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Westpac's (ASX: WBC) alleged 23 million contraventions of the Anti-Money Laundering and Counter-Terrorism Financing Act (AML/CTF Act) continue to give the bank a pounding migraine.
AUSTRAC's investigation into Westpac has fuelled the ire of shareholders, and Phi Finney McDonald will represent them in a class action against the big four bank.
The class action, commenced in the Federal Court today, revolves around allegations that Westpac breached its continuous disclosure obligations by failing to report non-compliance with the AML/CTF Act and failing to monitor customers transacting on accounts in a manner indicative of child exploitation.
Additionally, the class action alleges that Westpac exposed itself to AUSTRAC enforcement action as a result of its non-compliance with the AML/CTF Act, which might result in the bank being ordered to pay a substantial civil penalty.
Phi Finney McDonald further alleges that Westpac engaged in misleading and deceptive conduct by representing to the market that it had policy in place to comply with the AML/CTF Act and that it was in fact in compliance with the Act.
Ultimately, Phi Finney McDonald on behalf of shareholders alleges that Westpac's share price was artificially inflated because of the bank's alleged failures and misleading representations.
The claim is open to shareholders who bought shares in the bank between 16 December 2013 and 19 November 2019 and is funded by Woodsford Litigation Funding.
Westpac has acknowledged the class action this morning, saying that it will be defending the claims.
The class action follows a series of regulator action against Westpac in light of AUSTRAC's investigation.
Yesterday the Australian Prudential Regulation Authority (APRA) announced it would be investigating the bank for possible breaches of the Banking Act 1959.
Due to the bank's heightened operational risk profile, APRA will impose an immediate $500 million increase in Westpac's capital requirements.
This takes the total operational risk capital add-ons that Westpac is required to hold to $1 billion, following the increase announced by APRA in July 2019.
The scandal previously triggered resignations from the bank's CEO and chairman, and also led DBRS Morningstar to downgrade its long-term trend rating for Westpac citing "serious shortcomings in operational risk".
Shares in Westpac are down 0.49 per cent to $24.52 per share at 11.27am AEDT.
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