Executive Summary

In 2019, AUSTRAC commenced civil proceedings against Westpac for wide-ranging non-compliance with Australia’s AML/CTF laws. The allegations included millions of failures to report international funds transfer instructions (IFTIs), weak oversight of correspondent banking relationships, and inadequate monitoring of transactions with red flags for child exploitation in Southeast Asia. Westpac later agreed to pay a record civil penalty of approximately A$1.3 billion, the largest in Australian corporate history at the time.

Background: Westpac’s Role in Australian Payments

Westpac is one of Australia’s “Big Four” banks, with a significant share of the retail, business and international payments market. For years, Westpac provided low-value international remittance and cross-border payment services to its customers and through correspondent banking relationships. These activities generated large volumes of transactions that fell under AUSTRAC’s reporting regime and required effective transaction monitoring and risk-based controls.

Timeline of Key Events

• 2010–2018: Westpac processes millions of cross-border payments, including low-value transfers to high-risk jurisdictions.
• 2013–2018: Systems and processes fail to report a large number of IFTIs to AUSTRAC as required by law.
• 2018: Internal issues and AUSTRAC engagement highlight gaps in AML/CTF compliance.
• November 2019: AUSTRAC files a statement of claim, alleging over 23 million breaches.
• 2020: Westpac agrees to a civil penalty of approximately A$1.3 billion and commits to extensive remediation.

Key AML & CTF Failures Identified by AUSTRAC

Child Exploitation Typologies: Why This Case Stands Out

One of the most serious aspects of the Westpac case was AUSTRAC’s allegation that some transactions processed through the bank were consistent with child exploitation typologies, including small, frequent payments to high-risk locations with suspicious descriptions or patterns. Westpac’s systems and controls did not effectively flag, investigate or report these patterns in a timely way, raising critical questions about the bank’s capability to protect vulnerable victims.

Red Flags That Should Have Triggered Escalation

• Repeated low-value payments to individuals in high-risk locations associated with exploitation risks.
• Patterns of transactions inconsistent with the customer’s stated profile or income.
• Use of certain payment channels or remittance corridors known to be abused by offenders.
• Missing or vague payment descriptions for cross-border transfers.
• Large backlogs or gaps in regulatory reporting to AUSTRAC.
• Inadequate review of correspondent banking flows and nested relationships.

Penalty, Settlement & Remediation Outcomes

The outcome of AUSTRAC’s enforcement action against Westpac included:

• A record civil penalty of approximately A$1.3 billion for AML/CTF breaches.
• Formal acknowledgement of systemic failures in AML/CTF controls, including child exploitation-related monitoring.
• Leadership changes, including the resignation of senior executives and board-level accountability.
• Large-scale investment in financial crime technology, staffing and governance.
• Enhanced expectations from AUSTRAC and other regulators for the entire Australian banking sector.

Lessons for AML, CTF & Financial Crime Professionals

• Regulatory reporting (such as IFTIs) is not a formality — it is core to national financial intelligence.
• Child exploitation typologies must be integrated into transaction monitoring scenarios and training.
• Low-value transactions can still signal serious crime when analysed in context and over time.
• Risk assessments for products, channels and jurisdictions must be regularly updated and realistic.
• Correspondent banking and cross-border flows require strong end-to-end oversight.
• Senior management must receive clear, honest reporting on financial crime risks and backlogs.

GO-AKS Insight

“The Westpac AUSTRAC case demonstrates that AML/CTF failures are not only about regulatory fines — they can have a direct connection to some of the most serious harms in society, including child exploitation. For AML professionals, this case underlines the need to move beyond ‘tick-box’ compliance and build monitoring frameworks that genuinely protect vulnerable victims.”