Big four bank ANZ says it launched an internal investigation of whether its anti-money-laundering and counter-terror finance (AML CTF) systems were adequate following scandals at rival banks Commonwealth and Westpac.
On Wednesday ANZ said it was revealing the review, which had been under way since June, after questions from investors over the past few days prompted by bombshell regulatory action against Westpac that has seen off the bank’s chairman, chief executive and a director with oversight of risk.
ANZ’s announcement came as political pressure on Westpac continued, with Labor’s finance spokesman, Andrew Leigh, calling for the bank’s executives to be recalled immediately to face grilling at a parliamentary committee.
Westpac’s share price fell on Wednesday, dropping more than 1.7.% by 12.30 and erasing gains it clawed back on Tuesday when the chairman, Lindsay Maxsted, the CEO, Brian Hartzer, and the non-executive director Ewen Crouch announced they would be resigning.
The bank’s share price has fallen more than 7% since last Wednesday, when the financial intelligence agency Austrac launched legal action accusing it of breaching anti-money-laundering laws more than 23m times in transactions involving $11bn and linking its failures to child exploitation in the Philippines.
ANZ said it was not aware of any impending litigation from Austrac.
“Given recent issues identified by Austrac within the industry, we have been reviewing the systems and processes we use to transfer money to ensure we are reporting the information required by regulators,” the chief risk officer, Kevin Corbally, said.
“While the review is ongoing, it has found no material issues to date.”
In other developments on Wednesday, Labor’s Leigh called for Westpac to be recalled to face the parliamentary economics committee of which he is deputy chair.
Hartzer was grilled by the committee just three weeks ago, before Austrac launched its legal action.
The call was immediately rebuffed by the Liberal committee chair, Tim Wilson, who accused Leigh of wanting to hold “a show trial which could prejudice possible legal action”.
Leigh said this was “false” because Westpac faces a judge-only trial in the federal court.
“It is entirely appropriate that the economics committee also inquire into the surrounding institutional issues,” he said.
However, it is highly unlikely the Westpac case will ever go to court because the company has consistently said it wants to resolve the issue with Austrac as quickly as possible, with Hartzer last week telling reporters he agreed with almost all the allegations contained in the regulator’s statement of claim.
Compliance with AML CTF laws has now become a drag on the profits of all big four banks, ratings agency S&P said on Tuesday.
“We consider that strong political criticism of the Australian banks’ lapses in recent times largely reflects rising community expectations,” S&P said.
“Policymakers have increasingly called for greater penalties for such lapses, on the basis that banks must meet community expectations.”
ANZ last ran into trouble with AML CTF laws in 2009, when it paid a US$5.75m fine to American authorities for stripping identifying information from 31 transactions with Sudan and Cuba, which were under sanction by the US at the time.
Austrac launched legal action against CBA in 2017 over more than 53,000 alleged breaches of the law, mostly relating to its smart automatic teller machines, which the agency said were being used to launder the proceeds of drug and gun crime.
It paid a then record penalty of $700m to settle the case.
Westpac’s payment to Austrac is expected to run into the billions of dollars.
