Australian financial crime agency Australian Transaction Reports and Analysis Centre (Austrac) has filed a lawsuit against Westpac, the country's second-largest retail bank.

Westpac bosses have closed its cross-border service in response

The regulator claims Westpac allowed payments between known child exploiters, and that 23 million transactions moved through the bank violated anti-money laundering (AML) protocols.

In the wake of the investigation, Australian home affairs minister Peter Dutton has gone on the offensive, and called for the bank to consider the position of its CEO.

"It is clear … that the Westpac Banking bosses, through their negligence, have given a free pass to paedophiles and there is a price to pay for that, and that price will be paid," Dutton told parliament, according to Reuters.

The bank could be set to lose a government banking contract worth more than AU $100 million, as the Labour government of Victoria state in the country reconsiders Westpac's entry into a tender process due to begin in 2020.

The Australian Securities and Investments commission (Asic) and the Australian Prudential Regulatory Authority (Apra) have both opened independent investigations into the bank.

Westpac has said that it will close its cross-border payments services named in the Austrac report, and that its executive team would withhold all or part of their 2019 bonuses. The bank has also said it will spend an extra AU $80 million on improving its AML controls.

According to The Guardian, Westpac has entered into crisis talks with its largest investors, as the case brought by Austrac looks likely to incur fines in excess of AU $1 billion.