LONDON (CU)_One of Europe’s largest fintechs has accused Australian banks of anti-competitive behaviour, amid investigations launched by the Council of Financial Regulators in response to “debanking” concerns raised by the Treasury and the Australian Transaction Reports and Analysis Centre (AUSTRAC). The trend of banks closing bank accounts of digital currency exchanges, money transfer firms and financial technology businesses is termed as debanking. Although some of the major banks in the Trans-Tasman nation have cited compliance as the reason behind these practices, London-based Wise claims that this is not entirely accurate.
According to the company’s Australian country manager Tristan Dakin, Wise is one of many financial technology companies which have been continually de-banked over the past decade by large banks in the country competes with them in foreign exchange services. “Much of this has been masked with claims of anti-money laundering compliance, as opposed to AUSTRAC’s suggestion for case-by-case, risk-based assessments,” he said.
Wise, listed on the London Stock Exchange last year, is valued at $7 billion. Recently, the company launched a new cross-border payments network which enables individuals and businesses to move 54 currencies between countries. Previously, the tech firm had a banking relationship with Macquarie, which later decided to stop providing it with banking services. On the other hand, each of Australia’s Big Four banks have also refused to provide services to Wise, whose requests never progressed past a preliminary stage. As a result, the company was forced to rely on the services of an international bank operating in Australia.
Meanwhile, a couple of months ago, Wise was awarded a restricted banking licence by the APRA, which allows the London-based fintech to clear and settle its own payments by plugging into the real-time payment system without needing a local bank.
In early-December, Treasurer Josh Frydenberg asked the Council of Financial Regulators to prepare a report on the underlying causes of debanking and to deliver its advice by mid-year. Commenting on the request, Dakin said: “Wise welcomes the government’s inquiry into de-banking which is a major barrier to innovation and better customer outcomes. We believe that the Council of Financial Regulators is an appropriate forum to inquire into and develop policy responses to what is an anti-competitive practice, and we look forward to the issuance of the terms of reference by the Treasurer.”