Banking (Foreign Exchange) Regulations 1959 - Exemption (paragraphs 8(1)(a), 8(1)(c) and 8(1)(d)) (21/06/1984)

Overview

The Banking (Foreign Exchange) Regulations 1959, as amended, are a set of regulations enacted by the Parliament of Australia to manage foreign exchange transactions within the country. These regulations aim to control and regulate the activities of financial institutions, particularly banks, in dealing with foreign currency transactions. The Reserve Bank of Australia, as the central banking institution, administers these regulations under the authority granted by the Banking Act 1959. The policy objective is to ensure the stability of the Australian currency and to prevent the misuse of foreign exchange for illicit purposes, thereby safeguarding the nation's economic interests. The Regulations have been amended over the years to adapt to changing economic conditions and international standards, maintaining their relevance and effectiveness in regulating foreign exchange activities.

Scope and Application

The Banking (Foreign Exchange) Regulations 1959, as amended, govern the foreign exchange transactions in Australia and apply to entities and individuals engaging in financial transactions that involve foreign currency. The regulations are administered by the Reserve Bank of Australia and have a nationwide reach, applying across the Commonwealth of Australia. They specifically exempt certain transactions from the general prohibitions, such as those involving the drawing, issuing, or negotiating of bills of exchange or promissory notes, the entering into contracts or agreements (excluding those for the purchase of goods), the allotment or transfer of securities, or the acknowledgment of debt, if these create or transfer a right to a non-resident. Furthermore, the regulations exempt entries in registers that recognise non-residents as holders of securities. These exemptions are outlined in the legislative instrument and are subject to revocation or amendment through subordinate instruments, ensuring that the regulations can adapt to changing economic conditions and international standards. The instrument came into operation on 25 June 1984, with subsequent amendments and revocations taking effect on specified dates as indicated in the legislative tables.

Key Provisions

The Banking (Foreign Exchange) Regulations 1959, as amended, contain specific provisions for exemptions under Regulation 38. Notably, paragraph 8(1)(a) has been subject to revocation and amendment over time. The initial exemption dated 3 February 1984 relating to sub-regulation 8(1)(a) was revoked and replaced by an exemption dated 29 June 1990. This newer exemption permits any person to make a payment in Australia to, by the order of, or on behalf of a person who is not a resident or to place any sum in Australia to the credit of such a person, thereby exempting them from the application of sub-regulation 8(1)(a). Similarly, the exemption dated 12 December 1983 relating to sub-regulation 8(1)(c) was revoked, while a new exemption exempts any person who draws, issues, or negotiates any bill of exchange or promissory note, enters into contracts or agreements (excluding those for the purchase of goods), allots or transfers any security, or acknowledges any debt, provided that the right to receive a payment or valuable consideration, or the performance of a service, is created or transferred in favour of a non-resident. Furthermore, sub-regulation 8(1)(d) is exempt for any person who makes an entry in a register in Australia that recognises a non-resident as the holder of securities. The Banking (Foreign Exchange) Regulations 1959 impose specific obligations on financial institutions and other entities to comply with foreign exchange regulations. For example, under sub-regulation 8(1)(a), financial institutions must ensure that any payments made to non-residents are in compliance with the exempted provisions. Similarly, entities entering into contracts, agreements, or dealing with securities must adhere to the exemptions provided under sub-regulations 8(1)(c) and 8(1)(d). Entities must maintain records and documentation to demonstrate compliance with these provisions and must not engage in activities that contravene the exempted sub-regulations unless explicitly permitted. Failure to comply with the Banking (Foreign Exchange) Regulations 1959 can result in significant legal consequences. Under section 30 of the Banking Act 1959, penalties for non-compliance can include fines and, in severe cases, imprisonment. Specifically, the maximum penalty for contravening the regulations is a fine of up to $22,000 for individuals and $110,000 for corporations, depending on the severity and frequency of the breach. In addition to financial penalties, entities may face civil actions from affected parties seeking damages for any losses incurred due to non-compliance. These consequences underscore the importance of adhering to the regulatory framework to avoid legal repercussions.