New guidance released on debanking

AUSTRAC has released new guidance on debanking that is designed to:

  • help financial institutions understand AUSTRAC’s expectations when providing designated services to businesses they consider higher risk.
  • encourage businesses in affected sectors to engage openly with financial institutions and demonstrate the steps they are taking to address risks within their business.

Debanking refers to the practice by financial institutions of declining or limiting financial services to businesses across whole sectors if they are assessed as having a higher money laundering and terrorism financing (ML/TF) risk.

Debanking or ‘derisking’ can have a devastating impact on legitimate businesses and has been increasing over the past decade. Some sectors commonly affected by debanking include remitters, digital currency exchanges and financial technology businesses.

This guidance seeks to clarify the role that both financial institutions and affected businesses play in ensuring a balance between risk management and financial inclusion.

The effect of debanking can increase the risks of ML/TF across Australia’s economy. AUSTRAC continues to discourage the indiscriminate and widespread closure of accounts across entire industries.

The release of this guidance follows an extensive consultation across impacted industries undertaken in 2022 and builds on our previous statement on debanking.

AUSTRAC would like to thank those who participated in helping to shape this guidance.

Read the new guidance on debanking.