2020-11-30

Are banks motivated by greed?

In any kind of business, the basic principle is to maximize profit. But what is the real motive of banks in closing the accounts of remittance companies? Can banks equal the service provided? Are they even willing?

Last month, St. George Bank threatened to close the accounts of remittance companies suspected of money laundering. St. George appears to be the last among other big banks that have earlier made a similar move.

Reports have it that Commonwealth Bank has done the same much earlier, prompting St. George and Westpac to follow suit. The closure of the accounts of Philippine remittance companies appear to be based merely on suspicion that such companies are being used as conduits to fund terrorist activities in the Philippines.

Philippine Sentinel made an attempt to obtain some comments from a high-ranking officer of a European-based remittance firm. However, the person said that she is not allowed to talk about the topic. It will be remembered that there has been an earlier government crackdown on European remittance firms.

The Abu Sayaff, a known affiliate of Al Qaeda, has earlier been reported to carry out beheadings in the Southern parts of the Philippines. So far, not a single Filipino or Filipino organisation in Australia has been positively identified to be supporting any terrorist group in the Philippines.

According to Glennie Coronel, Branch Head of i-Remit in Blacktown, most Filipino remitters send small amounts to their families in the Philippines. At any one time, the average amount is $300 and usually no bigger than $1,000. Employees of Your Express Remittance Service (YES) at Westpoint Shopping Centre report similar statistics.

Filipino remittance companies provide door-to-door delivery service to families, reaching far flung remote areas where there are no banks. They are able to provide the service for a nominal fee of as low as $6 if the remitter is a senior citizen. Provided the cut-off time is met by the remitter, the nominated family in the Philippines receives the money within the same day.

Banks on the other hand collect a much larger fee and are not known to provide door-to-door delivery. On top of the larger fees, most banks have a much wider gap between the buying and selling foreign exchange rate. And because of delayed delivery or credit to the beneficiary’s account, the banks make a killing on float.

Those sending money to their relatives in the Philippines are now being compelled to use banks and therefore have to spend more on remittance fees. Remittance companies in Australia are closing down and their employees are being laid off. The consequence is expected to have a negative impact on Australia’s employment rate.

According to Lola, a teller of St. George Bank, Mt. Druitt Branch, the fee for sending money to the Philippines is $32, regardless of amount being sent. She added that it would take a minimum of 5 working days for the money to reach the intended recipient. The person sending the money must provide the bank details of the beneficiary. There is no such thing as door-to-door delivery of funds. What makes the entire process worse is that the bank in the Philippines deducts its own fees before finally crediting the beneficiary’s account.

Money remittance and currency providers have formed the Australian Remittance and Currency Providers Association (ARCPA) — to work with Government and the banking industry to save these critical remittance services. Visit online <www.arcpa.org.au>

Christmas is just around the corner. Billions of pesos are expected from overseas Filipinos as gifts for their relatives. It seems that Australian banks want the larger slice of the pie. — Dino Crescini