Australia’s oldest bank Westpac announced the results of its investigation into the Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) compliance issues and placed the blame on technology and human errors.
Westpac Chairman Mr John McFarlane said, “We are all committed to fixing these issues so they don’t happen again.
The failure concerning International Funds Transfer Instructions (IFTIs) non-reporting occurred due to a mix of technology and human error dating back to 2009.
Releasing the findings, Westpac reported identifying 3 primary causes of the AML/CTF compliance failures:
- Some areas of AML/CTF risk were not sufficiently understood within Westpac
- Unclear end-to-end accountabilities within Westpac for managing AML/CTF compliance
- Lack of sufficient AML/CTF expertise and resourcing
“While the compliance failures were serious, the problems were faults of omission. There was no evidence of intentional wrongdoing”, said Westpac CEO Peter King.
Mr King acknowledged the need for cultural change within the Bank.
Also read: Data is central to decision-making at ANZ
Westpac compliance issues related to Technology
Westpac said the allegations by AUSTRAC against Westpac occurred within the context of key trends including rapid industry change in technology and data analytics capability.
A subsidiary question arising from this review is whether the Westpac technology platforms are best practice and what part they played in Westpac’s capacity to deal with AML/CTF obligations?
The failure concerning International Funds Transfer Instructions (IFTIs) non-reporting occurred due to a mix of technology and human error dating back to 2009
Due to technology failings and human error, approximately 19.5 million International Funds Transfer Instructions (IFTIs) were not reported within the required time period.
The majority of non-reported IFTIs concern batch instructions received by Westpac through one product, and were from two global correspondent banks.
Also read: NAB leverages Human-Centric Design to expand Analytics Guild
Westpac revealed the failings can be traced back to the IFTI implementation program which started in 2009, where resource constraints in the relevant technology team impacted the successful implementation of the project.
In 2011/12, there was also a high turnover of staff where a whole team departed to join another organisation.
The loss of continuity and specialist knowledge associated with these departures contributed to the implementation errors.
Also read: Westpac switches on Apple Pay
A relatively small IT project involving a software upgrade and complex plumbing to connect to other systems was not completed satisfactorily and resulted in regulatory reporting deficiencies, which the Bank’s control and reconciliation processes failed to detect for some years.
The post-implementation review in 2011 of the IT project concerning IFTI reporting gave assurance to management that all IFTIs were being noted as required. This was incorrect and gave a misleading level of confidence in the reporting systems.
Westpac recently said it kept aside A$1 billion for Austrac proceedings including a provision for potential penalties and remediation actions.
Also read: Peter King to takeover as CEO
NAB launches new digital support features | VoiceID biometrics: NAB targets 250,000 customer enrolments
