Debanking is the process whereby a bank closes all a customer’s accounts, such that the customer can no longer operate them. This can apply to both business and retail customers. It means that unless the customer keeps transactional accounts at another financial institution, it risks becoming financially destitute, for an unknowable period of time, with all the consequences that ensue.

How can this be, and what, if any, are the remedies for aggrieved customers?


Currently, there is no law in Australia against debanking. So It was no surprise when in 2021 a  federal parliamentary enquiry uncovered a number of instances of businesses being arbitrarily de-banked. These businesses included bullion dealers, cash handling companies (supplying ATMs in various private and public locations), and cryptocurrency exchanges. The most recent public example of debanking came in March 2023 when Westpac told its customers it would prevent them from transacting with a number of cryptocurrency exchanges, including the local operation of the world’s largest, Binance.

In the case of cryptocurrency related payments, the main concern of banks seems to be that there is a greater possibility for money-laundering activities compared to ordinary conventional (fiat) currency transactions.  There is also an allegation that banks are seeking to hamper competitor businesses, whether straight cash, or digital transactions outside the traditional banking realm. Whilst the banks’ concerns may be abating over time, this has not prevented retail customers continuing to be caught in the crypto cross-fire. See the case study below.

So it’s probably no surprise that the anti-money laundering regulator, AUSTRAC, recently released a ‘guidance note’ regarding debanking. In short the regulator says that debanking is being over-used. If for no other reason than the obvious: that debanking can have a “devastating impact” simply because customers are suddenly (and often inexplicably) left with no alternative to meet their daily financial commitments.

AUSTRAC effectively said debanking was an inappropriate limitation on legitimate banking services. Arguably, the service of banking comprises a public good that really should remain an unrestricted community service.

Unsurprisingly, AUSTRAC is also worried that the practice of debanking will reduce the effectiveness of the anti-money laundering laws it administers. The concern is that debanking will push customers to conceal information and/or into utilising unregulated channels for value exchanges. In other words, with unrestrained debanking practices in vogue, AUSTRAC will have less oversight of the financial system than it might otherwise have.

But this is beside the point in the case of customers affected by debanking. Does the general law offer any help?

Legal remedies

Historically, the general law of banker and customer says that a bank cannot terminate the relationship without reasonable notice.  A reasonable notice period has been held to be a month, or even just 21 days. However in 2001 a NSW court has found that reasonable notice does not apply when a bank must ‘freeze’ an account. Perhaps though, “freezing” an account is more appropriate when an account is in debit (for example, an overdraft facility) rather than in credit.

Where an account can be operated by a debit card, internet or other electronic means, transactions on the account will likely be governed by the banking industry’s ePayments Code. Important changes to a customer’s terms of use of electronic banking facilities require at least 20 days notice to the customer. However, no notice is required if variations are necessary to restore or maintain the security of the system or of individual accounts.

There is also the revamped Banking Code of Practice (BCP) which offers a scheme similar to the ePayments Code for retail accounts. However, the most recent version of the BCP is considered less favourable to the customer than previous iterations. And latterly, in their standard form customer terms and conditions, banks are implicitly extending their right to debank by taking on the role of social arbiter. In the case of the NAB, it now purports to determine what constitutes ‘harm” or “abuse” of another person by a customer. Giving “person” its widest legal meaning, that other person could be the bank itself.


In summary, the growing propensity of banks to debank customers, fuelled substantially by the advent of greater risks in the cryptocurrency era, is considerably in advance of the judicialand ethical constraints imposed on banking business in the previous non-digital era. It will probably be left up to the courts to clarify how far the current law falls short in protecting the legitimate interests of seemingly arbitrarily debanked customers.

Appendix: case study

A foreign national, resident in Australia wishes repatriate cryptocurrency trading profits derived in an overseas jurisdiction. The resident receives the profits by way of periodic sub-$10,000 instalments. The individual had no control over this, but payment in this manner triggers the red flag of structuring under Australia’s Anti-Money Laundering and Counter-Terrorism (‘AML/CTF”) Act.

“Structuring” refers to the technique of splitting a large cash transaction into several smaller parcels, ostensibly to avoid obligating the relevant financial intermediary to report the transaction.  This is because the overall payments flow appears intended to evade the AML/CTF reporting threshold of $10,000. An onus on is then put on the financial intermediary (if it is vigilant) to decide whether it should submit a suspicious matter report as well.

However, nowhere in the relevant bank’s AML/CTF obligations is there scope for unilaterally debanking the customer’s existing domestic facilities as well. This is especially the case where debanking is being actioned for no other reason than an overseas based third party has inadvertently triggered the AML/CTF laws. It is suggested that in this case study, the bank has overstepped the debanking mark.

Allan McDougall

Consulting Principal

Keypoint Law

September 2023