Australia's corporate regulator has closed its investigation into possible breaches of anti-money laundering laws by Westpac Banking Corporation (ASX: WBC) after finding the institution did not breach the Banking Act 1959.
The move from the Australian Prudential Regulation Authority (APRA) to close its investigation comes after Westpac was hit with a $1.3 billion penalty last year after admitting to breaching anti-money laundering and counter-terrorism laws on more than 23 million occasions.
APRA's investigation was specifically into whether Westpac had breached the Banking Act 1959, rather than anti-money laundering laws - the focus of AUSTRAC's proceedings.
Though APRA's investigation has now closed, Westpac remains subject to a court enforceable undertaking (CEU) to implement an integrated risk governance remediation plan to uplift risk governance across its business with ongoing independent review over its progress.
The CEU was the result of APRA delegating its enforcement powers under the Banking Act to the Australian Securities and Investment Commission which was conducting its own investigation into whether the conduct giving rise to the allegations amounted to contraventions of the Corporations Act 2001.
The delegation was done to avoid both agencies separately investigating and potentially litigating related matters.
A $1 billion operational risk capital add-on, which reflects the bank's heightened operational risk profile, will also remain in place until Westpac completes its remediation under the CEU to APRA's satisfaction.
"Although the investigation has not found evidence of breaches of the Banking Act or the Banking Executive Accountability Regime, APRA remains determined to ensure Westpac rectifies its risk governance weaknesses effectively and sustainably," APRA deputy chair John Lonsdale said.
"Under the enforceable undertaking, Westpac has clearly defined Executive and Board accountabilities for the implementation of its integrated risk governance remediation plan.
"APRA will be holding Westpac to account for the delivery of the required improvements."Never miss a news update, subscribe here. Follow us on LinkedIn, Instagram and Twitter.
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