You have mentioned some extremely pertinent matters and as a...

You have mentioned some extremely pertinent matters and as a general proposition: whatever AUSTRAC are doing and how they are going about it I personally (as do many in the industry sector) finding both disarming and dangerous: AUSTRAC must work with the banks and develop a common understanding from their array of meetings and forums with banking IT consultants also accusing AUSTRAC of having their IT lagging worlds best practice. We seem to be witnessing a regulator "going nuclear" on 2/4 main banks with NAB also possibly in the cross-hairs. CBA paid their fine whilst the Royal Commission in progress and wanted their AUSTRAC matter gone - cost $700m to do so and I would say limited if any negotiation so no real sense of proportion or a true standard to measure computer generated spray of transactions: zillions per day.
The "elephant in the room" is State sponsored "hacking" that these major banks must also deal with just to make life as a bank very difficult.
moreover, in matters of crime prevention banking systems are used to "follow the money …." to and through the money trail to an end point.
Note, one a transaction is blocked criminals are alerted and will use another means or money movement mechanism.
Federally, there is a right of Appeal but AUSTRAC - went prosecution mode. Sums potentially very large even too large to arbitrate/ negotiate....
Specifics on the Westpac case per se is now before the Court and matters going to algorithm and settings etc a bit too far for HC, sorry.
Transactions merely ID as suspicious reportable transactions rather than "money laundering" - but, ID's transactions + knowledge that AUSTRAC/AFP can gather will determine. Since when has anyone had a bank ring and ask you why did you do, say, a $500 transaction last week, where did the money come from and what purpose including specific bank account to receive the funds and balance of that account: but, AUSTRAC / AFP can and do … Note for Fx going though a Counterparty Bank and then on to the actual account of the criminal and that account may be a local bank in the foreign jurisdiction.
Sorry about the waffle but things changed yesterday on Westpac specifics going into the minute' ...