Westpac – a few other things to consider

Trigger warning and disclosure.

TAFKAS is not an employee of Westpac or of any bank.  TAFKAS does not directly own and Westpac or any other bank shares – he probably owns them via ETFs but not directly.

Here are some things to consider around the Westpac/Austrac matter; things that don’t seem to have received much or any ventilation.

  • It is alleged that Westpac failed to report some 23 million transaction to Austrac over many years, possibly 7 years(?).  Ok.  Where then was Austrac?  There are 4 majors in Australia and several other banks.  Did not Austrac notice that Westpac was reporting a disproportionately lower number of transactions?  Does not Austrac have any accountability for failing to notice Westpac’s under reporting?
  • As TAFKAS understands, the not reported transactions in question were almost entirely overseas transactions.  The way that works is that Westpac has a correspondent bank (Standard Chartered was apparently one of the banks to whom Westpac’s transactions weren’t reported).  Much like it takes 2 to tango, it takes 2 banks to facilitate an overseas transfer.  Thus whatever Westpac sent, another bank received.  Where is the commentary on the other banks, including those who actually provide banking services to the providers of the suspect content?  Where is the commentary around the Austrac equivalent regulators overseas?
  • Westpac is not the police.  Westpac’s role is not to find and stop alleged improper and illegal behaviour.  That is the role of the police agencies.  Westpac’s role is to provide data to Austrac.  To suggest that Westpac has enabled criminal behaviour is like saying that car manufacturers are responsible for all road fatalities.

TAFKAS is not suggesting that Westpac is clean in this matter, if what is alleged is proven.  But a bit of perspective.  Please.

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31 Responses to Westpac – a few other things to consider

  1. stackja

    Was Westpac management too busy on social issues to notice all these transfers?

  2. JC

    Spart

    Out of 23 million transactions they came up with about 12 that could be suspect and 1 that is seriously problematic. I find it astonishing how few there were and the hysterics we find ourselves in. I find it also astonishing that the Austrac chiefs aren’t only coming out of this cleanly, but they’re smelling like roses.
    It’s the Austrac arseholes that ought to be fired but as usual, you could be Jeffrey Dahmer – openly eating human flesh in the staff canteen in a public sector job and you will not be fired.

  3. The thing with all bank (financial) transactions nowadays is that they are virtually fully automated. There is no excuse for required transactions not to be electronically tallied and sent to Austrac automatically. If this is how Westpac operates when it comes to regulatory authorities, how does it operate when it comes to customers?

  4. JC

    Bemused

    There was some glitch in the system causing them to be missed. Austrac was frequently demanding banks update their systems to suit them. Australian banks are pretty stupid, but they do have reasonable procedures.

    23 million transactions sounds like a weal, weal lot hey.

    About 15 years ago, the US recorded 300 million transactions a day going through the banking system. That would roughly mean 1 transaction per person per day as the population was then around 300 million.

    Apply, roughly, the same set of numbers for Australia in population proportion and you begin to see that 23 million transactions spanning over ~5 years is a small fraction.

    I fucking hate the Australian public sector with a passion just below hatred of real life Nazis. Senior Austrac officials should be sent to prison for perpetrating this thing onto Wetpatch. It’s a fraudulent scandal.

  5. The BigBlueCat

    stackja
    #3251835, posted on December 4, 2019 at 4:35 pm
    Was Westpac management too busy on social issues to notice all these transfers?

    Probably not … the management of money laundering and counter-terrorism risk would be a separate department within the bank. They would have reported some transactions, but clearly not all that should have had scrutiny. But really, how hard is it for a bank to corral transactions requiring further investigation by AUSTRAC? Surely transactions based on SWIFT BIC code, IBAN, value, ultimate destination country, value, currency, etc can be easily captured by Westpac systems and reported to AUSTRAC.

    I think TAFKAS is onto something here … the volume of transactions and the time period involved places some onus on AUSTRAC to ensure Westpac was being compliant. But Westpac will be held responsible. Also, the destination banks must also have a onus on ensuring international AMLCTR reporting is carried out. From what I remember, AMLCTR and KYC (Know Your Customer) was pretty common around the world.

    But AUSTRAC also needs to be seriously questioned regarding their involvement in ensuring Westpac was being compliant. I realise that AMLCTR is basically a responsibility of the banks to self-regulate in terms of complaince, but surely AUSTRAC should have been raising flags well before this (maybe they did).

  6. Botswana O'Hooligan

    Thank you TAFKAS, I thought that there must have been something wrong with me in old age because I have always figured that the banks are there to conduct transactions concerning money and skim some from the top for the shareholders, they are not there to conduct police business for that is supposedly the function of the various legal authorities. What would happen if I remitted a sum of money to you and you used it for some nefarious purpose, would the bloody banks be responsible for that?

  7. BrettW

    Seems like a repeat of JC’s thread from last week.

    However I think they knew about the issues 3 years ago but did not do much.

