Chapter 4


This chapter outlines the issues raised in relation to de-banking. It covers the affected sectors, examples, effects, reasons provided to businesses, the regulatory landscape, the response from the banks and suggestions made to the committee to address the issue. De-banking has an important impact on competition and the effectiveness of the Anti-Money Laundering and Counter-Terrorism (AML/CTF) regulations.


De-banking, also known as unbanking, is 'when a bank chooses to no longer offer banking services to a customer'.1 Dr Dimitrios Salampasis, Swinburne University of Technology, elaborated on this explanation:
Debanking or denial of banking services refers to the behaviour adopted by banking and nonbanking financial institutions, which have the ability to refuse service, restrict or even shut down a customer’s account and customer relationship, in general (individual, business or country) resulting in loss of access to the regulated global financial system.2
Bitaroo, an Australian Bitcoin-only exchange, noted that the power of the banks over their customers is significant:
Banks have the ability to freeze accounts instantly, shut them down with little notice and even ban customers from using their services ever again. No reason needs to be given and currently no regulator has the power to force banks to reveal the reasoning behind such decisions, thus leaving many Australians with fewer banking options at best or outright unbanked at worst.3

Examples of debanking

Aus Merchant, a bespoke Digital Currency Exchange (DCE), reported that it has 'encountered significant obstacles in setting up and running its business activities from the existing major banking providers'. It indicated that 'the current state of play is that all of the major banks will not do business with digital asset companies'.4
Bitcoin Babe, an Australian based peer-to-peer Bitcoin exchange, told the committee that it encountered de-banking in 2014 and since then the company and founder have been de-banked from or denied access to banking products from 90 banks. It was pointed out that:
Many participants in the digital asset space either start off as, or remain, small businesses. They may not have teams of lawyers and policy advisers who are able to step in and negotiate with large banks or regulators. There is no human resources department to monitor or coach them through the hardships of running a small business in an area that seemingly fights back at every turn. Founders and owners of small businesses risk losing everything at the whim of the banks and regulators, even when fully compliant. The personal toll this takes and how this affect the mental health of small business owners and employees is significant and should be considered by the Committee.5
Bitcoin Babe added that:
Our view is that Australian banks, institutions, and credit unions are unfairly penalising new and innovative businesses by seeking to minimise their own compliance duties. There have been no prior breaches to the AML/CTF Act or incidents that warrant the debanking of Bitcoin Babe and its founder…6
4.7, which enables the use of cryptocurrency, also reported that it has experienced de-banking in Australia as well as overseas.7
Mr Allan Flynn spoke about his experience of de-banking when he started a digital currency exchange trading Bitcoin which resulted in the closure of his business. In summary, since 2017, over 65 Australian banks denied him service for his digital currency operation 'without any care of my lawful safe-harbor KYC practices, DCE registration or AML/CTF policies as required by the AML/CTF Act'.8
Mr Flynn noted that '[t]ypically prior to each closure the bank has frozen services without notice. On occasions an account will then be closed prior to or at the same time as receiving a standard letter warning of pending closure, citing terms and conditions'. Mr Flynn also submitted that banks 'even claimed erroneously that the AML/CTF Act required them to close accounts. A defence which AUSTRAC denied'.9 He encouraged the committee to think of access to banking services as a right.10
A submitter described their experience of trying to open bank accounts for a 'company owner residing overseas (Ukraine) for a registered Digital Currency Exchange they desired to begin operating in Australia'. They reported that some banks refused service to blockchain or cryptocurrency related businesses and delays with identity verification.11
Verida, a company that develops decentralised technologies for developers, the private sector, governments and citizens, told the committee about its experience of using Airwallex in Singapore with no issues compared with using the same company as their banking provider for its Australian entity. Their application for the Australian entity was denied with no reason given. It added:
The lack of rationale for declining the application feeds into the 'culture of silence' about this problem which we feel is impacting the Blockchain industry more broadly. We regularly hear complaints from other Blockchain businesses about being debanked and the lack of transparency from bank and payments providers.12
Verida noted that Airwallex 'maintains jurisdiction specific Sign Up Terms':
Those terms will apply to the country the entity is incorporated in. Airwallex is a front-end for banking. They have service agreements with banks in the back-end whose infrastructure they utilise, and they must uphold those agreements. In this situation, ANZ is their back-end provider.13
Wise, an online money transfer service, reported that:
in the past 4 to 5 years Wise has had difficulty accessing payment services through Australian banks. Often, discussions have been terminated by the relevant bank after initial meetings without any further assessments made. This has resulted in Wise having to use international banks operating in Australia rather than a preferred local bank.14
Revolut Australia, part of Revolut group, a financial technology group of companies offering financial services to both retail and business customers, indicated that they have experienced 'risk aversion related to FX and remittance activity'.15
FinTech Australia reported on the experiences of its members:
Throughout all the instances of debanking conveyed to us by our members, there is one commonality; that debanking is sudden and generally done without reason or explanation. One of our members has been debanked four times since 2018; consisting of one instance of debanking in 2018, once in 2019 and twice in 2020. 23 members have reported experiences with being debanked.16

What sectors are affected?

While it was noted that de-banking is an issue across the FinTech sector, the evidence to the committee focused on the crypto space and there was also some evidence from money remitters and payments FinTechs.
FinTech Australia told the committee that de-banking 'is a considerable issue across the entire fintech market'. It noted that the issue is 'complex, as it affects companies broadly across different fintech verticals, such a payments, loans, remittance services, crypto-asset exchanges and others'.17 It noted that de-banking is a particular issue for crypto-asset businesses with some members reporting that:
they and their clients have either had bank accounts blocked or closed due to buying and selling crypto-asset or interrogated about what they intend to spend their money on, and whether it involves crypto-asset. Debanking has a chilling effect on the entire industry.18
The Reserve Bank of Australia (RBA) reported it is aware that in recent years many fintechs have 'faced challenges in obtaining and retaining access to the core banking and payment services that they need to provide services to Australian customers'. The RBA noted that:
A range of fintechs have been affected, most notably providers of international money transfers and digital currency exchanges, but also fintechs offering other services.19
The Department of Home Affairs and the Australian Transaction Reports and Analysis Centre (AUSTRAC) stated that the range of businesses impacted by the withdrawal of banking services has expanded over the past decade, with remittance providers, DCEs providers, non-profit organisations and fintech businesses 'disproportionally facing bank account closures'.20
Mr Michael Bacina, Partner, Piper Alderman, also noted that 'digital asset companies routinely have difficulties obtaining reliable banking services'.21
The Digital Law Association (DLA) reported that Australian banks are 'very reluctant to provide services to Australian FinTechs in the blockchain and digital asset space'. DLA added that '[l]arge banks have adopted policy decisions not to have such businesses as customers, and smaller banks and financial institutions have followed suit'.22 This point was echoed by La Trobe LawTech at La Trobe Law School.23
Dr Dimitrios Salampasis noted that with the 'rise of financial technologies, the FinTech industry and the emergence of cryptocurrencies and the cryptocurrency assets market, there have been numerous circumstances of debanking worldwide',24 including Australia.25
Independent Reserve, an Australian DCE, confirmed:
A pervasive issue for the digital asset and cryptocurrency sector is de-banking where businesses in the industry cannot secure the most basic of banking services…26
Mawson Infrastructure Group, a digital asset infrastructure business, also noted that 'crypto asset businesses or DCEs have limited access to banking services and no access to the major banks in Australia'.27
FinTech Australia similarly reported that de-banking presents challenges for payments fintechs 'as it not only severs a fintech's access to a bank account, it also removes their ability to access the payments rails or infrastructure which are essential to their operations'.28 Nium, a payments platform, also reported that it has experienced de-banking in Australia.29

