Overview

The Banking exemption No. 2 of 2012 is an instrument issued by the Australian Prudential Regulation Authority (APRA) under the Banking Act 1959. This determination serves to further vary the Banking exemption No. 1 of 2011 by adding Stewards’ Foundation of Christian Brethren to the list of charitable development funds exempt from the prohibition on carrying on banking business in Australia unless authorised by APRA. The initial determination was made to address a gap allowing specified charitable funds to operate under certain conditions without needing full authorisation from APRA. This amending instrument aims to extend the exemption to include another specified entity, ensuring consistency and fairness in the regulatory framework. The determination was made following consultation with the affected fund and the Office of Best Practice Regulation (OBPR), which confirmed that no additional regulatory analysis was necessary due to the minor nature of the change. The Australian Prudential Regulation Authority has also assessed the compatibility of this legislative instrument with human rights, concluding that it does not engage any applicable rights or freedoms as recognised or declared in the international instruments listed under the Human Rights (Parliamentary Scrutiny) Act 2011.

Scope and Application

Banking exemption No. 2 of 2012, issued under the Banking Act 1959, is an instrument by which the Australian Prudential Regulation Authority (APRA) modifies the scope of exemptions available to certain entities from the prohibition on carrying on banking business in Australia without authorisation. The Act applies to any person or body corporate intending to conduct banking activities, with the primary aim of ensuring that such activities are carried out under regulated conditions to safeguard the stability and integrity of the financial system. The exemption is geographically applicable across Australia, as the Act is a Commonwealth legislation. Determination No. 2, in particular, amends the previous exemption by adding the Stewards’ Foundation of Christian Brethren to the list of charitable development funds exempt from the prohibition, provided they adhere to the conditions outlined in the schedules of the determination. These conditions are designed to ensure that the exempted entities operate in a manner that aligns with the overarching objectives of the Act. The exemption is contingent upon compliance with specific criteria, and APRA retains the authority to vary or revoke the exemption as necessary.

Key Provisions

The main operative sections of Banking exemption No. 2 of 2012 (Determination No. 2) are subsections 11(1) and 11(4) of the Banking Act 1959. Subsection 11(1) allows the Australian Prudential Regulation Authority (APRA) to determine in writing that certain provisions of the Act do not apply to a person while the determination is in force. Subsection 11(4) provides APRA with the authority to vary or revoke a determination previously made under subsection 11(1). Determination No. 2 specifically amends Determination No. 1, made on 17 June 2011, by adding the Stewards’ Foundation of Christian Brethren to the list of charitable development funds exempt from the banking prohibition, provided they comply with the conditions set out in the Schedules. APRA imposes obligations on the parties it governs, particularly the charitable development funds listed in Schedule 1 of Determination No. 2. These funds must adhere to the conditions specified in Schedule 2 of Determination No. 1 to maintain their exemption from the banking prohibition under the Act. This includes ensuring compliance with regulatory requirements and meeting any additional conditions that APRA may impose to safeguard the interests of depositors and the stability of the financial system. Failure to comply with the conditions set out in the determinations can result in serious consequences. While the determinations themselves do not explicitly state penalties for non-compliance, breaches of the Banking Act 1959 may lead to enforcement actions by APRA, including the possibility of fines or other regulatory sanctions. The Act provides for various offences, and penalties for these can be significant, depending on the nature and severity of the breach. APRA has the authority to take action to protect the public interest and maintain financial stability.