Remitters have the ear of government

Representatives of the remittance industry met with a government committee this week in a bid to find a resolution to the situation that has led to all of Australia's big banks closing the accounts of money transfer operators.

The Australian Remittance and Currency Providers Association met with an inter-department committee made up of representatives from the Attorney-General's Department, the Department of Foreign Affairs and Trade, Prime Minister and Cabinet, Treasury and Austrac.

Formed last month, the committee's mandate is to "consider the issue and potential policy responses."

Austrac and law enforcement agencies are concerned that the sector's closure could lead to a surge in the use of underground money transfer conduits, including hawala.

ARCPA director Dianne Nguyen said that if the flow of money moves to unregulated channels law enforcement agencies will lose the ability to monitor transactions and will stop receiving transaction reports.

"That presents a national security risk," Nguyen said. "We understand the banks' desire to mitigate risk but terminating money transfer operators is an over-reaction."

Nguyen said there were steps that the banks could take to limit their risk profile while allowing the professional and compliant money transfer operators to continue operating.

"We are calling on the banks to suspend their decision and enter into a collaborative engagement with the money transfer industry, Austrac and law enforcement agencies. We want to work together toward a new regulatory framework that meets the needs of all stakeholders," Nguyen said.

After this week's meeting the government made a commitment to broker further discussions between ARCPA and the country's major banks to find a resolution.

The banking industry is sympathetic but said its hands were tied in the context of national and international AML/CTF regulations. One official said the problem was being driven by the threat of massive sanctions for non-compliance in the United States, and this was not a matter that the Australian government could control or resolve.

Steven Munchenberg, chief executive of the Australian Bankers Association, said the changing international regulatory landscape and stricter AML/CTF compliance requirements had made it impossible for banks to continue these relationships.

"The revised regulatory processes are part of an ongoing domestic and international process of verification of money transfers. This includes investing in the necessary internal and external safeguards to guarantee the nature of these payments," Munchenberg said in a statement.