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Debanking wave crashes on Australian bitcoin businesses

Multiple Australian bitcoin businesses will have their bank accounts shut down next month. The decision harms the local bitcoin sector and it even opposes the AML and CTF strategies of AUSTRAC and FATF.

Goldfields Money notified multiple bitcoin businesses yesterday that their accounts will be closed on the 18th of November. The decisions were attributed to “ongoing review processes” and did not include any specific justification. We have spoken with a number of affected businesses. This is the first coverage of what may constitute a fresh wave of “de-banking” that affects legitimate Australian businesses operating in the bitcoin space.

The effect of de-banking of legitimate and lawful financial services businesses can increase the risks of money laundering and terrorism financing and negatively impacts Australia’s economy. For this reason, AUSTRAC continues to discourage the indiscriminate and widespread closure of accounts across entire financial services sectors.

AUSTRAC statement 2021: de-banking

The indiscriminate closure of accounts for businesses operating in the bitcoin space, or in any lawful capacity, is discouraged by AUSTRAC. In October last year, AUSTRAC stated that “…banks should be able to manage high risk customers” and that “loss or limitation of access to banking services can have a devastating impact on individuals and their businesses.”

De-risking can introduce risk and opacity into the global financial system, as the termination of account relationships has the potential to force entities, and persons into less regulated or unregulated channels. Moving funds through regulated, traceable channels facilitates the implementation of anti-money laundering / countering the financing of terrorism (AML/CFT) measures.

FATF clarifies risk-based approach: case-by-case, not wholesale de-risking

In addition to directly damaging the emerging bitcoin industry in Australia and the people building it, “de-risking” strategies may exacerbate money laundering and terrorism financing according to FATF, the intergovernmental organisation tasked with combating money laundering and terrorism financing.

At the time of publication, we are waiting for a response from Goldfields in relation to the account closure notifications. When it is possible, this will be included in an update.

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