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BANKS UPDATE: Money laundering, child exploitation, and phone hacking – is your money safe?

Westpac financial negligence

Charging dead people, fees for no service – now money laundering and child exploitation are the latest revelations to emerge from Westpac. As the dishevelled banking sector continues its meltdown, it’s important you check in on your investments, writes Commercial Litigation Senior Associate, Charles Lethbridge.

Westpac’s CEO Brian Hartzer has resigned as the bank faces sensational claims of money laundering and illegal transactions potentially linked to live child sex shows in the Philippines.

The accusations have been levelled in a lawsuit against the well-established lender by Australia’s anti money-laundering and terrorism financing regulator, AUSTRAC, who claim Westpac has breached counter-terrorism finance laws 23 million times.

It is alleged the bank failed to properly vet international transactions worth $11 billion, from the period from November 2013 to September 2018, and that those transactions were potentially linked to child exploitation rings in South East Asia.

AUSTRAC CEO Nicole Rose said that AUSTRAC’s decision to commence civil penalty proceedings was made following a detailed investigation into Westpac’s non-compliance.

“Serious and systemic non-compliance leaves our financial system open to being exploited by criminals,” she said.

READ MORE: Banking Royal Commission Highlights ‘Sue the Bastards Mantra’ 

Bank executives initially backed their CEO but an emergency board meeting last week saw Hartzer quit along with Chairman Lindsay Maxstead, who is set to walk from the embattled bank next year.

Maxstead told media the bank was “unbelievably repulsed” by its alleged failure to properly vet transactions. He also defended the payment system at the heart of child exploitation allegations.

“Please don’t think that this bank has sat on its hands and had no attention to these matters. The actual evidence is that it’s the exact opposite,” he said.

Maxsted and head of investor relations Andrew Bowden have been meeting investors ahead of a potential board spill at its annual general meeting on Thursday, where shareholders will have their first chance to express anger at the board’s handling of the AUSTRAC scandal.

CommBank and NAB admit Hawking

The Westpac scandal comes as ASIC takes three wins via its post-Banking Royal Commission strategy to pursue litigation over negotiation, successfully forcing NAB and CBA into guilty pleas and admissions of wrongdoing.

Last week, CommInsure was convicted of 87 counts of offering to sell insurance products in the course of unlawful and unsolicited telephone calls, commonly known as “hawking”.

CommInsure pleaded guilty to the offences and has agreed to refund 30,000 customers approximately $12m, and fined $700,000.

In a separate matter in the NSW Local Court, former NAB employee Mathew Alwan was sentenced to a 12-month intensive corrections order and 200 hours of community service over his role in operating a fraud ring out a bank branch in Western Sydney.

The two developments follow NABs admission to 255 breaches of the Credit Act relating to its no defuct “introducer” referral program.

Post-Banking Royal Commission purge

AUSTRAC investigations have seen the departures of CEOs of two of the big four banks, while the Banking Royal Commission holds the scalps of NAB’s CEO Andrew Thorburn and its chairman Ken Henry.

More heads could roll from the big four banks as media report several senior staff have been called in for compulsory interviews with the Australian Securities and Investments Commission in the wake of Westpac’s money laundering claims.

It’s extremely important that you regularly check in on your investments and stay vigilant to detect bad financial advice or mismanagement.

If necessary, get some independent advice from an alternative reputable financial planner or forensic accountant.

Warning signs you are the victim of bad financial planning advice

Often, it can be difficult to identify when you have received bad financial advice before the losses are incurred. The damages flowing from financial advice often don’t quantify for at least 12 months (for example, at the end of a financial year), and sometimes longer. Through our experience, we have identified the following ways to identify bad financial advice:

Sudden loss in your investment

No doubt the most obvious way to identify bad financial advice is when you suddenly incur a financial loss on the net value of your investment portfolio. The greatest indicator of ‘sudden’ financial loss is a drastic turn in your investments. If you have seen your investment continue to drop at a rapid rate, we urge you to seek immediate advice.

Unexpected bills

If your financial planner has provided you with bad advice regarding your income, superannuation, tax or investments, the most likely time the losses would be realised is at the end of the financial year in an unexpected or unusually high bill.

Your financial planner provided you legal advice

While financial planners have general knowledge of the effect legislation has on your investments, estate planning and/or company arrangements and they are required to identify the potential legal implications of the arrangements with their clients, however, they are not qualified to provide you with legal advice.

Taking legal action for bad financial planning advice

There are two pathways to taking legal action against bad financial advice and the path you take depends on where you received the advisory service.

Bad financial planner advice from a bank

Some large banks who gave many customers poor financial advice have set up compensation review programs—including the CBA, Macquarie and NAB. We understand how these programs work, and we can guide you through every step of the process.

Bad financial planner advice from an independent planner

AFCA have opened a ‘legacy claim’ scheme that allows AFCA to determine claims dating back to 1 January 2008 up until 30 June 2020. Legacy claims allow those who received bad advice before the GFC and the Banking Royal Commission to have their claim reviewed when it would ordinarily be time barred after 6 years.

How Attwood Marshall Lawyers can help

Established in 1946, Attwood Marshall Lawyers is a leading banking and finance litigation law firm. Our experienced Commercial Litigation team lawyers are experts in all aspects of professional negligence claims against major lenders and individual financial planners. We are dedicated to delivering exceptional client services and ready to assist you get the compensation you deserve today. For a complimentary, obligation-free phone assessment of whether you are eligible for a No Win, No Fee claim please contact: Commercial Litigation Department Manager and Senior Paralegal, Amanda Heather, on direct line 07 5506 8245, email aheather@attwoodmarshall.com.au.

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Charles Lethbridge

Charles Lethbridge

  • Senior Associate
  • Commercial Litigation
  • Direct line: 07 5506 8240
  • Mobile: 0421 885 195