“I’m not holding my breath for politicians to do anything,” said Allan Flynn, on the eve of his tribunal against one of Australia’s “Big Four” banks, Westpac, who he is charging for debanking him and his crypto business Canberra Bitcoin several times over many years. “This is why I’m taking action myself. I’ve got this law supporting me, I’m going to use it.”
Two years into his legal journey, he seems tired, but has reason to be optimistic of the outcome; another of Australia’s Big Four banks, ANZ, recently settled for the same charges. The tribunal to hear whether Westpac breached Flynn’s human rights by debanking him began last Thursday and ran for three days, though he says it will be weeks before the decision will be handed down.
Debanking of crypto-related business is a hot topic in Australia at the moment. The issue is part of the remit of a Senate inquiry into fintech in the country, which filed its final report last week. Industry frustration grows as businesses of all sizes believe they are being unfairly targeted by banks and are left without options. Flynn said while Canberra Bitcoin was operational, between July 2017 and December 2019, the company was debanked over 20 times. This often came without warning, as the banks would determine it was a crypto business by the type of activity on the account and shut it down automatically.
“Once the bank detects that, they’ll shut you down,” Flynn said. “So, within a week and a half after starting, I was being shut down. It’s just a fact of life. You’d always have to have another bank account ready standing by to start using if you could so your business wasn’t interrupted too badly, but that’s not always possible.”
Occasionally receiving four weeks’ notice the accounts were being shut, other times he would receive none at all. Ostensibly, instances of debanking of crypto businesses relate to banks’ concern they are not maintaining proper anti-money laundering or counter-terrorism financing (AML/CTF) protocols. But Flynn says none of the banks ever investigated Canberra Bitcoin’s compliance in this area.
Eventually, this constant process took a toll on the business, and Flynn decided it could not continue.
“You get tired of telling customers that you’ve lost your bank account, that details that they have for depositing aren’t relevant anymore,” he said. “Customers begin to suspect, just because of all the authority that the bank has, ‘Well, wow, Mr. Flynn, if you’re getting closed down by a bank, maybe you’re running a dodgy business, maybe you need to do something about it.’ To be honest, you lose customers. Some customers just disappear. You don’t know why, but you’ve got to assume that there are implications to what the banks might be doing in a customer’s mind, at least.”
A growing problem
Australia’s banking sector has come under increasing pressure from the crypto industry of late, with multiple parliamentary hearings on debanking taking place in the past few months. In one such hearing, global payments unicorn Nium said Australia is the only country of the 40 in which the company operates that it has experienced debanking. Nium’s Asia Pacific consumer head Michael Minassian told a hearing “We hold an exemplary compliance record in Australia, yet we have still been debanked.” Operator of local exchange Bitcoin Babe, Michaela Juric, told the same hearing that she had been debanked 91 times, including by the nation’s four biggest banks.
Following this criticism, National Australia Bank and Westpac both publicly rejected the implications they are suppressing competition in the country by refusing to do business with crypto firms. NAB CEO Ross McEwan told a parliamentary hearing “It’s one of the emerging issues that we are looking at — what should our relationship be, if at all, with cryptocurrency.”
This position should come as no surprise; the Australia Banking Association had already informed the Senate it is concerned digital currency providers “risk becoming a virtual safe haven for the financial transactions of criminals and terrorists.”
Unsure of how to respond, Flynn decided to explore his legal options. And he stumbled upon quite an unusual legal strategy. As it turns out, the Australian Capital Territory, where Flynn lives, has an anti-discrimination law that made it unique in Australia. It is unlawful in the ACT to discriminate against an individual on the basis of their profession — unless that discrimination is proven to be reasonable. As Flynn’s profession was a protected attribute, ANZ and Westpac would need to prove the discrimination they took against him by debanking him was reasonable.
As far as Flynn and his lawyers’ research has revealed, the ACT is the only jurisdiction in the world to protect professions in this way.
