Westpac’s approach to risk in the wake of its money laundering scandal has been blasted by a financial regulator, which has also penalised the bank for breaching liquidity standards.

The bank on Tuesday revealed its efforts to improve risk governance have not met Australian Prudential Regulatory Authority (APRA) expectations.

APRA in December last year started reviewing how the bank managed risk after Westpac breached anti-money laundering laws 23 million times. Most of the breaches happened between 2013 and 2018 and led to a $1.3 billion fine.

The regulator’s review has found Westpac has an immature and reactive risk culture, unclear accountabilities and inadequate oversight, the bank on Tuesday said.

Westpac executives expect to form a legal agreement with APRA to set out the measures the bank will take to improve risk governance.

Westpac chief executive Peter King said the bank accepted it needed to work faster to address the shortcomings.

In the second blow for the bank, APRA on Tuesday said it was taking action after Westpac failed to meet liquidity standards.

The breaches mostly related to Westpac New Zealand funding and loan products last year and this year, which have since been corrected.

APRA said while it did not have concerns about Westpac’s liquidity, the breaches showed weakness in risk management.

The regulator has ordered the bank to have third party reviews of its liquidity reporting and risk management.

Westpac must add 10 per cent to the net cash outflow of its liquidity coverage ratio until it addresses the findings from the reviews.

Shares were up 1.29 per cent to $20.39 at 1446 AEDT.