Nice Chart !, page-23

The decision for WBC to exit the MSB market (not so much FX market) is a risk (AML - Anti Money Laundering) decision. The word I am hearing is they had a near 'very bad' breach and have exited rather than leave themselves exposed to huge fines such as what UBS copped overseas (hundreds of millions). The legislation and AML laws are faster than the banks can update their systems. And so they feel the risks are ever increasing. Its not just up to the banks now (in the eyes of the banks), but moreso up to each company to show they have proper internal AML controls in place. Yes, there are other banks likely willing to take these deals on, but the margins are now rising due to the associated risks. So banking costs for OxForex will likely rise. Although Westpac has exited this market totally (I knew this a while ago), the other banks are currently doing reviews of these MSB (money service businesses) clients with a view to exiting them if they dont stack up. I know for a fact that other banks have been exiting them on mass over the last 6 months. Only the best will survive. Dont you all remember in the news that the banks exiting the only MSB transfering money back to Lethoso (or some other backwater African country). All the people from that country were saying 'what can we do' - this scenario will become more common. More power to the Western Unions of the world who have good internal controls because the weak wont survive. The push is being done by the UK and US regulators and banks who are forcing the other banks around the world they deal with to comply. Be assured there is more of this to come. If you want to be a billionaire, write some software which can screen all payments (from non FIs) for AML concerns. The problems is, some ISIS member can go open a new bank account with fake ID and receive a payment. Well, thats a breach. You just transferred money to a terrorist organisation. The banks don't know how to cover their arses. I actually think the regulators are being too hard on the banks and the end result is, if more fines are ditched out, they'll just say its not worth it and more will exit the MSB market. Its not FX, but MSB. This means payments going to 3rd party accounts. If OxForex changed your AUD into USD and put it back into your (ie, same legal name) USD account then no probs. But OxForex will send it to whoever on your behalf (thus acting as an MSB).

The problem is, it affect MSB clients now (and many FX businesses) but it will soon pass over to trade (ie, non bank trade finance). Thats my prediction. PWC (or KPMG) write an AML report every year. Have a read if you have more interest.

PS: I think OxForex is a cracking business. It just needs to ensure it has seriously good internal AML controls in place.