Effects of de-banking

The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) was of the view that the 'seriousness of debanking cannot be understated' explaining:
Technology and financial businesses who have been debanked must allocate precious capacity to correcting the operational damage caused by a loss of financial services. This damage can include legal processes and time spent securing alternate services, if they can be found at all. We are aware that this process of renewal can take as much as 6 months, despite many businesses being given only 30 days' notice of account closure.30
ASBFEO cautioned the committee that the 'persistent inability of start-ups, many of which are small businesses, to access basic banking services, risks stunting Australia's technology and financial industries through unintentionally limiting competition before their true potential can be realised'.31
FinTech Australia also took a similar view:
As it stands today, fintechs both locally grown and expanding into Australia are at the mercy of the whims of the banks. Just one directive from a bank can put a fintech company out of business through no fault of their own and with no recourse. This is because a bank, without consultation, can withdraw services not just from a fintech but from its customers. This has happened, and it continues to happen with worrying frequency. It is not an anomaly; it is a pattern, and it occurs with opaque and dismissive reasoning from the bank. Fintechs who have been affected are afraid to speak out for fear of further alienation. This issue, if left unaddressed, will undermine the future of the fintech industry and result in a severe reduction in the number of operating companies. A resolution is critical to the future state of the fintech industry.32
Ms Michaela Juric, Bitcoin Babe told the committee about the business and personal effects of de-banking she has experienced:
As of yesterday I have been debanked and banned from 91 banks and financial institutions. That's 91 lifetime bans. No reasons given, no case by case assessments or discussions engaged and no recourse available. While the act of debanking and DCE is widely known, even more concerning is when our customers receive calls from their own banks telling them our services are a scam whenever they try to make a bitcoin purchase, or even going as far as debanking our customers. Suggestions have been made for banks to be recognised as utility, given society's high dependence on their services. But will this really make a difference? I've had bank bans prevent me from signing up with electricity, gas, phone and internet providers. This leaves me concerned that slapping a new label on them won't fix the underlying issue.33
Aus Merchant reported that its experience with de-banking 'has caused significant inherent risks for our DCE activities. We are regulated by AUSTRAC, and offer all of our compliance documentation to support onboarding, and yet get a default negative response causing our business to seriously consider moving our traditional banking offshore'.34
Swyftx, an Australian cryptocurrency broker, noted:
The unwillingness of traditional banks to facilitate digital asset businesses by refusing to do business with them has introduced an unnecessary and significant risk to both the growth and innovation of the digital asset businesses and also to Australian consumers.35
Swyftx added that the number of Authorised Deposit-taking Institutions (ADIs) in Australia willing to bank digital asset companies 'is unsustainably small', adding that this:
concentrates the risk of failure of the entire industry to almost a single point, which is unacceptable from a consumer’s point of view. Protection of Australians requires that the traditional banking system provide its services (which constitute critical infrastructure) to digital asset service providers in a fair manner.36
4.33 reported that following its experience of de-banking the 'subsequent search for alternative banks has been challenging'.37 It added that this 'affects our customers directly':
Whilst we have invested significant working capital to support customer’s purchases of crypto, withdrawals out of our exchange have been dramatically impacted. Funds are locked in our digital wallets with withdrawal limits put in place. In normal circumstances, these funds would be held in a safeguarded account at an APRA-regulated financial institution (“banks”), in compliance with our AFS license, providing customers the assurance that their funds are safe.38
Bitaroo reported that 'most Australian digital exchanges opted to use a payment processor as their fiat rails banking solution', however, [t]his comes at a cost that is being passed, directly or indirectly, to the users'. It added:
There are currently only a handful of such payment processors in the market. Disconcertingly this demonstrates that the entire digital exchanges industry is potentially exposed to almost a single point of failure instead of being able to enjoy the dozens of options that the Australian banking industry has to offer.39
Wise pointed out:
In countries where Wise isn’t engaged directly with the central bank we are obliged to use the services of established banks. This leads to the potential for disruption to our product that can significantly impact those sending money to family back home, forcing those customers to use traditional banking products for their cross-border payments, which are often less transparent, slower and more costly. This can negatively impact financial inclusion, reduce competition and reduce consumer choice.40
Wise added that there are market implications of de-banking:
It leads to ineffective mitigation of money laundering and terrorism financing (AML/CTF). Like our product, we operate with a high degree of transparency with our banking partners. Transparency helps to build trust but strong communication is also essential in tackling the inherent risk of money laundering and fraud.
If banks close their doors and are not willing to have an open dialogue about trends, controls and solutions, they’re not contributing to the effective prevention of AML/CTF. De-risking also contributes to restricting access to provision of business bank accounts. Restricted market access for a subset of consumers is a market failure. This drives ineffective competition between PSPs [Payment Service Providers] and incumbents, and may also lead to the concentration of risk.41
Nium told the committee that it 'has bank relationships in 40 countries around the world, yet Australia is the only market where we've been debanked'.42 It submitted that de-banking:
has significant impact on how a fintech makes decisions when investing in Australia, how a fintech operates within Australia, and ultimately deters both innovation as well as viable solutions to increase financial inclusion within Australia and to key corridors throughout the Asia Pacific region.43
Nium stressed that:
Fintechs are consistently one decision away (by the banks) from shutting down our respective businesses in Australia. That bears significant knock-on effects on what drives investment decisions globally and how Australia is considered as a destination for continued investment and resource dedication.44
FinTech Australia reported on the effects of de-banking for individuals, businesses and the wider fintech ecosystem:
One member noted that repeated debanking events took a significant mental, financial and motivational toll on their business and team. They were only able to remain afloat due to investment from an international bank. It also stalled any prospect of growth or international expansion plans for up to 36 months. This was particularly damaging, as in this time multiple international fintechs entered the Australian market offering similar services damaging Australia’s potential to be a fintech hub. Debanking is an issue that extends beyond the borders of Australia and is impacting the jobs and growth potential of Australia companies and their ability to compete in Australia and international[ly].45
It added:
One of our members ultimately noted that due to this environment, a fintech generally needs to leave Australia to survive, which is again incredibly damaging to the growth of innovation and job opportunity in Australia, and our country’s capacity to develop as a world leading centre of financial technology innovation.46

Effects of de-banking on financial intelligence collection

Home Affairs and AUSTRAC raised concerns that when businesses across entire sectors are being subject to de-banking, this can create gaps in AUSTRAC's financial intelligence capabilities and actually increase the risk of money laundering and terrorism financing activities occurring:
As Australia’s financial intelligence unit, AUSTRAC is particularly concerned that the closure of bank accounts across entire industry sectors can result in de-banked businesses being less open about the nature of their business relationships with banks. This leads to a loss of transparency, making it more difficult to distinguish lawful activity from unlawful activity.
It also requires de-banked businesses to change financial institutions frequently, which leads to banks having a less sophisticated understanding of expected transaction types and volume, due to limited historic data.
Contrary to mitigating and managing ML/TF risks, these activities can lead to businesses seeking alternative methods to conduct their transactions, such as increased reliance on cash or virtual assets, thereby increasing their exposure to criminal exploitation.
For AUSTRAC, the de-banking of businesses can lead to underground activities, resulting in a loss of financial reporting. This can impact AUSTRAC’s intelligence efforts and limit intelligence able to be shared with law enforcement and intelligence partners. This subsequently impacts law enforcement and intelligence visibility, operations and intervention. For AUSTRAC’s regulatory operations, challenges arise in attempting to re-engage and re-affirm that a business may be providing services. AUSTRAC has undertaken multiple campaigns to identify unregistered remittance businesses and similarly, identify newer business entrants that may be providing DCE services while unregistered.47

