Rpt-new zealand questions banks' remittance policies by reuters u s anti money laundering laws

Rpt-new zealand questions banks’ remittance policies by reuters u s anti money laundering laws

© reuters. RPT-new zealand questions banks’ remittance policies

(repeats story published late thursday. No change to text.)

By charlotte greenfield

WELLINGTON, march 17 (reuters) – the new zealand treasury has questioned major banks over their severing of ties with remittance services, according to an official document seen by reuters, amid concern over rising costs of money transfers and a lack of oversight.

In the first sign of government intervention, new zealand finance minister bill english wrote late last year to bank chief executives seeking feedback on the challenges they are facing in the remittance market, the government document said.

Regulators, remittance operators and police are concerned about the risks of money laundering and terrorist financing if so-called de-banking sends international transfers into underground systems which law enforcement cannot easily monitor.U s anti money laundering laws

Such fears have increased since the last big bank in the business in australia and new zealand, westpac banking corp WBC.AX , exited it in early 2015, reuters reported last month. Clients would welcome involvement from treasury if it gives comfort to banks that they can work in partnership with registered … Compliant money remitters, said claire piper, a compliance specialist who works with remittance companies.

Treasury officials declined to confirm the existence of the letter to the banks but a spokeswoman said the government was working to improve our understanding of the drivers of the cost of remittance and identify feasible policy options.

Banks in australia and new zealand have closed accounts with remittance agencies to reduce their potential liabilities resulting from those clients’ illegal activities, but the move may only have shifted the problem out of sight of authorities.U s anti money laundering laws

English’s request was sent to chief executives of state-owned kiwibank KIWOA.UL and to ANZ ANBHA.NZ ANZ.AX , commonwealth bank’s ASB bank CBA.AX , NAB’s BNZ BNZL.UL NAB.AX , westpac WBCNZ.UL WBC.AX , which are units of australia’s four major banks, according to a letter sent from a government official to a remittance provider concerned about the banks’ move.

In that letter, a government official said treasury was also seeking cooperation from leaders of pacific island countries and their views on potential solutions for the remittance industry.

In a separate document publicly released on thursday, the government said US banks had exerted pressure on their new zealand and australian counterparts to cease or limit services to remittance agencies or risk losing access to US dollar clearing facilities.

It also expressed concern that the exit of the banks had increased the cost of remitting funds.U s anti money laundering laws

Auckland-based remittance company E-trans took kiwibank to court alleging breach of contract and of competition laws over the bank’s decision last march to close its accounts. A judgement could be released this month.

New zealand’s remittance industry is fragmented and its value is difficult to establish, but about $2.2 billion was sent from the country in 2014, according to a world bank estimate.

Neighbouring australia’s remittance industry is worth about A$50 billion ($38.14 billion) a year, official figures show.

ANZ’s NZ unit and BNZ said in emailed statements that they continued to work with some money transfer operators who met their risk criteria. Westpac and kiwibank declined to comment. ASB did not respond to requests for comment. ($1 = 1.3111 australian dollars) (editing by jane wardell and stephen coates)

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