Alice is an event organiser. She has a service agreement with a transaction provider to allow the event attendees to pay for the event through her website.
Alice had been using the same transaction provider for a couple of years when the transaction provider asked Alice for information they said they needed to satisfy their anti-money laundering and countering financial terrorism (AMLCFT) obligations. Alice was reluctant to give the transaction provider this information.
The transaction provider said that if Alice did not give them the information they needed, they would close her account. Alice found another transaction provider, who did not need the same level of detail, and agreed to close her account with the original transaction provider.
However, the transaction provider were holding $36,000 that event attendees had paid to attend an event. The transaction provider were not prepared to release these funds to Alice because she had not given them the AMLCFT information.
Alice complained to FSCL.
Alice said it was not fair that the transaction provider were holding money that did not belong to them. At the time the event attendees had paid the money, the transaction provider had not indicated they needed more information.
The transaction provider offered to return the money to the event attendees, but Alice said this was impractical. She would have no way of knowing who had paid and who had not. Alice insisted that the transaction provider pay the money to her.
The dispute was at a stalemate. The financial service provider had received legal advice that they needed the information they had requested from Alice to satisfy their legal AMLCFT obligations. We could not ask the transaction provider to act contrary to this advice and Alice was not prepared to give the transaction provider the information they needed.
After further discussion, it was agreed that the transaction provider would hold onto the money until after the event had taken place, and they would then release the money to Alice. Alice reluctantly accepted this resolution, and we closed our file.
After the event had taken place, Alice contacted us to say she had not received the money. We contacted the transaction provider who said it can take some time to process the payment. About ten days later Alice contacted us again saying she had received the money from the transaction provider.