Bank account shutdown hurting communities sending $10 billion a year to family overseas
03 Dec 2020

The multicultural miracle of Australia is also a $10 billion money machine, as residents support relatives abroad with payments called ‘remittances’.

That’s the amount sent overseas annually, helping to float families around the world.

“It’s very important,” said businesswoman Duki Wani.

Sitting in her hair salon and boutique in a mall in Footscray, in Melbourne’s inner-suburbs, Ms Wani runs through the relatives in Uganda and South Sudan she supports with small, regular payments.

“I send every month, I have to send money,” she said.

“I have to send to my brother, I have to send to my son, I have to send to my uncle, I have to send to my niece… I have seven (relatives to support), I have to help them.”

But for African-Australians it’s getting harder, as remittance businesses that deliver money from the community see their bank accounts shut and are unable to open new ones.

Banks shut accounts over fears of money laundering

Tech entrepreneur Mohamed Ibrahim, a Commonwealth Bank customer since 1982, used to send $1 million a month to Somalia.

His business accounts were shut last week. He’s tried 14 new banks and has been turned down every time.

The problem is more about the bank than his business.

“There’s an Australian expression about ‘unintended consequences’, and I think that’s what’s happening,” Mr Ibrahim said.

In recent months, Westpac copped the nation’s biggest ever fine — $1.3 billion — for not doing enough to stop criminals laundering money and financing terrorism.

Financial crime agency AUSTRAC smacked the Commonwealth Bank with a $700 million fine for similar breaches of Anti-Money Laundering and Counter-Terrorism Financing — so-called ‘AML/CTF’ laws — in 2018.

It appears that banks worried about the risk of law-breaking have been closing the accounts of remittance businesses, particularly those that send money to areas of Africa suffering conflict.

That’s led to a perverse situation: where money-shifters registered with AUSTRAC and complying with Australian laws are being forced to close.

That leaves customers, dealing with physical cash, to send money in riskier and less transparent ways outside of government oversight.

“(AUSTRAC) are saying ‘You are not doing anything wrong. You have a license. You can collect the money’,” Mr Ibrahim said.

In a statement, a Commonwealth Bank spokesperson said remittance businesses provide “an important service to the community”.

“We continue to provide services to this sector, but all clients need to meet the standards and obligations we have under our Anti-Money Laundering and Counter-Terrorism Financing laws and bank policies,” the bank said.

A ‘life or death situation’

Despite being registered with AUSTRAC and following laws around identifying customers correctly to lower the risks of terror financing and money laundering, Abdi Adam, director of remittance business Bakaal Worldwide, hasn’t been able to get a bank account for four years.

“If people don’t get money to the countries, literally people could die — that’s how important it is,” he said.

“This is a life and death situation.”

By Daniel Ziffer, ABC News, 1 December 2020

Read more at ABC News

RiskScreen: Eliminating Financial Crime with Smart Technology

Advance your CPD minutes for this content, by signing up and using the CPD Wallet

FREE CPD Wallet