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Westpac Cuts Executive Bonuses After 23 Million Breaches Of Law

Treasurer Josh Frydenberg has repeatedly declined to say whether the board of Westpac should be sacked following money-laundering accusations.

Westpac will scrap or trim the bonuses of its executive team following allegations it committed 23 million breaches of money laundering laws.

The announcement comes after federa l treasurer Josh Frydenberg on Sunday repeatedly declined to say whether the board of the embattled bank should resign or be sacked.

Financial crime watchdog AUSTRAC is taking Westpac -- the country's second-largest bank -- to court over the breaches, some of which are alleged to be linked to child exploitation.

Westpac is being taken to court after allegedly committing 23 million breaches of money laundering laws. Image: AAP

Asked on ABC's Insiders program whether he would be happy if the CEO and chair of Westpac are still in place in six months time, Frydenberg said: "History shows you that these issues build a momentum of their own and where boards start is not necessarily where boards finish."

He noted the previous CEO of the Commonwealth Bank eventually left after the bank was also found to have breached money-laundering laws.

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Westpac Shares Plummet After Watchdog Accuses Bank Of More Than 23 Million Breaches

Westpac shares have hit a six-month low after Australia's financial intelligence agency accused the lender of breaching anti-money laundering and counter-terrorism financing laws more than 23 million times.

He said the Australian Prudential Regulation Authority has the ability to disqualify boards and executives under the Banking Executive Accountability Regime introduced by his government.

However, that came into force in 2018 and is not retrospective, while some of the alleged breaches date back to 2013.

Treasurer Josh Frydenberg on Sunday repeatedly declined to say whether the board of the embattled bank should resign or be sacked. Image: Tracey Nearmy/Getty

Asked what action he would like to see, Frydenberg said: "As I said, these issues develop a momentum of their own. They've got an AGM on December 12 and, no doubt, there'll be some very hard discussions between now and then."

He said he had spoken to the CEO and chair of Westpac and made it clear the seriousness of these issues.

Asked again whether these people should keep their jobs, the treasurer said: "Again, our position has consistently been, decisions about who are on boards are matters for shareholders and who are on executive teams are matters for boards."

"That being said, these are very serious issues. There must be accountability."

Westpac Shares Plummet After Watchdog Accuses Bank Of More Than 23 Million Breaches. Image: ASX

Westpac on Sunday released a statement outlining its response plan to AUSTRAC's legal action, with chairman Lindsay Maxsted saying the bank was "determined to urgently fix (the) issues".

"We accept that we have fallen short of both our own and regulators' standards and are determined to get all the facts and assess accountability," Maxsted said in a statement.

"In the interim, the board has determined that either all or part of the grant of the 2019 Short Term Variable Reward will be withheld for the full Executive team and several members of the general management team subject to the assessment of accountability."

In outlining the plan, Maxsted and Westpac chief executive Brian Hartzer said the bank's response would focus on three areas.

Those include the bank closing LitePay, lifting standards through priority screening and improving cross-industry data sharing and protecting people by investing in reducing the human impact of financial crime.