Security law fears as banks jump the gun on overseas ‘terror’ transfers

Berhan Ahmed, a research scientist in Melbourne, sends money to his family in Eritrea. ‘We have obligations’. Picture: David Geraghty Source: News Corp Australia.

By David Crowe
Wednesday, November 12, 2014

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Security laws are forcing banks to shut down fund transfers used by millions of Australians in a blow to customers just as Tony Abbott and world leaders attempt to cut the cost of the cross-border transactions.

Plans for reform at this weekend’s G20 summit are on a collision course with commercial reality as banks and other agencies make it more difficult for migrants and other customers to send money to their families.

The Australian has confirmed that Westpac will shut its remittance service in weeks despite pleas from migrant communities for accounts to stay open so they can help pay to feed and educate extended family in countries such as Somalia and Eritrea.

Security agencies are warning of the growing use of remittances to finance terrorism and crime.

Other big banks confirmed they were scaling back similar services to cut regulatory risks, fearing a single transaction might end up sending funds to a terror group and expose them to millions in penalties in the US or Australia.

While Australia has 5500 remittance providers sending and receiving about $7 billion a year in about 20 million transactions, smaller operators rely on big banks here and overseas to clear their funds.

The Prime Minister and his counterparts at the G20 in Brisbane will discuss remittances this weekend, with a commitment to cut costs largely agreed.

The Australian Bankers Association said governments should look closely at the “very real impacts” anti-money laundering and counter-terrorism laws were having. “We absolutely support the requirements, but they are making it increasingly difficult for banks to provide services to remittance agents,” said the association’s Steven Munchenberg.

Berhan Ahmed, a research scientist in Melbourne who sends money to his family in Eritrea each month, said he felt guilty when he could not make payments. “In an extended family we have obligations to support family members. I know they don’t have any income, some of them are orphans. I want them to be educated.”

Mr Ahmed set up the African Australian Small Business Association to try to persuade banks to keep services open, but Westpac has written to customers telling them its remittance service will close on November 24.

Justice Minister Michael Keenan has launched a review of the money-laundering and counter-terrorism laws, but the deadline for public submissions closed in March. The report is due to be handed to the minister mid next year.

Greens deputy leader Adam Bandt has written to Finance Minister Mathias Cormann to urge him to keep a “safe corridor” open to transfer funds, but bank industry insiders said that overseas banks were refusing to make the payments.

Customers can keep using telegraphic transfers or international money drafts, usually when there is an identifiable bank account in the other country to take the deposit, but these are of no use in countries without robust banking systems.

The NSW Crime Commission said further action was needed to crack down on alternate remittance services — many of which have been involved in large-scale money laundering and exploited to fund terrorism in Syria and Iraq.

“In one case, a single alternate remitter sent at least $265 million overseas in an eight-year period,” the agency said in its annual report, tabled in the NSW Parliament yesterday.

Additional reporting: Mark Schliebs, Anthony Klan

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