You are here
Australia's Westpac to quit remittance business by March 31
[SYDNEY] Westpac Banking Corp, Australia's second-biggest lender, will become the last big bank in the country to exit the global remittance business, making it tougher or in some cases impossible for immigrants to send money home.
The pullout leaves firms operating in Australia's A$30 billion (US$24.5 billion) remittance sector looking for ways to maintain their services. Some are now seeking help from the Australian government.
On Monday, Westpac said it will close accounts of firms that specialise in money remittance services after March 31, falling in line with a court ruling to extend a closure deadline after a group of 20 remitters sued for more time to work out alternative business plans.
The new deadline applies only to those 20-odd remitters who took part in the class action, said Richard Mitry, a lawyer acting on behalf of remitters in the case. Those who didn't file suit will have accounts shut down when the court settlement takes effect on Dec 24.
Australia's banks have gradually pulled the plug on the US$425 billion global remittance industry, citing rising compliance costs that make it hard to support remittance firms. In the past two months, the country's anti-money laundering and counter-terrorism financing regulator has cancelled the licence of three remitters, underlining the risk of dealing with some companies. "We are continuing to work closely with the government, regulators and our customers to see what longer-term solutions may be possible to support and help make such payments in the future," Westpac said in a statement.
The pullout means that money transfers to some countries, like Somalia, will no longer be possible using conventional banking services. "There is no alternative for us," said Hussein Haraco, Chairman of the Somali Remittance Action Group. Haraco is urging the government to find a solution soon.
A number of payment services giant Western Union Co's agents will also be hit, the company said in a statement to Reuters. Agents use bank accounts to deposit customer funds and settle with remittance network providers, such as Western Union, which help process the actual transfers.