Revocation of Authority to carry on banking business
Banking Act 1959
SINCE
- on 23 October 2015 Old Gold Credit Union Co-operative Limited ABN 27 087 651 634 (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 23 March 2016
[Signed]
Keith David Chapman Executive General Manager Specialised Institutions Division
Interpretation Document ID: 221344
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 within Australia. This legislation was introduced to address the need for a comprehensive regulatory system to ensure the stability and integrity of the banking sector, protect depositors, and maintain public confidence in the financial system. The Act was passed by the Commonwealth Parliament and serves to regulate authorised deposit-taking institutions (ADIs) and their operations, ensuring they meet certain standards and comply with prudential requirements. The policy objective of the Act is to safeguard the financial system and protect the interests of depositors by granting the Australian Prudential Regulation Authority (APRA) the power to supervise and regulate banking entities. This includes the authority to revoke an ADI’s licence under specific circumstances, as demonstrated in the revocation of Old Gold Credit Union Co-operative Limited’s authority in 2016, ensuring the interests of depositors are protected and the national interest is preserved.
Scope and Application
The Banking Act 1959, as referenced in the Gazette notice C2016G00459, applies to authorised deposit-taking institutions (ADIs), such as Old Gold Credit Union Co-operative Limited, which have applied to the Australian Prudential Regulation Authority (APRA) to revoke their authority to carry on banking business in Australia. This revocation is permissible under subsection 9A(1) of the Act, provided that it is not contrary to the national interest or the interests of the ADI's depositors. The Act extends its jurisdiction across the Commonwealth of Australia, regulating entities engaged in banking business. Notably, the Act imposes penalties for unauthorised banking activities, with a maximum fine of 1,000 penalty units for body corporates under the Crimes Act 1914. The Act also allows for the continuation of certain banking activities post-revocation for specified purposes, as outlined in subsection 9A(5A). Furthermore, APRA is mandated to publish the revocation notice in the Gazette and may use other appropriate means for public notification, as stipulated in subsection 9A(6).
Key Provisions
The primary operative section of the notice is subsection 9A(1) of the Banking Act 1959, which provides the framework for the revocation of an authorised deposit-taking institution's (ADI) authority to carry on banking business in Australia. This section allows the Australian Prudential Regulation Authority (APRA) to revoke an ADI's authority if it is satisfied that such a revocation would not be contrary to the national interest or the interests of the ADI's depositors. In this instance, Old Gold Credit Union Co-operative Limited has applied to APRA to revoke its banking authority, and APRA has granted this request under the provisions of subsection 9A(1).
The Act imposes several obligations on the ADI and APRA. For the ADI, it mandates that any application to revoke its banking authority must be made in writing to APRA, as outlined in subsection 9A(1). APRA, on the other hand, is required to be satisfied that the revocation would not be contrary to the national interest or the interests of the ADI's depositors, as stipulated in the notice. Furthermore, subsection 8(1) of the Act requires APRA to publish the notice of revocation in the Gazette and may also publish it in any other way it deems appropriate.
In terms of potential consequences, the Act outlines several offences and penalties for breaches. Under subsection 8(1) of the Act, a body corporate is guilty of an offence if it carries on banking business in Australia without being the Reserve Bank, an ADI, or having an order in force exempting it from this requirement. The penalty for such an offence is 200 penalty units, with a maximum of 1,000 penalty units for a body corporate, as specified in subsection 4B(3) of the Crimes Act 1914. This offence is indictable, meaning it can be prosecuted in a higher court, and the offence continues for each day the contravention persists, as outlined in subsection 8(3) of the Act.