  8. JC
    #3251862, posted on December 4, 2019 at 4:56 pm

    There was some glitch in the system causing them to be missed.

    There may be some mitigating circumstances (a seven year glitch?), but I don’t have a lot of sympathy for banks; nor for Austrac, their due diligence is lacking even more than that of the bank.

  9. Perfidious Albino

    ‘seven year glitch’ haha, well done, sir…

  10. Gowest

    Yep they discovered another bit of revenue to balance the budget… As I said before its yet another govt agency “service” operating with a pay for use fine – just like speeding camera’s.

  11. Gowest

    Actually on second thoughts now that the banks do this job, then we can save heaps by getting rid of AUSTRAC right.. now there’s a thought!
    Wasn’t it simpler when downloads were free..!
    Now we have highlighted the naughty dudes … they will shift to bitcoin etc… You could not make this stuff up!

  12. bruce

    When this broke it immediately reminded me of “the darkest day in Australian sport”.
    Which proved to be a government smokescreen for other issues.
    Govt agencies have a history of incompetence, and is this another smokescreen as TAFKAS suggests.
    I know we love to bash the banks, but who would you trust with your savings, government or Westpac?

  13. Cull the public servants

    Austrack…public servants. Say no more.

  14. Chrism

    for safety, the incoming CEO will order disclosure of EVERY transaction the Bank now facilitates within and across borders; and have a covering disclosure that while every effort has been made to verify the information contained – no responsibility etc – and put it in an email every 12 hours to every senior manager at AUSTRAC, and politely encourage the govt body to do their job ….

  15. DaveR

    From the AUSTRAC Statement of Claim against Westpac:

    19.43 million incoming transactions totaling $11.14bn went unreported from Westpac over 5 years from 2013-2018. Thats an average of $573 per transaction (although there would have been some very large transactions in that lot). Westpac reported all of these transactions to Austrac late, in Oct 2018 – Sep 2019. More concerning is that these late reports represent 72% of all Westpac incoming transactions for the 5 year period. Even when reported, 2.73m transactions still did not contain all reportable details required under the Act.

    For the outgoing payments, Westpac sent 13,085 outgoing transactions for an unknown total amount, but at least $707.4m, unreported from Westpac over 6 years. Thats an average of at least $54,000 per transaction, although there would have been some larger transactions in that lot. Westpac reported some of these transactions to Austrac late, in Oct 2019, but has not reported the remainder at all.

    The report of Westpac breaching the Act includes a lot of multiple breaches for the same transaction eg non reporting and non risk assessment.

    But scattered throughout the Statement of Claim are several specific references to when Westpac was provided with warnings of non-compliance, and even financial templates on what to monitor, stretching back to 2016. Its going to be hard for Westpac to argue they weren’t told.

  16. JC

    DaveR

    Westpac is either the largest or second largest bank in Australia. If 72% of Wetpatch’s remittances went unreported, why did it take Austrac 5 years to figure that out? Surely those cone-heads would have been able to figure out that something was wrong just by comparing the stats alone bank to bank.

    But even more than that and even more damning for Austrac, they found out only when Wetpatch self reported, or at least that’s what they claim contradicting this:

    But scattered throughout the Statement of Claim are several specific references to when Westpac was provided with warnings of non-compliance, and even financial templates on what to monitor, stretching back to 2016.

    The cone-heads are covering their useless arses.

  17. …but who would you trust with your savings, government or Westpac?

    Neither. As we saw from the Banking Royal Commission, the banks weren’t the innocent businesses some believed.

  18. JC

    Neither. As we saw from the Banking Royal Commission, the banks weren’t the innocent businesses some believed.

    I dunno, my experience with two banks is excellent. But then I use them for basic stuff anyways.

  19. Gertrude

    Well said. A bit of common sense leadership from our politicians would go a long way towards discouraging this rabid gouging on our financial institutions. AUSTRAC is like an old fashioned bushwhacked. Speak quietly, don’t raise a fuss, have the victim imagine for years that this is not a very serious issue ——- then pounce. “Gotcha!!!! Now pay up hundreds of millions of fines.”

  20. @DaveR

    You may be correct. Maybe. But thus far it is a Statement of Claim and not a Statement of Agreed Facts.

    But scattered throughout the Statement of Claim are several specific references to when Westpac was provided with warnings of non-compliance, and even financial templates on what to monitor, stretching back to 2016. Its going to be hard for Westpac to argue they weren’t told.

    TAFKAS has not seen the Statement of Claim, but who in Westpac was provided with warning, by whom in Austrac, in what format, when, in what context.

    And stretching back to 2016 …. that was but 3 years ago and yet the 23 million transactions are for 5 years. what happened during years 1 and 2?

    All warfare is based on deception. And all public servants primary objective is to deflect responsibility and to never accept accountability.

