Escort agency notified of imminent closure of bank accounts
An Australian company ran an escort agency which operated openly and legally. The enterprise was licensed by the state government.
The company operated four business bank accounts with a major Australian bank. It had access to internet and telephone banking services as part of that arrangement.
In November 2019 the bank sent the company a letter, titled "Notice of accounts and services closure", in which the bank set out its intention to close the company's accounts, providing it with 45 days to make alternative banking arrangements.
Bank's policy to exclude escort services and brothels
The bank told the company that it regularly reviewed the industries and activities for which it provided banking services. It explained that it had established a policy of excluding escort services and brothels because of the higher risk of money laundering and human trafficking.
Consequently, the company's business was now outside its risk parameters.
Industry association highlights impact of Covid-19 pandemic
The company requested that the business accounts remain open and its industry association wrote to the bank about its policy change regarding provision of banking services to the adult services industry, pointing out the impact of the Covid-19 pandemic on the bank's business customers.
The bank conducted a review of the company's request, but decided to maintain its position that it would close the company's accounts in line with its new policy.
The company complained to the financial ombudsman, the Australian Financial Complaints Authority (AFCA), claiming that the bank was acting improperly and unfairly. It was up to the ombudsman to determine whether the bank had the right to enforce its policy and close the escort agency's business bank accounts.
case a - The case for the bank
case b - The case for the escort agency
So, which case won?
Cast your judgment below to find out
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.