Millions of migrants in Australia affected by closure of money transfer services

Millions of migrants in Australia are hoping for a last minute reprieve from Westpac Bank to prevent the closure of its small money transfer services.

Westpac is the last major bank in Australia to provide the services, but it plans to stop them on Monday.

One of the communities to be hit hardest if the decision goes ahead is Australia’s Somali community.

The World Bank estimates Australians send money to more than 157 countries.

The newly formed Australian Remittance and Currency Providers Association estimates 6.5 million Australians with family or friends overseas rely on money transfer services.

The association has been formed to raise awareness about the impact Westpac’s decision could have on migrant communities.

It represents more than 5,000 registered money transfer organizations that, together, handle more than 80 million transfers into and out of Australia each year.

The association says the transfers are worth more than $30 billion.

Small money transfers critical for Australian Somalis

Hussein Haraco, from the Somali Remittance Action Group, hopes Westpac can postpone the decision so the community can come up with an alternative.

He warns that decision will have serious impact on his community.

“The people who depend on this remittance, because a kid goes to school, some elders have their medical expenses, they need to pay rent for the house they are in … And a lot of things – people going to units back home – a lot of things will stop, and that will impact their life.”

Regulation of small money transfers a ‘global issue’

The industry of small money transfers has been facing a crackdown from regulators in the last few years.

Regulators have demanded better safeguards against money laundering and terrorism financing schemes.

Australian Bankers Association chief executive Steven Munchenberg said it is not just an Australian problem, but a global issue.

“Those rules mean that it has become incredibly risky for banks to provide banking services to remittance agents, people who are helping people send money to countries overseas,” he said.

“We’re very mindful that this is having a big impact on both remittance agencies and the people who have been using them to try and send money home, but, unfortunately, the rules are such that it has become too risky for banks.”

Mr. Munchenberg said the industry has been searching for an alternative, but adds that at the moment, there are none without risk.

“Unfortunately, with remittance agents, the way the rules are designed, it means that not only do we have to be satisfied that we understand the operations of the remittance agent, but we also have to be aware of every customer they deal with and where all of that money goes. And if any one of those transactions results in money being sent or being used by terrorists or criminals, then the bank is actually in breach of its legal requirements.”

Somalia has been without a central government since 1991.

Millions of its people have been affected by war and famine, with many dying and many more being displaced since then.

Militants linked to al-Qaeda also control parts of the country, and it is the base for pirates who severely disrupt regional shipping.

End of small money transfers could lead to humanitarian crisis: Oxfam

Aid group Oxfam says the closure of small money transfer services could have devastating consquences.

“Somalia is particularly a unique case, in that it’s a country that has no formal banking sector now after 23 years of conflict and civil unrest,” said Oxfam campaigner Ben Murphy said.

“We’re particularly concerned that a country like this, which has an estimated 25 to 45 per cent of its economy based on remittances, would be particularly heavily affected by this closure.”

Mr Murphy said remittances from Australia to Somalia are estimated to be worth about $10.5 million annually.

Small money transfers popular worldwide

And he said it is an appealing option for many who want to send money quickly to family members.

“The popularity of small money transfer operators worldwide, not only in Somalia but in a lot of other developing countries, is that they provide a sort of secure, fast and easily accessible model for people to access money, particularly in areas where there’s very limited banking services or where they may not have access to modern forms of banking like electronic funds transfer,” Mr Murphy said.

Steven Munchenberg, from the Australian Bankers Association, stresses Westpac’s decision is not aimed at Somalia alone.

He said international money transfer businesses serving all countries around the world are impacted upon.

“Obviously, globally, there are some countries that are of particular interest to regulators at the moment, in the Middle East, in parts of Africa, in Russia even, with sanctions have been put in place.

“But this isn’t aimed at any particular country. Unfortunately, the way the rules work, it’s becoming increasingly hard to provide these banking services to remittance agents, no matter where they’re sending the money.”

‘Threat of terrorism financing is low’

The Australian Remittance and Currency Providers Association said the average transaction from Australia is about $300.

It says most destination countries present no threat of terrorism financing.

Hussein Haraco, from the Somali Remittance Action Group, hopes Westpac can postpone the decision so the community can come up with an alternative.

He warns that decision will have serious impact on his community.

“The people who depend on this remittance, because a kid goes to school, some elders have their medical expenses, they need to pay rent for the house they are in … And a lot of things — people going to units back home — a lot of things will stop, and that will impact their life.”

Source: SBS News