On Westpac
Stephen Wigney writes: Revelations of Westpac’s venal behaviour with respect to money laundering, together with the litany of continued abuses post-royal commission should make a few things clear: first, that regulators as currently constituted and funded do not have the resources to police an obviously corrupt sector; secondly, the “invisible hand” of the market has (surprisingly…) failed in ensuring optimal outcomes for ordinary Australians; and thirdly, and in my view most importantly, it is now time for the prudential presence of a government run banking entity to be re-established. A “commonwealth” bank (no relation), offering retail banking with a remit to break even or return a mandated small “profit” back to government, overseen by a parliamentary committee, should be established to use market forces to complement a seriously funded and empowered financial regulator. There appears to be no other way given the total untrustworthiness of the current oligopoly.
Joanne Knight writes: Free markets are encouraging such fundamental levels of corruption that society is breaking down, rise of authoritarianism, child abuse, increasing poverty and inequality. Capitalism has reached a point where it defeats humanity’s basic instinct for self preservation.
Marcus Hicks writes: Meanwhile we have a government obsessed with criminalising unions and further removing red tape for their big business donors.
Anne Lampe writes: Most likely the major cause of Westpac indifference to where money flowed abroad was that monitoring this area, or allocating resources to it, was regarded as a waste of money. It wasn’t a profit centre that could deliver bonuses up the chain, so no point in resourcing it. Never mind that transactions might be funding terrorists, or child exploiters. If the transactions provide a profit, why put resources into stopping them
Gregory Bailey writes: Of course, it is time some senior bank executives received appropriate justice, but I cannot see this happening when the “quiet Australian” is indifferent to this situation and has been for the past thirty years or more. Nihilism and neoliberalism go together beautifully as the world’s best trickle-up theory.
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I stand by my contrarian view that this Austrac action is state extortion. 14 to 17 million dollars for each transaction of a few hundred dollars in breach of a law that is hard to comply with. And conveniently under the rubric of civil penalty meaning either mere suspicion or low burden of proof and no court process required.
The obvious wrongs of banks in other areas has gulled many into thinking any and every accusation must be true. Tart it up with talk of terror and child abuse, as per the police state security laws, and off you go, no proof required and no recourse.
Even worse are the real unintended consequences of these and similar laws elsewhere playing out now. Already financial institutions have ceased offering remittance services to several poor countries preventing many families receiving desperately need monies. Is this likely to make these families less open to the offerings of terrorists or child exploiters ?
If our dodgy government can get away with this and restrictions on our right to transact in cash what’s next ? How about incontestable “civil fines” extracted straight from your account for things it decides not to like dressed up as usual with terror and abuser bogeys ?
Don’t say you weren’t warned.
Hi Mark,
I’m interested in your view – contrarian or not. What do you think makes the AUSTRAC regulations difficult to comply with (bearing in mind the sophisticated technology available to banks)? I agree with your thoughts about invoking the “won’t someone think of the children” line, aka politics of fear, and also your misgivings about the cash transactions proposals (I’ve separately also written to pollies/signed petitions against this). The sheer number of allegedly offending transactions does however boggle the mind.
Genuinely interested in your view.
Steve.
The requirement as I understand it is to develop and apply computerized analytics and use this to determine problematic transactions. I understand banks have sophisticated technologies but that is rightly more focused on fraud and theft prevention.
How is a bank supposed to know if a payer or payee has a connection with a country ? How does it know that a non customer payee has been convicted of an offense ? At what point is it required to report suspicions to Austrac ? It seems reasonable a bank should expect support from such agencies to help it comply with the law. Instead Austrac may have just sat back, let alleged violations accumulate, then pounced possibly when some manager or internal review pointed out their remiss behaviour.
It reminds me of the difference in behaviour of public transport cops. Here, they’re all too keen to let you stuff up then fine you. In other countries they assist you to obey the law.
It’s about whether the aim is to prevent bad actors or sit back and ping intermediaries. Maybe the banks were slack, but maybe they weren’t the only ones and the power of the state backed by draconian laws is being used to avoid blame and accountability.