$12 million banking crisis strips access to funds, raising alarms over hidden financial practices

When Michael Alford logged into his online banking account in January, he couldn't believe his eyes. There, displayed in his account summary, was a deposit of $12 million—money that wasn't his, money he'd never seen, and money that was mysteriously listed as 'held elsewhere.'

For most people, finding millions in their account might seem like a dream. For Alford, it was the latest twist in a seven-year nightmare that has left him on the brink of bankruptcy and scrambling to understand what happened to his own money.

The Perth businessman's ordeal began in 2018 when he started noticing strange transactions draining his accounts—the same year he was diagnosed with blood cancer and stepped back from managing his two successful mining communications and GPS tracking businesses.

'I had insurance for things like cancer, and I did get paid some sums of money for that, but all of that money seemed to get drained away from my accounts over the next 12 to 18 months in varying capacities,' Alford explains. Despite repeated requests to his bank for explanations, 'we never quite got to the bottom of it.'

When banks turn their backs

What happened next illustrates a growing phenomenon that's affecting thousands of Australians: debanking. His bank, Bankwest (now owned by Commonwealth Bank), essentially wanted to end their relationship with him entirely.

Despite never defaulting on any credit in his life, Alford found himself being asked to close all commercial accounts and pay off outstanding debts. The bank was happy to maintain personal accounts but wanted all business relationships terminated.

Debanking occurs when financial institutions close people's or organisations' bank accounts because they perceive the account holders to pose a financial, legal, regulatory, or reputational risk. The closure of accounts is generally performed without giving a reason and without the prospect of appeal.

By 2021, the couple had given up. They sold their Perth life and moved to Darwin, thinking they had enough money for a fresh start. But the bank's demands to pay out every facility left them effectively destitute.

You're not alone: The hidden scale of Australia's debanking crisis

Michael Alford's story isn't unique. In the past few years, over 100 financial services companies in Australia have been debanked and are having to find alternative solutions to manage accounts. According to Fintech Australia's CEO, Rebecca Schot-Guppy, out of the 100 fintech companies that have been debanked, many are afraid to speak out.

The problem has become so widespread that AUSTRAC continues to discourage the indiscriminate and widespread closure of accounts across entire industries.

The government's financial intelligence agency warns that the effect of debanking can increase the risks of money laundering and terrorism financing across Australia's economy, and can have a devastating impact on legitimate businesses.

Recent cases show this isn't just about businesses. In 2024, a gay sex worker in Melbourne won his discrimination case against two financial service providers for closing his accounts in 2021 due to prejudice against his occupation.

Meanwhile, UK data shows banks were closing nearly one thousand accounts daily, with just over 343,000 closed in 2022, compared to about 45,000 in 2017—suggesting this is a growing global trend.

Understanding your rights when banks won't explain

The most frustrating aspect of Michael Alford's case is the lack of transparency. Despite formal requests dating back to 2021, he still hasn't received detailed information about the mysterious transactions that drained his accounts.

However, recent legal developments are strengthening consumer protections. Australian banks that subscribe to the Banking Code of Practice have committed to 'act honestly and with integrity' and be 'fair and responsible' in their dealings with customers. A recent court case has established that contractual terms between banks and customers must 'strike a fair balance' between customer needs and the bank's interests.

When facing banking disputes, your primary avenue for help is the Australian Financial Complaints Authority (AFCA). AFCA independently assists consumers and small businesses to make and resolve complaints about financial firms, following a complaint resolution process that provides free and fair outcomes.

Government action on the horizon

The good news is that Australian authorities are taking the debanking crisis seriously. The government recognises the seriousness of debanking and its commitment to taking action, while acknowledging banks are commercial enterprises that must manage their own risks and resources.

The Albanese-led government intends to release draft legislation in 2025 for public consultation and has promised to work with Australia's four largest banks to better understand debanking. This comes as part of broader financial services reforms aimed at improving consumer protection.

The release of AUSTRAC's guidance on debanking follows an extensive consultation across impacted industries undertaken in 2022, indicating regulators are actively working to address the problem.

The road ahead for Michael Alford

Michael Alford has now engaged a lawyer to help clear his name and recover his money. His solicitor, John Hammond, describes the bank's treatment as 'oppressive and unconscionable', arguing that 'if this conduct was carried out by any other business, there would be a full-scale investigation and heads would roll'.

The mysterious $12 million deposit remains unexplained, a stark symbol of how the banking system can leave ordinary Australians in limbo. Alford estimates he has lost several million dollars over the years and describes himself as 'nearly broken' and 'on the verge of bankruptcy'.

His case highlights crucial questions about banking transparency and consumer rights. As Hammond puts it: 'The Alfords deserve to know to whom their money was transferred, why there is an amount of $12,000,000 disclosed in their bank statements, why there is a statement that says 'monies held elsewhere''.

What this means for you

While Michael Alford's case involves complex business accounts and substantial sums, the principles apply to anyone facing unexplained banking transactions or account closures.

The key lessons are clear: document everything, know your rights, and don't hesitate to escalate to AFCA when banks won't provide adequate explanations.

AUSTRAC encourages open communication between financial institutions and their customers, and recent legal developments suggest banks can't simply close accounts without acting in good faith.

The banking system is built on trust, but that trust works both ways. While banks have legitimate reasons to manage risk, customers deserve transparency and fair treatment. Michael Alford's ongoing battle may help establish important precedents for how banks must treat their customers in the future.

Commonwealth Bank, which now owns Bankwest, has been contacted for comment on this case but has yet to respond publicly.

Have you experienced unexplained banking transactions or sudden account closures? What steps did you take to resolve the situation? Share your experiences and advice with fellow readers in the comments below—your insights could help others facing similar challenges navigate these complex situations.