Banks criticized for shutting out money remitters

A powerful parliamentary committee has slammed the big 4 banks for cutting off services to money remitters, leaving hundreds of legitimate businesses stranded without bank accounts. (Source: News Corp Australia)

Fearing they wouldn’t be able to comply with strict anti-money-laundering rules both here and overseas, the big four banks dumped, or “de-banked”, an entire sector late last year.

In a report released last month, the joint committee on law enforcement said a solution was needed that both supported robust anti-money-laundering and counter-terrorism finance (AML/CTF) rules and allowed legitimate remitters to operate.

However, any solution appears a long way off. A working group of remitters, banks and regulators, chaired by the Attorney-General’s Department, was set up in November last year but has yet to report back.

The committee’s chairman, NSW Liberal MP Craig Kelly, acknowledged terrorists had used remittance services to finance their activities but said law-abiding operators were being turned into “un-persons” because they could not get a bank account.

He said banks had legitimate concerns about terror finance but at the same time were knocking out smaller, cheaper, more efficient competitors.

“There are 400 little private guys who have done everything right by the regulations and have built up businesses over the years, who have basically been wiped out,” he said.

“They’ve not only had their business accounts closed down, they’ve also had their private accounts closed down. “These guys have done nothing wrong, they’re working in a heavily regulated space where they’ve got AUSTRAC and all the compliance conditions.

Terrorists will  find other means to transfer money

“If someone’s involved in terrorism they’re going to find other ways to transfer money.” An Australian Bankers Association spokeswoman said de-banking was “an international issue that requires an international solution”.

“We need a global approach to address the international restrictions that all banks face in serving certain high-risk sectors of the population, including remitters,” she said.

Remittance is a major source of money for poorer countries, with Australians sending an estimated USD15.9 billion (AUD23bn) to friends and family overseas in 2014, according to World Bank data.

Earlier this year Roger Wilkins, the Australian head of global anti-money-laundering body the Financial Action Task Force, said banks should not dump the whole remittance sector. “The guidance we put out to banks talks about a risk-based approach, which doesn’t mean you find a risk and then automatically in a blunderbuss sort of way de-bank whole sectors or whole countries,” he said in February.

The joint committee called on the federal government to extend AML/CTF laws to cover other occupations, including real estate agents and accountants.

A spokeswoman for the A-G’s department said bringing other occupations under the rules was being considered by the review, which “is expected to be completed by late 2015”. — Source: Ben Butler (The Australian)