Banking (Foreign Exchange) Regulations 1959 - Direction Relating to Foreign Currency Transactions and to Iran - Amendment to the Annex - Variation of Exemptions - Amendment to the Annexes (14/07/2010)

Overview

The Banking (Foreign Exchange) Regulations 1959 was enacted to provide the Reserve Bank of Australia with the authority to manage and administer financial sanctions against foreign entities and individuals, particularly in response to international geopolitical issues. The Act was enacted to ensure that Australian financial institutions comply with international sanctions, thereby reinforcing Australia's foreign policy and national security objectives. This legislative instrument was introduced by the Australian Government and is administered by the Reserve Bank of Australia under the directive of the Government. The policy objective of these regulations is to prevent and mitigate risks associated with foreign entities and individuals, including those related to proliferation, terrorism, and national security threats. The explanatory statement accompanying this particular amendment outlines the addition of one individual and two entities to the sanctions list against Iran, reflecting the ongoing review and updating process to maintain the efficacy and relevance of these sanctions.

Scope and Application

The Banking (Foreign Exchange) Regulations 1959, administered by the Reserve Bank of Australia, apply to the financial transactions of specific individuals and entities in response to Australian Government directives. This particular amendment to the Annex adds one new individual and two new entities subject to financial sanctions against Iran, supplementing those already listed by the United Nations Security Council. The updated Annex now includes 12 persons and 11 entities, with these additions impacting transactions involving these specified individuals and organisations. The changes are integral to the three instruments referenced, which were originally published in the Commonwealth of Australia Gazette No. S 200 on 15 October 2008, and the amendments are treated as part of the original instruments. This amendment does not significantly alter the existing financial sanctions but ensures they are kept current, as per the provisions outlined in Section 18 of the Legislative Instruments Act 2003, which deems further consultation unnecessary beyond what has already been conducted by the Treasury and the Department of Foreign Affairs and Trade.

Key Provisions

The Banking (Foreign Exchange) Regulations 1959 primarily deal with the administration of financial sanctions, and this specific amendment pertains to sanctions against Iran. Section 5 of the Regulations empowers the Reserve Bank of Australia to implement directives issued by the Australian Government. The main operative sections relevant to this amendment include Section 5, which allows the Reserve Bank to enforce sanctions, and the Annex, which lists the sanctioned entities and individuals. The recent amendment to the Annex, as stated in Attachment A, adds one individual and two entities to the list of those subject to financial sanctions. The obligations imposed by this Act on the parties it governs are primarily concerned with ensuring compliance with the financial sanctions. Financial institutions and entities must refrain from engaging in any transactions with the listed individuals and entities, including but not limited to, monetary transfers, financial services, and the provision of funds or economic resources. The obligation extends to all Australian entities and individuals who must adhere to the sanctions, effectively freezing any assets or financial ties they may have with the listed persons and entities. Failure to comply with these sanctions can lead to severe penalties. Under the Banking (Foreign Exchange) Regulations 1959, breaches of the financial sanctions can result in both civil and criminal consequences. Civil penalties may include substantial fines, while criminal penalties can result in imprisonment. The maximum penalty for a criminal offence under these Regulations can be significant, reflecting the seriousness of non-compliance with international financial sanctions. The specific penalties are detailed in the Regulations, ensuring that there are clear repercussions for those who violate the imposed sanctions.