Reasons given for de-banking

A lack of information in relation to the reasons for de-banking was a common theme in evidence to the committee. ASBFEO reported that debanked businesses 'are rarely provided with an official reason for the decision, leaving them unsure of how to alter operations to correct perceived issues'. However, ASBFEO indicated that some have been told unofficially that:
they are too high risk;
they carry too great an AUSTRAC risk; or
they are not an area the bank will service because of 'commercial reasons'.48
Mr Flynn recounted the reasons offered by banks to deny service to him which included: 'Your business is too small; Your business is too large; There's not enough government regulation; We aren't into that; and We already closed your account previously'.49
The RBA indicated that there seem to be a number of factors involved which include:
financial institutions' focus on the profitability of their relationships, 'know your customer' (KYC) compliance costs, and apparent heightened risk aversion and uncertainty among financial institutions about AML/CTF and sanctions obligations. Difficulties in assessing risks associated with small and unique fintech businesses may also be a factor.50
Piper Alderman noted that:
Banks have broad discretion to suspend and limit access to users' accounts with no obligation to provide reasons or any opportunity to review that decision. Australia, has no 'right' to banking, despite the absence of banking meaning that a business has extremely limited ability to serve customers. The dramatic drop in the use of cash and rise of online commerce further highlights this situation.51
Wise reported its experience in Australia:
conversations with relevant domestic banks…rarely advance beyond preliminaries. At each bank, discussions were terminated early by the relevant bank and the reasons for non-provision of service were broadly in the same vein. That is, concerns about “compliance”.52
Where some detail was provided, concerns appear to centre on risk in relation to financial crime. Mawson Infrastructure Group stated that the major reason given by banks is the AML/CTF risk to banks. It argued that this position is 'unwarranted and without merit' as the 'crypto sector and DCEs…are regulated by AUSTRAC in the same way as any other entity is in Australia'.53 ADC Forum also noted that '[b]anks have argued that there are AML/CTF risks associated with banking the blockchain industry'.54
Revolut reported that in their experience 'the sticking point with banking partners tends to be related to concerns regarding financial crime'.55
Dr Dimitrios Salampasis noted that 'banking and non-banking institutions globally receive enormous pressure from national and international regulators to be in compliance, especially in relation to AML/CTF requirements'. De-banking is therefore:
‘informed’ by the discretionary and calculated risk perceived by banking and non-banking financial institutions…in order to avoid being in breach of national and international compliance requirements, especially AML/CTF, imposed by national and international regulators. Moreover, such behaviour can also be driven by the fact that an individual or organization may be associated or be…located in a high-risk jurisdiction that is on a ‘blacklist’ due to high risk for money laundering, financing terrorism or inability to comply with international standards. Additional drivers of debanking can include increased capital requirements, profitability, prudential requirements, reputational risk and geopolitical situations. By [de-banking],banking and non-banking financial institutions aim at minimizing the risk of being penalised with large regulatory fines due to potential violations…56
4.50 told the committee about its understanding of the reasons for de-banking:
We understand there has been a reduced risk appetite by many of the financial services incumbents in the wake of the COVID-19 pandemic and also in light of AUSTRAC’s heightened concerns and their ability to take enforcement action. This resulted in the cessation of our banking partnerships with minimal explanation and no opportunity to discuss options.57
Dr Max Parasol submitted:
Banks can withdraw banking services from a business and surrounding personal accounts for various reasons such as money laundering and criminal conduct. Banks are, understandably, highly sensitive to the reputational damage that accompanies being implicated in a money laundering or terrorist financing incident. Currently under Australia’s anti-money laundering and counter-terrorism financing (‘AML/CTF’) laws, banks have a broad discretion to close bank accounts.58
In relation to why Verida was declined in Australia and not in Singapore, it offered the following analysis:
We can’t know for sure, due to the lack of disclosures on the rejection correspondence in relation to our application, but can only infer from other similar experiences in the industry.
We believe it’s likely due to a lack of internal understanding and risk management processes on how to assess risk associated with startups in the Blockchain and crypto sector.
The lack of a regulatory framework development from the Government on token classifications and risk exposure. Such a framework may help banks in maturing their own risk management policies.
The lack of firm support for Blockchain businesses at the Government level to help encourage banks and payments companies to support businesses like ours.59
The Digital Law Association noted that policy decisions to not have Australian FinTechs in the blockchain and digital asset space as customers:
are presented as positions taken after an assessment of money laundering, terrorist financing and proliferation financing risk posed by the sector. There is however no convincing evidence that appropriate risk assessments were undertaken as required by international standards adopted by the Australian government.60
La Trobe LawTech at La Trobe Law School also noted that:
Australian banks generally justify their de-banking decisions based on the risks posed by FinTech companies. We have however encountered little evidence of consistent and appropriate appraisals of money laundering or terrorist financing risks posed by an affected customer. An appropriate assessment of that risk requires the bank to consider the customer’s risk management processes. In very few cases do Australian banks actually collect such information before banking services are denied. International anti-money laundering and counter terrorist financing standards require banks to undertake individual assessments and not to engage in large-scale denials of service to industry sectors. While banks often cite these standards to support their denials of service there is therefore no clear evidence that Australian banks actually comply with the standards in relation to their debanking decisions.61
FinTech Australia reported:
At least two members were debanked without any explanation regarding why this occurred. Another noted that the official reason provided to them in writing by the offending bank was “commercial reasons”. Whilst another member debanked by a big 4 bank noted that the bank’s motivation to debank them changed depending on who they spoke to. After closing one member’s accounts funds were supposed to be sent by cheque. However, this money is still held by the bank, and has not been released. Rather disturbingly, one member has been advised by several big four banks that they have been debanked as the fintech does not fit their business model.62
FinTech Australia noted the difficulties that this lack of information causes for the businesses:
The lack of information and clarity surrounding the reasons for debanking increases the difficulty of identifying and fixing the relevant issues. Unless a business understands what the issues are, they cannot be fixed, impinging its ability to find new banking partners and may well contribute to reputational damage and harm growth and competition in the sector in the long-term.63
FinTech Australia noted that despite the lack of information two key reasons for de-banking are emerging: AUSTRAC and anti-money laundering and counter-terrorism financing legislation and anti-competitive conduct.64
Financial Inclusion By Design saw de-banking as a 'form of financial exclusion' suggesting that 'banks should be required to provide a transparent reason for debanking a customer' as '[h]iding behand risk governance language – or even worse simply citing "commercial reasons" – is unacceptable and reputationally destructive for banks, Australia's banking system and broader economy.65 In their view debanking is driven by:
Outdated reliance of Standard Industrial Classification (SIC) Codes to understand the nature of a business and therefore its risk; SIC Codes are not fit for purpose in the era of the digital economy;
Reduced risk appetite driven by disproportionately fearful, biased and reactive responses in risk governance at Big 4 banks due to successful actions brought by AUSTRAC;
Inadequate investment in compliance technology such as regtech solutions that can surface and analyse billions of data points in real time to reduce the entire end-to-end risk on non-compliance. Ironically, Australia leads the way in regtech, for example, ASX-listed companies Identitii Limited and Kyckr Limited are just two examples.66

