Westpac has announced its group chief executive officer Brian Hartzer will step down on December 2 as the bank battles a money laundering and child exploitation scandal.
Current chief financial officer, Peter King, will be taking over as acting CEO effective on that date.
“As CEO I accept that I am ultimately accountable for everything that happens at the Bank,” Hartzer stated.
“And it is clear that we have fallen well short of what the community expects of us, and we expect of ourselves.”
Hartzer has been given 12 months notice and will be paid his fixed remuneration of $2.686 million over that period.
The AUSTRAC allegations
On 23 November, the Australian financial crime watchdog, AUSTRAC, applied for civil penalty orders against Westpac bank over 23 million instances of money laundering failures.
Around 19.5 million international fund transfers amounting to $11 billion were not reported to the regulator.
AUSTRAC alleges Westpac also failed to carry out due diligence on transactions to the Philippines and South East Asia with recognised child exploitation indicators.
And, AUSTRAC says Westpac didn’t introduce any measures to detect the known child exploitation processes.
Westpac’s response plan
Westpac chairman Lindsay Maxstead released a response plan, which included a set of actions across three areas: immediate fixes, lifting its standards and protecting people.
Combined, these actions will increase expenses by up to $80 million.
“We understand the gravity of the issues presented by AUSTRAC and reiterate our deep sorrow for failings by Westpac,” Maxstead stated.
“We are determined to urgently fix these issues and lift our standards to ensure our anti-money laundering and other financial crime processes are industry leading. As a major bank we play a critical role in helping law enforcement agencies prevent criminals from carrying out illegal activity,” he added.
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