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Legal Money Transfer To Nepal

In August 2019, AUSTRAC launched their campaign against illegal money transfer dealers and in particular, dealers operating without a registration.

Marel Pencev -  at MJWebs

Marel Pencev

Jun 09, 2020

The campaign’s focus is important in the remittance industry given the high vulnerability of customers, businesses and the general economy when such services are used. Our team assists our customers with legal money transfer to Nepal, but this blog will dive deep into the importance of finding the right money transfer provider, no matter where you intend to send money.

Registration of Remittance Service Providers

AUSTRAC commenced their most recent campaign in relation to illegal remittance service providers in August 2019, which spanned some 12 weeks and wrapped up in December 2019. The campaign was centred on unregistered money transfer dealers.

Since 2011, regulations in this space have been tightened and any provider of money transfer services is not only subject to Anti-Money Laundering and Counter-Terrorism Financing legislation, but providers must also be registered with AUSTRAC and their registration must be renewed every three (3) years. The application process for registration with AUSTRAC is somewhat onerous and for good reason. It involves providing AUSTRAC with information showing their suitability for registration, as well as providing AUSTRAC with information to allow AUSTRAC to conduct their own inquiries as to suitability. As at 2016, the total number of registered entities was over 6,000.

The use of remittance services is prevalent in today’s globalised world. AUSTRAC reports that in the 2018/19 financial year, $60 billion was transferred through Australia’s registered remittance service providers and this constituted some 17.3 million transactions. These figures of course do not account for any transactions conducted through illegal or unregistered money transfer dealers. In 2018, there was a huge number of people sending money to Nepal; approximately $8.1 billion in total.

Interestingly, the top 20 remittance service providers (who are predominantly Remitter Network Providers) in Australia account for 76 per cent of the total volume of overseas money transfers and 83 per cent of the total value of those transactions (figures extracted from AUSTRAC’s Report On The Statutory Review Of The Anti-money Laundering And Counter-terrorism Financing Act 2006 And Associated Rules And Regulations published April 2016.).

There is an onus on registered remittance service providers in Australia to implement adequate safeguards against the use of their services as vehicles for criminal activity and to continually review and uplift these controls as required. We take security and compliance very seriously. We are compliant as we’re certified by Austrac. This is required to ensure when our customers complete a money transfer to Nepal, we’re able to facilitate a secure transaction.

Illegal Remittance Service Providers

It is a well known fact that remittance service providers, by their very nature, play an important role in protecting local communities, businesses and the Australian economy from the risks posed by the laundering of proceeds of crime.

Unregistered money transfer dealers are greatly susceptible to having the proceeds of crime laundered through their platform and / or money laundered to fund criminal activity. Whether in the circumstances of the former of the latter, unregistered remittance service providers are vulnerable to exposure to funds associated with various criminal activities including terrorism, human trafficking, child exploitation, drug trafficking, tax evasion and other criminal conduct.

The penalties for failing to register with AUSTRAC are hefty, with fines up to $420,000 or seven (7) years jail, or both. AUSTRAC has warned unregistered money transfer dealers to “stop now and contact AUSTRAC to begin the registration process”.

Registration with AUSTRAC reduces the risks of such exposure and helps to ensure the safety of both consumers using the service and the community as large. In short, it is vital that remittance service providers are regulated and there is transparency in the industry and one of the primary ways in which this is achieved is through registration. It should be noted that registration goes a long way in ensuring that anti-money laundering and counter-terrorism financing legislations and regulations are complied with and that there is adequate oversight in the industry.

The Campaign

The campaign run by AUSTRAC was a community initiative to raise awareness around the risks associated with using illegal money transfer dealers. This involved more than 130 AUSTRAC staff members visiting local communities and registered remittance service providers across Australia to speak about the importance of dealing solely through registered providers and the threats posed by transferring money using unregistered remittance providers. The campaign also included information about how to report providers suspected to be unregistered (or otherwise illegal).

Consumers were encouraged to check the money transfer dealers are registered with AUSTRAC (you can search the AUSTRAC register to check if your provider is registered before using their services).

In a press release on 16 January 2020, AUSTRAC provided key highlights of the campaign, including that staff had visited over 400 registered remittance service providers across Perth, Adelaide, Sydney, Melbourne, Canberra and Brisbane. Not only did these sessions allow providers to give AUSTRAC feedback, it also gave them the opportunity to clarify their legal obligations in order to ensure they were compliant in all respects and doing the right thing by their customers.

The campaign also involved holding town hall meetings across the capital cities which were attended by more than 240 people, where valuable feedback and insight was gained.

Throughout the campaign, AUSTRAC also provided helpful guidance materials to businesses and consumers, which was published in 11 languages and received overwhelmingly positive feedback.

Findings

There four main themes which were prevalent in all the feedback received by AUSTRAC during the campaign. AUSTRAC has said that these included:

  • Some consumers have difficulty accessing the banking system.
  • Proactive engagement with banking partners has been helpful for some consumers in retaining bank accounts.
  • Remittance service providers are innovating particularly in terms of the channels they use to both advertise to consumers and provide their services – online platforms are increasingly being used.
  • Guidance materials, workshops and other support provided by AUSTRAC are appreciated by registered money transfer dealers.

AUSTRAC continues to formally collate and prepare reports in relation to their full findings from the campaign. They have said that they will be assessing the findings in full to determine appropriate next steps and actions.

Further, a number of reports of suspected unregistered remittance providers have been made and AUSTRAC will be reviewing and investigating these reports in the coming months and no doubt taking action accordingly.

Given the positive feedback regarding support materials guidance from AUSTRAC, and the corresponding positive impacts, AUSTRAC plans to provide further support throughout 2020 with a pipeline to be announced later in the year – so watch this space!

What you should do

The most important and preliminary step that you should take to ensure that the remittance service provider you plan to use (or maybe even currently use) is registered with AUSTRAC. This is a key step when you are ready to send money to Nepal. You can do this by searching on their website at: https://online.austrac.gov.au/ao/public/rsregister.seam

In line with this recent campaign, if you do come across a money transfer dealer who doesn’t show up on the register and you suspect is unregistered or illegal, you should immediately report them to AUSTRAC by filling out the form on their website – click here to access that page directly.

When considering a money transfer to Nepal, feel free to reach out to us at any time! We are the ONLY registered remittance service provider providing money transfer services between Australia and Nepal so you can rest assured you’re in good hands with us!