By Nathan Lynch, Regulatory IntelligenceThe Australian remittance sector is pinning its hopes of survival on a new cloud-based platform that promises to allow due diligence on payment providers, their customers and fund recipients. 

A former Westpac executive is spearheading the new industry-driven solution, which was created in response to the "de-banking" problem facing the vast majority of local remittance providers. Remitters hope the platform will satisfy the banks that they have appropriate systems and controls in place to meet any money laundering or terrorist finance risks.

Banks, for their part, have long argued that the remittance business poses an unacceptable AML/CTF risk due to the fact that payments are aggregated. The U.S.-based correspondent banks have told Australian banks that they will no longer process those types of transactions as they pose too great a risk of breaching sanctions or AML/CTF laws. As a consequence, the major banks and most of the smaller banks have shut the accounts of remitters. 
The International Payment and Transaction Monitoring Association, based in Sydney, aims to reverse that, launching an online compliance platform that will allow remitters to upload copies of their anti-money laundering and counter-terrorist financing compliance programs and any subsequent audits into a secure online portal. The remitters can then grant their banks the right to view these documents along with information on the sender and recipient of any transfers that they conduct. 

Thyer McCaffery, IPTMA's founder, said the service would allow a bank to see the payees and beneficiaries of any transactions that they facilitate, to ensure that individual transactions fall within its risk limits.

Sources said the banks are also running transaction monitoring filters to identify customers who are likely to be operating remittance business accounts. This sophisticated transaction monitoring software, which was rolled out for AML/CTF compliance, is effective at picking up remitters who may have slipped through the net. 
McCaffery said the remittance sector and the government had voiced their support for an independent third-party platform to address these compliance challenges. The government and the Australian Transaction Reports and Analysis Centre have expressed their concern that banks are closing down remitters' accounts indiscriminately. Officials are worried this may drive the remittance sector underground back to unregulated hawala agents. 

IPTMA is optimistic banks will support the platform and allow local remitters to continue to operate. McCaffery said the platform would address their principal concern: that there is too much opacity in remittance payments.

The Australian anti-money laundering regulator has urged banks to assess their relationships with remitters on a case-by-case basis. It has opposed wholesale de-banking — a process the banks describe as "de-risking" — on the basis that with appropriate AML/CTF systems and controls in place, banks should be able to manage high-risk customers. This includes remitters and fintech companies such as bitcoin exchanges, both of which have been affected by de-banking in recent years.

For more than one year the AML regulator has been working with alternative remitters and banks, alongside other government agencies, to address the industry's problems. The parties have thus far