Westpac's chief executive says he will personally lead the bank's response into accusations from the financial crime watchdog it persistently breached money-laundering and counter-terror laws.
Brian Hartzer said he was "utterly horrified" by accusations from AUSTRAC that Westpac had no due diligence around payments potentially funding child exploitation in Southeast Asia.
In light of the revelations, Scott Morrison has demanded the big banks lift their game, telling reporters in Brisbane he was "absolutely appalled".
AUSTRAC has taken Westpac to court over allegations the bank contravened the laws on more than 23 million occasions.
The transactions amounted to more than $11 billion over nearly five years.
AUSTRAC chief executive Nicole Rose said Westpac failed to keep required records and pass on information about the origin of international funds transfers.
Ms Rose said the bank also failed to do customer due diligence on high-risk transactions to the Philippines and Southeast Asia, with potential child exploitation risks.
"AUSTRAC alleges that Westpac's oversight of its corresponding banking services was deficient, and that its oversight of its anti-money laundering and counter-terrorism financing program was also deficient."
Speaking to media on Wednesday afternoon, Mr Hartzer refused to say whether he would quit in light of revelations.
He became aware of the issues around customer due diligence a month ago, but only learned about the more detailed matters regarding child exploitation on Tuesday.
"I was utterly horrified at what I read, and am absolutely determined to get to the bottom of why on earth this was allowed to persist," he said.
Mr Hartzer pinned the failures to detect money laundering on an automated process the bank set up in 2010.
National Australia Bank last week admitted it faces a huge fine for multiple possible breaches of counter terrorism and anti-money laundering laws.
Commonwealth Bank was fined a record $700 million in 2018 for serious breaches of the same laws.
Attorney-General Christian Porter said the CBA fine came after 53,000 breaches, while Westpac was alleged to have made 23 million.
He said it was unclear if they were in the same category or a different level of seriousness.
"That is a matter of the utmost seriousness. I mean, on its face, it's completely appalling but we need to know more about it," Mr Porter told the National Press Club.
Ms Rose said Westpac's alleged failures resulted in serious and systemic breaches of anti-money laundering and counter-terrorism financing laws.
"This resulted in a significant loss of intelligence to AUSTRAC and our national security and law enforcement partners," Ms Rose said.
The prime minister said despite the controversies, the banks needed to continue supporting home buyers and small businesses.
"All of this is not a leave pass to pull up the drawbridge in terms of the credit extension into the Australian economy," Mr Morrison said.
Australian Associated Press