When all is said and done, the only thing of value any of us have is our reputation.

For years, Westpac chief Brian Hartzer and his chairman Lindsay Maxsted have been handsomely rewarded for their stewardship of one of the country's biggest financial institutions. Along the way, they've been elevated to pillars of society.

That now counts for nought. Community outrage and Federal Government anger now threatens to boil over following revelations the bank aided and abetted child pornographers and child exploitation on multiple occasions and did absolutely nothing to stop it.

Incredibly, reports from within the organisation suggested on Friday, as the Westpac board held a crisis meeting to deal with the unfolding disaster, that senior management and directors thought they were being unfairly and harshly treated; that somehow this was all a huge injustice.

The statement they released after the meeting was breathtaking in its arrogance, stunning in just how removed from reality those running Westpac really are.

It's a malaise that appears to have infected the entire Australian banking landscape.

Rather than quit, the chairman and chief executive dug in with a "sincere" apology and a vague promise of justice Westpac style with an in-house investigation.

Global ramifications

If the gravity of the situation appears to have been lost on our business leaders, it certainly hasn't been in Canberra.

Or Washington. Or London. Or Frankfurt. Or Basle. Or any other country committed to the war on terror.

The sickening and horrific revelations of child abuse in the Philippines are bad enough.

Westpac chief executive Brian Hartzer has apologised rather than quit over the scandal. ( ABC News: John Gunn )

But this scandal isn't simply about Westpac's own criminal customers.

And when added to the failings of the Commonwealth Bank two years ago, this has far deeper ramifications.

There are implications here for national and global security as both banks, for years, have left the door wide open for global terrorist financing, delivering easy access to the Australian banking system for criminal money laundering.

In Westpac's case, 16 separate foreign banks that had a relationship with the Australian bank — in a deal known as correspondent banking — were delivered open access to our banking system with no oversight.

It would appear other regional and global banks piggybacked off those relationships as well.

According to the regulator, in a large number of cases Westpac had no idea where the transactions originated, who was behind them, what the cash was for or the identity of the beneficiaries.

This went on for more than five years. And it continues to this day.

In short, this is an unmitigated disaster.

There is evidence Westpac helped foreign banks open accounts in sanctioned countries such as Iraq, Lebanon, Ukraine, Zimbabwe or the Democratic Republic of the Congo.

Just to add fuel to that toxic mix, it then failed on 23 million occasions to meet its legal obligation to report these transactions to authorities.

We've been here before: Westpac's Somalia experience

Westpac has form in this area, going back years.

In 2014 it was the last western bank to withdraw its money transfer services to Somalia.

It caused an uproar in Somali communities, many of whom depended upon foreign remittances for their survival and Westpac had become the only conduit.

But when you are the last operator you attract all the business, even the illegitimate.

The reason every other global bank had shut down remittance payments to Somalia was that, with the introduction of new global anti-money laundering laws, the risk of financing terrorism simply was too great.

Banks such as HSBC, Standard Chartered and Bank Paribus had paid billions of dollars in fines to settle money laundering and sanctions-busting cases.

There was clear evidence from within Westpac that cash was being funnelled through to "charity" groups of dubious origin and — despite a concerted push from Somalian groups that included court action against Westpac to maintain its services — it shut down its remittance operations.

That's what makes the revelations from last week even more shocking.

Having dodged a bullet on its Somalian transfers and being forced to deal with specific problems around terrorism funding, Westpac then designed and established a cheap and hugely profitable operation called Litepay to allow for remittance payments.

It was a system designed to circumvent the SWIFT global payments system and it effectively took all the business from small remittance firms.

What it didn't do was put in place the necessary oversight to ensure its money laundering and anti-terrorism commitments could be met or even its obligations to report transactions to the proper authorities.

Why? The answer is simple. Profit.

Profit before responsibility

During the past 30 years executive salaries, and particularly chief executives, have depended upon profit.

Base pay often is well below half the potential take-home salaries with the bulk made up in short-term and long-term bonuses with profit the major driving factor.

It's a system designed to maximise shareholder returns. The better the company performs, the better the boss is paid.

But it has one major flaw. Given it's in their own interests, executives invest in areas that make the greatest returns.

And they reduce costs or shut down areas that don't deliver earnings.

As a bank executive, you can't just get rid of the compliance division, the area that ensures you meet all your legal obligations.

But given it's a cost centre rather than a profit centre, you look to trim those costs and invest the savings in the areas that deliver the loot.

This is a system that has been at the heart of everything that is wrong with modern banking.

These are the institutions that delivered the global financial crisis a decade ago, that have been involved in rigging every conceivable market in recent times from foreign exchange to interest rates.

As evidenced from the recent royal commission, most of Australian's banking atrocities have been concentrated on home turf — until now.

Money laundering heaven

Westpac isn't alone in this. The Commonwealth Bank two years ago was left reeling — after a series of scandals involving stealing from its own customers — when a police investigation found the bank may have been involved in money laundering for local criminal syndicates.

An AUSTRAC investigation discovered more than 53,000 breaches of its reporting obligations resulting in a $700 million fine.

While breathtaking at the time, it pales into insignificance when compared to Westpac's 23 million transgressions.

Treasurer Josh Frydenberg says there must be accountability for the scandal at Westpac. ( ABC News: Tamara Penniket )

National Australia Bank has warned that it too has been the subject of an AUSTRAC investigation.

That means that three of our big four banks have failed to meet global standards and obligations on anti-terrorism and money laundering rules, leaving the door ajar for global terrorism financing.

Both CBA and Westpac have claimed technical glitches for the oversight. That simply cannot be believed.

While not his fault, this is hugely embarrassing for Prime Minister Scott Morrison who no doubt will be asked to explain how and why our banks could so comprehensively disregard international law for so long, given the potentially dire consequences.

That explains his anger and the thinly veiled threat from Treasurer Josh Frydenberg that the banking regulator could dismiss the entire Westpac board.

Global regulatory bodies also would be justified in questioning the ability of our systems, and particularly AUSTRAC, which only recently appears to have become a force to be reckoned with, to enforce the law.

When it comes to the war on terror, our reputation is in tatters.

Brian Hartzer and Lindsay Maxsted, meanwhile, are digging in, in a desperate effort to preserve their own.