HKMA Fines Westpac $510,000 for Anti-Money Laundering Failure, Delays in Periodic Review of 121 Customers Including 58 High Risks Customers
2nd February 2023 | Hong Kong
Hong Kong central bank Hong Kong Monetary Authority (HKMA) has fined Westpac $510,000 (HKD 4 million) for Anti-Money Laundering failure, delaying periodic review of 121 customers including 58 high risks customers (2016 to 2017) despite being aware of the delays. HKMA: “Out of 143 customers who were subject to periodic reviews during the Relevant Period, there were delays in 121 customers of which 58 were of high risk. It was further found that delays of carrying out such reviews for 27 high risk customers lasted for over a year. Westpac Hong Kong therefore contravened section 5(1)(a) of Schedule 2 to the AMLO. Whilst Westpac Hong Kong was aware of the issue of delay in completing periodic reviews for customers, it failed to take appropriate follow-up actions and to conduct periodic reviews as per its internal schedule. Besides, there appeared to be a lack of robust policy management system maintained by Westpac Hong Kong for ensuring that regulatory requirements were complied with for proper discharge of its section 5(1)(a) obligation during the Relevant Period. Hence, Westpac Hong Kong contravened section 19(3) of Schedule 2 to the AMLO.” (AMLO ~ Anti- Money Laundering and Counter-Terrorist Financing Ordinance). See below for HKMA statement:
“ HKMA Fines Westpac $510,000 for Anti-Money Laundering Failure, Delays in Periodic Review of 121 Customers Including 58 High Risks Customers “
Carmen Chu, HKMA Executive Director (Enforcement and AML): “Timely periodic reviews for customers is a vital part of effective framework for banks to help combat money laundering and financial crime. Banks should maintain up-to-date understanding of risks and deploy adequate resources to detect and deter abuse of accounts, and thus contributing to the ecosystem response to evolving threats and upholding the integrity of banking system. Reference can be made to the HKMA’s relevant guidance to ensure systems of controls remain effective and risk-based.”
Westpac is Australia’s first bank and oldest company, one of four major banking organisations in Australia and one of the largest banks in New Zealand. Westpac provides a broad range of consumer, business and institutional banking and wealth management services through a portfolio of financial services brands and businesses. Established in 1817 as the Bank of New South Wales, the company changed its name to Westpac Banking Corporation in 1982.
HKMA Statement
The Monetary Authority takes disciplinary action against Westpac Banking Corporation, Hong Kong Branch for contraventions of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance
31st Jan 2023 – The Hong Kong Monetary Authority (HKMA) announced today (31 January) that it had completed an investigation and disciplinary proceedings for Westpac Banking Corporation, Hong Kong Branch (WBCHK) under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Chapter 615 of the Laws of Hong Kong) (AMLO) (Note 1). The Monetary Authority (MA) has imposed a pecuniary penalty of HK$4,000,000 against WBCHK for contraventions of the AMLO.
The disciplinary action (Note 2) follows an investigation by the HKMA on WBCHK’s systems and controls for compliance with the AMLO. The control lapses identified in the investigation relate to its delay in completing periodic reviews for some of its customers during the period between 1 June 2016 and 31 May 2017. WBCHK also failed to establish and maintain effective procedures for carrying out its duties under the AMLO in relation to periodic reviews for its customers during this period.
In deciding the disciplinary action, the MA took into account all relevant circumstances and factors, including the following:
- (a) the seriousness of the investigation findings;
- (b) the need to send a clear deterrent message to WBCHK and the industry about the importance of effective controls and procedures to address money laundering and terrorist financing risks;
- (c) WBCHK has rectified the deficiencies identified; and
- (d) WBCHK has no previous disciplinary record in relation to the AMLO and cooperated with the HKMA during the investigation and enforcement proceedings.
Relevant link: Statement of Disciplinary Action
Notes:
1. Prior to 1 March 2018, the short title of Chapter 615 of the Laws of Hong Kong was the Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance.
2. The disciplinary action is taken under section 21 of the AMLO. The AMLO imposes customer due diligence and record-keeping requirements on specified financial institutions, including Authorized Institutions, and designated non-financial businesses and professions. As regards Authorized Institutions, the MA is the relevant authority under the AMLO.
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