The Reserve Bank of New Zealand (RBNZ) has announced that it is ramping up its scrutiny of insurers and banks after Australia’s number-two retail bank, which has a major presence in NZ, was alleged to have breached anti-money laundering and counter-terrorism financing laws.

RBNZ Governor Adrian Orr said he was “very concerned” about AUSTRAC’s allegations that the dual-listed Westpac Group made more than 23 million contraventions of anti-money laundering laws.

Read more: Westpac issues apology for connections to child abuse funds

The scandal has so far claimed two of the bank’s big bosses – chief executive Brian Hartzer, who stepped down on Tuesday, and chairman Lindsay Maxsted, who announced his retirement in early 2020, sooner than planned.

In a statement accompanying the bank’s financial stability report, RBNZ deputy governor Geoff Bascand said the bank’s “recent reviews of banks and life insurers, and the number of recent breaches in key regulatory requirements, reinforces the need for financial institutions to improve their behaviour,” and that RBNZ “will be taking a more intensive approach, which will involve greater scrutiny of institutions’ compliance,” Reuters reported. 

Orr said RBNZ had contacted all banks to ask for assurances they were meeting regulatory requirements and was working closely with Westpac’s NZ unit on the issues that had emerged in Australia. 

This year saw RBNZ revoking ANZ’s local license to calculate its own operational risk capital due to persistent control failures. It has also stepped up monitoring of NAB’s subsidiary Bank of New Zealand after identifying errors in the lender’s risk capital calculation process, Reuters reported.