SYDNEY/BENGALURU (Reuters) - Australia’s Westpac Banking Corp (WBC.AX) said an internal investigation had concluded that child exploitation payments made through its system were the result of “faults of omission” and not intentional wrongdoing.
In a bombshell lawsuit in November, AUSTRAC accused the bank of allowing 23 million payments that violated anti-money laundering protocols, including payments from Australians to known child pornography purveyors in the Philippines.
The review by the nation’s second-largest bank said, however, that it had flagged some suspicious customers to the regulator.
Westpac has said it was working with the regulator to resolve the matter as quickly as possible but last month filed a defence in the civil case brought by AUSTRAC. It has stopped short of agreeing with the statement of facts put forward by AUSTRAC in the court proceedings.
“Without a statement of agreed facts this could end up going through the court system, creating some lingering uncertainty,” Credit Suisse analysts said in a note to clients.
The review said the breaches were due to “a mix of technology and human error dating back to 2009” but that 12 customers it is accused of allowing to pay child exploiters had been flagged to AUSTRAC.
“While the issues did not arise from intentional wrongdoing or misconduct at any level, the fact remains that compliance failures within Westpac’s financial crime program occurred,” it said.
AUSTRAC declined to comment.
The scandal prompted Westpac’s CEO to leave and its chairman to bring forward his retirement, and in April the company said it expects a A$900 million ($620 million) fine.
Reporting by Shreya Mariam Job in Bengaluru; Editing by Anil D'Silva and Edwina Gibbs