Again this week a major bank (Westpac this time) was in the news relative to money laundering and other compliance related issues. As noted in the Financial Times, the CEO Peter King ” said he was committed to fixing the processes that led to the breaches in money laundering compliance, including recruiting another 200 people in financial crime and compliance and ‘putting in place a clearer accountability regime that will speed up decision making.’” This particular breach related to money laundering related to child exploitation involving pedophiles. It resulted in a fine of Australian $900 million based on transactions totalling over Australian $11 billion occurring across six years.
As with other banks that have faced fines and sanctions related to money laundering, Westpac is focused on adding staff to address financial crime and compliance. However, is that the right approach? It is my opinion that banks need to focus primarily on their culture – building a culture where the individual bankers focus on proper and legitimate banking. I can not understand how Australian $11 billion in transactions were processed by individuals at Westpac without any thought as to the activities behind the movement of the money. If those individuals were supported by a culture focused on doing values-based banking as opposed to doing anything that makes money for the bank, I suspect these transactions would not have been processed. And Westpac would not be paying such a large fine.
