The principal lawyer leading a class action against the country’s second largest bank has said the mammoth settlement agreement over its money laundering charges would spell good news for claimants.
Tim Finney, director of Melbourne law firm Phi Finney McDonald, said the $1.3 billion penalty agreement between Westpac and the Australian Transaction Reports and Analysis Centre (AUSTRAC) would now put pressure on the bank to settle its other lawsuits.
“The size of the settlement with AUSTRAC indicates the value of the class action claim is substantial, very substantial relative to the normal size of these cases,” Mr Finney said.
Thousands of Westpac shareholders had signed up through the open class action against the bank, and Mr Finney said Westpac’s admission of wrongdoing as part of its Austrac settlement would also assist their case.
“It would be unusual for Westpac to admit something in the AUSTRAC proceeding and not admit that in the class action,” Mr Finney said. “It certainly may assist a settlement.”
The bank declined to comment.
Westpac was hit with three shareholder class actions where lawyers allege the bank failed to properly warn investors of the risk involved in AUSTRAC’s investigation into the bank over breaches of anti-money laundering laws.
American investor rights firm Rosen filed a similar class action in January. Another case brought by Johnson Winter & Slattery has been merged with the Phi Finney McDonald claim.
Westpac reached a landmark agreement with AUSTRAC last week, where it acknowledged systemic failures in its technology and management resulted in a failure to properly vet 19.6 million international payments, some linked to child exploitation in the Philippines.
In a prospectus released prior to Westpac’s November capital raise, the bank disclosed a “key risk” as a failure to report a “large number” of transactions to the regulator and the bank could face litigation and reputational damage.
The class actions allege the bank breached its continuous disclosure obligations by failing to inform shareholders of the extent and scope of these risks.
AUSTRAC’s chief executive Nicole Rose said the bank’s misconduct had meant law enforcement agencies missed critical intelligence needed to support police investigations.
When AUSTRAC first lodged its statement of claim in the Federal Court last November, mounting investor pressure for accountability forced chief executive Brian Hartzer to resign and chair Lindsay Maxsted to bring forward his retirement.