MANILA, Philippines— Australian banking giant Westpac, currently at the center of an international money laundering case, was found to be directing money to the Philippines that could have been used for child exploitation.
Agence France-Presse on Wednesday reported that Westpac faces a massive fine after being accused by regulators of "serious and systemic" breaches of money-laundering laws involving more than US$7 billion.
Australia's financial intelligence agency, AUSTRAC, said it had taken legal action against Westpac for failing to report more than 19.5 million international fund transfers, including "high-risk transactions" to Southeast Asian nations potentially linked to child exploitation.
Australia's Westpac faces huge fine for money-laundering breaches
Overall, AUSTRAC chief Nicole Rose said, Westpac violated the anti-money laundering and counter-terrorism financing act 23 million times.
Among the most damaging allegations, the regulator accused Westpac executives of "indifference" to clear evidence that some international transfers were used to fund child exploitation.
"Since at least 2013, Westpac was aware of the heightened child exploitation risks associated with frequent low value payments to the Philippines and Southeast Asia, both from AUSTRAC guidance and its own risk assessments," it said in the report of AFP.
For its part, Westpac said it “accepts responsibility for the issues that have occurred.”
“Westpac has identified the need to improve financial crime management, based on issues identified by its business, financial crime and internal audit teams over a number of years,” the bank said in a statement.
It said that it has worked closely with AUSTRAC in addressing the risks of child exploitation and other serious crime.
The bank said that there is an ongoing customer due diligence in relation to financial indicators of potential child exploitation risk in relation to payments to the Philippines and South East Asia.
In December 2016, AUSTRAC also issued Westpac’s financial crime team with industry guidance regarding key indicators for the purchase of child exploitation material involving international funds transfers to the Philippines and South East Asia.
AUSTRAC alleged that Westpac failed to carry out appropriate due diligence on 12 customers, with a view to identifying, mitigating and managing the known risks of child exploitation.
Among the immediate fixes Westpac has identified is a lookback screen of its customer transactions.
“Westpac has undertaken a further review of all child exploitation transaction types for the Philippines over the past 12 months, to identify and report any further suspicious transactions or customers that warrant investigation,” the bank said.
Efforts to raise awareness on sexual exploitation in Philippines underway
The bank said it is also investing to reduce the human impact of financial crime by protecting people.
It is investing $ 18 million to match the funding of the International Justice Mission over three years to tackle Online Sexual Exploitation of Children (OSEC) in the Philippines.
“This will enable IJM to expand on-the-ground initiatives in Southeast Asia to help end child exploitation,” Westpac said.
Likewise, it is matching the Australian Government’s funding for SaferKidsPH partnership with Save the Children, UNICEF and The Asia Foundation by investing $6 million over six years.
The move is to also “raise awareness of OSEC and support programs to protect children in the Philippines.”
In September, AUSTRAC also ordered an investigation into global money transfer platform PayPal, amid concerns it may be being misused by sex offenders to buy child abuse material from the Philippines and other parts of Asia. —Rosette Adel with reports from Agence France-Presse
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