Despite the Royal Commission, Westpac continues to operate with a degree of brazen immunity and it is hard to see whether the latest scandal will see any viable changes made, writes Dr Binoy Kampmark.
THE BANKING ROYAL COMMISSION still seems fresh in the mind but for all its warnings, modest recommendations and occasional high tone, Australian banks continue to show form.
The bankers in the boardroom knew that they were facing a restrained opponent, one with, according to Professor Kevin Davis, 'a limited mandate and limited time'. The latest revelations regarding Australia’s second-largest bank, Westpac, are being treated as horrendous, but do they shock?
The Australian Transaction Reports and Analysis Centre (AUSTRAC) – the regulator responsible for countering anti-money laundering and terrorism operations – has placed a hungry cat among the pigeons with its application against Westpac for civil penalty orders. The regulator’s press release states: 'The civil penalty orders relate to systematic non-compliance with the Anti-Money Laundering and Counter-Terrorism Financing Act”, which it alleges Westpac breached on over 23 million occasions.
AUSTRAC’s claims suggest a bank indifferent to the regulatory environment.
Westpac, for instance, did not
'appropriately assess and monitor the ongoing money laundering and terrorism financing risks associated with the movement of money into and out of Australia through correspondent banking relationships.'
Other banks, as a consequence, did not follow due diligence procedures in using the Australian Payments System and accessing the banking environment.
The regulator also takes issue with
'over 19.5 million International Funds Transfer Instructions (IFTIs) to AUSTRAC over nearly five years for transfers both into and out of Australia.'
This proved particularly irksome given that body’s role in protecting 'Australia’s financial system and the community from harm'.
Information on the source of funds to other banks in the transfer market was also absent, as were any records 'relating to the origin of some of these international funds transfers'. This created what amounted to opaque '"nesting arrangements". But perhaps most stomach-churning of all was the bank’s failure to do its “due diligence” on particular transactions dealing with markets in South-East Asian and Philippines. Some of these involved payments to an individual in the Philippines, who was later arrested for engaging in child sex trafficking and live-streaming child sexual abuse — a point that had been known for six years.
As the statement of claim notes, Westpac failed to observe the behaviour of a dozen customers in total, with transactions 'consistent with child exploitation typologies'. These had 'no apparent family ties to the Philippines/south-east Asia, frequently remitting small sums of money to multiple beneficiaries in the Philippines/South-East Asia within short timeframes'.
Westpac also stands out as having turned up its financial nose at the Society for Worldwide Interbank Financial Telecommunication (SWIFT) messaging standard, which came into effect in 2009.
Designed to target money laundering, Westpac, according to the statement of claim, deemed it too
'costly and not an efficient means of sending low-value, large volume payments for clients of global banks that need to make and receive payments around the world.'
This behaviour reeks of the near-criminal, though the regulator intends to keep the matter within the civil jurisdiction.
The SWIFT system was replaced by two alternatives, and severely compromised Westpac products: the Australasian Cash Management (ACM) platform covering large payments up to $100 million and LitePay for more modest transfers up to amounts of $3,000. The latter has been particularly appealing to sex traffickers. This saw the bank not 'record the originator, purpose of payment, beneficiary or jurisdiction of the origin of funds'.
But the glaring sub-text in this, in addition to the cruelties, lies in a rich bankster tradition: evading the tax system and depriving the treasury of its share of revenue. 'That’s what this case is all about,' suggests Nathan Lynch of Thomson Reuters’ Asia-Pacific Bureau. 'It’s the facilitation of massive high-level, cross-border tax evasion.' For Lynch, the prosecution by AUSTRAC is portentous in that fundamental respect, and will 'send shockwaves around the globe'.
Rather than sensing the continuing rot in the Australian banking sector, the Morrison Government preferred to praise AUSTRAC for doing what regulators do. Coalition governments would rather not interfere in banking traditions, but they have found themselves having to make some mutterings to that effect. The focus for Prime Minister Scott Morrison is to place stress on Westpac board meetings and decisions to “address firstly the clear weaknesses they’ve had in their systems that have allowed this to take place”. Given the bank’s record of not heeding concerns and alerts to such weaknesses, this is hardly grounds for building confidence.
For his part, Westpac boss, Brian Hartzer, expressed disgust and disappointment, but in the perennial legacy of failed banking leaders, refused to resign:
“As CEO of Westpac I am very sorry this has happened and we will fix it.”
His own introduction to the Westpac Group’s Principles for Doing Business seems spectacularly at odds with the conduct of the outfit.
The section of the publication discussing the bank’s commitment to respecting human rights comes across as emetic, given the civil action:
'Respecting and advancing human rights helps us achieve our vision to help our customers, communities and people to prosper and grow, and reflects the belief that all people are entitled to basic rights and freedoms, regardless of where they are from, their religion, gender, race or any other status.'
The open question remains how far AUTRAC’s case will go, and to what extent any viable changes will be made by Westpac. The Australian bankster continues to operate with a degree of brazen immunity. The prospect of time behind bars is virtually non-existent.
One approach is to consider taking advice from organisations on how best to bank ethically, something which invariably leads to the possibility of a secondary boycott. This is something that is not only frowned upon by Prime Minister Scott Morrison but openly condemned as something to criminalise. But the implications are clear: Vote with your account and funds; shun the environmental and human rights abusers with your wallet. Market forces, for instance, 'expose the institutions that are financing environmentally destructive projects and help Australians hold these institutions accountable'.
As Erin O’Brien of the Queensland University of Technology explained in the Sydney Morning Herald,
'When consumers have information about which banks are embedding ethical values in investment decisions, it becomes easier for consumers to make an ethically-motivated choice when choosing a bank.'
This entails an information war that financial institutions like Westpac cannot afford to lose, however smug in survival they may seem.
Dr Binoy Kampmark was a Commonwealth Scholar at Selwyn College, Cambridge. He lectures at RMIT University, Melbourne. You can follow Dr Kampmark on Twitter @BKampmark.
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia License
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