More Than 150 Fintech Companies Have Been Banned By Banks, Senate Committee Hears

More Than 150 Fintech Companies Have Been Banned By Banks, Senate Committee Hears
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Approximately 150 members of Fintech Australia have been debanked by banks or financial institutions in Australia without reasons or the ability to appeal the decision, according to CEO Rebecca Schot-Guppy.

Speaking to the Senate Select Committee on Australia as a Technology and Financial Centre, Schot-Guppy called for an end to the allegedly ‘anti-competitive’ behaviour from Australian banks.

“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.

“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.”

According to Schot-Guppy, anti-competitive behaviour from banks, as well as anti-money laundering and counter-terrorism financing (AML/CTF) concerns are the main two reasons fintechs get debanked in Australia.

And when these fintechs get debanked, it makes it literally impossible to continue running their business as usual.

“[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,” Schot-Guppy explained.

For example, Bitcoin Babe’s Michaela Juric told the committee she had been debanked and permanently banned from 91 banks and financial institutions across Australia without any explanation.

“Ninety-one lifetime bans, no reasons given,” she said, adding that she felt bullied by AUSTRAC and was even placed on a terrorism watchlist. “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.”

The discussion comes after the Australian Transaction Reports and Analysis Centre (AUSTRAC) extended AML/CTF regulation to cryptocurrency exchanges back in 2017, which has since resulted in 4,722 exchanges being registered in Australia.

Similarly, Michael Minassian told the committee his company Nium has faced similar issues from banks.

“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.”

However, Schot-Guppy says there needs to be more collaboration and conversation between fintechs and AUSTRAC.

“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,” she said.

“There needs to be a little bit more collaboration or discussion with AUSTRAC.”

The solution? If you ask Schot-Guppy, a self-regulatory system similar to what we’ve seen in the buy now, pay later space could be a good option for crypto businesses.

“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.

However, Senator Andrew Bragg, who chairs the committee, isn’t stoked on this idea and went so far to assert that it would be going “backwards”.

“To be candid, the trend in this cryptocurrency space is not going to be self-regulation,” he said.

“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.”