The Australia firearms industry wants the Australian government to expand its probe into de-banking, saying the tech industry isn’t the only victim of bad behaviour by the major banks.
The government recently commissioned a report from the Council of Financial Regulators, ACCC, AUSTRAC and the Attorney General’s Department into the issue of ‘de-banking’, in which the four major banks refuse to provide services to businesses, effectively pulling the financial rug from under them.
The report focused on the tech industry but it is becoming a more and more serious issue for the firearms industry as dealers find themselves shut out of banking services and potentially unable to operate.
It is believed the banks are de-banking firearms dealers simply to avoid “reputational risk”, one of the key motivating factors in de-banking identified in the report.
“De-banking is a global challenge driven by a number of inter-related causes, including Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) laws, sanctions compliance, profitability and reputational risk considerations,” the government report stated.
It also found “the banks’ processes are not transparent and there is little opportunity for businesses and individuals to seek review of the banks’ decisions”.
The report highlighted the dangers of de-banking: “The systematic de-banking of legitimate businesses across entire sectors can have significant impacts on affected businesses and increase their risk profile by forcing them to operate outside of the legal framework and conduct transactions exclusively in cash.”
This is a point not lost of the firearms industry.
“The denial of banking services to the firearms industry actually increases the risks that de-banking seeks to mitigate, as firearms dealers are a critical and legislated part of Australia’s firearms regulations and therefore make a practical contribution towards public safety,” James Walsh, executive officer of the Shooting Industry Foundation Australia (SIFA), said.
“Like all legitimate businesses, firearms dealers require access to financial services to operate efficiently and safely,” Mr Walsh said.
One of the four recommendations of the report is that more data on de-banking be collected, which would be particularly useful to the firearms trade because there is no quantified analysis of how dealers have been affected by the practice.
“We have made a further representation to the Department of the Treasury highlighting the terms of reference for the report were quite narrow and targeted at Financial Technology businesses, and that wider consideration needs to be given to ensure all industry sectors benefit from any planned reforms,” Mr Walsh said.