Craig Kelly (Hughes, Liberal Party) Share this | Hansard source

On behalf of the Parliamentary Joint Committee on Law Enforcement, I present the committee's report on its inquiry into financial related crime.

On 5 March 2014, the Parliamentary Joint Committee on Law Enforcement initiated an inquiry on financial related crime.

The inquiry's terms of reference were particularly focused on current Commonwealth law enforcement agency legislation and administrative arrangements that target serious and organised financial related crime, including money laundering and identity fraud. The committee's report examines numerous issues in relation to financial related crime and contains 14 recommendations. I was not chair of the committee at the time the report was handed down, and I congratulate the past committee chairman, the member for Forde, and also the deputy chairman, a Labor Tasmanian senator, Lisa Singh.

One issue that came up particularly in the committee's inquiry was that of what has been known as de-banking in the remittance industry. Firstly, we have a home remittance industry in this country. There is $30 billion. That is money transferred in and out of Australia under the home remittance industry. In fact, the World Bank figures show that in 2014 a total of US$16 billion was transferred by people working in Australia either on visas or as permanent citizens to people overseas. We should consider this as a form of foreign aid. This is money generated by the Australian economy that gets transferred to less fortunate economies than ours to help people in those economies. This amount from 2014 was in excess of $20 billion. This is more than four times government foreign aid. This is one of the highest amounts per capita in the world. So, if we are looking at foreign aid, we must include that amount of wealth created in Australia and transferred by private individuals to overseas.

But the real concern is what the banks are actually doing. Firstly, there has been an industry set up of small businesses organising to remit money to overseas on behalf of Australian citizens, Australian residents and visa holders. The reason why it is being done by small business and not the big banks is simply that these small businesses are doing it more efficiently and they were able to do it more cost-effectively. But what has happened is that the banks have used the terms in the Anti-Money Laundering and Counter-Terrorism Financing Act as a reason to close those accounts down. So what we have seen is at least 400 small businesses in this industry get letters from their bank saying: 'We no longer want you as a customer. Your account is now closed.' These businesses are legitimate business, they are highly regulated by AUSTRAC, they pay significant compliance fees and they are under significant compliance regulation. Yet we have regulation with the banks that is closing these people down and putting them out of business when they have a completely legitimate business model.

Mr Speaker, you may think that perhaps the banks are closing them down for legitimate reasons. But what we need to understand is the reason why the banks do not have any of this business: they cannot compete with these more efficient small businesses. In fact, if you go to transfer money overseas from a bank they will charge you a margin averaging about five per cent of the difference of the currency exchange rates plus a fee of around $30. Because these small businesses are more efficient, they do that transfer without any fee and only charge a margin of less than one per cent. So, by closing down this industry of $10 billion worth of money transfers from small businesses, the banks stand to profit by $2.5 billion in fees and an extra $500 million in remittance costs.

The ACCC have looked at this. The ACCC, firstly, have only given it a very superficial look. It goes to the heart of our competition laws and also to the heart of fairness. We cannot, in this place, allow legislation to come in that wipes out 400 small businesses that are acting completely legitimately. We need to look to do something about this, to enable these people to continue with their business.

Report made a parliamentary paper in accordance with standing order 39(e).

I move:

That the House take note of the report.

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