Westpac hit with a record-breaking fine – how does it compare to others?
Christian Mc Karthy | On 28, Sep 2020
If individuals get punished for breaking the law, so does corporate bodies. Westpac, one of the big fours, headquartered in Sydney has been slammed with a record-breaking fine of $1.3 billion over money laundering and child exploitation breaches.
This is the largest ‘civil penalty‘ issued in Australia’s corporate history, leaving many people’s mouth agape because of the hugeness of the sum. When compared to similar fines handed over to other corporate bodies in the past, this one certainly dwarfs them all.
The chief executive of Westpac, Peter King, had revealed the bank’s initial intention to settle with an estimated sum of $900 million. But there was a plot twist when another 250 transactions were disclosed consistent with child exploitation, a massive increase compared to the initial 12 that the regulator took actions over.
After the bank met with the representatives from the Australian Transaction Reports and Analysis Centre (AUSTRAC), the estimated $900 million rose to $1.3billion; a sum which the bank has agreed to pay. This deal between the bank and AUSTRAC is, however, subject to approval by the Federal Court.
Peter King, in a news briefing on Thursday, expressed apologies on behalf of the bank.
“We are committed to fixing the issues to ensure that these mistakes do not happen again,” he said. “This has been my number one priority. We have also closed down relevant products and reported all relevant historical transactions.”
AUSTRAC Chief Executive Nicole Rose, in a statement, said that the fine “reflects the serious and systemic nature of Westpac’s non-compliance.”
How does this penalty compare to others over the years? Let’s examine some of the largest fines handed to cooperate bodies in the past.
In 2018, the Commonwealth Bank was fined $700 million for its violation of anti-money laundering laws 53,506 times. This happened when their uncapped cash deposit machines made it possible for illegal businesses such as drug and armed dealers to clean their cash. When compared to Westpac’s 23 million violations of the same act, the difference is clear.
Volkswagen received a fine of $125 million by the Australian Competition and Consumer Commission (ACCC) for providing misleading information about diesel emission of its products.
Earlier this year, NAB admitted to deceptive and false conduct; they charged $117 million worth of fees to superannuation members for services they never rendered. The Federal Court imposed a penalty of $57.7 million on NAB as a result.
Tabcorp, a betting giant in Australia, received a fine by AUSTRAC after failing to alert regulators of suspicious customers. This violation spanned over five years, for which the fine was $45 million.
Visy was fined $36 million for engaging in a four-year price-fixing and cartel scheme with packaging rival Amcor.
There are so many other civil penalties handed to corporate bodies over the years, but none of them come close to the penalty issyed to Westpac. Westpac’s 1.3 billion fine is enormous, but at the same time fair, no one is above the law and ignorance of the law is not a defence. With these penalties in place, corporate bodies will make it a duty to be careful in their dealings and avoid future violations.