A customer walks from a Westpac bank branch in Sydney November 3, 2014. Australia's Westpac Banking Corp booked a fifth straight year of record profit with an 8 percent rise in full-year cash earnings on robust loan growth and declines in bad debts.
A customer walks from a Westpac bank branch in Sydney November 3, 2014. Australia's Westpac Banking Corp booked a fifth straight year of record profit with an 8 percent rise in full-year cash earnings on robust loan growth and declines in bad debts. Reuters/Jason Reed
A customer walks from a Westpac bank branch in Sydney November 3, 2014. Australia's Westpac Banking Corp booked a fifth straight year of record profit with an 8 percent rise in full-year cash earnings on robust loan growth and declines in bad debts. REUTERS/Jason Reed (AUSTRALIA - Tags: BUSINESS LOGO)

Westpac announced on Tuesday that it would quit its remittance business on March 31, 2015. Among the Big 4 banks in Australia, it would be the last to leave the $24.5-billion remittance sector in the country.

The move makes it more difficult for immigrants to send money to their home countries, but at the same time would make it more difficult to track and stop funds being sent to terrorists, warned Pakistan.

With official channels closed, the Australian government would have to track the money coming in to fund terrorism among smaller remittance handlers and underground operators.

Westpac would close the accounts of remittance agencies on Dec 24, but would keep open until March 31 accounts of 20 remitters who filed a class action suit to give them time to find other companies that offer remittance services. The extension is in compliance with a court order.

Among the reasons given by Australian banks in withdrawing from the $425-billion global remittance industry is the rising cost of compliance with anti-money laundering regulations, particularly tracking the identities of the sender and recipient of the money.

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The closure of Westpac's remittance business would affect even large remittance companies like Western Union since remittance agents use bank accounts to deposit the customer money and to settle with their network providers like Western Union.

Westpac said in a statement, "We are continuing to work closely with the government, regulators and our customers to see what longer-term solutions may be possible to support and help make such payments in the future."

To contact the writer, send email to: v.hernandez@ibtimes.com.au