Bank response on de-banking

The Australian Banking Association noted that '[a]cross the globe, banks offer services in accordance with their risk-appetite, risk-profile, and their skills and capability to manage the legal obligations and risks associated with customers operating in certain sectors'.67
The CBA stressed that it 'does not have a policy or make decisions to cease a customer relationship due to competitive or market factors'.68 CBA reported that:
when making a decision about lending to new business customers, we take a range of risk considerations into account including the terms and conditions of any loan documentation and possible security provisions provided. This also includes managing compliance risks as well as decisions regarding the financial viability of the business – an important factor for our shareholders, our prudential standing, and essential for the business customer itself to avoid assuming the risk of overcommitting.69
CBA added that the Australian financial services industry is 'subject to a number of regulatory requirements, including prudential lending obligations and anti-money laundering and counter-terrorism financing (AML/CTF) laws'.70
NAB stressed that each customer is considered on a case-by-case basis and outlined a number of reasons why debanking may occur:
Commercial consideration – The cost and resources of NAB to support and oversee a customer may be greater than the commercial benefit of doing so. For example, the monitoring and oversight of a fintech's underlying activity may be cost prohibitive meaning that the risk of the fintech may be greater than any possible commercial benefit.
Security and resilience – NAB may hold concerns about the level of security and resilience of a fintech's technology system or business process. For example, an incidence of material fraud.
Financial Crime – NAB may hold concerns around an entity's management of Anti-Money Laundering or Counter Terrorism Financing (AML/CTF) requirements or their capability to meet these requirements. This could include a lack of evidence about how the entity will meet their requirements, or an entity may not have sufficient processes to monitor who their customers are.
Product misuse – NAB has experienced instances of some fintechs using certain banking products for purposes which they are not intended. A product may be designed and offered according to certain commercial, risk or regulatory parameters. NAB may stop offering that product to a customer if it is not being used in-line with its intended design or use.71
NAB added that de-banking decisions 'are informed by NAB's risk appetite to provide business transaction services to fintechs'. Where a decision to de-bank is taken 'this will be communicated to the customer in writing', however:
In some specific areas such as financial crime, we are not always able to be specific about the reason for de-banking due to legislative requirements.72
NAB reported that the customer 'will be provided with time to provide alternative banking arrangements in most cases' and if they request more time this is considered on a case-by-case basis.73
Westpac submitted that they 'are not actively looking to exit customers where we can provide banking services that fall within our risk appetite and comply with our legislative obligations'. Westpac also indicated there are a range of reasons why de-banking occurs including 'management of financial crime-related risks, dealing with companies which become deregistered, fraud and certain convictions, among others'.74
Westpac told the committee that it has in place 'a comprehensive Financial Crime Risk Management Framework…which is designed to ensure we meet our obligations under the AML/CTF Act'. It added that 'Westpac does not consider FinTech to be higher risk or out of appetite per se. However, there could be segments of the FinTech sector that operate in higher risk areas or have higher risk aspects and these may result in a decision to decline or cease to offer banking services'.75
Before a decision to de-bank is taken Westpac 'will undertake a process to gather further information'. If the decision is made to de-bank a customer 'generally a standard 30-day notice period is provided to the customer' and they will also consider requests to extend this period on a case-by-cases basis. Westpac noted that there may be circumstances where it determines that a 'shorter notice period is necessary to manage the risk'.76
The ANZ reported that the following criteria are assessed when either commencing or discontinuing a banking relationship with a fintech and they include:
The viability of the entity’s business model and their ability to service any financial obligations to us;
The standard of the entity’s management personnel;
The adequacy of the entity’s governance arrangements;
The type of business that the entity proposes to, or does, carry on and our technical ability to manage the banking and other risks associated with that business line;
Any changes to that business after we commence banking them which may alter the risks (compliance and otherwise) of the customer;
The ability and willingness of the entity to meet their policies and legal compliance obligations, including whether they have been the subject of any regulatory actions and/or undertaken any necessary remedial action;
The way in which the entity manages (or fails to manage) customer fraud claims;
the commercial viability of providing services to the entity taking into account the revenue to be received on the account and the costs incurred to service it, which will include compliance activities that we need to undertake to bank them safely and legally.77
At a hearing Mr Aidan O'Shaughnessy, Executive Director, Policy, Australian Banking Association discussed this issue with the committee and stated:
The simplest obligation is that the government require[s] banks to explain to regulators where the money is coming from and where the money is going to. If you heard from the managing director of Bitaroo, he himself said that it's not possible to do that with a number of these types of assets.78
Mr O'Shaughnessy offered reasons why organisations, particularly in the digital asset space are being de-banked:
Right now, today, when we look at virtual assets, it is an unregulated environment. When you look at the obligations, how banks operate, they each have a different and unique strategy, the types of markets they service. They all have a risk appetite. They have expectations from their correspondent banks overseas and they all have a risk profile. After that, they then say, 'What are our skills, capacity and capability to manage the risk?' When it comes to today, when it comes to virtual assets, it's an unregulated environment, an unregulated product, an unregulated activity. When you have legal obligations under the AML/CTF and the corps act and you have regulators that are willing to impose billion dollar fines, the risk far exceeds the risk appetite for a bank to say, 'My strategy is to be able to partner with or serve customers in that particular sector of the economy.'…79
Mr O'Shaughnessy further explained the reason why in some cases they are unable to provide a lot of detail when de-banking a business:
There are a number of obligations in the AML/CTF Act. There is one in section 123 of the act called the tipping off provision. Where a bank or another type of reporting entity forms a suspicion of an illegal or criminal activity and reports that to AUSTRAC, there is a very clear—and it comes with criminal liability—obligation on the bank and the individuals in the bank to not tip off that individual or entity that a suspicion has been formed, because that allows law enforcement then to observe that activity and take action. So I understand that frustration that some entities in the market have—that silence when suddenly banking services are cut off—but it is a legal obligation on banks and other reporting entities to do such a thing.80
When speaking about the need for increased transparency or an appeals mechanism Mr O'Shaughnessy emphasised that:
Section 123 of the AML/CTF Act comes with criminal consequences if a bank officer tips off an entity or an individual on which a suspicious matter report has been made to AUSTRAC. That binds the bank and that individual. They cannot tell anyone else. They cannot tell AFCA. It is a strict obligation...We have actually talked to AFCA on this, and they do have updated guidance under which, if a customer makes a complaint, AFCA is able to explain to the customer the different legislative obligations imposed on banks.81
It was stressed to the committee that digital assets are new and unregulated and with that comes risk. In summary, 'Australian banks adhere to the [Financial Action Task Force] standards and regulations on anti-money laundering and counterterrorism financing, and, as part of that, they have to manage the risk. Virtually, right now, it is very difficult for any bank across the globe to manage the risk in providing banking services to these types of entities in this unregulated part of the market.'82
In order to move forward Mr O'Shaughnessy suggested:
once the Financial Action Task Force finalises its standards for virtual assets, Australia should adopt and implement those into national law;
looking to and working with other jurisdictions more advanced in this area to establish a taxonomy of virtual assets which would allow the design of governance policies, regulation, consumer protection and cyber security standards; and
a move from registering with AUSTRAC to licensing obligations.83

Regulatory landscape

Domestic AML/CTF Act

The Department of Home Affairs (Home Affairs) is responsible for administering the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) which in 2018 was extended to regulate DCEs. The AML/CTF Act:
applies a risk-based approach to combating financial crime. The risk-based approach extends to new technologies, for which regulated businesses must understand and mitigate any ML/TF risks prior to adopting them. The risk-based approach represents a balanced approach to new technologies, that minimises restrictions on innovation while also helping to ensure that associated risks are understood and addressed before they can be exploited by criminals.84
Home Affairs indicated that it is aware that 'Australian banks, when concerned about the ML, TF and sanctions risks posed by particular customers, sometimes choose to 'de-bank' these customers by withdrawing the provision of financial services'. It added that the decision to de-bank a customer 'sits with the relevant financial institution, and the AML/CTF Act does not mandate this practice'.85 Home Affairs stated that:
The blanket de-banking of whole industry sectors and classes of customers goes beyond the risk-based approach to AML/CTF regulation, which is premised on a customer-by-customer assessment of risk and appropriate mitigation measures, rather than the complete disengagement from risk. At the same time, the AML/CTF Act does not require any financial institution to provide services to particular customers—this would go well beyond the scope of AML/CTF regulation.86
Home Affairs emphasised that this risk-based approach recognises that 'each individual business is in the best position to assess the ML/TF risks it faces in relation to the customers, products, and services it offers, and ensure that the procedures and policies put in place are proportionate to those risks'. The approach also recognises 'that the drivers of de-banking are complex and go beyond ML or TF concerns', adding that:
A range of additional factors may lead to a customer being de-banked, e.g. commercial considerations; reputational risk; uncertainty associated with new business models; expectations of overseas correspondent banks; and a range of other regulatory requirements relevant to the financial sector.87
AUSTRAC stated that it 'has and will continue to emphasise that banks must consider those risks as related to the individual business or entity, as opposed to any general cohort of businesses'.88 At the same time, AUSTRAC 'expects businesses operating in the remittance, DCE and fintech sectors to understand and meet their AML/CTF obligations':
These sectors are being exploited by criminals, and that is why the AML/CTF Act extends to these types of businesses. The nature of these businesses may provide opportunities to put in place appropriate compliance frameworks and technology quickly and easily, compared with more complex and larger entities. Efforts to strengthen and protect their own businesses demonstrates a strong willingness and culture of compliance, and should build trust with the banking sector.89
Bitaroo noted assurances from the Chief Executive of AUSTRAC that 'Australia's AML/CTF Act does not impose requirements on a reporting entity to close accounts or terminate a business relationship'. However, it noted that 'the reality remains that individuals, businesses, and digital exchanges particularly have been, are, and will continue to be shut down on a whim without an option to object or any form of government intervention'.90

AUSTRAC responses to de-banking

AUSTRAC stated to the committee that it 'takes its role as Australia’s AML/CTF regulator seriously and has a strong, ongoing focus on building capability, professionalism and levels of compliance across its regulated population'. It stated further:
[AUSTRAC] does this in a variety of ways including through ongoing education, outreach and engagement, and provision of guidance to assist reporting entities to identify, mitigate and manage their ML/TF risks.
AUSTRAC continues to produce sectoral ML/TF risk assessments that are informed through engagement with law enforcement agencies and industry experts. The risk assessments enable reporting entities to better understand the risks they face and implement appropriate systems and controls to mitigate and manage these risks.
AUSTRAC recently completed a three-month registration pilot trialling enhanced application forms and vetting processes for remittance and DCE providers. The aim is to ensure more rigour around the assessment of an applicant’s probity, suitability and capacity. AUSTRAC is considering the outcomes of the pilot and future steps to strengthen the registration process.91

