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Scandal-Hit Westpac Reshuffles Leadership, Names New CEO

Tom Burroughes

28 November 2019

Shares in statement of claim and will shortly commence the independent review. The board will continue to provide updates on these issues.”

Hartzer said: “As CEO I accept that I am ultimately accountable for everything that happens at the bank. And it is clear that we have fallen well short of what the community expects of us, and we expect of ourselves.”

Australia’s banking and wealth management sector has been hit by a number of misdeeds and oversights.  Late in 2017, the government created a Royal Commission to probe into a raft of problems around mis-selling, weak AML controls and lapses, and other problems. Senior figures at a number of banks have resigned and been replaced. (See an overview of these stories here.)

Worldwide problem
AML lapses and breaches of sanctions of countries such as Iran, Sudan and Cuba have prompted a wave of fines, C-suite resignations and licence cancellations in jurisdictions such as Singapore, Denmark, France and Australia. In Europe, to give one example, Copenhagen-based Danske Bank’s executive leadership has been replaced over AML failings linked to its Estonia branch. Other European banks have been allegedly implicated.

In Asia, a massive corruption scandal centred on the state-created fund, , has prompted criminal investgations in Singapore, Switzerland and the US. Singapore’s regulator has kicked out Falcon Private Bank and BSI, both Swiss firms, from the Asian city-state. The US government has slapped heavy fines on banks such as BNP Paribas ($8.9 billion, May 2015) for sanctions breaches. In the small Mediterranean island of Malta, the jurisdiction has been rocked by claims – hotly denied by Prime Minister Joseph Muscat – that he and ministers used offshore Panama accounts to launder money. Several senior Malta government ministers have resigned. Maltese regulators removed a banking licence from the lender Pilatus exactly a year ago for AML failings.

The profusion of AML cases raises questions about what systems banks should use when onboarding clients and handling existing ones, such as how to make better use of technology to flag up problems early on. The way that bankers are remunerated, and the corporate ethos they should have to protect the reputation of a bank, are also hot topics for this industry.