Westpac settles US class actions

The first action was filed in August 2016 in the US District Court for the Southern District of New York in relation to trading activity in the Australian BBSW market. 

The settlement is subject to negotiation, execution of complete settlement papers and court approval. 

Westpac previously raised a provision in relation to the case for its 2020 financial results. The terms of the settlement agreement, however, are confidential.

The bank has previously paid a pecuniary penalty of $3.3 million for contravening section 12CC of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) through its involvement in setting BBSW in 2010.

The latter case was filed by Rosen in the US District Court for Oregon at the beginning of the year, following market disclosure issues connected to the bank’s financial crime obligations from 11 November 2015 to 19 November 2019. 

The litigants had alleged that throughout the period in question, Westpac made false and/or misleading statements and/or failed to disclose that:

• it failed to report over 19.5 million international funds transfer instructions to financial crime regulator AUSTRAC;
• it did not appropriately monitor and assess the ongoing money laundering and terrorism financing risks associated with movement of money into and out of Australia;
• it did not pass on requisite information about the source of funds to other banks in the transfer chain;
• despite being aware of the heightened risks, it did not carry out appropriate due diligence on transactions in south-east Asia and the Philippines that had known financial indicators relating to child exploitation risks;
• its AML/CTF program was inadequate to identify, mitigate and manage money laundering and terrorism financing risks; and
• as a result, its statements about its business, operations and prospects were materially false and misleading and/or lacked a reasonable basis at all relevant times.

The settlement is subject to court approval. 

Westpac reported it would not be material and resolves all claims against it without any admission of liability. 

The big four bank is still facing a class action from local firm Phi Finney McDonald over the AUSTRAC violations. 

In September, the Australian legal firm told our sister brand Investor Daily that Westpac’s $1.3-billion fine from AUSTRAC could be key to its case.

[Related: Court approves largest civil penalty in history]