International standards and risk-based approach

De-banking is a global issue. The Financial Action Task Force (FATF) is an inter-governmental body that sets international standards to prevent money laundering and terrorist financing. Australia is a member and the government has committed to ensure that Australian laws and practices meet the FATF standards.92 The standards require banks to take a risk based approach to enforcement but FATF has also stated the expectation that:
Implementation by financial institutions should be aimed at managing (not avoiding) risks. What is not in line with the FATF standards is the wholesale cutting loose of entire countries and classes of customer, without taking into account, seriously and comprehensively, their level of money laundering and terrorist financing risk and applicable risk mitigation measures for those countries and for customers within a particular sector.93
FATF has issued guidance on a risk-based approach.94 However, La Trobe LawTech noted that:
The experience of smaller FinTechs in Australia is that Australian banks do not comply with these standards. The banks, when pressed, generally refer to standing policy decisions that they will not engage with businesses involved in crypto. Individual risk assessments may be undertaken in relation to large FinTechs but in the majority of cases FinTechs are not even given an opportunity to provide information about their business model and risk control measures. The lack of appropriate consideration of the risk and risk management information of an individual applicant does not meet the FATF standards.95
In February 2021 FATF announced a new project to study and mitigate the unintended consequences resulting from the incorrect implementation of the FATF Standards. The project focuses on four main areas:
De-risking, or the loss or limitation of access to financial services. This practice has affected non-profit organisations (NPOs), money value transfer service providers, and correspondent banking relationships, in particular;
Financial exclusion, a phenomenon whereby individuals are excluded from the formal financial system and denied access to basic financial services;
Undue targeting of NPOs through non-implementation of the FATF’s risk-based approach;
The curtailment of human rights (with a focus on due process and procedural rights) stemming from the misuse of the FATF Standards or AML/CFT assessment processes to enact, justify, or implement laws, which may violate rights such as due process or the right to a fair trial.96
In June 2021, FATF indicated that it 'will now build upon its existing work, and begin identifying possible further mitigation options'.97

Questions around competition

Questions were also raised about whether de-banking could amount to anti-competitive behaviour. Financial Inclusion By Design noted that the 'most commonly targeted fintechs for debanking are in the cryptocurrency, payments and neo-lending areas [which has] raised the question whether this behaviour by the banks is anti-competitive'.98 It added they 'do not believe there is a purposeful misuse of market power by the Big 4 banks with respect to debanking of fintechs. However, it is entirely possible that the impact of debanking may be anti-competitive, depending on how the ACCC would define the relevant market'.99
Similarly, Wise submitted that 'limiting the access of startup and scale-up companies to local business bank accounts can have an anti-competitive effect even if the intent is not anti-competitive'.100
Swyftx also questioned whether this behaviour is anti-competitive:
The basis for traditional banks unwillingness to bank digital assets companies to date, which have relied on some arbitrary and ill-advised notion of “increased risk” related to digital assets is no longer an acceptable or good faith approach, and is beginning to look like anti-competitive behaviour born of self-interest and at the expense of consumer confidence and protection.101
Dr Parasol posited whether the 'broad discretion afforded to Australian banks to de-bank may conflict with Australia’s Open Banking aspirations that seeks to make banking products more competitive for consumers'. He noted:
There are potential competition issues relating to industry-wide bank account closures. However, de-banking where non-bank firms that compete with banks are being dropped as clients by traditional banks, often citing risk or regulatory concerns, is potentially anticompetitive behaviour. De-banking occurs in the sense that FinTechs have been stopped from gaining access to the payment infrastructure because they pose a commercial threat to the major banks.102
Dr Parasol added:
This commercial threat to banks is real. For some crypto assets, the transfer of assets is processed for a few cents. A bank transfer can often cost two hundred dollars for that same transfer.103
Wise argued that:
Blanket debanking, which has been occurring in Australia, has been increasing AML/CTF risks and gives rise to serious questions about the misuse of market power by the traditional financial institutions. The loss to the consumer through the increased costs associated with debanking along with the barrier that this phenomenon poses to innovation in the payments space is considerable.104
Nium pointed out that because de-banking 'lies in the concentrated banking sector [this] further perpetuates anticompetitive and incumbent-driven models, depriving the Australian market of the widespread benefits of financial technology innovation'.105
FinTech Australia provided examples in relation to anti-competitive conduct:
it has been suggested to us by our members that it is often the case that companies subject to offboarding challenge the banks’ current market position, and that it may be done, at least partly, as a commercially convenient outcome for the bank. One member received reasons from the bank including that they were debanked because: they were a fintech; they held an Australian Credit Licence; they were a payments company; they issued cards in a scheme; and one of their accounts had been historically been overdrawn. Many of these indicate that the bank’s motivations may have been genuinely anti-competitive. A lender member also submitted that from their experience, debanking by larger financial institutions is driven by anti-competitive motives. They note that the dynamic of having the established financial institutions own the payment architecture in Australia means that established players use their market dominance to prevent competition, meaning they do not have to compete with fintechs on cost or convenience to the consumer. This is not a good outcome for consumers.106
FinTech Australia added:
Allowing banks to debank fintechs gives them the position of defacto gatekeepers to innovation, as they then become the arbiters of who should and should not be provided banking services, and therefore a viable chance at success in Australia. The practical effect of this is that banks are seen as a single point of failure for a fintech company and present a risk to the health and viability of a business.107
Speaking at a hearing, in relation to a question about the de-banking of remittance providers, Mr Joseph, Healy, Chief Executive Officer, Judo Bank, pointed out:
You have to remember that we have one of the most profitable banking systems in the world, which is a good thing. But it's one of the most profitable banking systems in the world because it's weak in terms of competition, so all of the incentive of the incumbent system is to maintain the status quo, whilst obviously publicly towing the line in terms of being supportive of competition, or at least not blocking competition. But the reality is that we have a system that is heavily concentrated and dominated by powerful players who have an ability, if not to stop, to slow down innovation, and that's not good.
I go back to my opening remarks, obviously we're working in a market economy and a critical part of a market economy is real competition and real innovation. Powerful players, particularly privileged players like the banks, should not be allowed to frustrate innovation and competition. Again, if you're running these organisations you want to protect what you've got. I think in the cross-border currency payments business the amount of innovation and competition there has been hugely impressive and that has got to be encouraged.108

ACCC response on competition

The ACCC informed the committee that it has investigated potential breaches of the Competition and Consumer Act 2010 (CCA) as a result of allegations of de-banking but the investigations did not establish a breach. It submitted that the 'establishment of an effective due diligence scheme would more easily allow the ACCC to examine whether the denial of banking or payment services raises concerns under the CCA'.109
The ACCC saw de-banking as 'having the potential to be a significant threat to competition', noting that it looked at this issue as part of its 2019 inquiry into the supply of foreign currency conversion services in Australia.110
The 2019 ACCC inquiry found that de-banking and the prospect of de-banking raise costs for the following groups:
New IMT entrants seeking to secure banking services
These costs, or the inability to sure banking services, can act as a barrier to entry and therefore threaten competition.
Existing non-bank IMT suppliers.
These costs include potentially high compliance costs to maintain access to bank services. These additional costs can hamper non-bank IMT suppliers' ability to price services competitively and win customers, especially given bank IMT suppliers do not face these same costs.111
The 2019 inquiry found that 'de-banking was a significant issue for non-bank IMT [International money transfer] suppliers'112 with the ACCC reporting that:
Some non-bank IMT suppliers have been denied access to bank services or have found access to bank services under threat. In the examples we considered in the inquiry, the need to comply with Australia's anti-money laundering and counter terrorism financing (AML/CTF) laws has been a factor in the banks' decisions to withdraw access to banking services for non-bank rivals. However, inherent to issues relating to de-banking is the difficulty in distinguishing between accounts being closed due to legitimate AML/CTF concerns, and accounts being closed for anti-competitive reasons.113
The ACCC report recommended the government:
form a working group tasked with consulting on the development of a scheme through which IMT suppliers can address the due diligence requirements of the banks or providers of payment system infrastructure, including in relation to AML/CTF requirements.
The Working Group should begin a public consultation process on the merits and design of such a scheme by 31 December 2019 and conclude that process by 30 June 2020. The Working Group should consider any alternative solutions to address the issue of de-banking that are raised by stakeholders during the public consultation process.
By 31 December 2020, the scheme should be operational or the Working Group should have set out any alternative approach it will initiate to ensure that non-bank IMT suppliers are able to obtain efficient access to the banking and payment services they need to compete in the supply of IMT services to Australian consumers.114
The government agreed to 'urgently conduct further work on the issue of de-banking, where third party providers are denied access to banking services by the major banks, who are also their competitors. The government indicated that it would:
establish a taskforce to consult with all relevant stakeholders and report back with further reform options, ensuring that compliance with Australia's anti-money laundering and counter-terrorism laws does not unnecessarily stifle competition.115
The committee sought an update on this work which was provided by ACCC officials who confirmed the government has set up a working group led by Treasury which is being overseen by the Council of Financial Regulators. Ms Leah Won General Manager, Competition Enforcement and Financial Services, ACCC informed the committee:
we recommended at the end of that foreign exchange inquiry that a working group be formed to look at the issues, but our recommendation was associated with a due diligence scheme being put in place to really streamline the process for both the banks and the businesses to give them a common language about what was actually required to satisfy the banks that they were a reasonable AML/CTF risk. It was our strong view when we did the inquiry that it was important to have multiple parts of government in the room for that discussion, and that's why we welcome the formation of this working group. We think it's really critical that AUSTRAC and Home Affairs, as well as the other financial services regulators—and us, to the extent that we've got good visibility over the problem—are in the room and can work together towards a sensible solution. That working group was suspended through some of the COVID period, but it is now reformed. I think it is actively working and will report back to the Council of Financial Regulators.116
The June 2021 Quarterly Statement by the Council of Financial Regulators (CFR) outlined work on Australia's role in the G20 Roadmap for Enhancing Cross-border payments and noted:
A related issue has been the withdrawal of banking services (‘de-banking’) from payments and other financial service providers. Participants discussed trends and drivers of decisions to ‘de-bank’ these providers. They agreed that agencies would undertake further work to explore the underlying causes and examine possible policy responses.117
The ABA indicated that it 'welcomes and supports the Council undertaking further work to explore the underlying causes and examine possible policy responses and will assist the Council's research as this issue is explored'.118

