Revocation of Authority to carry on banking business
Banking Act 1959
SINCE
- on 27 October 2014 AWA Mutual Limited, formerly AWA Credit Union Limited ABN 31 087 651 652 (the ADI) applied in writing to APRA under subsection 9A(1) of the Banking Act 1959 (the Act), to revoke its authority to carry on banking business in Australia (the Authority); and
B. I am satisfied that revocation of the Authority:
(i) would not be contrary to the national interest; and
(ii) would not be contrary to the interests of the depositors of the ADI,
I, Keith David Chapman, a delegate of APRA, under subsection 9A(1) of the Act, REVOKE the Authority.
Dated: 24 April 2015
[Signed]
Keith David Chapman Executive General Manager Specialised Institutions Division
Interpretation Document ID: 215206
In this Notice
APRA means the Australian Prudential Regulation Authority.
ADI is short for authorised deposit-taking institution and has the meaning given in subsection 5(1) of the Act.
banking business has the meaning given in subsection 5(1) of the Act.
Note 1
Under subsection 9A(5A) of the Act, the notice of revocation of the authority may state that the
authority continues in effect in relation to a specified matter or specified period, as though the revocation had not happened, for the purposes of a specified provision of the Act or the regulations, or a specified provision of another law of the Commonwealth that is administered by APRA, or a specified provision of the prudential standards, and the statement has effect accordingly.
Note 2
Under subsection 9A(6) of the Act, APRA must publish a copy of this Notice in the Gazette and
may cause notice of the revocation to be published in any other way it considers appropriate.
Note 3
Under subsection 8(1) of the Act, a body corporate is guilty of an offence if the body corporate
carries on banking business in Australia and the body corporate is not the Reserve Bank and the body corporate is not an ADI and there is no order in force under section 11 of the Act determining that subsection 8
(1) does not apply to the body corporate. A penalty of 200 penalty units applies or by virtue of subsection 4B
(3) of the Crimes Act 1914 in the case of a body corporate, a penalty not exceeding 1,000 penalty units. By virtue of subsection 8(2) of the Act, an offence against subsection 8(1) is an indictable offence. Under subsection 8(3) of the Act, if a body corporate commits an offence against subsection 8(1), the body corporate is guilty of an offence against that subsection in respect of the first day on which the offence is committed and each subsequent day (if any) on which the circumstances that gave rise to the body corporate committing the offence continue (including the day of conviction for any such offence or any later day).
Overview
The Banking Act 1959 was enacted to provide a framework for the regulation of banking activities in Australia, ensuring the stability and integrity of the banking sector. The Act was introduced to address the need for a comprehensive legal structure governing the operations of authorised deposit-taking institutions (ADIs) and the protection of depositors' interests. This legislation was enacted by the Commonwealth Parliament and aims to maintain public confidence in the financial system. The Act includes provisions for the licensing and supervision of ADIs, including the revocation of banking authority where necessary to protect the interests of depositors and the national interest. Keith David Chapman, a delegate of the Australian Prudential Regulation Authority (APRA), revoked AWA Mutual Limited's authority to carry on banking business in Australia, under the authority granted by the Act, following an application by the institution.
Scope and Application
The Banking Act 1959 applies to authorised deposit-taking institutions (ADIs) in Australia, which includes entities such as banks, credit unions, and other authorised financial institutions engaged in banking business. The Act is of Commonwealth jurisdiction, meaning it applies across the entire nation and is enforced by the Australian Prudential Regulation Authority (APRA), a federal regulatory body. The Act's scope extends to revoking the authority of an ADI to carry on banking business if it is in the public interest and the interests of depositors, as demonstrated in the revocation of AWA Mutual Limited's authority. The Act further stipulates that any body corporate found carrying on banking business without the appropriate authorisation commits an offence, with penalties including fines up to 1,000 penalty units. The Act's application may be extended or specified through subordinate instruments, which provide additional details on the revocation process and enforcement mechanisms.
Key Provisions
The primary operative sections of the Banking Act 1959, as referenced in the revocation notice, involve sections 9A and 8. Section 9A allows the Australian Prudential Regulation Authority (APRA) to revoke the authority of an authorised deposit-taking institution (ADI) to carry on banking business in Australia if the authority's revocation is deemed not to be contrary to the national interest or the interests of the ADI's depositors. This is demonstrated in the case of AWA Mutual Limited, where the authority to carry on banking business was revoked on 27 October 2014. Section 8, meanwhile, prohibits any body corporate from carrying on banking business in Australia unless they are the Reserve Bank, an ADI, or have a specific exemption order from APRA. The revocation notice confirms that AWA Mutual Limited no longer has the authority to conduct banking business, and this revocation is effective from the specified date.
The Act imposes certain obligations on the parties it governs, particularly the ADIs. These include adhering to the conditions set forth by APRA and maintaining the safety and soundness of their operations to protect the interests of depositors. ADIs must also comply with all applicable banking regulations and standards set by APRA. Failure to meet these obligations can lead to the revocation of their banking authority, as seen in the case of AWA Mutual Limited. Additionally, any entity carrying on banking business without the proper authorisation is required to cease such activities immediately upon revocation of their authority to avoid facing legal consequences.
Breaching the provisions of the Banking Act 1959 can result in significant legal and financial repercussions. Under section 8(1), any body corporate that carries on banking business in Australia without the requisite authorisation commits an indictable offence. The penalty for such an offence can be severe, with a fine of up to 200 penalty units or, in the case of a body corporate, up to 1,000 penalty units. These penalties underscore the seriousness of operating without proper authorisation and the importance of compliance with banking regulations to avoid legal action. Furthermore, if a corporate body continues to operate in violation of section 8(1) after the revocation of their authority, they are liable for each day the offence continues, highlighting the continuous nature of the offence until resolved.