The Australian Prudential Regulation Authority (APRA) has warned it could disqualify Westpac directors and managers following the money-laundering scandal that has engulfed the bank.
APRA chairman Wayne Byres told a parliamentary committee the allegations from the country's financial crime agency, AUSTRAC, against Westpac were "very serious".
"While we must be careful not to duplicate or cut across matters for which AUSTRAC is the appropriate regulator, and which are before the courts, we are actively considering what further action by APRA is required," said Byres.
There are various people designated by Westpac under the act as accountable persons"
"This includes examining whether obligations under the Banking Executive Accountability Regime (BEAR) have been met, and how Westpac's management of operational and compliance risks more broadly needs to be enhanced," he added.
AUSTRAC has accused Westpac of breaching money laundering laws 23 million times and allowing payments potentially linked to child abuse. The head of Australia's second-largest bank quit after the accusations.
APRA said the Westpac money laundering and child exploitation scandal showed Australian banks had spent too little on monitoring potentially suspicious transactions.
"There are various people designated by Westpac under the act as accountable persons - that broadly includes the board of directors, individually, the chief executive and by and large the next layer of group executives," Byres said.
The prudential regulator chair said that each of these people have "their own obligations under the BEAR regime - to act honestly, conduct their affairs with due skill, care and diligence and to make sure they don't do anything that might unduly jeopardise the prudential standing or reputation of the bank."
If a director or senior executive is found to have breached these obligations, APRA will have the power to terminate their employment from Westpac or ban them from the industry altogether.
APRA expected to announce its decision before the end of 2019, he said.
APRA is one of three financial regulators circling Westpac in the wake of the scandal that has claimed the scalp of former chief executive Brian Hartzer and chairman Lindsay Maxsted. The Australian Securities and Investments Commission (ASIC) and AUSTRAC are also investigating the breaches.
Attorney-General Christian Porter has said Westpac's case is serious. Some commentators have speculated the bank could be fined more than A$1bn, which would be the largest in Australian corporate history.