Westpac CEO steps down amid money laundering and child exploitation scandal

Westpac CEO Brian Hartzer has stepped down following allegations of a money laundering scandal in which the bank reportedly enabled customers using its services to exploit children in the Philippines.

Mr Hartzer’s departure comes after mounting pressure from investors.

The bank CEO will depart his role on Monday. He will be paid his fixed salary of $2.7 million in lieu of 12 months notice.

Westpac chairman Lindsay Maxstead will bring forward his retirement to early 2020.

Westpac has ties to several overseas banks which allow customers to make payments abroad, and in exchange, overseas bank customers use Westpac to make payments in Australia. Banks are legally required to monitor this system strictly to ensure payments are legitimate, and stamp out illegal activity.

Last week, AUSTRAC, the government agency that identifies money laundering and organised crime, accused Westpac of failing to conduct proper checks on more than 23 million transactions, totalling billions of dollars.

AUSTRAC says the bank failed to do through checks over a 12 year period on frequent low-level transactions, which is a pattern of behaviour known to be linked to child exploitation.

Channel 9 finance editor and host of 3AW’s Money News, Ross Greenwood, said he expects the bank will be fined billions for the legal breaches.

“It’s likely to be in the billions of dollars, given the fact that the Commonwealth Bank, for 53,000 breaches, paid $700 million,” he told 3AW’s Neil Mitchell.

Mr Greenwood said other banks will likely be caught out, too.

“Westpac is not the last bank that’s going to go through this,” he said.

“Other big institutions are likely to go through exactly the same process with AUSTRAC.”

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Image: Bloomberg / Contributor