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APRA ends Westpac probe, wants improvement

Financial regulator APRA has closed its investigation into Westpac’s breaches of anti-money laundering and terror financing laws, but says it will make sure the bank improves its operations.

The Australian Prudential Regulation Authority on Friday said it made the decision after considering the results of an ASIC investigation into whether the bank’s conduct breached the Corporations Act.

Westpac last year agreed to pay a $1.3 billion fine, having admitted to breaking international fund transfer laws 23 million times.

Some suspicious transactions that slipped under the radar were linked to child abuse.

The bank has agreed to measures to improve risk management. These include a $1 billion operational risk capital add-on, a risk governance remediation plan and independent review of its operations.

APRA deputy chair John Lonsdale said the regulator would be holding Westpac to account to deliver the improvements.

The bank has not made comment.

APRA started investigating the bank in 2019 following concerns from the Australian Transaction Reports and Analysis Centre (AUSTRAC).

Most of the breaches happened between 2013 and 2018, and were blamed on technology and human error.

The scandal led to then Westpac CEO Brian Hartzer and chairman Lindsay Maxsted stepping down, followed by senior management changes.

Westpac last month claimed first-quarter cash earnings were up 54 per cent to $1.97 billion, and home loan applications were increasing.

However, the cash earnings figures did not account for payments such as the $1.3 billion fine.

Shares in the bank were lower by 0.16 per cent to $24.49 at 1422 AEDT.

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