The Westpac Banking Corporation (ASX: WBC) share price dipped 3% yesterday to 25.67, placing it as one of the worst performers in the ASX200. Westpac is Australia’s second-largest bank and provides a range of consumer, business and institutional banking and wealth management services.
AUSTRAC has commenced civil legal proceedings against Westpac (ASX: WBC) regarding alleged breaches of anti-money laundering and counter-terrorism financing. Consequently, Westpac’s share price has fallen by 3%. (Credit: Small Caps)
The share price fall comes after the Australian Transaction Reports and Analysis Centre (AUSTRAC) commenced civil proceedings against the banking giant for alleged breaches of its Anti Money Laundering and Counter-Terrorism Financing Act. Westpac (ASX: WBC) had previously warned investors that it had self-reported failures to report a number of international funds transfer instructions (IFTIs). Furthermore, the banking giant revealed that AUSTRAC was also investigating numerous other areas within their processes, procedures and oversight.
Westpac CEO Brian Hartzer commented:
We are committed to assisting AUSTRAC and law enforcement agencies to stop financial crime. These issues should never have occurred and should have been identified and rectified sooner.
The fine may be as high as $210 per breach. However, when a large number of breaches are involved, the Federal Court has discretionary power to limit the fine. It is worth noting that Commonwealth Bank of Australia (ASX: CBA) paid a $700 million fine in 2018 for breaches of anti-money laundering and counter-terror financing law.
The investigation places heavy pressure on Westpac and their reputation, especially when considering their recent royal commission remediation. Furthermore, the potentially hefty fine may place a burden on their earnings, which may contribute to the underwhelming start to FY20, which has seen a near 10% fall in share price already.
The stock may now appear attractive to some investors, given its recent fall and strong fully franked dividend of 6.55%. However, it is foreseeable that the stock may continue its downward trend as this legal battle plays out.
This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)
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