The Australian Prudential Regulation Authority has closed an investigation into possible breaches of banking rules after Westpac’s failure to report transactions to the anti-money laundering regulator. The failure led to Westpac being slapped with the largest corporate fine in Australian history.
In a Friday statement, APRA said it had also ended an investigation into whether any current or former Westpac executives violated rules under the BEAR legislation, which governs executive behavior, The Australian reported. However, the regulator said it would keep in place an additional $1 billion capital add-on until the bank completes an undertaking to introduce a risk mitigation plan.
“Westpac remains subject to a court enforceable undertaking to implement an integrated risk governance remediation plan to uplift risk governance across its business with ongoing independent review over its progress,” APRA said. “The $1 billion operational risk add-on, which reflects the bank’s heightened operational risk profile, will also remain in place until Westpac completes its remediation under the CEU to APRA’s satisfaction.”
Westpac’s failure to report millions of money transfers to Austrac – including transfers that could be linked to child abuse in the Philippines – resulted in a $1.3 billion fine for the major bank last year, The Australian reported. The scandal also led to the ouster of CEO Brian Hartzer and chairman Lindsay Maxsted.
APRA’s decision to drop its investigation comes after a December decision by the Australian Securities and Investments Commission to end its own probe without taking action against Westpac. APRA deputy chair John Lonsdale said that the regulator would continue to monitor the bank until it deals satisfactorily with its cultural and governance issues.
Read more: ASIC drops charges against Westpac
“Although the investigation has not found evidence of breaches of the Banking Act or the BEAR, APRA remains determined to ensure Westpac rectifies its risk governance weaknesses effectively and sustainably,” he said. “Under the enforceable undertaking, Westpac has clearly defined executive and board accountabilities for the implementation of its integrated risk governance remediation plan. APRA will be holding Westpac to account for the delivery of the required improvements.”