The Reserve Bank's formally warned the New Zealand branch of Westpac Banking Corporation (WBC) for failing to report "prescribed transactions" as required by the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act 2009.
RBNZ says between 1 July 1, 2018 and February 2019, WBC failed to submit prescribed transaction reports in respect of 7,792 outgoing international wire transfers, sent by New Zealand corporate entities to overseas recipients, that were equal to or over the reporting threshold.
"Under the AML/CFT Act, reporting entities are required to report prescribed transactions (including international wire transfers of $1,000 or more) to the Police’s Financial Intelligence Unit," RBNZ Deputy Governor and General Manager of Financial Stability Geoff Bascand says.
He says WBC designed and configured its prescribed transaction reporting (PTR) systems in a way that failed to detect and report all eligible international wire transfers, resulting in it failing to report the transactions.
"This formal warning reflects the importance of the prescribed transaction reporting regime in building an intelligence picture across New Zealand’s financial system, and reiterates the seriousness with which we view non-compliance with the AML/CFT Act,” Bascand says.
The formal warning comes as the Reserve Bank releases its findings from its survey of all New Zealand registered banks’ correspondent banking, prescribed transaction reporting, and transaction monitoring.
The survey was launched in the wake of allegations made by Australia’s AML/CFT regulator Australian Transaction Reports and Analysis Centre (AUSTRAC) against Westpac Banking Corporation in November 2019.
Based on the survey responses received by the Reserve Bank, all banks surveyed appeared to have adequate processes and controls in relation to correspondent banking due diligence, prescribed transaction reporting and transaction monitoring regarding potential child exploitation.
Westpac New Zealand Limited and WBC were assessed separately as part of a scheduled statutory on-site inspection by the Reserve Bank’s AML/CFT Supervision team. Notwithstanding WBC’s PTR failings, the Westpac entities were also found to have satisfactory procedures and controls in place for the other surveyed areas.
However, the survey also found that an assessment of the effectiveness of these procedures and controls could not be determined from the survey alone, and going forward this will be covered as part of the Reserve Bank on-site inspection programme.
"The survey was a useful exercise to better understand current compliance with the Act by registered banks and will inform our more intensive supervisory approach," Bascand says.