How Much Should Banks Really Be Asking About Your Cash Withdrawals?

A number of Commonwealth Bank customers have come forward with complaints around prying questions.

ATM machines are seen outside a branch of the Commonwealth Bank in Melbourne, Australia, on Aug. 8, 2018. William West/AFP via Getty Images

The CEO of the financial crime watchdog has sought to clarify the extent to which banks should be asking customers for details on cash withdrawals.

The comments after customers complained online about the Commonwealth Bank of Australia quizzing them on details regarding cash withdrawals and their source of wealth, with the threat of account freezes and closures if information is not provided.

The Commonwealth Bank told The Epoch Times that all Australian banks had to comply with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006.

“All banks operating within Australia are required to collect, verify, and maintain customer identification information,” a spokesperson said.

“In the same way that we need to comply with regulations when a customer first opens an account, we also need to comply with current law regarding the maintenance of their identification information.

How the Banks Enforce the Laws is Up to Them: Watchdog

And while that’s true, the Act does not require banks to deny services or freeze accounts, according to Australian Transaction Reports and Analysis Centre (AUSTRAC), nor does it stipulate what type of questions to ask customers.

The Act requires banks to develop risk-based systems and controls tailored to the nature, size, and complexity of interactions proportional to the level of money laundering, terrorism financing, or serious crime that could be committed.

How a financial institution mitigates those risks is up to them.

Banks do have an obligation, however, to ensure customers are who they say they are, and to carry out additional verification checks if suspicions are raised.

“Banks need to know the money laundering risks posed by the services they provide and the customers they provide them to and have processes to manage those risks,” said AUSTRAC CEO Brendan Thomas, in comments to The Epoch Times.

“AUSTRAC does not require banks to deny services, freeze or close customer accounts,” he added, nor do they have rules about how often questions are asked of customers.

Thomas said the “Know Your Customer” system, which ensures banks identify customers and keep an eye on suspicious transactions, is an important part of managing money laundering risks.

“Banks ask customers questions and ask them to provide verification so they can understand what a normal transaction looks like for their customers and identify when a transaction may raise suspicions,” Thomas said.

“This helps banks to manage risks of criminal activity such as fraud or scams.”

If There Are Further Complaints

Anyone who has lodged an internal complaint with their financial institution and feels it hasn’t been resolved can submit a complaint with the Australian Financial Complaints Authority (AFCA).

“AFCA encourages consumers to contact their bank in the first instance and discuss options to resolve any outstanding concerns,” an AFCA spokesperson said.

“If you encounter issues which you are unable to resolve directly with your bank, AFCA may be able to consider your complaint.

“You can register your complaint with AFCA by using our online complaint form or by calling 1800 931 678.”