Fiji's Financial Intelligence Unit says Australian banks stopping small money transfers to the Pacific is unjustified and could be catastrophic for local people.
The banks are reviewing the accounts of money transfer organisations that allow people to send remittances back to relatives in the Pacific islands, saying those accounts pose a money laundering risk.
Its director, Razim Buksh, says there is no evidence of money laundering through remittance channels to the Pacific.
He says most Pacific nations are part of the Asia Pacific Group On Money Laundering, so are required to implement international standards and have all transactions scrutinised by financial intermidaries.
"The International Monetary Fund undertook a survey of the risk and vulnerabilities with remittance and other money laundering risks in the Pacific Island countries, and they established that the Pacific Island countries remain low-risk for both money laundering and terrorist financing. And therefore, even if countries were complacent somewhat in not fully implementing, we would still be somewhat in the comfort zone."
Razim Buksh says a lot of families depend on remittances to pay for education, healthcare and food, and the consequences of not receiving the funds could be severe.
