The Australian government has come forward with policy recommendations to support the issue of de-banking in the country. The Treasury laid this out in an official statement paper that was titled “Government Response: Potential Policy Responses to De-banking in Australia”.
It defined de-banking as a result of when a bank declines to offer or withdraws banking services to a customer. It is driven by a number of inter-related causes, including Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) laws, sanctions compliance, profitability and reputational risk considerations.
Calling de-banking as not just an Australian challenge but the one that affects many jurisdictions globally, the Treasury addressed potential policy responses to counter the same. It also said that these proposed solutions must balance support for business, whilst appropriately managing financial crime and other risks. The statement further read:
“The Government recognises the seriousness of de-banking and understands that inaction on the issue will stifle competition and innovation in the financial services sector and may drive businesses underground and to operate exclusively in cash.”
The announcement supported the four recommendations given by the Council of Financial Regulators (CFR) last year on de-banking that could affect change for crypto-related entities. These were commissioned in response to the recommendations in the final report of the Senate Select Committee on Australia as a Technology and Financial Centre.
In response to CFR’s advice, the government:
1. Agrees to the data collection recommendation;
2. Supports the transparency and fairness measures recommendation in principle;
3. Supports the guidance by major banks recommendation in principle; and
Notes the capability uplift recommendation.
The move comes in the background of the largest Australian bank – CBA’s early June decision to restrict certain payments to crypto exchanges over scam risk. Recently, Blockchain Australia, the country’s industry body, also made a fresh commitment to minimise “the intersection of crypto-assets and scams”. It revealed its vision of collaborating with payment providers and banks to ensure that scams are stopped.