Revocation of Authority to carry on banking business
Banking Act 1959
SINCE
- on 3 August 2016 ECU Australia Ltd ABN 50 087 650 986 (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, Louis Serret , a delegate of APRA, under subsection 9A(1) of the Act, REVOKE the Authority.
Dated: 4 May 2017
[Signed]
Louis Serret
Acting Executive General Manager Specialised Institutions Division
Interpretation Document ID: 226509
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 regulate the banking industry in Australia, ensuring financial stability and protecting depositors. In addressing the specific issue of ECU Australia Ltd's application to revoke its authority to carry on banking business, the Act allows for the revocation under certain conditions, ensuring it does not negatively impact the national interest or depositors. The revocation process is overseen by the Australian Prudential Regulation Authority (APRA), which has the authority to delegate this responsibility. The policy objective here is to maintain the integrity of the banking system by allowing for the orderly revocation of banking authority when deemed appropriate, while protecting the interests of depositors and the broader national interest.
Scope and Application
The Banking Act 1959 applies to any entity or person carrying on banking business in Australia, specifically targeting authorised deposit-taking institutions (ADI) and any other corporate body not specifically exempted by the Act. The Act's jurisdictional reach is national, administered by the Australian Prudential Regulation Authority (APRA), which has the authority to regulate and oversee the financial stability of authorised deposit-taking institutions and other financial entities. The revocation of authority under this Act is applicable across Australia and is aimed at ensuring the financial stability and protecting the interests of depositors. The Act provides for penalties for entities that carry on banking business without the requisite authority, with significant fines that escalate for ongoing violations. The Act allows for the revocation of an institution's authority to carry on banking business if deemed necessary by APRA, with specific provisions for how such revocations can be communicated and the conditions under which they take effect. The Act may also extend its application through subordinate instruments, which provide further detail on the types of banking activities regulated and the specific conditions for revocation.
Key Provisions
The primary sections of the Banking Act 1959 that apply here are sections 9A(1), 9A(5A), 9A(6), 8(1), and 8(3). Section 9A(1) provides the mechanism for an authorised deposit-taking institution (ADI) to apply to the Australian Prudential Regulation Authority (APRA) for the revocation of its banking business authority. Section 9A(5A) allows the notice of revocation to specify that the revocation will not affect certain matters or periods, effectively allowing some business operations to continue under specific conditions. Section 9A(6) mandates that APRA must publish a copy of the revocation notice in the Gazette and may choose to disseminate it in other ways deemed appropriate. Section 8(1) imposes a prohibition on entities not authorised by APRA from carrying on banking business in Australia, with severe penalties for non-compliance, as outlined in sections 8(2) and 8(3).
The obligations imposed on parties by the Act are multifaceted. Primarily, an ADI must formally apply to APRA for the revocation of its banking authority if it wishes to cease operations. APRA, in turn, is obliged to review the application and ensure that the revocation does not adversely impact the national interest or the interests of depositors. Furthermore, APRA must publish the revocation notice in the Gazette and may choose additional methods to inform the public. The Act also stipulates that any entity found to be operating banking business in Australia without proper authorisation will be subject to penalties.
The Banking Act 1959 outlines significant penalties for breaches. According to section 8(1), any body corporate found to be carrying on banking business in Australia without the requisite authority commits an offence, with a maximum penalty of 200 penalty units as stated in the Crimes Act 1914. For a body corporate, the penalty may extend to 1,000 penalty units. An additional consequence of this offence is that it constitutes an indictable offence, as outlined in section 8(2). Under section 8(3), the offence is treated as continuous, meaning that the entity is guilty of the offence for each day the illegal activity persists, including the day of conviction and any subsequent days. This continuous nature of the offence ensures that entities are held accountable for the entire duration of their unauthorised banking activities.