AUSTRAC Denounces De-banking Practices To Prevent Financial Crimes

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De-banking activities lead criminal activity underground and compound the risks criminals pose to Australia’s financial system and the community.@AUSTRAC https://t.co/qOCsbERSft

— Regulation Asia (@RegulationAsia) November 1, 2021

Due to bank account closures and changing financial institutions, banks find it difficult to keep track of transaction types and volumes.“For this reason, AUSTRAC continues to discourage the indiscriminate and widespread closure of accounts across entire financial services sectors.” 

Although the new and emerging businesses face risks of vulnerability to financial crime, they contribute positively to Australia’s community and economy. AUSTRAC says that the businesses looking to avoid risk management should not have their accounts closed.

“AUSTRAC expects businesses operating in these susceptible sectors to understand and meet their anti-money laundering and counter-terrorism financing and other regulatory obligations,” says AUSTRAC.

“These sectors must improve risk management and ensure they have appropriate systems in place to help them identify, track and disrupt criminal exploitation of the financial sector.”

Along with other recommendations, the committee has also approached the government to demand a “clear process” for de-banked businesses in order to ensure transparency and certainty on de-banking.

“Debanking is debilitating. It destroys the ability of Australia’s small business to disrupt and deliver new ideas,” said the committee chair Senator Andrew Bragg.

“The committee has delivered a market solution to debanking through consumer protection laws and the insertion of the Australian Financial Complaints Authority.”

Suggested read: AUSTRAC’s ML/TF Risk Assessment Report on Major Banks [Part 1]