“We do need to guillotine it at some stage,” Justice Beach said, adding that the boundaries of the case needed to be set.
AUSTRAC’s bombshell claim last year threw Westpac into crisis, sparking an executive shake-up and prompting the bank to this year set aside $900 million to cover the record-breaking fine it is likely to face. It has admitted to the vast majority of AUSTRAC’s allegations, including failing to properly vet 12 customers who made transactions fitting the pattern of payments for child exploitation.
However, the two sides have not agreed on a penalty, they disagree on whether Westpac had a compliant AML/CTF program, and last week it emerged AUSTRAC could amend its statement of claim after the bank reported 272 additional customers who made suspicious payments.
AUSTRAC’s barrister, Wendy Harris QC, told the online court hearing the latest reports from Westpac had similarities to the allegations regarding the 12 customers where Westpac had admitted inadequate vetting. “There is a real prospect that the AUSTRAC CEO will complete an investigation and say we need to bring forward some additional allegations,” Ms Harris said.
Westpac’s barrister, John Sheahan, QC said AUSTRAC’s latest claims would require the bank to handover tens of thousands of documents, adding that some of the customers were in a “quite different category” to the 12 people included in the initial case.
“This has to come to an end at some point,” Mr Sheahan said. “We understand the regulator continues to regulate, but there has to come a point where new issues stop being loaded into this existing proceeding.”
Justice Beach ordered AUSTRAC to propose any amendments to its statement of claim to Westpac by mid-August and file an amended statement of claim with the Court by early September. Both parties were working towards a trial in early 2021 on any outstanding points of disagreement, he said.
The key disagreement so far has been over whether the bank had a sufficient AML/CTF compliance program, and Justice Beach questioned if a trial on this issue could take place later this year. Westpac and AUSTRAC instead supported a slower timetable that could result in a trial next year.
The scandal at Westpac also sparked investigations from the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) over potential breaches of laws these agencies enforce.
APRA on Wednesday said that to avoid these probes overlapping, it had delegated enforcement powers to ASIC, so that ASIC could seek fines or banning orders if there were breaches of the Banking Executive Accountability Regime.