When communication between banks and remittance clients peak at an exit letter it is surely impossible to understand any risk regarding a business. How is it possible to de-risk the unknown without penalizing an entire industry?
The Australian banking industry has no standard approach to remittance banking. There are no real procedures that can determine whether a client is enabling a potential terrorist or criminal threat. There is no pathway that can enable transparency of payee to end beneficiary nor is there visible continuity about how decisions to keep or exit clients are made.
The majority of Money Service Business (MSB) clients in Australia comply fully with AUSTRAC regulations yet many of these businesses have had their accounts exited from banks, whilst other MSB’s with the same (and sometimes with less) robust AML/CTF controls in place are still able to operate. It is argued by some that the top MSB businesses often employ tighter controls on payments than banks due to the fact that money is not sent until it has passed stringent tests on a real time basis whereas banking checks are done retrospectively.
In my experience of the remittance industry most MSBs run their business above regulatory requirements and are willing to demonstrate this to improve relationships with banks. Unfortunately many MSBs feel they are being judged with a playground mentality rather than on a merit based system, with the banking industry seemingly possessing carte blanche to close accounts on any chosen whim whilst letting other equally viable accounts stay operative.
It is widely acknowledged that Australian banks are closing MSB accounts due to a fear that money laundering/terrorism financing is being facilitated. Indeed in an SBS interview on 16th November 2015 Steve Munchenberg, CEO of the Australian Bankers Association, stated that:
‘In line with international laws to combat terrorism funding and money-laundering we have to know where the money has come from and where it is going. When dealing with remittance agents we don’t always know who their customers are and we don’t know where all the money is going to?’
The glaring double standard is that Australian banks are still receiving payments from American remittance companies and banks. Australian banks are receiving these payments without specific knowledge on who the payee and beneficiary are. Why do Australian banks treat their own customers more harshly than those of foreign banks and or allow the same foreign banks to influence their decision making?
To randomly close bank accounts of regulated entities because there is the potential for money laundering is wrong. It achieves nothing except penalizing a large section of society whilst creating the potential to cause hostility and provide fuel to the fire of radicalism. Society and regulators need to be able to know who is safe and who is not. It is vital that MSBs do not feel marginalized but instead feel they are being judged fairly under the same legislations.
An issue doesn’t go away because it is swept under the carpet. An issue will only cease to exist when a fair and workable solution is created and implemented. If a problem is pushed out of sight all that happens is the inevitable creation of an underground solution.
IPTMA has been created with the sole purpose of providing the required workable solution to meet the banks’ requirements and to enable the MSB industry to demonstrate their robust adherence to regulations. The search facility will also allow the banks to get to the details of the end payee and beneficiary. If needed a bank will be able to view the ID documents of the payee and the information provided for the beneficiary by clicking through the steps.
Correspondent banks in particular have increased the requirements in relation to payments. The pressure they have placed on knowing who the end payees and beneficiaries is one of the main reasons regulated entities have had their bank accounts closed. Access will give correspondent banks ability to check these details. It will also give them the ability to check the regulated entities’ policies and audit reports if they choose to go into that much detail.
Auditability is crucial for the veracity of the information provided. It is for this reason that information provided will be presented in a way that meets audit requirements. Timestamps, unique reference numbers and names of who approved input information will be provided. Not only does this assist in giving strength to the details provided it enables information to be traced easily.
IPTMA is effectively an IT company that has a focus on a particular financial issue. This means we are dynamic and are able to deliver change or unique information on request. The IPTMA information security policy is in line with the Australian banking industry.
All people in Australia who wish to send money to their family abroad should be able to do so safely and easily through people they trust without being made to feel like a criminal. It should be possible for law abiding citizens to conduct business safely without being negatively impacted by nefarious criminals abusing the system. Likewise it should be possible to have steps in place where the real criminals and terrorists can be easily identified.