Major
trading banks are closing customer business accounts where they operate third
party international money transfers claiming it is to avoid liability under
money laundering legislation. This has
the effect of limiting fees competition in the lucrative business of
immigrants’ remittances to the Pacific Islands, Asia and elsewhere.
The High Court issued an interim injunction
blocking Kiwibank from closing the account of third-party remitter E-Trans
International Finance pending a fuller inquiry into banks’ obligations under
the Banking Code to act fairly and reasonably.
Evidence was given that eight of the fifteen
specialist remittance and currency exchange providers in Auckland had seen
their bank accounts unilaterally closed.
Banks say these accounts raise potential liability for them under the
Anti-Money Laundering and Countering Financing of Terrorism Act.
Kiwibank says its terms and conditions give it
the right to close any account for any reason on 14 days notice. The court was told E-Trans was convicted in
2004 for eleven offences under the Financial Transactions Reporting Act in
relation to five separate transactions.
E-Trans
International Finance v. Kiwibank – High Court (23.06.15)
15.072