One of Australia’s biggest banks has added another AUS$341m to its misconduct costs, but is fearing that the regulator might slam it with a huge fine.
Westpac revealed the potential cost in a statement sent to the Australian Securities Exchange (ASX). It stated that its earnings for the second half of 2019 will be slashed by AUS$341m. The money will go to its ongoing remediation programmes.
With these extra costs, the bank has been forced to fork out about AUS$1.9bn since 2017, according to ABC.
“A key priority in 2019 has been to deal with outstanding remediation issues and refund customers as quickly as possible,” said Brian Hartzer, CEO of Westpac.
“The additional provisions announced today are part of that commitment. As part of our ‘get it right put it right’ initiative we are determined to fix these issues and stop these errors occurring. We will continue to review our products and services to ensure they deliver the right outcomes for customers, and if necessary, make further provisions.”
Moreover, Westpac flagged that the Australian Transaction Reports and Analysis Centre (AUSTRAC) might hit the bank with a massive unrelated fine.
The penalty would be due to failure to report several international funds transfer instructions (IFTI), which means an instruction to send money either into or out from Australia.
Westpac said most of these IFTIs happened between 2009 and 2018. While the bank believes it may face a financial penalty, it could not estimate how big it would be.
Westpac is not the only the only Australian bank to be having difficulties with the authorities.
The Australian Securities and Investments Commission (ASIC) alleged in early October this year that the Commonwealth Bank of Australia (CBA) had failed to the rules of the country’s anti-hawking laws multiple times between October and December 2014. These laws protect customers from cold calls attempting to sell life insurance policies.
As a result, the CBA could be made to pay a fine of AUS$1.8m for making 87 unsolicited calls to sell life insurance. Each offence could cost the bank AUS$21,250 or AUS$1.8m for all 87 calls together.
ASIC also made the news in August when it was revealed that the regulator was teaming up with the FBI in a cryptocurrency probe investigating whether or not digital currencies were used for money laundering.
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