Westpac has made the news for ALL the wrong reasons. The awfulness that 12 paedophiles could have used Westpac's non-tracking of overseas transactions to pay for thousands of on-line paedophilia services in the Philippines is horrific.
Yet despite the horror of this - millions of OTHER transactions totalling MORE than $11B were likely used for money laundering and tax evasion by criminal and/or terrorist groups, countries with suspect governance and individuals..
AUSTRAC: "The regulator said billions of dollars had passed through these arrangements with "correspondent banks" overseas over the past six years alone, noting that "with a significant number of payments processed under these arrangements, Westpac did not and does not know where the funds originate".
AUSTRAC's lawyers said Westpac's failure to have appropriate anti-money laundering programs in place made the total number of breaches "unquantifiable".
"Westpac contravenes section 81 of the act on each occasion it provides a designated service where it does not have a compliant Part A Program in place," they noted.
"These contraventions are too voluminous to quantify and are ongoing."
The paedophilia claims were at the back of AUSTRAC'S 48 page statement of claim which is.. "...what this case is all about - it's the facilitation of massive, high-level, cross-border tax evasion," says Nathan Lynch, Thomson Reuters' Asia-Pacific bureau chief, financial crime and risk.
"Westpac established a cloak of invisibility for cross-border payments - tax authorities, financial regulators and agencies couldn't see anything.
"It's this aspect of the case that makes it such a landmark case for AUSTRAC to take on - and a case that will send shockwaves around the globe," Mr Lynch said.
The analysis by business reporter Stephen Letts continues:
"To understand why this was unlikely to be just sloppiness on an industrial scale you have to dig into the arcane world of data reporting of fund transfers between financial institutions.
The global standard is the Society for Worldwide Interbank Financial Telecommunication (SWIFT) messaging standard for so-called cover payments: the MT202 COV.
The SWIFT platform was established in 2009 as part of a global crackdown on money laundering, and is used in most of the world's high-value cross border payments.
In simple terms, it is designed to ensure that information about the sender and beneficiary of a transaction travels with the money at all times.
According to AUSTRAC's statement of claim, however, Westpac decided that this global standard was too expensive and too cumbersome.
"Westpac considered that the SWIFT payment network was costly and not an efficient means of sending low-value, large-volume payments for clients of global banks that need to make and receive payments around the world," was AUSTRAC's damning assessment.
Letts continues:
"To get around the "inconvenience" of SWIFT, Westpac set up two of its own products: LitePay for small transfers of up to $3,000 — the favoured platform of those sending money to Filipino sex traffickers — and the heavy-duty Australasian Cash Management (ACM) platform, capable of facilitating payments of up to $100 million."
AUSTRAC clearly has its suspicions about the big players availing themselves of Westpac "cloak of invisibility".
"....At all times until February 2019, one correspondent bank maintained two accounts with Westpac, in its own name, each was used to facilitate payments for two large multinationals and their related companies. Each multinational accessed the accounts through the banking logon provided by the correspondent bank."
The whole scam may have not been uncovered had it not been for some foresighted regulation drawn up by AUSTRAC three decades ago, and supported by the Hawke government.
Questions have to be asked WHO are these criminal/terrorist groups, individuals and Corporations who would use such a platform to transfer funds in and out of Australia to avoid detection and tax?
Are they respected or known Australians running Companies and large Corporations who have knowingly rorted Australians? WILL we EVER find out who they are?
It appears it will be VERY unlikely!
OUR Politicians are pretending to be gob-smacked about this - yet OUR Governments have known Australia is a HAVEN for overseas MONEY LAUNDERING for decades - BUT unlike NZ have CHOSEN to do NOTHING about it!
Why would this be so?
Are our Governments so concerned about the ECONOMY AND CORPORATIONS losing PROFITS and the political fallout if they make legislation to clamp down on MONEY LAUNDERING - that they don't CARE about needing to cut SERVICES for everyday Australians due to tax-minimisation rorts in the future?