© Reuters. A woman leaves the first floor of an office building with the Westpac logo in Sydney
By Byron Kaye
SYDNEY (Reuters) – Australia's Westpac Banking Corp (AX 🙂 agreed to pay a record $ 1.3 billion ($ 920 million) fine to settle a lawsuit accusing it of millions of making payments to people who exploit children.
Ten months after financial crime agency AUSTRAC dropped the bombing suit, Australia's second largest lender said the parties had agreed to pay out so illegal payments could continue for years, plus 76,000 additional violations found after the trial began.
"We are determined to fix the issues to ensure these bugs do not recur," Westpac CEO Peter King said in a statement.
AUSTRAC said the deal showed that it would do whatever it takes to prevent criminals from exploiting the Australian financial system.
"Our job is to protect the financial system against the financing of serious crime and terrorism. This penalty reflects the serious and systemic nature of Westpac's non-compliance," said Nicole Rose, Managing Director of AUSTRAC, in a statement.
The payout exceeds the A $ 900 million Westpac earmarked for the lawsuit in April and dwarfs an A $ 700 million fine on larger rival Commonwealth Bank of Australia (AX 🙂 when it admitted thousands in 2018 allow payments between money launderers.
The settlement comes at a difficult time for Australian banks in general. Last year the industry was charged with a violent investigation into rampant fee collection and predatory sales tactics to inflate bonuses.
Banks now must step down the sensitive path of getting thousands of borrowers to repay their mortgages after offering credit vacation tied to government-ordered shutdowns to combat the pandemic.
"There are still some ASIC issues, some class actions, but this is the biggest part of it. I think that will give them a lot more security in the future," said Bell Potter analyst TS Lim, referring to the Australian securities and investors initiated lawsuits in the light of the AUSTRAC lawsuit.
"It's also difficult to run a bank during COVID. That's one less distraction for Peter King," he said.
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