Westpac CEO Brian Hartzer has resigned and chairman Lindsay Maxsted has announced his early retirement in the wake of a money laundering scandal that is threatening to engulf the Australian bank.
Hartzer's resignation come just a day after announcing plans to consolidate the bank's disparate anti-money laundering systems into a single, group-wide, database, and to double the number of people in its financial crime unit, in response to regulatory accusations that it contravened AML/CTF laws on over 23 million occasions.
The allegations, documented last week by Australia’s anti money-laundering and terrorism financing regulator, Austrac, could leave the bank facing penalties of over $1 billion and open the floodgates to a wave of class action lawsuits.
The bank had already suspended payment of bonuses to executives running the compliance operations subject to determining accountability for the shortcomings.
It has also closed its LitePay product, the subject of deeply damaging allegations that it was used by paedophile networks to send payments to the Philippines, without raising any red flags.
Announcing his resignation, Hartzer says: “As CEO I accept that I am ultimately accountable for everything that happens at the Bank. And it is clear that we have fallen well short of what the community expects of us, and we expect of ourselves.”
He will serve out a 12-month notice period on a full salary of $2.69m, but will forego a short-term bonus this year and will lose any long-term bonuses that have not already vested.
Hartzer is being replaced by chief financial officer Peter King who will take over the role next week.