The removal of Hartzer comes a day after the high-performing CEO tried to brush aside the controversy saying that the average Aussie wasn't going to be interested in it. Hartzer held a top-secret meeting with senior managers to discuss the child exploitation claims but apparently trivialised the import of the allegations after the meeting, The Australian reported citing sources.

In belief, Westpac might per chance well per chance additionally face a exquisite up to 483 trillion Australian dollars (US $330 trillion).

Chief financial officer Peter King, who is due to retire next year, is temporarily taking over from Mr Hartzer, with an global search for a new CEO due to start after Westpac's annual general meeting on December 12.

Chairman Lindsay Maxsted also brought forward his retirement and risk and compliance chairman Ewen Crouch announced that he was stepping down, but for numerous bank's major shareholders, three scalps are simply not enough.

"As was appropriate, we sought feedback from all our stakeholders including shareholders and having done so it became clear that board and management changes were in the best interest of the bank", Hartzer said in a statement lodged to the Australian Securities Exchange.

Shadow Treasurer Jim Chalmers said the behaviour of Westpac under Mr Hartzer was "nothing short of disgraceful" and there had been "a failure of leadership".

Chairman Lindsay Maxsted would also step down next year, the bank announced on Tuesday.

Treasurer Josh Frydenberg mentioned "there needed to be accountability".

"The Board accepts the gravity of the issues raised by Austrac", Maxsted said in the statement.

Mr Hartzer is the third chief executive among Australia's "big four" banks to depart since the royal commission began in 2018.

Hartzer expressed disgust over some of the allegations, but also insisted numerous questionable transfers cited by Austrac were "recurring, low-value payments" from foreign government pension funds to people living in Australia.

"I've had conversations with Westpac and those discussions were constructive", he added.

Government minister Greg Hunt said it was an "appropriate" move.

Financial planner AMP Ltd lost its Chief Executive, chair and several board members over accusations of doctoring a supposedly independent report to a regulator.

Maxsted had initially stood behind his CEO and commenced a string of meetings with institutional investors in an effort to stave off a shareholder backlash against the board at the bank's annual general meeting on December 12.

The changes leave King with the task of running an investigation into how the bank facilitated offshore payments that violated anti-money laundering protocols for more than half a decade, as alleged by AUSTRAC.

Larger rival Commonwealth Bank of Australia was accused of similar - but far fewer - breaches by AUSTRAC, resulting in a record A$700 million penalty and the early retirement of its Chief Executive.

Westpac's share price climbed 1.9 percent in morning trade on the news.