“Lo and behold,” Flynn said, “I just happened to live in the only territory in the world that had a human rights protected attribute for my occupation. In this case, as a digital currency exchange, I discovered that I actually have anti-discrimination laws on my side in the ACT and nowhere else in the world I’ve discovered since after searching high and low researching for my lawsuits.”
The ACT was one of the earliest states in the country to decriminalize prostitution when it did so in 1992, and Flynn believes this protected status on profession was included in the discrimination bill to address the newly acquired legal freedoms of sex workers. However, the country’s most populous state, New South Wales, decriminalized the profession even earlier, and no legal protection for professions exists in that jurisdiction.
Other sources suggest the protected status might have been included to protect a collection of businesses in the territory’s suburb of Fyshwick; just outside the city center of Canberra, the suburb was well known for many years as a colorful place of adult stores and fireworks sellers. And sitting very close to the NSW border.
According to a statement from ANZ, the bank “acknowledges that this could, subject to the defense in section 57N, have amounted to unlawful discrimination contrary to sections 7(1)(p) and 20 of the Discrimination Act 1991 (ACT),” in which a person’s profession, trade, occupation or calling, is a protected attribute which may not be denied services due to discrimination. Flynn has withdrawn his claim and no compensation has been paid.
Forkast.News reached out to both banks for comment for this story; ANZ only provided existing publicly available information and Westpac did not respond.
What’s next?
With the current level of interest surrounding debanking, the ANZ settlement appears to be the first sign of real movement on the issue. But some industry watchers remain only cautiously optimistic at this stage; given the charges against ANZ were settled, no actual ruling on the matter was handed down. For that, we’ll have to wait for the result of the Westpac tribunal.
“I’m hopeful this is a step forward in the right direction,” Michael Bacina, a partner at Piper Alderman, who also sits on the board of Blockchain Australia, told Forkast.News. “I think that the statement that’s come out from ANZ might be seen as confirmation of something that many have suspected over the years, with debanking being something of great concern that I see regularly in my role, both as a lawyer and on the board of Blockchain Australia.”
The Senate Select Committee’s report released last week made direct reference to debanking, recommending the Australian Government develop clear processes for business that have been debanked which should be anchored around the Australian Financial Complaints Authority. Despite the testimony the Committee heard on the issue, those listening to Committee Chair Senator Andrew Bragg closely should not have been surprised by the limitations of the recommendation. While repeatedly mentioning the seriousness of the issue, as he outlined in an address during Australian Blockchain Week this year, his position has always been that it is not up to the government to dictate who banks can do business with.
While not directly imposing any requirements on the banks, Bacina is hopeful the report will encourage further engagement with the industry and dispel concerns crypto businesses do not adequately adhere to AML/CTF obligations. Though it may be a while before much of the industry allows itself to hope for much change.
“You will see it be a muted [response] from the industry because if there is a change, they’ll look for the proof of banks actually extending services,” he said. “That’s sort of a skeptical approach I think people would have based on their past dealings [with the banks]. Because the fundamental issue is this myth of digital assets being all about money laundering or crime use and banks don’t appear to be spending a great deal of time educating themselves but are in apposition where they are able to now.
Likewise, Flynn is not hopeful of any immediate fix but is hopeful he’ll one day be able to run a crypto business successfully again.
“I can’t wait to get access to a bank account to start operating Canberra Bitcoin again,” he said. “I’ve been inactive for the last couple of years, and so I’ve been working as a handyman and an installer on construction sites of showers and wardrobes and I want to get back into it — as soon as I can.”
“So, we’ll see what happens.”
Correction: Oct. 28, 2021
An earlier version of this story incorrectly reported that “ANZ concedes its actions were not reasonable and that closing Flynn’s accounts amounted to discrimination contrary to sections 7(1)(p) and 20 of the Discrimination Act 1991 (ACT).”
According to a statement from the bank shared with Forkast.News, the correct result of the settlement was that “ANZ further acknowledges that this could, subject to the defense in section 57N, have amounted to unlawful discrimination contrary to sections 7(1)(p) and 20 of the Discrimination Act 1991 (ACT).”