Update on the CFR's work on de-banking

The RBA provided further information to the committee on behalf of the CFR, outlining the progress of its work to date on de-banking. It noted the establishment of a CFR working group on de-banking in June 2021, to examine possible policy responses on these issues. Membership of the working group comprises representatives of APRA, ASIC, the RBA, the Treasury, the ACCC, AUSTRAC and the Department of Home Affairs.119
The focus of the CFR working group is 'payments and other financial services providers, including international money transfer (IMT) and financial technology (fintech) firms'. It was noted that this scope is broader than the taskforce established following the ACCC’s Foreign Currency Conversion Services Inquiry, which was focused on IMTs.120 The RBA noted further in its correspondence:
The CFR working group is in its early stages and it will be some time before conclusions are reached. However information from Treasury’s engagement with fintechs, banks and regulators on de-banking provides useful background to the issue. It highlights that a range of factors may drive decisions about whether to bank a firm. However, the fine balance between banks’ AML/CTF risks and compliance costs on one hand, and their returns from servicing small fintech and IMT firms on the other, appears to be key. Banks’ risk appetites may also have been affected by recent substantial penalties for AML/CTF breaches, highlighting that the policy objective of preventing money laundering and terrorist financing may at times conflict with that of promoting the provision of competitive and efficient financial services. Issues of uncertainty about AML/CTF compliance obligations and transparency of de-banking decisions have also been raised. So far, the regulators have seen no evidence that de-banking is occurring as a competitive strategy.
The CFR working group will continue to explore these issues and potential policy options that could address or mitigate them. At this time a deadline for completion of this work has not been set.121

ASIC response

ASIC noted that it 'does not have a regulatory role in relation to concerns about debanking', stating that it considers the 'response to debanking is a policy matter for the Australian Government'. ASIC emphasised actions it has taken which have been consistent with increasing the availability and accessibility of banking services.122

Suggestions to improve the framework governing de-banking practices

Suggestions from submitters in relation to improving practices around de-banking centred on achieving better regulation and more transparency.


Noting the discussion in Chapter 3 around potential regulatory reforms relating to digital assets, a number of submitters and witnesses argued that an improved regulatory framework would also assist mitigate de-banking issues for the sector.
Mr Bacina submitted that '[a] clearer regulatory position around digital asset products…will remove any regulatory uncertainty which may be underpinning bank decisions on grants account privileges'.123
Swyftx argued that:
A clear regulatory regime is needed which provides for government to prevent traditional banks withholding services to digital asset service providers (acting as unauthorised gatekeepers to the system), but which also establishes clear and robust registration and licensing requirements for digital asset service providers to assuage both consumer and bank concerns around the particular risks posed by individual digital asset service providers.124
Mawson Infrastructure Group suggested:
The introduction of a well understood and clear regulatory framework will give banks more confidence in dealing with crypto businesses;
Banks must ensure that all banking services are available to crypto businesses; and
We believe APRA may need to revisit and revise its treatment and risk weighting of crypto business and consumer deposits so that it is considered no different to any form of Tier 1 capital for banks.125
Dr Parasol acknowledged the AML/CTF risk for banks, adding that 'they may be unwilling to take a risk on the Crypto Exchange industry without regulatory guidance. Regulatory guidance should, as a result, be drafted in a way that is consistent with the AML/CTF Act'.126
4.113 also recommended:
the regulators conduct coordinated analysis of the crypto industry in order to provide a benchmark and guidance to the incumbent banks in relation to the appropriate risk parameters to be applied when working with fintech businesses. This will help banks understand when they will and will not be at odds with the regulators’ expectations.127
ADC Forum was of the view that the AML/CTF risks can be mitigated:
Deep forensics on the blockchain by companies like Chain Analysis show less than 1% of all crypto transactions are used for ML/TF purposes. As the blockchain is an immutable, distributed, secure and transparent ledger all transactions can be traced and tracked unlike cash. In our submission, the economic and business risks of not banking this emerging sector far outweigh any AML/CTF risks presented.128
Revolut pointed out the:
anti-money laundering technology available from companies such as Elliptic (which Revolut uses to monitor and screen all crypto withdrawals in jurisdictions where that feature is offered) is exceptionally precise and advanced, and is used by a number of government crime agencies in Europe, as well as some banks. We believe a greater effort by banks to engage and understand this type of technology is key to banks better targeting the financial crime risks relating to crypto (rather than taking a blanket ban approach to all crypto businesses).129
Aus Merchant advised the committee that it is currently in the process of 'onboarding to a US based bank as a risk mitigation strategy'. When it asked to onboard as a digital asset company:
[the US bank] responded with a digital asset specific onboarding compliance and due diligence procedure. This makes me question what is stopping Australian Banks from working with the industry to provide these same enhanced due diligence procedures. We suggested this to the Australian banks as a solution on more than one occasion, specifically when the notification of account closure came through, however a standardised "risk off" without compromise approach was maintained.130
Noting that the legislation encourages banks to operate in a risk averse manner, Independent Reserve expressed the view that:
it is the responsibility of the digital asset and cryptocurrency industry and law makers to design the industry such that banks want to do business with the sector.
Independent Reserve recommends as a first step in this process, to put in place minimum requirements and licensing for the custody of digital assets and cryptocurrency. AUSTRAC already ensures that all DCEs must adhere to the AML/CTF Act 2006. If we can add a licence and minimum standards to the custody and security of customer assets, there is a demonstration of clear and comprehensive consumer protections in place.131

Risk mitigation and guidance

Dr Salampasis also emphasised the need for 'regulators to provide assistance to banking and non-banking financial institutions so as to recalibrate risk assessment models and redevelop risk mitigation strategies on a case-by-case rather than wholesale debanking'.132
Wise also submitted:
The lodestar of de-risking practice should be bespoke risk-based approaches and the assessment of new customer relationships and due diligence requirements that are made on a case-by-case basis of the level of risk identified.133
To address de-banking Nium recommended: AUSTRAC provide clear guidance for financial institutions; an industry-wide de-banking process to provide certainty and transparency; and to provide entities an opportunity to appeal a de-banking decision with an appropriate regulatory body.134

Greater transparency

Ms Rebecca Shot-Guppy, CEO FinTech Australia spoke about how to address this issue:
As we've mentioned our submission, the balance of power needs to be readjusted. This issue needs to be resolved so that the needs of both banks and fintechs can be met and that a cohesive ecosystem can be supported. Banks should have an imperative to work with their partners to solve regulatory challenges, not shut the door on them. An appeals process should be put in place to manage this. This problem can be also managed by giving fintechs better and direct access to payment rails, to allow them to operate around the banks. Providing further clarification on the regulatory obligations of banks and their fintech partners will also reduce the risk of this practice occurring.135
Specifically, FinTech Australia suggested that:
AUSTRAC introduce clearer guidelines for banks and fintechs in relation to the obligations with an aim of reducing the occurrence of de-banking;
an industry-wide de-banking process should be developed to provide certainty;
an appeals process should be implemented to hold banks accountable for de-banking activities; and
the ACCC investigate whether de-banking is undertaken for anti-competitive reasons.136
To address the issue of de-banking, the ASBFEO recommended that an appropriate entity 'be empowered to require a financial institution to provide clarity around the robustness of decision making around a decision to withdraw or deny a financial service to a legally operating business'. In addition '[c]onsideration should also be given as to whether this might then be published and whether a review could be undertaken by the Australian Financial Complaints Authority of the decision'.137
Financial Inclusion By Design suggested that there is a need for:
an accountability framework, such as an Australian Banking Association Code of Conduct and an external complaints mechanism (e.g. AFCA or an Ombudsman), to ensure that debanking is not the result of a generic and anonymous risk management exercise because that is categorically unfair and unreasonable given the enormous negative economic business, social and personal impacts that such a decision unleashes.138
Financial Inclusion By Design also suggested that the issue of debanking should be referred to the ACCC for an in-depth inquiry.139


