The Reserve Bank has issued a formal warning to Westpac New Zealand for failing to comply with anti-money laundering rules.
The central bank said Westpac's internal systems failed to detect and report almost 8000 corporate transactions to overseas recipients between July 2018 and February 2019.
The law requires financial service providers to report all overseas transactions worth more than $1000 to the police and the Reserve Bank.
Reserve Bank deputy governor Geoff Bascand said the formal warning reflected the importance of the reporting regime in building an intelligence picture across New Zealand's financial system, and reiterated the seriousness with which it viewed non-compliance with the Anti-Money Laundering and Countering Financing of Terrorism Act.
There is no suggestion that Westpac was engaged in money laundering activity.
A spokesperson for Westpac said it reported the issue to the RBNZ and took the situation very seriously.
"This issue arose from an inadvertent error with our reporting system which is now fixed," the spokesperson said.
It is not the first time the Reserve Bank has disciplined Westpac for breaching banking rules.
In March it was ordered to commission two independent reports over concerns about its compliance with liquidity rules.
In 2017 Westpac was ordered to increase its amount of capital and do an independent review of the models it was using to assess risk.
The Reserve Bank's warning to Westpac came as it released its findings from a survey of all the country's registered banks into transaction reporting and monitoring.
It found they all had adequate processes and controls in place.
Westpac New Zealand was assessed separately and notwithstanding its failure to disclose its prescribed transactions it demonstrated that it had satisfactory procedures.
The Reserve Bank said the survey suggested the effectiveness of these anti-money laundering measures could not be determined from a survey alone and it would now cover this as part of its on-site inspections.