CBA ‘de-banks’ tobacconists in crackdown as financial crimes watchdog monitors transactions
Commonwealth Bank has ‘de-banked’ dozens of tobacconists, but retailers warn that legitimate businesses will be caught up in the illicit cigarette crackdown. And some think it’s already happening.
Commonwealth Bank is quietly ‘de-banking’ tobacconists to support a national crackdown on businesses allegedly selling illicit cigarettes and vapes, meaning they can’t use CBA accounts or terminals to do business.
But the bank’s actions have unnerved legitimate retailers who fear they are being caught up in a well-intentioned financial purge and unfairly targeted.
The Australian has seen correspondence from CBA advising tobacconists that their accounts will be closed within 30 business days.
Without providing any reason for the decision, the boilerplate letter informs them that they are permanently banned from setting up new accounts or using any of CBA’s products or services.
One tobacco shop owner in a town around 40km south of Brisbane received a letter from CBA on October 3 advising him that it was shutting both his business and personal banking accounts by November 17, without cause.
“Except at our sole discretion, you will not be able to use Commonwealth Bank branch services, including to process deposits to other customers’ accounts or cash a cheque,” the letter stated.
The shop owner, who insisted he does not sell illicit tobacco but did not want to speak publicly for fear of being falsely associated with the black market, said the bank refused to justify its decision.
“I’ve been a loyal CBA customer since 2002 and this is how they treat their customers,” he said.
He has moved all of his business over to Westpac, and said he knew a dozen other tobacco shops who had received similar letters. “I suspect they are going after companies that have ‘tobacco’, or something associated with smoking in their trading name, because I know of convenience stores who sell illicit tobacco yet bank with CBA and they’ve not received similar letters,” he claimed.
The Australian revealed in September how small tobacconists and corner shops were being used by criminal organisations to move illicit cash offshore under the guise of ordinary business.
Sales of illicit cigarettes are put through point-of-sale systems connected to major banks.
The income appears legitimate, but often includes the proceeds from untaxed cigarettes in a burgeoning black market estimated to be costing the tax office $3.2bn in lost revenue, according to the latest figures. These profits are often wired offshore in less than 24 hours.
Pam Wright, who employs around 50 people across her 10 Tobacco Station Group stores in Townsville, is a prominent critic of the government’s attempts to tackle the illicit trade.
While she banks with ANZ, Ms Wright said she uses 12 of CBA’s point of sale terminals for accepting card payments.
But for the second time in as many months, Ms Wright was visited by two CBA employees last week who wanted to examine her stock, discover if she had any outstanding debt and sought two years’ worth of financial records.
“They said, ‘we want to be able to go in and fight for you if the bank decides to withdraw your (point of sale) machines’,” Ms Wright said. “I told them: ‘these criminal organisations are channelling money through your banks. I’m not a criminal’.”
Ms Wright warned that alienating legitimate businesses could ultimately play into the hands of organised crime.
“I’m not saying that a lot of legitimate shops aren’t selling illegal stuff, but a lot of them are doing it under duress, they’ve been intimidated, or they’ve had to bite the bullet to stay alive,” she added.
By her estimation, there are 22 shops selling illegal cigarettes in the Townsville region alone.
The CEO of the Australian Association of Convenience Stores Theo Foukkare said it was “very promising” CBA was taking the issue seriously. “However they need to be extremely careful to not impact legitimate retailers who have already been impacted by this illegal trade in so many ways – lost customers, (higher) insurance premiums, threatening behaviour and intimidation,” he said.
He called for banks to ascribe legitimacy by checking whether or not they had a valid state government-issued tobacco licence.
Austrac CEO Brendan Thomas said he was “confident no Australian bank wants this dirty money in their business and will work with us to help shut it out”.
“Any bank receiving funds through these channels is at risk of dealing with illicit proceeds,” Mr Thomas said. “We are asking banks to assess, mitigate, and, where possible, eliminate these risks.”
But to avert a crackdown that could hurt legitimate businesses, he advocated for stricter controls: “our shared goal is to target criminal enterprises, not legitimate economic activity,” he said.
A CBA spokesperson said the bank played a “critical role in combating financial crime and protecting the financial system, our customers and communities”.
“In line with Austrac’s guidance, we are actively managing risks linked to illicit tobacco activity. We have measures to detect, deter and respond to red flags that may indicate illicit activity,” the spokesperson added.
“Where we identify heightened risk, actions may include blocking accounts, reporting to authorities, or ending customer relationships. If a customer has concerns about any action taken, we encourage them to contact the bank about their specific circumstances.”
More Coverage
Originally published as CBA ‘de-banks’ tobacconists in crackdown as financial crimes watchdog monitors transactions
ASX apologises for ‘disruption’ as glitch impacts continue; AUB sinks
