Authority to carry on banking business in Australia
Banking Act 1959
To: TransferWise Australia Pty Ltd ABN 38 616 463 855 (the body corporate)
SINCE the body corporate has applied for an authority to carry on banking business in Australia,
I, Therese McCarthy Hockey, a delegate of APRA:
(a) under subsection 9(3) of the Banking Act 1959 (the Act), GRANT the body corporate an authority to carry on banking business in Australia; and
(b) under paragraph 9AA(1)(a) of the Act, IMPOSE conditions on the authority, as specified in the schedule.
This authority commences on 30 November 2020. Dated: 20 November 2020
[Signed]
Therese McCarthy Hockey Executive Director Banking Division
Interpretation
In this instrument:
APRA means the Australian Prudential Regulation Authority.
banking business has the meaning given in subsection 5(1) of the Act.
Notes
APRA is required to publish this instrument in the Gazette.
A decision to impose conditions on an authority is a decision to which Part VI of the Act applies. You may request APRA reconsider the decision in accordance with subsection 51B(1) of the Act. The request for reconsideration must be made in writing, must state the reasons for the request, and must be given to APRA within 21 days after the day on which you first received notice of this decision, or within such further period as APRA allows. If you are dissatisfied with the outcome of APRA’s reconsideration of the decision, you may, subject to the Administrative Appeals Tribunal Act 1975, apply to the Administrative Appeals Tribunal for review of the reconsidered decision.
The address where written notice may be given to APRA is Level 12, 1 Martin Place, Sydney NSW 2000.
Schedule – conditions on authority
- The banking business that the body corporate is authorised to carry on is limited to providing purchased payment facilities.
2. The body corporate must at all times, hold Tier 1 Capital in the greater of the following two amounts:
(a) $3 million; or
(b) 5 per cent of total outstanding stored value liabilities.
3. The body corporate must not pay interest on amounts held for the benefit of its customers.
Interpretation
In this schedule:
purchased payment facility has the meaning given in subsection 9(1) of the Payment Systems (Regulation) Act 1998.
stored value liabilities has the meaning given in Prudential Standard APS 610 Prudential Requirements for Providers of Purchased Payment Facilities.
Tier 1 Capital has the meaning given in Prudential Standard APS 111 Capital Adequacy: Measurement of Capital.
Overview
The Banking Act 1959 was enacted by the Australian Parliament to regulate and govern banking institutions operating within Australia. The Act provides a framework for the supervision and regulation of banks and authorised deposit-taking institutions, ensuring financial stability and consumer protection. The problem or gap addressed by this legislation includes the need for a comprehensive legal framework that governs the operations of banking entities, ensuring that they maintain adequate capital, manage risks effectively, and protect the interests of depositors and customers. The Australian Prudential Regulation Authority (APRA) is the body responsible for enforcing this Act and granting authorities to institutions seeking to carry on banking business in Australia. The policy objective of the Act is to maintain a safe and sound banking system, safeguarding the interests of depositors and promoting financial stability. This legislation empowers APRA to impose conditions on the authorities granted to banking entities, ensuring compliance with regulatory standards and maintaining the integrity of the banking sector.
Scope and Application
The Banking Act 1959, as applied through the authority granted to TransferWise Australia Pty Ltd, applies specifically to the entity as a corporate body. This authorisation pertains to the conduct of banking business within Australia, narrowly defined to the provision of purchased payment facilities. The geographic reach of this legislation is confined to Australia, and the authority is granted by the Australian Prudential Regulation Authority (APRA), which acts under the Commonwealth jurisdiction. This authority is subject to specific conditions detailed in the schedule to the instrument, which includes financial requirements such as maintaining a certain level of Tier 1 Capital and a prohibition on paying interest on customer deposits. Notably, the authority does not extend to all forms of banking business but is restricted to the specified purchased payment facilities as defined in the Payment Systems (Regulation) Act 1998. Additionally, the authority can be further regulated or modified through subordinate instruments as stipulated by the Banking Act 1959.
Key Provisions
The Banking Act 1959 (the Act) grants TransferWise Australia Pty Ltd (the body corporate) an authority to carry on banking business in Australia, as detailed in section 9(3) of the Act. This authority is specifically limited to the provision of purchased payment facilities, as outlined in the Schedule to the instrument. The authority is subject to certain conditions, as stipulated under paragraph 9AA(1)(a) of the Act, and these conditions are explicitly stated in the accompanying schedule.
Under the conditions imposed, the body corporate is required to maintain a minimum amount of Tier 1 Capital, as per section 2 of the Schedule. This capital must always be at least the greater of $3 million or 5 per cent of total outstanding stored value liabilities. Additionally, the body corporate is prohibited from paying interest on amounts held for the benefit of its customers, as outlined in section 3 of the Schedule.
The Act also imposes obligations on the body corporate to ensure compliance with the specified conditions. Failure to maintain the required Tier 1 Capital levels or to refrain from paying interest on customer holdings could lead to breaches of the authority's conditions. Moreover, the body corporate must adhere to the definitions provided in the Schedule for terms such as "purchased payment facility," "stored value liabilities," and "Tier 1 Capital," which are further defined in relevant Prudential Standards.
Failure to comply with the conditions imposed on the authority may result in various consequences. Under the Act, breaches can lead to civil or criminal penalties, although specific penalties are not detailed in the instrument. The body corporate has the right to request reconsideration of the decision to impose conditions within 21 days of receiving notice, or any further period allowed by APRA, as per subsection 51B(1) of the Act. If dissatisfied with the reconsideration outcome, the body corporate may apply to the Administrative Appeals Tribunal for review, subject to the provisions of the Administrative Appeals Tribunal Act 1975.