  21. Pyrmonter

    @ TAFKAS

    You are right to suggest this isn’t quite a scandal on par with, say, Hanson and Lambie letting the CFMEU carry on in its merry way. But … let’s consider the potential for blame-shifting.

    The public servants involved are there to receive reports. Your suggestion they should have detected the failures is akin to blaming shoplifting offences on the police. Sure, it’s their job to investigate and deter offences, but the primary responsibility for preventing theft lies with the theives. So, the primary responsiblity for AML-CTF compliance lies with the reporting entity.

  22. JC

    Pyrmonter

    The public servants involved are there to receive reports.

    Not only and in Austrac’s case, from their website :

    AUSTRAC (the Australian Transaction Reports and Analysis Centre) is Australia’s financial intelligence unit and its anti-money laundering and counter-terrorism financing regulator.

    We work with our partners to protect our country and its people from serious crime and terrorism. We use financial intelligence and regulation to:

    prevent criminal abuse of our financial sector
    help our government and law enforcement partners detect, deter and disrupt money laundering, terrorism financing and other serious crime
    build and maintain trust and integrity in Australia’s financial system.

    Your suggestion they should have detected the failures is akin to blaming shoplifting offences on the police.

    It’s shit simple to have detected westpac’s problem in the 1st year. FFS, these people are dishonest sacks of shit. They claim 72% of Westpac’s remittances remained unreported for ~around 5 years or so. Wouldn’t that ring a bell in comparison to the reporting from other banks. And then they also knew information was missing on a large number that were reported. Why didn’t they ring the bell then?

    More concerning is that these late reports represent 72% of all Westpac incoming transactions for the 5 year period. Even when reported, 2.73m transactions still did not contain all reportable details required under the Act.

    Sure, it’s their job to investigate and deter offences, but the primary responsibility for preventing theft lies with the theives. So, the primary responsiblity for AML-CTF compliance lies with the reporting entity.

    No, Austrac is primarily responsible and they were derelict.

    These people are total scum.

  23. @Pyrmonter

    So, the primary responsiblity for AML-CTF compliance lies with the reporting entity.

    Fair. Entirely fair.

    But AML-CTF compliance is knowing your customer and reporting transactions to Austrac. It is not prosecuting crime or tracing what the receiving party does with the funds.

    The public servants are not there to receive reports. They are there to receive data and to analyse it and generate their own reports and actions. The last “a” in Austrac is analysis not asscovering.

    It is also assumed that the Austrac requirements are satisfiable.

  24. I dunno, my experience with two banks is excellent. But then I use them for basic stuff anyways.

    I wouldn’t go so far as to say my experiences with my two banks is excellent. I’ve certainly had my frustrations, sometimes over the most basic of services. And it’s not the face to face staff at fault, but the faces you don’t see.

  25. JC

    The Artist Formerly Known As Spartacus
    #3252087, posted on December 4, 2019 at 8:13 pm

    @Pyrmonter

    So, the primary responsiblity for AML-CTF compliance lies with the reporting entity.

    Fair. Entirely fair.

    This goes back around 5 years. Where was Austrac in year 1?

  26. DaveR

    @TAFKAS, there is no doubt to me that Westpac failed to report the +19m international transfers within 10 days, as the Act says, and also didnt do lots of other things like transaction risk assessments, “deep dive” investigations and so on.

    But I also wonder where was AUSTRAC when Westpac failed to report 72% of the bank’s incoming foreign transactions between 2013 and 2018, when AUSTRAC was in regular discussion with Westpac monitoring and risk divisions (by their own statement).

    Did they help them report all these transactions (late) in 2018-2019 then………………..gotcha?

  27. Paul

    “Westpac is not the police”

    Were they to act as the Police they would soon be unable to continue acting as a Bank.

  28. Win

    Now that Australia’s manufacturing sector can not put money through the banks and the mining sector is strangled at birth where else can they get the money to pay themselves their exorbitant bonuses and salaries.

  29. Tel

    Peter Schiff recently bellyaching about Goldmoney and compliance costs.

    Seems that Goldmoney was originally intended to be friendly to small accounts … in order to encourage people to think about putting aside some savings. Even though those small accounts don’t add up to much, the idea was get people comfortable with being able to put their cash somewhere protected from inflation. A certain percentage of those accounts would then grow over time.

    So gradually compliance costs have mounted up and it’s no longer affordable to have small accounts. Goldmoney introduced a minimum “storage cost” which is really an account-keeping fee … that goes towards all the paperwork they need to do. Stuff that has nothing whatsoever to do with their business. This will burn off all the little guys, and cut them down to just serious accounts. Upshot is that if you have plenty of money then you get the opportunity to protect yourself from inflation … but if you are starting out with not much and you want to get a foot on the ladder then you can’t start saving because those fees will wipe you out.

    Another way government is looking after rich people … errr thanks I guess!

  30. Andre Lewis

    Austrac will presumably be prosecuting money launderers and pedophiles now they have all the 23 million transaction details. They will wont they?

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