Collusion would risk cartel provision breach

Had the banks been found to have acted collectively to close the accounts of digital currency operators they would have risked breaching the cartel provisions in the 2010 Competition and Consumer Act.

"It appears that banks have individually decided to stop providing banking services to digital currency businesses in order to ensure their ability to meet their regulatory obligations and manage their risk," Mr Sims wrote.

"The available material also suggests that banks have made their decisions at different times, and with different outcomes. For example, one bank adopted a policy to not deal with digital currency businesses in 2011, while a different bank adopted its policy in June 2015. Some banks remain open to providing services to digital currency businesses on a case by case basis."

The findings back up claims made by Australian Bankers' Association chief Steven Munchenberg, who previously said banks around the world were refusing to deal with bitcoin companies because of fears they were not compliant with anti-money laundering and counter-terrorism financing (AML/CTF) requirements.

Senator Sam Dastyari branded the ACCC's findings as "utterly astonishing," and said they didn't reflect the situation explained to him by debanked companies. Dominic Lorrimer

'Utterly astonishing'

Senator Dastyari – who chaired the recent Senate Economics References Committee into digital currency – however, branded the ACCC's findings as "utterly astonishing", and said they didn't reflect the situation explained to him by debanked companies. He said that in addition to closing business accounts, he had also heard allegations that banks were blacklisting individuals from operating personal accounts.


Senator Dastyari said debanked bitcoin companies had claimed, independently of each other, that they were cut off in the space of a few weeks. He said the ACCC had not made contact with any of the companies during its investigations, and had also not consulted with him or anyone on his staff.

"We would hardly have any confidence in our police if they went around asking alleged criminals if they were guilty without interviewing victims … At face value, they could certainly put much more effort into their investigations," Senator Dastyari said.

"If banks consider digital currency, blockchain or bitcoin to be a clear and present risk, then they owe it to the public and to these business owners to confirm as much. Sending chain letters that simply say 'we can close accounts of whoever we like' is not good enough, especially when we hear that banks are investing in blockchain companies."

Ron Tucker, middle, with fellow executives of Bit Trade, said many Australian digital currency companies followed the same procedures as banks regarding AML/CTF compliance. Lisa Maree Williams

ACCC responds

Mr Sims rejected the suggestion that the ACCCs inquiry had failed to hear from the victims, telling the Financial Review it had heard from some debanked companies that claimed their businesses had full traceability to address AML/CTF concerns.

However, he said the banks had given investigators good access to documents and individually provided credible and different explanations about the decisions to cut off companies. He said the ACCC had decided there was currently no need to launch an in-depth investigation.

"We understand the concern here, because in a sense these companies have been excluded from the marketplace, but there does seem to be a justifiable reason," Mr Sims said.


"Our investigators are well trained and can sniff things pretty quickly, and this had the smell of being a very reasonable explanation … but we will keep watching the sector very closely because we are acutely conscious that with new economy start-ups, we want to make sure that the established players aren't stopping their progression."

Mr Sims said it was beholden on bitcoin companies to demonstrate to banks that their systems could be traced and guaranteed against breaching AML/CTF requirements, and if banks still refused to deal with them after that then further investigation could be required.

Industry not informed

Meanwhile Ron Tucker, chairman of industry body The Australian Digital Currency Commerce Association and founder of bitcoin exchange Bit Trade, confirmed that while the ACCC had met with the ADCCA, he was unaware of any direct contact with affected businesses.

He said the ADCCA advocates voluntary compliance and best practice by the industry in relation to AML/CTF processes. Rather than being a risk, he said many leading Australian digital currency businesses operated in accordance with the legislative guidelines applying to regulated businesses and in many cases performed at bank level or better.

Mr Tucker said he hadn't heard from the ACCC following the conclusion of its investigation, and that the digital currency operators now needed to work with the banking sector to properly work out how the industry should work in the future.

"Our members, and ADCCA as the industry body, continue to engage with key regulators and government agencies and welcomes an ongoing dialogue with financial service providers to help create a robust, financially inclusive and healthy fintech industry in Australia," he said.