The Australian Financial Complaints Authority (AFCA) 'is the independent external dispute resolution scheme for the financial sector'. AFCA advised that they receive 'complaints involving claims of de-banking from time to time' and two of the typical claims made are:
a bank closed the complainant’s account without consent
a credit provider decided to stop providing a credit facility to the complainant.140
However, AFCA noted that it has 'limited jurisdiction to deal with complaints about commercial decisions made by banks and other financial firms. This includes whether or not the firm will provide a financial service or product to a consumer or a small business'.141
AFCA indicated that for a complaint about account closure, they consider:
whether product terms and conditions allow the financial firm to close the account or stop providing a service
whether the firm has fairly exercised its rights by taking into account:
obligations under the relevant laws and codes of practice
good industry practice
customer conduct
the impact of the account closure on the customer
whether the firm provided sufficient notice
what is fair in all the circumstances.142
AFCA further advised:
To date, AFCA has not seen any particular trend of de-banking complaints by cryptocurrency or digital asset businesses, or the Fintech sector more broadly. Generally speaking, complaints made to AFCA involving de-banking issues, such as account closures and credit facilities, have arisen across consumer and small business complainant types. They appear to be due to factors such as the conduct or risk profile of the account holder and their transaction activities, or other commercial decisions made by a bank as to the provision of products and services to a particular consumer or small business.143

Access to payments systems

As noted above, as a suggestion to address de-banking, Fintech Australia suggested greater access to the payments architecture:
One potential solution to the risk of debanking for a fintech is direct access to the payments architecture in Australia. Although this does come with considerable compliance and capital costs for access to the New Payments Platform [NPP].144
NPP Australia provided the committee with an update in its work enabling third party payment initiation, due to be delivered by mid-2022, which will be helpful for FinTechs but won't solve the issue of de-banking for payments companies:
As communicated to the Committee previously, the biggest improvement we expect to see in relation to the needs of fintechs is enabling third-party payment initiation with the delivery of the NPP’s PayTo service (formerly known as the ‘Mandated Payments Service’).
This will allow non ADIs, whether they are directly connected to the NPP or indirectly connected via a sponsoring entity, to send instructions across the NPP for payments to be made from a customer’s account, with the customer’s authorisation. PayTo enables a more digital and enhanced customer experience, providing customers with more visibility and control over their payment arrangements.145
In October 2020 Mr Scott Farrell led a review into the Australian Payments System which reported in June 2021 and was released in August 2021. The review covers access to the NPP and other payments infrastructure and recommended a new tiered payments licensing framework for payments providers which, if implemented, would see broader access to the NPP for businesses who fit under this new licence category but are not full ADIs. The final report noted that while the recommendations won't solve de-banking:
The proposed licencing regime should facilitate better direct access to key payment systems. Direct access would allow PSPs an ability to circumvent the need to rely on a bank to get access to payment systems. Moreover, setting out functional definitions of payment services should provide a basis with which AUSTRAC can provide guidance and certainty to PSPs [payment service providers] around the AML/CTF obligations. Finally, PSPs that holder a payments licence may provide further confidence to banks in their ability to meet minimum level of standards around information and security obligations.146
The review also found that there is 'considerable scope to provide transparency and clarity over the requirements for gaining direct access to payment systems'.147 and recommended that the RBA develop 'common access requirements in consultation with the operators of payment systems'.148 These common access requirements would form part of the payments licence.149
Currently Treasury is consulting on the recommendations of the review ahead of the government finalising a response.150
On 28 September 2021 it was reported that Wise received approval to become the first non-bank with direct access to the NPP which would allow it to clear and settle its own payments in real time:
Wise says its mission is to make international payments instant and eventually free. It is already connected to real-time networks in Britain, Singapore and parts of the EU; once it goes live with the NPP next year, customers will be able to send funds to those countries for immediate withdrawal, just like sending an email.151
It was reported that NPP Australia Chief Executive Mr Adrian Lovney 'said the payments operator wanted to see broader licensing, to lift the number of direct connections by non-banks'.152

