Westpac, ANZ donate $6 million to charity over foreign exchange breaches

Sydney Morning Herald March 15 2017 - 1:44pm

Mathew Dunckley

Banking giants Westpac Banking Corp and the Australia and New Zealand Banking Group will donate $6 million to charity and submit their wholesale foreign exchange arms to independent scrutiny as part of a settlement with the corporate regulator.

The Australian Securities and Investments Commission on Wednesday announced it reached a deal with Westpac and ANZ to set up so-called 'enforceable undertakings' that will commit the banks to good behaviour after problems were discovered in their wholesale foreign exchange businesses.

An ASIC investigation into a five year period between 2008 and 2013 bound both banks failed to have systems strong enough to spot inappropriate conduct identified including the disclosure of confidential client trading information to external traders through the use of code names.

"The foreign exchange market is a systemically important market that depends on all participants acting with integrity and fairness. ASIC is committed to ensuring that major financial institutions have the systems in place to ensure that financial services are provided fairly, honestly and efficiently," said ASIC Commissioner Cathie Armour.

Westpac will also donate $3 million to support the "financial capability of vulnerable people including women experiencing family violence, the elderly and youth at risk" while ANZ will pay $3 million to Financial Literacy Australia.

Under similar deals struck with the Commonwealth Bank of Australia and the National Australia Bank, those banks donated $2.5 million each to fund financial literacy projects in Australia.

"We have taken responsibility and we apologise," said ANZ chief risk officer Nigel Williams.

"There has been a cultural and compliance step change in our Markets business since 2013. While we are always looking at ways to strengthen our compliance environment, there have been major improvements to compliance, training and monitoring systems in recent years which will go a long way toward ensuring this does not happen again."

Lyn Cobley, chief executive of Westpac Institutional Bank, said the bank had improved controls in its foreign exchange business

"We look forward to continuing this process as we fulfil our commitments set out in the enforceable undertaking," she said.

It is understood Westpac has already taken steps to tighten use of chat rooms and other electronic communications as well as changing the trading systems and improving supervision.

Under the deal with ASIC, Westpac and ANZ will improve their systems and supervision of employees in the foreign exchange business to be overseen by an independent consultant appointed by ASIC.

The deal also requires both banks to give ASIC an annual formal assurance that its systems are up to scratch and those systems will be subject to an annual review by the external expert for three years.

The ASIC investigation into Westpac found:

Westpac employees disclosed confidential details of pending client orders to external traders in the spot FX market including the