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Consultation on draft guidance: Providing financial services to customers that financial institutions assess to be higher-risk

Status
Open for submissions
Submission deadline

AUSTRAC has released draft guidance for consultation to help financial institutions understand AUSTRAC’s expectations when they provide financial services to businesses they assess to be higher risk.

The draft guidance also suggests ways that affected businesses can engage with financial institutions and explains the types of information financial institutions may request from a business to demonstrate the steps they’re taking to address risk.

Background

In recent years, some financial institutions have declined, withdrawn or limited services to busineses they consider to be higher risk in certain sectors such as remitters, digital currency exchanges (DCEs) and fintech and other businesses, citing reputational and regulatory risk exposure and commercial considerations.

This is known as ‘debanking’ or ‘derisking’ and it can have a devastating impact on legitimate businesses. It can also reduce the capacity of Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) framework to detect and prevent money laundering, terrorism financing and other serious crime within Australia’s economy.

Under the AML/CTF Act 2006, banks are required to take a risk-based approach to dealing with customers in higher risk sectors; tailoring this approach to the nature, size and complexity of the business and proportionate to the level of money laundering, terrorism and serious crime risk they face.

This guidance is intended to support meaningful engagement between financial institutions and affected businesses.

Guidance consultation

This draft guidance is open for consultation from 9 November 2022 to midnight (AEDT) 21 December 2022.

The guidance is relevant to all authorised deposit-taking institutions (ADIs), remitters, DCEs, fintech companies and other businesses that financial institutions assess to be higher risk.

AUSTRAC encourages feedback on the draft guidance from both financial institutions and those operating within higher risk industries. Submissions and any inquiries should be emailed to: Guidance_Consultation@austrac.gov.au

Next steps

Following the closure of the consultation, AUSTRAC will consider feedback and publish the finalised guidance on the AUSTRAC website.