Westpac’s rating unaffected by money laundering proceedings
The credit rating agency, Fitch Ratings, has said Westpac’s credit rating will not be immediately affected by credit negative proceedings brought to the firm by the Australian Transaction Reports and Analysis Centre (AUSTRAC) for systemic non-compliance with the Anti-Money Laundering and Counter-Terrorism Financing Act, as it had been already factored into the bank’s negative outlook.
The agency said it believed the allegations reflected a wider range of weaknesses in internal controls and reporting systems which were already taken into account.
“Fitch believes the alleged failures reflect broader weaknesses in Westpac's current systems and controls, which the authorities have claimed is not unique among Australia's four major banks – whose long-term internal dispute resolutions are all on negative outlook. Westpac is addressing the weaknesses,” the company said.
“The AUSTRAC proceedings are likely to increase costs for Westpac and take up management's time in the short-term, but we believe the immediate impact for Westpac will be manageable.”
On 20 November 2019, AUSTRAC applied to the Federal Court of Australia for civil penalty orders against Westpac, with allegations indicating that Westpac's oversight of banking services provided through its correspondent banking relations was deficient in allowing correspondent banks to access the Australian Payment System without conducting appropriate due diligence.
Also, it said the bank failed to report over 19.5 million International Funds Transfer Instructions (IFTIs) to AUSTRAC, of which the potential costs from fines or settlement have yet to be determined.
“Likewise, we expect any fine or settlement to be manageable if it is one-off in nature,” the agency said.
“By way of comparison, Commonwealth Bank of Australia (AA-/Negative/aa-) agreed to a $700 million after-tax settlement with AUSTRAC in 2018 following proceedings related to the anti-money laundering and counter-terrorism financing law.”
Recommended for you
Following an extraordinary general meeting today, Dixon Advisory parent company E&P Financial Group’s shareholders have voted on its proposed delisting from the ASX.
While overall financial adviser numbers have dipped below 15,500 this week, Rhombus Advisory is experiencing growth and approaching 500 advisers in its ranks.
Iress’ Xplan continues to dominate the financial planning software market with a multitude of uses, according to Netwealth research, despite newer players battling for a piece of the pie.
ASIC has shared the percentage of breach reports related to financial advice in FY24, noting increased reporting by smaller AFSLs.