Rawiri opened an account with a money transfer service and attempted to transfer $5,000 to a person overseas. The money transfer service stopped the transfer and told Rawiri that they needed to complete further due diligence checks before they could proceed. They explained that they thought Rawiri was at a high risk of being scammed, so they also deactivated Rawiri’s account.
Rawiri asked the money transfer service to refund the money to his bank account. However, the money transfer service said they could not do this until after they had carried out their additional checks. They initially told Rawiri that these checks usually take a few days or longer, but later changed this timeframe to 60 working days.
After a month of waiting, Rawiri had still not received his refund, so he complained to FSCL. Rawiri also complained that his account had been deactivated.
Dispute
Rawiri did not agree with the money transfer service’s decision to deactivate his account. Rawiri asked them to explain why they deactivated his account, as he felt they were accusing him of doing something wrong.
Rawiri also complained that the money transfer service had not completed their due diligence checks within the first timeframe they had given him.
The money transfer service explained that they had deactivated Rawiri’s account in line with their terms and conditions. They said that due to the way they were regulated, they could not tell Rawiri exactly why they had deactivated his account. However, they said Rawiri could appeal their decision if he did not agree.
The money transfer service said they told Rawiri that their due diligence checks could take up to 60 working days.
Review
Rawiri received the money shortly after we began our investigation of his complaint, 52 working days after the money transfer service began their checks. However, Rawiri still wanted to proceed with his complaint.
We agreed that the money transfer service were not required to tell Rawiri why they deactivated his account. We explained that their terms and conditions allowed them to close a customer’s account without explanation in certain circumstances. However, we noted that the money transfer service initially said that they deactivated Rawiri’s account because they believed he was at a high risk of being scammed.
We acknowledged that the money transfer service gave Rawiri varying timeframes of when the checks would be completed. However, the money transfer service always told Rawiri that the checks may take longer than the timeframes they told him. We noted that the money transfer service completed their checks after 52 working days, so they were completed within the stated timeframe of 60 working days.
We acknowledged Rawiri’s frustration at the amount of time it took the money transfer service to complete their checks, but we explained that they had to complete these checks to comply with the required laws and regulations.
We suggested that Rawiri discontinue his complaint.
Resolution
Rawiri disagreed with our decision and submitted a lengthy response. However, Rawiri’s response did not change our view. We issued a final decision confirming that Rawiri should discontinue his complaint.
Insights for consumers
Money transfer services must comply with the required laws and regulations. This means that sometimes your transaction will be put on hold until they have completed their due diligence checks.
