SYDNEY - One of Australia's major banks have been hit with civil legal proceedings in Federal Court on Wednesday, accused by the country's financial watchdog of breaching anti-money laundering and counter-terrorism finance (AML/CTF) laws a staggering 23 million times.

Australian Transaction Reports and Analysis Center (Austrac) Chief Executive Nicole Rose said the decision to lodge the suit against Westpac Bank was made after a detailed investigation revealed "serious and systemic non-compliance" breaches.

"These AML/CTF laws are in place to protect Australia's financial system, businesses and the community from criminal exploitation," she said. "Serious and systemic non-compliance leaves our financial system open to being exploited by criminals."

"The failure to pass on information about international funds transfer instructions to Austrac undermines the integrity of Australia's financial system and hinders Austrac's ability to track down the origins of financial transactions, when required to support police investigations," Rose added.

As well as failing to monitor the movement of money in and out of Australia with due diligence, Austrac alleges that Wespac did not keep records relating to the origin of some international fund transfers, particularly in troubled hot spots where child exploitation is rife.

Weighing in on Wednesday's bombshell court filings, Australian Prime Minister Scott Morrison did not mince words.

"It is a fairly damning indictment about some of the processes and procedures they have had in place," he said. "They have just got to lift their game."

With each individual breach carrying a maximum fine of 21 million Australian dollars ($14.31 million), the case is almost certain to result in the largest-ever corporate penalty in the nation's history.

In 2018, the Commonwealth Bank was ordered to pay around 700 million Australian dollars ($477 million) after also being found to have breached the AML/CTF Act 53,750 times.

Although disappointed, Morrison said the situation "shows that our cop on the beat, Austrac is doing their job."

In response to allegations, Westpac Chief Executive Brian Hartzer said in a statement that the bank is reviewing the claim and will be working constructively with Austrac to resolve the matter.

"We recognise these are very serious and important issues. We are committed to assisting Austrac and law enforcement agencies to stop financial crime."

"Like many banks around the world, we have been heavily investing in a program of work to improve and bolster the management of financial crime risks including strengthening our policies, data feeding systems, processes and controls," he added.

As a result of the turmoil, Westpac Bank's share price fell 3.37 percent and is now valued at 25.66 Australian dollars ($17.49) per share as of 15:30 pm local time.