How Banks Are Exploiting A Loophole To Legally Discriminate Against Sex Workers

"He told me 'we just don't deal with certain kinds of people'."

sex work financial discrimination photo

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Australian financial institutions, particularly the Big Four banks, have far more control over the sex work industry than many of us realise.

Sex workers’ battles with the tech and finance industries have dominated headlines in recent months, from MasterCard and Visa’s decision to ban the use of their services on PornHub, to OnlyFans’ plan to ban sex work from the platform altogether — a decision that was later scrapped. 

On top of the already devastating blow of the pandemic practically obliterating the ability to safely conduct in-person sex work, the industry has been ravaged by a series of changes that — in theory — are designed to protect us all from harm, but in reality make sex work significantly less safe for those involved. 

We saw this in the case of Mastercard’s policy changes, which were designed to prevent child sexual abuse and sex trafficking, but actually resulted in thousands of consensual and legal sex workers having to go to more extreme measures to make money. 

And it turns out a similar piece of legislation, initially implemented to protect us from money laundering and terrorism funding, is allowing Australian banks to get away with financial discrimination right in our own backyard.

Sex Workers Are Being Discriminated Against

One sex worker, Kate*, alleged that Suncorp and NAB bank totally refused to open an account for her.

Commonwealth Bank allegedly told Kate her business was considered “high risk” and she would be required to pay an additional $500 high-risk account fee annually to open a merchant account. This is despite the fact that she operates her business legally and within the parameters set in her state.

“I still don’t have a merchant account, as I’m not comfortable with lying to a bank or merchant provider to get one,” Kate told Junkee. “Because to lie to the bank means I have to lie to the government when I register a new business that says I do something other than sex work. It’s ridiculous to have to lie about my business when my business is legitimate in all other aspects.”

“I was originally with ING and I had been banking with them for over a year,” another woman, Sarah*, told Junkee, before explaining how ING allegedly called her and queried her frequent cash deposits. “I was like ‘yeah I’m putting my wages that I earn from working’ and they asked what I do for work, to which I replied that I’m a full-service sex worker and work in a brothel.

“They were like ‘okay, well you can’t use your account for business’ and I replied that I’m not really using it for business, it’s just a personal transaction account,” said Sarah.

Ultimately, ING allegedly told Sarah they could not accept her business in any capacity — a personal or business account — as a sex worker. This is despite the fact that her work is completely legal in the state she lives. Junkee has reached out to ING for comment.

After being led to believe the issue was needing a business account, she attempted to open a business account with NAB.

“I tried to do it online and it all seemed to go through, then the next day there was an email being like ‘there’s an issue, contact the bank,'” Sarah said, noting that she had been clear in the online application that she worked in sex work/adult industry sector. “When I tried to speak to them on the phone, I spoke to three different people.”

After telling the first person on the phone that she is a “full-service sex worker”, she was put on hold before allegedly being told NAB could not open an account for her.

“I was quite upset from the previous interaction I had with ING, so I didn’t just say ‘okay’, I asked to talk to the manager because I wanted to understand why my legal profession was preventing me from banking with them,” she said.

According to Sarah, the second person she spoke to couldn’t give her a clear response as to why they couldn’t accept her business, simply stating that she just couldn’t bank with them.

“He told me ‘we just don’t deal with certain kinds of people’.”

Upon talking to a third person at NAB — who was allegedly a senior Melbourne small business manager — she explained her business and was again told NAB wouldn’t accept her business.

“He told me ‘we just don’t deal with certain kinds of people’,” Sarah told Junkee.

According to Sarah’s allegation, the only other type of business to be refused at the time was arms dealers. “He compared his industry to mine,” she said, alleging that he told her, “You know how you can pick and choose who you do business with, we can do the same thing”.

A third woman, *Alice, also claims she was de-banked by NAB in 2019.

When approached by Junkee for comment, NAB clarified that it “does not provide banking services to brothels, however we do provide banking services to individual sex workers”.

But when questioned on the multiple allegations of sex worker de-banking, a NAB spokesperson declined to comment further.

Ultimately, Sarah ended up opening an account with Bank Australia, which she can legally and openly bank with. She clarified that she did have to jump through some legal hoops with Bank Australia to prove that she pays tax and runs her business legally, but has since had no issues with the service.

Financial Discrimination Is Widespread And Under-Reported

This isn’t a new thing, and it isn’t specific to banks — or Australia — as we’ve seen with Mastercard’s recent merchant rule changes, and last year’s move from both Visa and Mastercard to completely remove their payment services from Pornhub amid ongoing fears of sexual exploitation and child abuse.

“When we see a change from social media, financial services, and service that sex workers use, that has a ripple effect globally and that also applies to law,” Scarlet Alliance spokesperson Gala Vanting told Junkee.

