Westpac Australia settles money laundering case for $1.3 billion

Westpac in Australia has reached a deal with AUSTRAC to settle more than 23 million alleged breaches of anti-money laundering laws by paying a record $1.3 billion penalty.

The penalty is the biggest in Australian corporate history, and is almost double the previous record $700 million fine paid by the Commonwealth Bank for almost 54,000 money laundering breaches, revealed by the ABC in 2017.

In a statement, AUSTRAC said Westpac had admitted to breaching the Anti-Money Laundering and Counter-Terrorism Financing Act more than 23 million times.

Australian Transaction Reports and Analysis Centre (AUSTRAC) is responsible for picking up criminal abuse of the financial system in Australia.

These breaches included a failure to properly report more than 19.5 million international funds transfer instructions (IFTI) amounting to more than $11 billion.

AUSTRAC said the breaches included suspicious transactions associated with possible child exploitation as well as failure to assess risks of money laundering and terrorism financing.

"Our role is to harden the financial system against serious crime and terrorism financing and this penalty reflects the serious and systemic nature of Westpac's non-compliance," AUSTRAC chief executive Nicole Rose said in the statement.

In a statement, Westpac chief executive Peter King once again apologised for the contraventions.

"We are committed to fixing the issues to ensure that these mistakes do not happen again. This has been my number one priority," he said.

"We have also closed down relevant products and reported all relevant historical transactions."

The settlement with AUSTRAC comes after intense legal negotiations with the financial crime agency in recent weeks.

Westpac had earlier set aside $900m for a penalty after flagging that it intended to accept most of the charges levelled by AUSTRAC.

The scandal, which erupted in late 2019, forced the resignation of then Westpac chief executive Brian Hartzer and the retirement of chairman Lindsay Maxsted, along with other board and executive changes.