Westpac has been linked to an int’l paedophilia case following the arrest of a notorious Australian sex offender who is suspected of using the bank’s transfer system to pay for live-streamed child abuse videos in south-east Asia.

It is the first instance where an attempt to procure abuse of a child has been tied to Westpac’s failure to heed warnings since 2016 from money laundering watchdog AUSTRAC that lax standards for its LitePay and other money transfer systems could be used to facilitate the international child sex trade.

The Victorian man allegedly attempted to arrange for a child to be exploited in a south-east Asian country recently. It is not known whether the alleged abuse went ahead.

The criminal charges against the man come after Westpac had been privately suggesting to the market since the scandal broke that there was no evidence any act of child exploitation had occurred despite more than 3k suspicious payments being identified.

The man, who cannot be named , has been arrested and charged by the Australian Federal Police with soliciting child abuse material and possessing child abuse material.

Police are still examining thousands of the man's private social media messages.

Legal restrictions prevent the publication of details of the case, except that the man allegedly used Westpac systems to send tens of thousands of dollars to a south-east Asian country in more than 100 transactions since late 2018 and recently attempted to solicit live-streamed child sex abuse.

The man has denied any wrongdoing.

The registered sex offender had already served a substantial jail term for ordering live-streamed child sex abuse from contacts in a south-east Asian country.

A Westpac spokesman said the bank was unable to provide comment on specific matters while proceedings are before the court.

“We have made a number of changes to our transaction monitoring to lift our standards and ensure our financial crime processes meet our obligations,” he said. “Westpac is working co-operatively to resolve this matter with AUSTRAC.”

The revelation will be a further blow to the embattled institution, which has already lost its chief executive Brian Hartzer, experienced massive share price drops and suffered an intense backlash from the public, politicians and shareholders.

Westpac announced on Thursday that it had appointed Colin Carter, president of the Geelong Football Club, as the third member of an advisory panel reviewing the bank board's risk, governance and accountability.

The federal and state police Joint Anti-Child Exploitation Team has been investigating numerous referrals about Australian-based sex offenders since AUSTRAC launched civil proceedings against Westpac in November 2019 for committing 23 million violations of anti-money laundering laws stemming back to 2013.

Among AUSTRAC's allegations are that Westpac should have detected the activities of at least 12 customers, including a convicted child abuser, who were making transactions through the bank’s systems “consistent with child exploitation typologies” since 2013, according to Federal Court documents.

AUSTRAC claims Westpac was specifically warned in late 2016 about the risk of international funds transfers being used to purchase child exploitation material, a risk that the bank had already identified internally regarding its LitePay and other payment systems earlier that year.

It is alleged Westpac repeatedly failed to implement an “adequate” system for detecting and responding to financial activities potentially related to child exploitation, at least until June 2018.

The bank’s alert system identified some of these transactions but no action was taken.

In one case, AUSTRAC alleged that Westpac became aware of one customer’s convictions for child sex abuse in June 2019 but allowed them to continue to send money to the Philippines.

Financial institutions are legally required to monitor for, prevent and report to authorities any suspicious financial transactions under anti-money laundering and terrorism financing laws.

Westpac’s monitoring had identified and filed suspicious matter reports for the customers outlined in AUSTRAC’s claims. However, we acknowledge we should have implemented more robust transaction monitoring earlier than we did. This would have generated more suspicious matter reports to AUSTRAC.”

LitePay, which Westpac has now shut down, is a low-cost payment system for making international money transfers up to $3000.

AUSTRAC case against Westpac continues in the Federal Court.

https://fntalk.com/markets/westpac-linked-to-international-paedophilia-case-after-australian-man-charged/

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