“American law has these sweeping impacts and we saw this in the case of FOSTA SESTA, which passed in the US in 2018 and we’re still feeling the effects of deplatorming of sex workers as a result of that legislation. And I don’t think we can separate that piece of legislation from what’s happening with Mastercard because it’s the same lobbying force behind both of those things. And that lobbying force is the anti-trafficking and anti-child exploitation movement and the United States is really a hotbed for that.”

While everyone is in agreement that criminal activity like child exploitation and sex trafficking is a huge problem, the sex work community is concerned that many of the new tech and finance regulations actually cause more harm than good.

“We agree that child exploitation and sex trafficking is a problem and then we attempt to solve it by targeting a completely different space or issue and so for most sex workers, what we’re hearing them say is ‘this actually puts me in more direct harm’,” said Vanting.

How The Banks Are Getting Away With It

A similar issue is present here in Australia and creates the loophole that allows for financial discrimination to happen.

Australian banks and financial institutions are required by law to comply with the Australian Transaction Reports and Analysis Centre (AUSTRAC)’s regulations regarding money laundering and counter-terrorism financing. Under the Anti‑Money Laundering and Counter‑Terrorism Financing Act 2006 (AML/CTF), banks, building societies, credit unions, and authorised deposit-taking institutions (ADI) must enrol with AUSTRAC and comply with its regulations regarding AML/CTF rules in Australia.

“The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 requires banks to develop risk-based systems and controls tailored to the nature, size and complexity of their business and proportionate to the level of money laundering, terrorism financing and serious crime risk they face,” AUSTRAC summarised the bill in a statement to Junkee.

…in practice, it has been used to de-bank crypto trading businesses and sex workers, who operate entirely legal businesses with no clear link to either of these crimes.

In theory, the legislation was introduced to prevent illegal behaviour like money laundering and the funding of terrorism abroad, but in practice, it has been used to de-bank crypto trading businesses and sex workers, who operate entirely legal businesses with no clear link to either of these crimes.

Buried in this massive piece of legislation is a little section labelled Clause 235 — “protection from liability” — which gives financial institutions an exemption from legal ramifications that may arise from neglecting to service-specific customers. Despite submissions from Liberty Victoria and the Human Rights and Equal Opportunity Commission specifically raising the issue of how Clause 235 has the potential to allow banks to discriminate against people, the legislation still stands.

“Financial discrimination against sex workers from all aspects of the Australian financial industry is widespread and very underreported,” Gala Vanting told Junkee.

In a statement to Junkee, AUSTRAC asserted that de-banking — across the board — is a complex issue.

“The widespread closure of banking services to certain businesses and customers is referred to as de-banking or de-risking and is a complex issue that occurs around the world,” an AUSTRAC spokesperson said, noting that the body discourages de-banking of entire industries. “AUSTRAC continues to discourage the indiscriminate and widespread closure of accounts across entire industry sectors and seeks for financial crime risks relating to customers to be assessed on a case by case basis.”

Junkee reached out to Westpac, Commonwealth Bank, ANZ, and NAB, for clarification on their policy for sex work.

“Financial discrimination against sex workers from all aspects of the Australian financial industry is widespread…”

“We take our obligations seriously under Australian’s Equal Opportunity and Anti-Discrimination laws,” a spokesperson for ANZ told Junkee. “All our retail customers are subject to our responsible lending policies, we have no restrictions on providing products or lending to individuals employed within the sex work industry.”

“We deal with every customer on a case-by-case basis and incorporate environmental, social and governance considerations into each of our business decisions, but we do not have a blanket policy that stops us providing banking services to legal sex industry businesses,” a Commonwealth Bank spokesperson told Junkee, adding that in some cases — at the bank’s discretion — CBA may no longer wish to continue a relationship with a customer based on AML/CTF risk factors.

Westpac did not respond to numerous requests for comment.

Stakeholders Are Finally Starting To Take Note

The issue of financial discrimination, especially in sex work, has been specifically raised as part of this year’s independent Banking Code Review.

Every three years, Mike Callaghan, the current chair of the Commonwealth Grants Commission,  conducts a thorough review of the Australian Banking Code of Practice, accepting external comments and submissions from relevant stakeholders on issues they have experienced with the code as it currently stands.

The report from the 2021 review is due out in late November 2021, but submissions from the interim report — published back in October — show a clear trend. Of the 37 public submissions made to the review, sex industry financial discrimination was a key issue raised, with 11 submissions noting some sort of banking discrimination as an issue, with seven of those specifically referencing the sex industry.

Any findings made in the review won’t necessarily change the banking code — or legally stop banks from being able to financially discriminate against sex workers based on their profession — but any effort to bring attention to the issue has the possibility of sparking change within the banks, or in the AML/CTF legislation moving forward.

*Names have been changed for privacy. 

Lavender is a news and politics reporter at Junkee, whose work has also appeared in Pedestrian.TV and Gizmodo. Follow her on Twitter.