Conditions on banking authority 2023 – Wise Australia Pty Ltd
Banking Act 1959
To: Wise Australia Pty Ltd ABN 38 616 463 855 (the body corporate)
SINCE the body corporate holds a section 9 authority under the Banking Act 1959 (the Act) to carry on banking business in Australia (the authority) that is subject to conditions, as specified in the schedule (the existing conditions),
I, Chris Gower, a delegate of APRA, under paragraph 9AA(1)(b) of the Act, VARY the conditions on the authority by replacing the existing conditions with the conditions specified in the schedule (the varied conditions).
This instrument commences on the day it is made. Dated: 27 June 2023
Chris Gower General Manager Banking Division
Interpretation
In this instrument:
APRA means the Australian Prudential Regulation Authority.
banking business and section 9 authority have their respective meanings given in subsection 5(1) of the Act.
Notes
APRA is required to publish this instrument in the Gazette.
A decision to impose conditions or additional conditions, or vary the conditions, on a section 9 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 – the existing conditions
- 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.
Schedule – the varied conditions
- The banking business that the body corporate is authorised to carry on is limited to providing purchased payment facilities.
2. 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.
Overview
The Conditions on banking authority 2023, enacted on 27 June 2023, modifies the conditions of the banking authority held by Wise Australia Pty Ltd under the Banking Act 1959. This Act, administered by the Australian Prudential Regulation Authority (APRA), addresses the need for stringent regulatory oversight of banking entities to ensure financial stability and protect consumers. The policy objective is to impose specific conditions that Wise Australia Pty Ltd must adhere to while conducting its banking business, particularly in the provision of purchased payment facilities. The authority granted under section 9 of the Act is subject to these conditions to maintain the integrity and reliability of the banking system.
Scope and Application
The Conditions on Banking Authority 2023 applies specifically to Wise Australia Pty Ltd, a body corporate holding a section 9 authority under the Banking Act 1959, which allows it to carry on banking business in Australia. This authority is subject to certain conditions that have been varied by the Australian Prudential Regulation Authority (APRA), a delegate of the Commonwealth, under the authority granted by the Banking Act 1959. The varied conditions replace the existing conditions outlined in the schedule, affecting the specific operations and financial obligations of Wise Australia Pty Ltd. These conditions pertain to the scope of banking activities that Wise Australia Pty Ltd can undertake, which remains limited to providing purchased payment facilities, and include financial requirements such as maintaining a specified level of Tier 1 Capital and a prohibition on paying interest on customer deposits. The Act extends its jurisdictional reach across the Commonwealth of Australia, with APRA being the primary regulatory body overseeing compliance with the stipulated conditions. The varied conditions do not introduce new exclusions or exemptions beyond those already specified, and they come into effect on the date of the instrument's issuance. The application and interpretation of these conditions may be further detailed through subordinate instruments, which can refine the scope and application of the Act in accordance with regulatory needs.
Key Provisions
The main operative sections of the Conditions on Banking Authority 2023 (Wise Australia Pty Ltd) under the Banking Act 1959 (the Act) are detailed in the schedule of the legislation. The primary alteration involves the financial requirements imposed on Wise Australia Pty Ltd, specifically regarding its capital holding obligations. Section 2 of the existing conditions stipulated that the body corporate must maintain a certain level of Tier 1 Capital, which was the greater of $3 million or 5% of total outstanding stored value liabilities. The varied conditions now only stipulate that the body corporate must hold sufficient Tier 1 Capital but do not specify the exact amount, leaving it somewhat open to interpretation or further regulatory guidance (Section 2, Schedule). Both the existing and varied conditions continue to limit the banking business to providing purchased payment facilities and prohibit the payment of interest on amounts held for the benefit of its customers (Sections 1 and 3, Schedule).
The obligations imposed by the Act on Wise Australia Pty Ltd include maintaining adequate capital levels as determined by regulatory standards and adhering to the specified banking activities. The entity is obligated to comply with the Prudential Standard APS 111 Capital Adequacy: Measurement of Capital for determining the required Tier 1 Capital. Additionally, the entity must ensure that it does not pay interest on amounts held for its customers, aligning with the constraints placed on the type of banking business it can conduct. These obligations are crucial to ensure the financial stability and regulatory compliance of Wise Australia Pty Ltd in its operations.
Any breach of the conditions specified in the Banking Act 1959 may result in various consequences, both civil and criminal. The Act does not explicitly detail specific offences or penalties in the provided text, but it does mention that a decision to impose or vary conditions on a section 9 authority is subject to Part VI of the Act. Generally, under the Act, non-compliance could lead to enforcement actions, including fines, legal proceedings, or even the revocation of the banking authority. For more detailed information on penalties, one would need to refer to other sections of the Act or relevant regulatory guidelines.