Westpac battles insurers for $400 million AUSTRAC penalty payout – report
Westpac battles insurers for $400 million AUSTRAC penalty payout – report | Insurance Business Australia
Insurance News
Westpac battles insurers for $400 million AUSTRAC penalty payout – report
Penalty deemed largest issued by the regulator
Insurance News
By
Roxanne Libatique
Westpac has initiated legal action against several insurers to claim $400 million in insurance payouts, following the record penalty levied against it in 2020 for breaches in anti-money laundering protocols.
Why is Westpac suing insurers?
The legal dispute revolves around the interpretation of the insurance policies and whether they cover the $1.3 billion penalty imposed by AUSTRAC in 2020. This penalty, the largest ever issued by AUSTRAC, led to the departures of then-CEO Brian Hartzer and chairman Lindsay Maxsted.
Westpac said it had a comprehensive insurance strategy designed to manage risks, including coverage for potential civil penalties.
“The decision to commence proceedings is one we’ve taken very seriously and has been considered in line with our legal and regulatory obligations as well as the interests of our shareholders,” a spokesman told AFR. “As the matter is now before the court, we are unable to comment further.”
Westpac asserts it is entitled to claim $400 million from its insurers to offset the AUSTRAC fine.
Additionally, the bank acknowledged 76,000 further violations when it reached a settlement with AUSTRAC.
Legal dispute between Commonwealth Bank of Australia and AUSTRAC
By contrast, the Commonwealth Bank of Australia (CBA) encountered a similar issue with AUSTRAC in 2017 and managed to recover $145 million in professional indemnity claims from its insurers over its $700 million penalty, as reported in its 2020 annual report. CBA did not resort to legal action to secure these claims.
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