International Remittance Company
EZ Money Express Pty Ltd
ABN; 59 150 749 125
Shop 2, 339 Albany Highway, Victoria Park 6100
Tel: +618 9470 6681
Mob: 04 3550 9965
Issues Paper- AML/CTF Act Review Legislative Review and Mutual Evaluation Criminal Law and Law Enforcement Branch Attorney -General's Department
4 National Circuit
BARTON ACT 2600
20 June 2014
By email:
Statutory Review of Anti-Money Laundering and Counter Financing of Terrorism Act 2006
Lack of Financial Inclusion Bank Account Closures for Money Service Businesses (MSB) in Australia
There is a drive by the Australian Banks to close the operating bank accounts of all Money Service Business (MSB) companies in Australia. This is having a significant impact on the international money transfer industry in Australia and is moving the industry away from the registered compliance standards that all interested parties are keen to see in place.
Australian Banks are stating that their present interpretation of the AML/CFT legislation means they are now being held accountable and responsible for compliance issues on all international money transfers, not only for their customers, but their customer's customers as well. This means MSB's customers. They state they do not have the structure, systemization and resources in place to be able to effectively oversee such requirements. Quite frankly, they also add, commercially it is also unattractive to pursue such an initiative. Therefore they have taken the position the only solution is opting out and to not service any MSB companies accordingly. They state they are left with no other option but to close accounts and cease doing business with all MSBs.
I was told directly by one of the leading banks in Australia that in order to quickly identify MSB companies so they could close down their accounts and exclude them from having any commercial dealings with the bank, they went straight to the AUSTRAC list of registered MSB companies. I explained that companies on that list should be the last entities in our industry the bank is cutting commercial ties with, as they are the operators who do have the appropriate compliance procedures in place. The bank official went on to say it is now proving to be far more challenging in clearly identifying other non registered operators of international money transfer activities. What they are now slowly finding, are operators who are using personal bank accounts and multiple family member account names handling funds for such transactions.
The biggest concern for our industry that these bank account closures presents, is this. The typical individual end user will continue to transfer funds back home. If no longer able to use registered MSB companies because they no longer have access to operational bank accounts, the customer will look to find other alternative channels to move their funds. They will not go back to the banks because they are prohibitively expensive. This ultimately means the other alternative options could well end up being illegal channels and non registered operators. This is then the ironical outcome of the present regulatory circumstances. Despite best intentions, the industry is now been taken down a path which is in the very opposite direction to which all interested parties, both international and Australian regulatory authorities, think tanks and operators are intending for it to go.
Another important aspect to consider and within the bigger picture of the review of the AML/CFT Act, is whether in Australia's case, the overseeing authority AUSTRAC should perhaps be playing a more prescriptive role in the facilitation of compliance with registered MSB operators. From our own experience operating directly in two different jurisdictions, there is a stark contrast between how Bank Negara Malaysia (BNM) for example, oversees and facilitates compliance, operating standards and reporting, compared to how AUSTRAC facilitates the same process. BNM will set the framework, with clear, specific definition around all borders and then proceed to set out every step and its implications, from A to Z. Random, intensive follow up spot audits are also completed by BNM to ensure that
www. ezmoneyexpress.com.au
International Remittance Company
EZ Money Express Pty Ltd
ABN; 59 150 749 125
Shop 2, 339 Albany Highway, Victoria Park 6100
Tel: +618 9470 6681
Mob: 04 3550 9965
procedures are being correctly implemented on an ongoing basis. AUSTRAC's approach is more along the lines of here is the framework, there are the regulatory requirements and reporting submissions that you must meet, it's then your responsibility to make it work. While both styles have their distinct pros and cons, the present hands off approach by Australian authorities leads to significant variation in standards and levels of compliance practices and procedures being actually implemented on a daily basis by operators. This in turn, then gives more credence to the interpretation by the Australian banks that the registration of MSB companies in Australia with AUSTRAC is worth little in terms of accreditation and reliability of compliance standards in place in the industry. It therefore supports their decision to not deal with such operators and makes it easier to justify.
While we believe concerns around compliance and the new perceived additional risk the banks say they are facing is playing a part in their decision to close MSB company accounts, we also still strongly feel there is a strong element of non competition and market protection by the established players in this industry, that drives the decisions being made. It has now become convenient and easy to use the auspices of compliance to cover other primary incentives involved in the position being taken by the major Australian banks.
Finding suitable solutions to the challenges our industry is facing in this regard requires a number of steps and changes right down through the supply chain of international money transfer services.
Obviously it needs to start with the best possible regulatory framework at the international level where standards and regulations are consistent and their implications further on down the line are well thought through and carefully considered. Equally important as the regulations themselves is how these standards and practices are actually implemented. If interpretation of definition and application of meaning is unclear from one jurisdiction to another or is just simply ambiguous, then all the best intentions and standards will still not deliver the desired outcome. More careful consideration and clarity on the implementation of the regulatory standards within the AML/CFT framework should be an important part of the process whenever the Act itself is being reviewed and changes considered.
For this step to be effectively included in the process there needs to be oppor tunity and scope for discussions at the same table that includes representatives from all the relevant parties. This includes the international regulatory authorities, the Australian regulatory authorities, the Australian entities that facilitate the implementation of the regulations, the Banks and the MSB companies themselves. This way, relevant input to the process all the way down the line can be reviewed and considered to help ensure the Act can most effectively contribute to delivering the desired outcome of compliance practices and efficiencies in our industry.
We trust this latest review of the AML/CFT Act 2006 will include these necessary considerations.
Rory Anderson
Director
EZ Money Express Australia Pty Ltd
www.ezmoneyexpress.com. au