Westpac to Shift 1k jobs to Australia amid escalating trouble of disclosure failures

  • Jul 29, 2020 AEST
  • Team Kalkine
Westpac to Shift 1k jobs to Australia amid escalating trouble of disclosure failures

Summary

  • Of late, Westpac has decided to move 1000 jobs from overseas to Australia, after international coronavirus control measures triggered significant delays in processing times for home loans.
  • Implementing new roles is anticipated to take up to 12 months and would result in an increase in costs of Westpac by about $45 million per annum.
  • AUSTRAC's probe into the suspected infringements of anti-money laundering, and Counter-Terrorism Financing Act (AML/CTF) by Westpac has broadened in the wake of recent disclosures by the bank.
  • Recently, Westpac updated AUSTRAC with the information on its self-reported threshold transaction reports (TTRs) filed with incomplete or inaccurate information, in its 2020 interim financial report during the month of May.

Westpac Banking Corporation (ASX:WBC) has pledged to bring 1000 call centre employments to Australia from abroad in a bid to fulfil the growing requirement for customer assistance because of COVID-19 and lower the risk of offshore disruptions.

The roles would support WBC's call centres and offer processing and operational assistance for services such as home loans and customer financing, which would result in all key voice related positions move back to Australia.

The step came after the unemployment in the country rose to 22- year high of 7.4% in June, as coronavirus forced large scale layoffs in Australia

Westpac CEO, Peter King stated that with this shift in voice calls to the nation, an Australian would answer the phone if a customer calls WBC. He further added that it has somewhat become a possibility due to remarkable changes in work patterns since COVID-19, and development of its technology infrastructure in last few years, empowering teams to function efficiently from home or elsewhere.

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He also added that it would take around 12 months to execute this new strategy that would provide the organisation time to collaborate with international partners under its current commitments.

The Group would maintain its relationship with its overseas partners in certain areas of technology and operations, even after its decision to move its call centre job positions back to Australia.

King stated that the new roles would offer major economic relief in the wake of the sharpest slowdown in decades, providing 1k job openings for new and existing workers throughout regional and metro areas.

He also noted that although the journey ahead is likely to be multifaceted and difficult, there would be a requirement for policymakers and companies to address the problem of high unemployment and firm understanding of the crucial position that Westpac plays in the economic reconstruction as a key employer and bank. However, the other improvements and successful results of Australia in handling once in a century shock of coronavirus cannot be missed.

The bank has estimated that the new roles would result in a rise in costs by $45 million per annum, by the end of the full year 2021.

Westpac under scanner amid disclosure failures

AUSTRAC has been investigating into Westpac's operations since last year as the Group is under scanner for over 23 million alleged violations of anti-money laundering laws.

As per AUSTRAC, the civil penalty orders are connected to systematic non-compliance with the anti-money laundering and Counter-Terrorism Financing Act (AML/CTF). AUSTRAC had applied for civil penalty orders to the Federal court against Westpac in November 2019.

In June, Westpac released results of its internal investigation into AML/CTF compliance concerns raised by AUSTRAC in 2019, in which it accepted its failure to report 19.5 million IFTIs to AUSTRAC over 6 years due to technological and human error dating back to 2009.

On 17 July, Westpac released its reassessment of its culture, governance, and accountability remediation plan. A study commissioned by AUSTRAC found that the lender had not made adequate changes to its risk control, and culture even after it was sued for allegedly making transactions to suspected child exploiters in Philippines and South East Asian regions.

As a result, the bank has planned to launch a multi-year programme to fix shortcomings in its management of non-financial risk, which was found to be immature and reactive.

According to the Company’s reassessment, Westpac was found to be overly complex, which results in confusion around accountability and challenges in execution.

Such inadequacies have been identified by each of the bank's 3 lines of defence, with further change needed to tackle identified weaknesses.

Reporting issues identified in TTRs

Westpac has made new announcements related to the Group's internal investigation of reporting failures related to financial crime regulator AUSTRAC's investigation of breaches of AML/CTF.

The Group reported it had found around 90k threshold transactions that had not been revealed to AUSTRAC when the investigation began, as per WBC’s 2020 interim financial results presentation published in May. 

As per its latest update dated 28 July, Westpac self-reported Threshold Transaction Reports (TTR) issues to AUSTRAC, including TTRs recorded with inadequate or incorrect information, as well as a projected 60,000- 90,000 TTRs that had not been reported to AUSTRAC.

Westpac has given AUSTRAC with updated information relating to TTR issues, including about 175,000 transactions not reported to AUSTRAC and 365,000 TTRs that were reported contained incomplete or inaccurate information. A large proportion of possible compliance concerns apply to a range of complicated situations, where Westpac is needed by law to determine whether numerous transactions may be aggregated, and whether a threshold transaction has actually taken place.

Westpac recognised a "huge proportion" of its reporting failures to a "set of diverse regulatory situations" that forced the bank to exercise discretion on how various transactions might be aggregated, and whether a threshold transaction has actually taken place. However, the Group laid emphasis that not all newly disclosed threshold transactions may be violations of its legal obligations.

Further, Westpac announced about the creation of a new Group Operating Office and appointed Scott Collary to lead this division as CEO. Recently, WBC also announced the appointment of Anthony Miller as Chief Executive of Westpac Institutional Bank (WIB) and Michael Rowland as the Chief Financial Officer of the Westpac Group.

On 29 July, WBC last traded at $17.7, up by 1.375% from its last close.

 


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