The Australian Prudential Regulation Authority (APRA) has removed the remaining $500 million capital penalty imposed on Westpac following its money laundering scandal. APRA initially enforced the penalty in July 2019, with a further $500 million add-on in December of the same year. This decision acknowledges the completion of Westpac’s multi-year risk transformation program, aimed at addressing the deficiencies that led to the initial penalties. Westpac is one of Australia’s big four banks and provides a broad range of banking and financial services. The company is headquartered in Sydney.
Westpac had previously admitted to shortcomings in monitoring risks associated with money flows into and out of Australia. These failures included a lack of due diligence on suspicious transactions potentially linked to child exploitation, resulting in a $1.3 billion fine in 2020 for breaches of the Anti-Money Laundering and Counter-Terrorism Financing Act. APRA partially lifted the penalty in July 2024 by removing $500 million of the add-on, while the remaining $500 million stayed as risk remediation continued.
According to APRA member Therese McCarthy Hockey, completion of the risk transformation program marks “a vital step in ensuring [APRA’s] expectations are consistently met.” She also emphasised the expectation that Westpac will maintain its strong capital position, even as effective risk transformation programs may identify legacy issues. Westpac’s chief executive, Anthony Miller, stated that the changes in how the bank manages risk must be maintained and continually strengthened.
With the removal of Westpac’s penalty, ANZ remains the sole major bank with an active APRA capital penalty. ANZ’s penalty was increased from $750 million to $1 billion in April following an enforceable undertaking to rectify weaknesses in non-financial risk management and risk culture stemming from its bond trading scandal. ANZ submitted a plan to address these issues late last month, though experts anticipate full resolution could take several years. Westpac reports that the removal of the capital overlay will increase its common equity tier 1 (CET1) capital ratio by approximately 17 basis points.
