Australian banks have been disguising anti-competitive compliance behavior by excluding customers using cryptocurrencies, Senator Andrew Bragg said.
“I think many banks have disguised bank foreclosure as a regulatory necessity. In fact, it is often anti-competitive behavior and much more sinister and threatening than it appears at first glance,” said the liberal senator for New South Wales in a speech prepared for the Australian Technology Council today.
Refusal to provide banking services, or debanking in English, It occurs when a financial institution decides to stop offering banking services to a customer. You don’t need to state a reason, and banks have the ability to freeze an account immediately or close it with or without notice. In the case of cryptocurrency users, banks often cite concerns about compliance with laws against money laundering and terrorist financing.
Senator Bragg told Cointelegraph that his Senate Committee heard evidence that banks closed accounts for “commercial reasons”, a practice “known for a long time and indicated by the ACCC [Comisión Australiana de Competencia y Consumo]”.
“In other words, they ousted clients to protect their entrenched market position. This is not enough.”
In September of this year, “Bitcoin Babe” founder Michaela Juric told the Senate inquiry committee on “Australia as a technology and financial center” that it had been vetoed by a total of 91 banks and financial institutions throughout its seven years of experience in the cryptocurrency sector.
“No reasons were given, it was not evaluated or discussed on a case-by-case basis, and no appeal was presented,” he said then.
Another Australian digital currency trader, Allan Flynn, settled with ANZ for a debanking case on October 15. Although ANZ denied any responsibility, the bank offered him the opportunity to reapply for a bank account. Flynn also has a similar case against Westpac that is still ongoing.
In his address today to the Technology Council, Senator Bragg condemned the nefarious practice, saying it “hurts Australia as a cryptocurrency center.”
“How can you be a hub if you can’t get a bank account as a trader, miner, exchange, custodian or investor? You can’t be.”
However, things are changing. On November 3, Commonwealth Bank announced that it will become the first Australian bank to offer its clients the ability to buy, sell and hold crypto assets through its CommBank app. According to Bragg, banks will find it difficult to reconcile a position against cryptocurrencies as they begin to enter the world of digital assets themselves.
“The position that banks have historically taken will be difficult to maintain with the recent entry of banks into the world of cryptocurrencies. I will make sure it is not an opportunity for banks to be hypocritical.” he said in his speech today.
And he added to this statement, telling Cointelegraph:
“I think it would be hypocritical to allow and encourage customers to use cryptocurrencies in the app, and then exclude other customers for doing the same. I’m pleased to see banks jump on the crypto bandwagon.”
The “report on cryptocurrencies” of the Senate commission, published on October 20, formulated 12 Recommendations Aimed At Addressing Key Issues Related To The Cryptocurrency Industry, including that the Australian government develop a “clear process for companies that have been excluded from the banking sector”.
Following the publication of the report, Australian Transaction Analysis and Reporting Center (AUSTRAC) released a statement harshly criticizing the bank exclusion on October 29:
“The effect of bank foreclosure of legitimate and bona fide financial services businesses may increase capital legitimation and terrorist financing risks and negatively impact the Australian economy”, the report states.
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