Westpac NZ plays down impact of money laundering scandal

Westpac Bank chief executive Brian Hartzer has resigned after the lender was embroiled in a money laundering scandal, but the bank says the issue will not impact operations in New Zealand.

The Westpac group boss (pictured) quit yesterday after the bank was sued by Australian regulators for breaching money laundering laws, with possible links to child exploitation. 

The offence would be one of the biggest money laundering violations in history, and concerns 23 million alleged breaches of counter-terrorism financing and money-laundering laws.

Many of the offences concern late reporting of overseas transactions. 

Amid pressure from institutional shareholders and politicians, the bank announced Hartzer would step down, effective from next Monday. 

The scandal has provoked a warning from ratings agency S&P that compliance scandals would hit big four banking profits over the next two years. S&P believes the Westpac scandal will hurt the banking sector's chances of reducing new regulation and controls.

Westpac NZ has moved to play down fears of similar compliance issues in its New Zealand business. 

A spokesman said the bank has "reviewed AUSTRAC’s statement of claim to make absolutely certain our Westpac New Zealand systems and processes are robust and secure".

The spokesman added: "The AUSTRAC proceedings relate to Westpac Banking Corporation and Australian AML/CFT laws. The proceedings do not relate to Westpac New Zealand which is subject to independent oversight by the Reserve Bank of New Zealand under New Zealand AML/CFT laws. We have a range of controls in place to identify and prevent financial crime.

The spokesman said the bank received regular oversight from the Reserve Bank, and was confident it met all standards and requirements.

"We do not offer the LitePay or Australasian Cash Management Direct Entry products in New Zealand. The RBNZ supervision in New Zealand includes onsite visits and monitoring. We regularly engage with the RBNZ on these issues and will continue to do so. We are confident we are complying with relevant New Zealand laws and regulation."


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