Pacific Injustice and Instability: Bank Account Closures of Australian Money Transfer Operators

“Pacific injustice and instability: Bank account closures of Australian money transfer operators”, (2014) 25 Journal of Banking and Finance Law and Practice 243-256.

UNSW Law Research Paper No. 2015-14

26 Pages Posted: 11 Apr 2015

See all articles by Ross P. Buckley

Ross P. Buckley

University of New South Wales (UNSW) - Faculty of Law

Ken Ooi

Centre for International Finance and Regulation (CIFR)

Date Written: April 6, 2015

Abstract

The remittance industry provides international money transfer services for migrant workers and individuals looking to send relatively small amounts of money overseas. Money transfer operators (‘MTOs’) facilitate these international payments and offer services to a segment of the market that is often unserved by banks. An alarming trend is developing in Australia of banks closing the accounts of MTOs. A potential explanation for this trend is the increased cost of regulation and perceived risk to the banks from facilitating these transactions. However, these account closures create real problems for the remittance industry, Australia and the Asia Pacific region.

This paper is in five parts. Part I highlights the importance of remittances to the Pacific Island Countries (‘PICs’) and Australia. Part II explores the trend of account closures in Australia. Part III considers the regulatory framework in Australia, and argues that the current approach to anti-money laundering (‘AML’) and counter-terrorist financing (‘CTF’) regulation has had the unintended consequence of encouraging banks to create financial exclusion. Part IV investigates the factors that have influenced bank behaviour. Finally, Part V explores the role that financial regulation should play in promoting financial inclusion. This final part explores how this trend of MTO account closures might be addressed and how the seemingly conflicting goals of AML/CTF regulation can be balanced with financial inclusion.

Suggested Citation

Buckley, Ross P. and Ooi, Ken, Pacific Injustice and Instability: Bank Account Closures of Australian Money Transfer Operators (April 6, 2015). “Pacific injustice and instability: Bank account closures of Australian money transfer operators”, (2014) 25 Journal of Banking and Finance Law and Practice 243-256.; UNSW Law Research Paper No. 2015-14. Available at SSRN: https://ssrn.com/abstract=2592487

Ross P. Buckley (Contact Author)

University of New South Wales (UNSW) - Faculty of Law ( email )

Sydney, New South Wales 2052
Australia

Ken Ooi

Centre for International Finance and Regulation (CIFR) ( email )

Level 7, UNSW CBD Campus
1 O'Connell Street
Sydney, NSW 2000
Australia

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