SYDNEY • Westpac Banking Corp "unreservedly" apologised after Australia's financial crimes agency alleged that a dozen customers funnelled money to South-east Asian nations to pay for child pornography and sexual abuse, amid the nation's worst ever breach of money-laundering laws.
"The notion that any child has been hurt as a result of any failings by Westpac is deeply distressing and we are truly sorry," its chairman, Mr Lindsay Maxsted, said in a statement after the board met yesterday.
"As a board, and as individuals, we are devastated by the issues raised."
While not commenting explicitly on the future of chief executive officer Brian Hartzer, Mr Maxsted said the "board, CEO and management team are fully committed to fixing these issues".
Mr Hartzer, 52, has been under pressure since the bank was sued on Wednesday for allegedly breaching money-laundering laws 23 million times, a number that puts it among the worst transgressions reported globally in recent years.
While Mr Hartzer has vowed to stay in the job and lead the response to the claims, the bank has faced criticism from Prime Minister Scott Morrison, pension funds and investors.
In off-the-record conversations, fund managers have expressed their horror at the extent of the allegations.
They said they were angry at the apparent slowness of management in rectifying the problems and questioned whether the board had the right skills to oversee executives. Most have questioned whether Mr Hartzer could survive.
Westpac said it will appoint independent experts to review efforts to improve compliance with anti-money laundering and counter-terrorism financing laws.
It has also started talks with community groups about taking further steps to fight child exploitation.
The suit alleges that between November 2013 and June this year, Westpac failed to report more than A$11 billion (S$10 billion) in international transfers, and laid the blame on "indifference by senior management and inadequate oversight by the board".
Among the most serious allegations, the Australian Transaction Reports and Analysis Centre said Westpac failed to carry out appropriate due diligence on 12 customers whose accounts showed repeated low-value transactions to countries in South-east Asia including the Philippines, even though it knew these patterns were indicative of child exploitation risks.
In one case, a customer in October and November 2014 transferred money to a person in the Philippines who was later arrested for child trafficking and exploitation involving the live streaming of child sex and offering minors for sex.