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Part of the ‘Know Your Customer’ (KYC) policy, CBA is required to maintain identification details to detect, deter, and disrupt financial crime, under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006.
One customer, SQM Research managing director Louis Christopher, took to X (formerly Twitter) to voice his frustration with the KYC requirements.
According to Christopher, CBA emailed him threatening to shut off accounts and remove the ability to use cards if he didn’t provide the following details:
- Details relating to his source of funds.
- Details relating to his source of wealth.
- Confirmation of date of birth, full name, any other names he’s known by, and his residential address.
- Confirmation of his current occupation and/or employer.
- Recollection of his identification documents.
Failure to comply would see the removal of:
- The ability the use and access accounts.
- The ability to use cards and ATMs.
- The ability to view and access accounts (including NetBank, CommBiz, and the CommBank app).
- Any scheduled transactions, direct debits, direct credits, or regular payments.
Christopher described the demands as “Orwelian” in an interview with Sky News.
“I was surprised. I first thought when I saw it, when I received the email, it was spam. I went every day, everybody’s getting threats galore through spam, but when I noticed there was no link in the email I thought it could be real,” he said.
“I called the bank on a separate number and they verified that yes, they would suspend all my personal accounts including my super.”
Despite his frustration, this policy is clearly outlined on the CBA website. KYC requirements are enforced by the Australian Transaction Reports and Analysis Centre (AUSTRAC).
AUSTRAC states under its KYC guidance: “You must document the customer identification procedures you use for different types of customers. The procedures you use must be based on the level of money laundering/terrorism financing risk that different customers pose.
“You must check a customer’s identity by collecting and verifying information before providing any designated services to them. You must identify both individual customers (people) and non-individual customers (such as companies, associations or trusts).”
CBA provided a statement to Broker Daily discussing the KYC requirements.
“We are required to manage our customers’ accounts in line with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006, which sets out that all banks operating within Australia are required to collect, verify and maintain customer identification information. In the same way that we need to comply with regulations when a customer first opens an account, we also need to comply with current law regarding the maintenance of their identification information,” it said.
“Ensuring we have a customer’s most up-to-date and correct details also helps us to keep them safe and protect them from fraud.”
Following protocol or breaching privacy?
While much of the media is quick to vilify CBA for requesting this information, the issue isn’t black and white.
Business Advice Agency founder Phil Rice believes this instance of KYC requirements being implemented speaks to a larger issue of consumer privacy.
“The Commonwealth Bank of Australia has reportedly sent letters to thousands of customers asking highly personal questions, including why they made cash withdrawals, whether they hold cash at home, why they made certain transactions to third parties, and how they built their wealth,” Rice said.
“This has sparked concerns about privacy, regulatory overreach, and the potential misuse of KYC requirements under Australia’s anti-money laundering and counter-terrorism financing laws, enforced by AUSTRAC.”
Despite this, Rice said AUSTRAC procedures involve collecting and verifying basic identity information.
‘High-risk’ customers may have added scrutiny to understand sources of funds or wealth, which he said are limited to “specific contexts,” such as large transactions.
This instance involving Christopher may have overreached, said Rice.
“Importantly, AUSTRAC does not mandate or explicitly permit banks to ask customers why they made cash withdrawals, whether they hold cash at home, or how they built their wealth as part of standard KYC processes,” he said.
“The focus is on verifying identity and monitoring for suspicious activity, not probing into personal financial habits. For example, the guidance emphasises collecting documents like passports or utility bills, not conducting surveys on cash usage.”
Push for a cashless society?
For years, there have been talks of Australia moving towards becoming a cashless society. Some predict that in as little as five years, this could be a reality.
Further, at the end of last year, CBA paused plans to charge customers a $3 fee to withdraw money at branches and post offices.
Assistant Treasurer Stephen Jones labelled the move a “kick in the guts.” The policy, slated to be implemented from 6 January 2025, was subsequently placed on hold.
“While these are separate policies, they contribute to the perception that CBA is steering customers toward digital banking, potentially using KYC letters to gather data on cash usage as part of this strategy,” said Rice.
“The timing of these letters, combined with the cash withdrawal fee, suggests CBA might be using KYC as a pretext to collect additional data, potentially to enhance market share or control over transactions. This raises ethical questions about the balance between regulatory compliance and customer rights, especially in an era of increasing digital surveillance.”
The fallout from the KYC debacle is yet to be seen; however, it could result in regulatory scrutiny and a loss of trust from consumers.
Rice concluded by recognising the need for financial crime protections; however, when it compromises the rights of the customer, there is sure to be backlash.
“CBA should clarify the legal basis for these inquiries, and regulators must ensure banks respect customer confidentiality. The broader context of CBA’s cashless policies suggests a possible agenda, though this remains debated and requires further scrutiny,” Rice said.
