Australia’s second largest bank Westpac is facing A$1 billion (US$690 million) fine—the heftiest in Australian banking history—after it was found to have violated the Anti-Money Laundering and Counter-Terrorism Financing Act.
AUSTRAC, the country’s financial intelligence regulator, has claimed that Westpac failed to appropriately monitor money laundering and terrorism financing risks for movement of funds into and out of Australia. This includes carrying out necessary due diligence on transactions to South East Asian countries that have known financial indicators relating to potential child exploitation risks. They also failed to report over 19.5 million International Funds Transfer Instructions to AUSTRAC over a five-year period.
AUSTRAC CEO Nicole Rose says, “These AML/CTF laws are in place to protect Australia’s financial system, businesses and the community from criminal exploitation. Serious and systemic non-compliance leaves our financial system open to being exploited by criminals. The failure to pass on information about IFTIs to AUSTRAC undermines the integrity of Australia’s financial system and hinders AUSTRAC’s ability to track down the origins of financial transactions.”
This presents an incredible opportunity to explore transitioning into a financial world with the use of blockchain technology as it is an immutable, auditable and transparent ledger that can be used by all entities to solve the limitations faced today by financial institutions with their legacy systems.
The usefulness of blockchain technology comes from the fact that it would be the one commonly used public ledger by all entities and individuals.
Regulatory bodies already have a lot of information on the identity of criminals, but have a heavy reliance on financial institutions to self-police by entrusting them to develop their own internal systems to manage the transactional data required to meet their reporting obligations. The data is convoluted across complex and outdated legacy systems. This makes it very difficult to have the overall visibility required for all transactions, tying it back to the identity of the customer and to have traceability of the flow of money when criminal activity needs to be investigated.
Independent auditors retrospectively perform checks to determine if the banks are meeting their reporting obligations, and face heavy fines if they are found to have violated the guidelines. The entire process from start to finish involving all entities is cumbersome, costly, time consuming and greatly inefficient.
When you consider the entire objective of stringent regulation is to ensure the integrity of the financial system remains intact, a lot of the time non-compliance will go unaccounted for, or only be discovered when it is too late.
The use case of how this improves efficiency in every aspect will be too difficult to ignore. Financial Institutions can leverage off the immutable evidence trail of the public blockchain ledger, and invest more of their efforts into improving their ‘Know Your Customer’ data point captures for new and existing customers. The use of the blockchain ledger for transactional data gives traceability and auditability to all entities, which far exceeds the standards of what exists today in the current financial system.
Bitcoin (BSV) is the only blockchain that has been willing to work with regulators to be able to integrate into the existing financial system. By keeping the protocol stable as per the original design and scaling with large blocks, it continues to remain compliant within the legal framework whilst having the scaling capacity to be able to handle the throughput of data the global financial system requires if we are to ever transition towards the end goal of using one global blockchain to be the one ledger of account. This rule out all other alt-coins, including Bitcoin Core (BTC) who have failed to scale on chain by limiting the block size to tiny blocks, have altered the protocol to be more anonymous and seek to add side-chain solutions that move away from the use of blockchain.
New to blockchain? Check out CoinGeek’s Blockchain for Beginners section, the ultimate resource guide to learn more about blockchain technology.
