Westpac has agreed to pay $1.3 billion for breaching anti-money laundering and counter terrorism financing laws more than 23 million times. That is a lot of money. But it translates to just $56.52 per offence. AUSTRAC says it send a strong message to the banks.
Attorney-General Christian Porter said that the penalty “reflected the significant and systematic nature of Westpac’s compliance failures. … this should serve as a wake-up call to all financial institutions operating in Australia that the Government is serious about maintaining a strong financial system and won’t tolerate serious non-compliance,”
The Minister for Home Affairs Peter Dutton said “the agreement shows that the government is serious about ensuring the integrity of Australia’s financial system while also protecting the community from crime.”
“Banks have a responsibility to not let criminal activity go undetected and to protect Australians from serious and organised crime like child exploitation, drug trafficking and fraud,” Mr Dutton said.
“They should be able to trust their banks and financial services they use daily to have strong systems in place to protect the community from crime. In this case, Westpac breached that trust and let their customers down, ultimately putting Australians at risk.”
Who gets to negotiate the penalty that they pay for breaking the law? Only entities that are too big to fail. We saw during the global financial crisis that companies that are too big to fail can thumb their noses at the law and at the rules which are in place to regulate our interactions in society. It’s time we did something about that. Putting the people responsible in gaol would be likely to focus their minds. The law provides for imprisonment for money laundering.
I anticipate the reception that I will get, next time that I am in court representing a refugee taxi driver who has dropped a passenger in a no-stopping area, when I say to the magistrate that we would like to negotiate the penalty, and that something in the order of a cent in the dollar seems appropriate.
The penalty per offence for Westpac’s offences was up to $333,000, plus long periods of imprisonment.
Westpac is a relatively small donor to political parties.
Westpac’s treatment simply brings Australia’s criminal justice system into contempt.
Lawyer, formerly senior federal public servant (CEO Constitutional Commission, CEO Law Reform Commission, Department of PM&C, Protective Security Review and first Royal Commission on Intelligence and Security; High Court Associate (1971) ; partner of major law firms. Awarded Premier’s Award (2018) and Law Institute of Victoria’s President’s Award for pro bono work (2005).
Comments
4 responses to “Banks behaving badly again and get only a rap over the knuckles”
Ian,
I agree with you 100% Some time in the clanger would certainly focus the Banking Bosses minds!
Around the world these suspicious transaction reporting laws have proven fine examples of the law of unintended consequences and in Australia have added perverse incentive.
Transaction reporting is difficult and expensive. There’s little evidence laws have reduced crime or money laundering in any ongoing sense. Fining banks is easy money and gives the impression of something being done. It’s no substitute for catching and trying the criminals involved. On the other hand the laws now mean many companies will no longer risk providing services to many of the poorest strife torn countries. This means millions of desperate families can no longer receive remittances or must pay excessive transaction prices – often to criminals.
Locally AUSTRAC had a strong incentive not to act and allow fines to pile up. Discrepancies between reporting levels from different companies would be easily noticed by a competent regulator. A regulator is supposed to regulate in real time.
I’ve previously commented on this case Ian and I’m quite a dissenter from the prevailing views of righteous indignation. These penalties to me are gross state overreach and little better than a legalised shakedown of investors and, we can be certain, customers in their turn.
The penalties are very conveniently civil penalties which require little burden of proof of guilt. Almost all of the transactions were legitimate meaning your average of $50 each is misleading at its kindest. They were not crimes just regulatory non compliance which is a totally different matter. Your theoretical taxi driver should be most annoyed should you try the ruse you mention.
They are not crimes unlike the various actual crimes mentioned in media reports such as fees for no service or deliberately misleading conduct. They certainly deserved penalty but the sensible principle of concurrency must apply. The actual crimes are those of the few criminals allegedly identified. More focus on them and less focus on soft targets like banks is a better and far more effective way to go.
Worst of all is that all round the world this category of laws have meant many of the poorest strife torn countries can no longer receive desperately needed family remittances. The righteous wealthy world washes its hands of this conundrum and points to a very few sex and terror offenses reduced. Anyone who believes these laws will prevent such crimes in any meaningful sense is deluded.
How much of this is for merely flouting US sanctions?