Thanks patio11 for the insight.
Of course we fully understand and respect the bank's decision if they choose to close our business account. We already had the intention to close the account anyway. What's unacceptable is the total lack of communication (especially when they refused to stop incoming transfers to prevent further fraudulent transactions). On top of that, we have already built in an advanced fraud prevention system (partly outsourced to a YC startup in this field) and in most instances fraudulent transactions were caught. However there was no opportunity or channel for us to discuss anything with the bank.
Personally I have no complaint regarding their decision. This blog post written by my co-founder is more of a contrast of totally different reactions of two big banks in Australia. One of the transactional banking specialists in our new bank attended our startup pitch, and quickly arranged a meeting with us to discuss the products and services they can offer. Not only they acknowledged the risk of our business model, they gave us a great deal of valuable advice and we discussed a new approach to transaction processing (which will launch in September). With regards to the risk, we were more than happy to put up a security to take more control over the banking arrangements and they're happy to give us relatively customized solutions.
EDIT:
Regarding the personal accounts closure, I was severely affected in terms of my personal life and financial wellbeing, because majority of my financial transactions happen with Commonwealth Bank and my only credit card is with them (and it's blocked with full balance due Sep 2). Half of the cards in my wallet became useless overnight. Technically speaking, they have every right to do this and I don't think their Code of Banking Practice will ever protect me in this circumstance. I believe that it's a fine line to draw between "security risk" and "blatant discrimination". Unlike in the US, the "good behaviors" in one's credit history aren't freely transferable between financial institutions (only the "bad events" are recorded and shared). To me, the personal banking relationship is a lot more than just an account number and some dollars. It concerns the mutual trust between the bank and me that both parties have spent real effort and time building and maintaining. I'm a business guy and I know what the bank is doing can be considered "right", but in the end I feel socially worse-off and discriminated against just because of their issue with one of my startups.