  • 1
    NAB, Submission 52, p. [2].
  • 2
    Dr Dimitrios Salampasis, Submission 11, p. 5.
  • 3
    Bitaroo, Submission 5, p. 1.
  • 4
    Aus Merchant, Submission 27, p. [3].
  • 5
    Bitcoin Babe, Submission 54, pp. [2-3].
  • 6
    Bitcoin Babe, Submission 54, p. [3].
  • 7, Submission 55, p. 3.
  • 8
    Mr Allan Flynn, Submission 57, p. [3].
  • 9
    Mr Allan Flynn, Submission 57, pp. [1-2].
  • 10
    Mr Allan Flynn, Submission 57, p. [3].
  • 11
    Name Withheld, Submission 1, p. 1.
  • 12
    Verida, Submission 4, p. 2.
  • 13
    Verida, Submission 4, p. 2.
  • 14
    Wise, Submission 18, p. 1.
  • 15
    Revolut, Submission 44, p. 8.
  • 16
    FinTech Australia, Submission 62, p. 23.
  • 17
    FinTech Australia, Submission 62, p. 23.
  • 18
    FinTech Australia, Submission 62, pp. 25-26.
  • 19
    RBA, Submission 37, p. 4.
  • 20
    Department of Home Affairs and AUSTRAC, Answers to written questions on notice provided 7 October 2021, p. 1.
  • 21
    Piper Alderman, Submission 72, p. 9.
  • 22
    Digital Law Association, Submission 49, p. 27.
  • 23
    La Trobe LawTech, Submission 14, p. 5.
  • 24
    Dr Dimitrios Salampasis, Submission 11, pp. 7-8.
  • 25
    Dr Dimitrios Salampasis, Submission 11, p. 6.
  • 26
    Independent Reserve, Submission 17, p. [4]. See also Dr Darcey W.E. Allen, Associate Professor Chris Berg, Professor Sinclair Davidson, Dr Aaron M. Lane, Dr Trent MacDonald, Dr Elizabeth Morton and Distinguished Professor Jason Potts, Submission 67, p. 17.
  • 27
    Mawson Infrastructure Group, Submission 68, p. 7.
  • 28
    FinTech Australia, Submission 62, p. 26.
  • 29
    Nium, Submission 63, p. 5.
  • 30
    ASBFEO, Submission 6, p. 1.
  • 31
    ASBFEO, Submission 6, p. 1.
  • 32
    Ms Rebecca Schot-Guppy, CEO, FinTech Australia, Proof Committee Hansard, 8 September 2021, p. 1.
  • 33
    Ms Michaela Juric, Bitcoin Babe, Proof Committee Hansard, 8 September 2021, p. 11.
  • 34
    Aus Merchant, Submission 27, p. [3].
  • 35
    Swyftx, Submission 21, p. [3].
  • 36
    Swyftx, Submission 21, pp. [3-4].
  • 37, Submission 55, p. 3.
  • 38, Submission 55, p. 3.
  • 39
    Bitaroo, Submission 5, p. 2.
  • 40
    Wise, Submission 18, p. 2.
  • 41
    Wise, Submission 18, pp 2-3.
  • 42
    Mr Michael Minassian, Regional Head of Consumer, APAC, Nium, Proof Committee Hansard, 8 September 2021, p. 12.
  • 43
    Nium, Submission 63, p. 5.
  • 44
    Nium, Submission 63, p. 5.
  • 45
    FinTech Australia, Submission 62, p. 25.
  • 46
    FinTech Australia, Submission 62, p. 25.
  • 47
    Department of Home Affairs and AUSTRAC, Answers to written questions on notice provided 7 October 2021, p. 2.
  • 48
    ASBFEO, Submission 6, p. 1.
  • 49
    Mr Allan Flynn, Submission 57, p. [3].
  • 50
    RBA, Submission 37, p. 4.
  • 51
    Piper Alderman, Submission 72, p. 9.
  • 52
    Wise, Submission 18, p. 2.
  • 53
    Mawson Infrastructure Group, Submission 68, p. 7.
  • 54
    ADC Forum, Submission 35, p. 14.
  • 55
    Revolut, Submission 44, p. 9.
  • 56
    Dr Dimitrios Salampasis, Submission 11, pp. 5-6.
  • 57, Submission 55, p. 3.
  • 58
    Dr Max Parasol, Submission 20, p. 13.
  • 59
    Verida, Submission 4, p. 3.
  • 60
    Digital Law Association, Submission 49, p. 27.
  • 61
    La Trobe LawTech, Submission 14, pp. 1-2.
  • 62
    FinTech Australia, Submission 62, p. 24.
  • 63
    FinTech Australia, Submission 62, p. 24.
  • 64
    FinTech Australia, Submission 62, p. 24.
  • 65
    Financial Inclusion By Design, Submission 3, p. 2.
  • 66
    Financial Inclusion By Design, Submission 3, p. 3.
  • 67
    ABA, Submission 30, p. 4.
  • 68
    CBA, Submission 40, p. 1.
  • 69
    CBA, Submission 40, p. 2.
  • 70
    CBA, Submission 40, p. 2.
  • 71
    NAB, Submission 52, pp. [1-2].
  • 72
    NAB, Submission 52, p. [2].
  • 73
    NAB, Submission 52, p. [2].
  • 74
    Westpac, Submission 51, p. 1.
  • 75
    Westpac, Submission 51, pp. 1-2.
  • 76
    Westpac, Submission 51, p. 2.
  • 77
    ANZ, Submission 80, pp. 1-2.
  • 78
    Mr Aidan O'Shaughnessy, ABA, Proof Committee Hansard, 27 August 2021, p. 24.
  • 79
    Mr Aidan O'Shaughnessy, ABA, Proof Committee Hansard, 27 August 2021, p. 26.
  • 80
    Mr Aidan O'Shaughnessy, ABA, Proof Committee Hansard, 27 August 2021, p. 24.
  • 81
    Mr Aidan O'Shaughnessy, ABA, Proof Committee Hansard, 27 August 2021, p. 28.
  • 82
    Mr Aidan O'Shaughnessy, ABA, Proof Committee Hansard, 27 August 2021, p. 26.
  • 83
    Mr Aidan O'Shaughnessy, ABA, Proof Committee Hansard, 27 August 2021, p. 27.
  • 84
    Department of Home Affairs and AUSTRAC, Submission 23, p. 3.
  • 85
    Department of Home Affairs and AUSTRAC, Submission 23, p. 5.
  • 86
    Department of Home Affairs and AUSTRAC, Submission 23, p. 5.
  • 87
    Department of Home Affairs and AUSTRAC, Submission 23, p. 5.
  • 88
    Department of Home Affairs and AUSTRAC, Answers to written questions on notice provided 7 October 2021, p. 3.
  • 89
    Department of Home Affairs and AUSTRAC, Answers to written questions on notice provided 7 October 2021, p. 3.
  • 90
    Bitaroo, Submission 5, p. 2.
  • 91
    Department of Home Affairs and AUSTRAC, Answers to written questions on notice provided 7 October 2021, pp. 3-4.
  • 92
    La Trobe LawTech, La Trobe Law School, Submission 14, p. 5.
  • 93
    Outcomes of the FATF Plenary meeting, Paris, 21-23 October 2015, statement on FATF action regarding de-risking. See also Digital Law Association, Submission 49, pp. 27-28.
  • 94
    FATF, Guidance on the Risk-Based Approach for Effective Supervision and Enforcement by AML/CFT Supervisors of the Financial Sector and Law Enforcement, 2015.
  • 95
    La Trobe LawTech, La Trobe Law School, Submission 14, p. 7. See also Digital Law Association, Submission 49, p. 28.
  • 96
    FATF, 'Mitigating the Unintended Consequences of the FATF Standards', (accessed 28 September 2021).
  • 97
    FATF, 'Mitigating the Unintended Consequences of the FATF Standards', (accessed 28 September 2021).
  • 98
    Financial Inclusion by Design, Submission 3, p. 3.
  • 99
    Financial Inclusion by Design, Submission 3, p. 3 (emphasis in original).
  • 100
    Wise, Submission 18, p. 2.
  • 101
    Swyftx, Submission 21, p. [4].
  • 102
    Dr Max Parasol, Submission 20 p. 13.
  • 103
    Dr Max Parasol, Submission 20 p. 13.
  • 104
    Wise, Submission 18, p. [3].
  • 105
    Nium, Submission 63, p. 5.
  • 106
    FinTech Australia, Submission 62, p. 25.
  • 107
    FinTech Australia, Submission 62, p. 25.
  • 108
    Proof Committee Hansard, 8 September 2021, p. 22.
  • 109
    ACCC, Submission 9, p. 3.
  • 110
    ACCC, Submission 9, p. 1.
  • 111
    ACCC, Submission 9, p. 2.
  • 112
    ACCC, Submission 9, p. 2.
  • 113
    ACCC, Submission 9, p. 2.
  • 114
    ACCC, Foreign currency conversion services inquiry, final report, July 2019, p. 11.
  • 115
    The Hon Josh Frydenberg MP, Treasurer of the Commonwealth of Australia, 'ACCC finds consumers are paying too much in foreign transaction fees', Media release, 2 September 2019.
  • 116
    Proof Committee Hansard, 8 September 2021, p. 36.
  • 117
    Quarterly Statement by the Council of Financial Regulators – June 2021.
  • 118
    ABA, Submission 30, p. 4.
  • 119
    Reserve Bank of Australia, Correspondence to the committee dated 8 October 2021, p. 1.
  • 120
    Reserve Bank of Australia, Correspondence to the committee dated 8 October 2021, p. 1.
  • 121
    Reserve Bank of Australia, Correspondence to the committee dated 8 October 2021, pp. 1-2.
  • 122
    ASIC, Submission 61, p. 10.
  • 123
    Mr Michael Bacina, Submission 72, p. 9.
  • 124
    Swyftx, Submission 21, p. [4].
  • 125
    Mawson Infrastructure Group, Submission 68, p. 7.
  • 126
    Dr Max Parasol, Submission 20, p. 14.
  • 127, Submission 55, p. 4.
  • 128
    ADC Forum, Submission 35, p. 14.
  • 129
    Revolut, Submission 44, p. 9.
  • 130
    Aus Merchant, Submission 27, p. [4].
  • 131
    Independent Reserve, Submission 17, p. [5].
  • 132
    Dr Dimitrios Salampasis, Submission 11, p. 10.
  • 133
    Wise, Submission 18, p. 3.
  • 134
    Nium, Submission 63, pp. 6-7.
  • 135
    Ms Rebecca Shot-Guppy, Proof Committee Hansard, 8 September 2021, p. 1.
  • 136
    FinTech Australia, Submission 62, p. 28.
  • 137
    ASBFEO, Submission 6, p. 1.
  • 138
    Financial Inclusion By Design, Submission 3, p.p. 2-3.
  • 139
    Financial Inclusion By Design, Submission 3, p. 3.
  • 140
    AFCA, Submission 73, p. 1.
  • 141
    AFCA, Submission 73, pp. 1-2.
  • 142
    AFCA, Submission 73, p. 2.
  • 143
    AFCA, Submission 73, p. 2.
  • 144
    Fintech Australia, Submission 62, p. 27.
  • 145
    NPPA, Answer to written question on notice, received 3 August 2021, p. [1].
  • 146
    Australian Government, Payments System Review: From system to ecosystem, June 2021, p. 88.
  • 147
    Australian Government, Payments System Review: From system to ecosystem, June 2021, p. 68.
  • 148
    Australian Government, Payments System Review: From system to ecosystem, June 2021, p. 70.
  • 149
    Australian Government, Payments System Review: From system to ecosystem, June 2021, p. 69.
  • 150
    See: Treasury, 'Review of the Australian Payments System – Final report', (accessed 28 September 2021).
  • 151
    Mr James Eyers, AFR, 28 September 2021, pp. 13, 19.
  • 152
    Mr James Eyers, 'Wise to plug directly into real-time payments, cutting out banks’ role', AFR, 28 September 2021, pp. 13, 19.

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