How A 'Minor' Negligence Lead To An Unspeakable Crime
November last year, before the pandemic swept the world and dominated media reports, a scandal of considerable proportions emerged in Australia. The second largest Australian bank, Westpac, was accused by the national financial intelligence unit (AUSTRAC) for breaching anti-money laundering laws a whopping 23 million times, involving AUD $11 billion in transactions.
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Fast forward to present day, and Westpac has admitted to the breaches, though blames technological errors. Citing deficient processes and a resource shortage, rather than intentional acts of wrongdoing — the bank was forced to put aside AUD $900 million to address the potential legal penalty. Though, according to experts, Westpac will likely need to pay more for its negligence.
As the bank goes through its lawsuit, some believe that a larger penalty will be imposed by the Federal Court because the social harm caused by Westpac’s compliance failure is impossible to calculate. After all, its failure to adhere to anti-money laundering and counter-terrorism financing laws allowed for widespread criminality to potentially go undetected — a consequence difficult to measure.
The most disturbing of these crimes include the failure to vet payments that may be linked to paedophilia.
What's the link between sexual child exploitation and Westpac?
In December 2016, AUSTRAC had given an official briefing outlining the typology of an individual engaged in child exploitation. This typology was meant to be used when upgrading the detection systems of all banks, so that they could automatically catch certain patterns of payments and raise the appropriate red flags.
The financial profile for child abusers provided by AUSTRAC included individuals who send small amounts of money to different people in the Philippines or South-East Asia, despite having no obvious family links. Often, these transactions occur over a short period of time.
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While these suspect transactions were to be promptly reported to regulators, Westpac delayed its internal upgrades to catch these red flags until June 2018. In effect, the bank allowed suspicious and harmful transactions from child exploiters to go undetected for at least one year and a half after AUSTRAC’s notice.
Of these, at least 12 suspicious customers were identified by AUSTRAC, who engaged in repeated suspicious transactions sending money to the Philippines. One of which was a convicted paedophile, and another who was linked to live sex shows. In total, these individuals made more than 3,000 seperate transactions and transferred nearly half a million dollars to the Philippines.
Why is the Philippines at risk?
The sad reality is that child sexual exploitation is a lucrative industry with payouts for impoverished families. For the abuse, little equipment is needed — just a webcam and the internet.
Unfortunately, the Philippines is considered a child-exploitation hotspot. One of the reasons is the prevalence of the English language, allowing offenders to easily communicate. Since the Philippines is in a similar time zone as Australia, it also makes it optimal for live streaming.
Secondly, the Philippines is huge on remittance payments. According to the World Bank, the Philippines is one of the top remittance receiving countries. This means the "same financial facility that millions of overseas Filipino workers use to easily send money back home” facilitates sex offenders paying for live-streamed abuse. Depending on age of victim, number of victims, and number of viewers, paedophiles pay anywhere from $15 to $500.
