Cryptocurrency exchange Bitcoin Babe testified it has been debanked 91 times and bullied by Austrac, with the industry body calling for an end to such ‘anti-competitive’ behaviour from Australia’s banks.By Asha Barbaschow
The CEO of Fintech Australia has told a Senate committee that around 150 of her organisation’s members have been debanked by banks and financial institutions in Australia, with no reason provided or ability to appeal the decision.
“I’ve got at least 14 anecdotal issues, but I’d say that there’s least 150 of them that have been debanked over time,” Rebecca Schot-Guppy told the Select Committee on Australia as a Technology and Financial Centre on Wednesday.
“I would say at least 100 of them are fintech businesses, given that the highest amount of debanking occurs probably in that payments space … but this is also an issue for our wealth tech businesses. And it’s not the wealth techs necessarily being debanked themselves, it’s their customers, the likes of trading platforms, robo-advisors.”
Schot-Guppy believes there are two main reasons a fintech gets debanked. The first is anti-money laundering and counter-terrorism financing (AML/CTF) concerns, and the second is anti-competitive behaviour from the banks.
“[Fintechs] can’t actually operate their business without transaction accounts, or the ability to access payment rails … when a bank does debank an Australian fintech, it has really wide effects, too.”
Those effects include not being able to find a replacement banking partner to allow them to continue operating their business; being forced to return to square one in finding a new partner instead of scaling; and sometimes making customers be put off by the brand due to being debanked.
The Australian Transaction Reports and Analysis Centre (Austrac) in late 2017 gained authorisation to extend AML/CTF regulation to cryptocurrency exchanges. Austrac in July said it has around 4,722 exchanges registered.
“What is interesting in some respects is some of them are actually already reporting to Austrac directly, some of them already have reporting obligations, because of the type of their business and so those AML/CTF concerns of the big banks are really overreaching given that they already have self-reporting obligations,” the CEO continued.
“There needs to be a little bit more collaboration or discussion with Austrac.”
Also appearing before the committee was Michaela Juric from Bitcoin Babe, who said as of yesterday, she has been debanked and banned from 91 banks and financial institutions.
“91 lifetime bans, no reasons given,” she said. “There’s no reasoning given, it’s just, ‘sorry, we can no longer offer our services’, it can range anywhere between 30 days’ notice, all the way up to 24 hours’ notice is the shortest time I’ve been given to find new banking arrangements.”
Juric said her registration with Austrac was never asked for by the banks. She also said she felt bullied by Austrac and that she was placed on a terrorism watchlist.
Michael Minassian from remittance-focused Nium has likewise been debanked on several occasions.
“Nium has bank relationships in 40 countries around the world and yet Australia is the only market where we’ve been debanked,” he said. “Fintechs are always one decision away by the banks from closing their businesses.”
Schot-Guppy asked the committee to consider giving fintechs greater access to the payment rails, enhanced regulatory clarity from Austrac in regards to AML/CTF requirements. She also asked for banks to be mandated to accept the AML/CTF arrangement that fintechs already have with Austrac and the establishment of an appeals process for when a fintech is debanked.
On regulation, Schot-Guppy said a self-regulatory regime, such as seen in the Buy-Now, Pay-Later space, would work in the crypto space.
“We’ve seen the self-regulatory codes work really well … and I think the pace innovation is occurring in the crypto sector, it makes sense for a self-regulatory code rather than a full licencing regime,” she said.
Committee chair Senator Andrew Bragg said it was unlikely the government would “go backwards” to accept self-regulation in the space, particularly given there has been a call to regulate crypto entities.
“To be candid, the trend in this cryptocurrency space is not going to be self-regulation … we already have some regulation around registration of currency exchanges, and so I think we’re sort of heading in the other direction on this one,” he said.
Juric said stronger regulation could see traditional finance, such as banks, come into the crypto sector.
“And the crypto sector as we know now would essentially become default because banks have that ability to quash the competition,” she said.