on an appropriate penalty, the Federal Court of Australia may choose to impose a materially greater or lower penalty provision.

Whatever the final fine is, the AML/CTF breaches at Westpac  have highlighted the importance of banks in taking financial crime regulations seriously and shines a spotlight on the potential material consequences financial institutions in Australia can face in terms of fines, customer remediation and capability uplifts.

Read more on ABC News Australia reported by David Chau 14 April 2020.

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