The bank is facing a potentially massive fine

Australian banking giant Westpac said Tuesday its beleaguered CEO Brian Hartzer was stepping down after regulators accused the bank of major breaches of money laundering laws involving more than US$7 billion.

The bank is facing a potentially massive fine over claims that it failed to report millions of international fund transfers, including “high-risk transactions” to Southeast Asian nations potentially linked to child exploitation.

Chairman Lindsay Maxsted will bring forward his retirement to “the first half of 2020” and long-standing director Ewen Crouch will not seek re-election next month, the bank said, as it seeks to address the scandal with new leadership.

Hartzer’s replacement as acting CEO, current chief financial officer Peter King, will take over on December 2.

The personnel moves come just days after Maxsted apologised “unreservedly” on behalf of the board, saying management was “fully committed to fixing these issues”.

Australia’s financial intelligence agency, AUSTRAC — which levelled the accusations against Westpac — has said any potential penalty is a matter for the courts.

But in its submission to the Federal Court, AUSTRAC noted that each of the 23 million breaches attracts a civil penalty “between Aus$17 million and Aus$21 million” — theoretically putting the bank on the hook for up to Aus$483 trillion (US$330 trillion) in fines.

“The Board accepts the gravity of the issues raised by AUSTRAC,” Maxsted said in a statement announcing the changes.

“As was appropriate, we sought feedback from all our stakeholders including shareholders and having done so it became clear that board and management changes were in the best interest of the bank.”