Westpac is ordered to pay $1.3billion - the biggest fine in Australian history - for breaching anti-money laundering rules more than 23 million times

Westpac has agreed to pay a record $1.3billion fine for breaching anti-money laundering rules - and enabling the funding of child exploitation and potentially terror activities.

Australia's second biggest bank has told the Australian Securities Exchange it had reached an agreement with AUSTRAC, the federal government agency charged with tackling organised crime.

Westpac has admitted to 23million breaches of anti-money laundering laws over six years, including failing to report international funds transfers worth more than $11billion.  

Australia's oldest bank will present an agreed statement of facts to the Federal Court on Thursday morning.

This 94-page document has been published on the ASX outlining how Westpac broke anti-money laundering and counter-terrorism laws between 2013 and 2019.

Westpac has agreed to pay a $1.3billion fine for breaching anti-money laundering rules

 Westpac CEO Peter King offered an apology after agreeing to the biggest fine in Australian corporate history

Westpac CEO Peter King offered an apology after agreeing to the biggest fine in Australian corporate history. 

'I would like to apologise sincerely for the bank's failings,' he said. 

His New York-born predecessor Brian Hartzer resigned as chief executive in November after AUSTRAC, also known as the Australian Transaction Reports and Analysis Centre, alleged Westpac had allowed 12 customers to make almost 3,000 transactions involving child exploitation, adding up to $480,000.

That month, AUSTRAC chief executive Nicole Rose had presented evidence showing the bank failed to carry out due diligence on high-risk transactions to the Philippines and South East Asia that carried potential child exploitation risks.

Home Affairs Minister Peter Dutton said Westpac had put Australia at risk.

'Banks have a responsibility to not let criminal activity go undetected and to protect Australians from serious and organised crime like child exploitation, drug trafficking and fraud,' he said on Thursday.

His New York-born predecessor Brian Hartzer resigned as chief executive in November after AUSTRAC, also known as the Australian Transaction Reports and Analysis Centre, alleged Westpac had allowed 12 customers to make almost 3,000 transactions involving child exploitation, adding up to $480,000

'They should be able to trust their banks and financial services they use daily to have strong systems in place to protect the community from crime. 

'In this case, Westpac breached that trust and let their customers down, ultimately putting Australians at risk.'

Home Affairs Minister Peter Dutton said Westpac had put Australia at risk

On Thursday, Mr King promised Westpac would fix its accounting systems so money laundering laws would not be broken again. 

'We are committed to fixing the issues to ensure that these mistakes do not happen again,' he said.

Mr King said on Thursday Westpac had closed down relevant products and reported all relevant transactions. 

The bank's LitePay international money transfer service wasn't discontinued until November 2019 - three years after AUSTRAC had first warned Westpac management about illicit transactions.

Westpac had put aside $1.027billion in the first half of fiscal 2020 to fund any penalty from the money laundering scandal as a precursor to Thursday's announcement. 

The bank has admitted to contravening the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 for transactions between November 2013 and November 2019. Gail Kelly was Westpac's South African-born CEO during one year of that period

The bank has admitted to contravening the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 for transactions between November 2013 and November 2019.

Gail Kelly was Westpac's South African-born CEO during one year of that period.

Alan Kirkland, the CEO of consumer group CHOICE, said no Westpac executive had been properly held accountable.

'Today's settlement between AUSTRAC and Westpac clearly demonstrates that personal executive accountability is still missing in the financial industry,' he said.

'No executives or senior management at Westpac have been held to account by either regulators or the courts for this abhorrent failure of management.'