Securing a financial institution license in the Australian continent is rigorously supervised by the prevailing legitimate framework of the nation. In today's discourse, we shall delve into the pivotal facets of monetary services oversight in Australia, alongside the fundamental conditions requisite for getting an Australian monetary license.

Australian banking control

The primary legislative structure dictating the conduct of banking entities within the nation encompasses:

  • Banking act 1959;
  • Reserve Bank act 1959 (RBA Act);
  • Financial Sector act 1998 (FSSA);
  • Corporations act 2001;
  • Financial Sector act 2001 (FSCODA);
  • Financial Sector act 1999 (FSTRA).

The main supervisory bodies liable for controlling monetary actions in Australia include:

  1. The control of monetary functions in the country is entrusted to the Australian Prudential Regulation Administration (APRA). It assumes answerability for the reasonable control and oversight of authorized deposit-taking institutions (ADI), private insurance enterprises, etc.
  2. The Australian Securities and Investments Commission (ASIC), founded pursuant to the Securities Commission Act, functions as a corporate entity and overseer of markets and monetary solutions, tasked with market conduct and investor protection.
  3. The Reserve Bank of Australia (RBA), created in conformance with the Reserve Bank Act, is the controller answerable for pecuniary and credit plan, oversight of pecuniary infrastructure resilience, and the payment organization.

If you target to found an Australian bank, it is noteworthy to mull that there are additional regulatory bodies exerting influence on financial institution oversight in Australia. These encompass:

  • The Federal Treasury - an executive body primarily engaged in economic policy formulation. The Treasury also provides counsel on political processes and reforms to advance a secure monetary system, rational corporate practices, and safeguard public interests in matters such as client safety and international contributions.
  • The Australian Competition and Consumer Commission (ACCC), liable for upholding the law in this domain is CCA.
  • The Australian Taxation Office (ATO) is the primary government agency for income collection. ATO also handles broader issues impacting revenue systems, such as determined tax strategy and financial economics.
  • The Australian Transaction Reports and Analysis Center (AUSTRAC) serves as the controlling body combating illicit finance and financing of criminal activities, serving as a specialized unit within monetary intelligence.
  • The International Investment Review Board (FIRB) scrutinizes proposals from multinational companies regarding investment activities in Australia in conformance with the Foreign Acquisitions and Takeovers act of 1975 (FATA).
  • The Australian Stock Exchange (ASX) stands as the premier stocks market in Australia. All enterprises adhere to listing rules, as well as subsequent specifications and recommendations set forth by the ASX.

Banking licensure in Australia

For those aiming to commence monetary undertakings in Australia, it is paramount to note that the country maintains two types of accreditations.

Acquiring an Australian monetary institution license from APRA is demanded for companies engaging in "banking services," which comprises accepting deposits, lending money, providing acquired payment instruments within the meaning of the payment systems act, and other prescribed monetary operations.

APRA's approval for executing banking activities in Australia may fall under peculiar stipulation. Affiliates of intercontinental banks authorized as ADIs are not permitted to take initial deposits or other finances from persons and non-corporate entities below the amount of 250,000 AUD. These affiliates may accept contributions and other finances in any amount from corporate enterprises, non-residents, and their personnel.

Certain entities may obtain a limited banking license in Australia. APRA may grant a limited ADI license under the limited ADI licensing system. This framework enables the provision of services under a restricted ADI license until the institution is ready to receive a full license, with phased regulatory obligations. Such a regime targets startups and small enterprises with limited banking experience and low-risk banking activities. The applicant's assets must not exceed 100 million Australian dollars, and restricted ADIs will have up to 2 years to demonstrate full adherence with the foresighted structure.

Acquiring a monetary services license in Australia. As per the corporations act, any entity engaging in "monetary services business" within the country's jurisdiction (including ADIs) must obtain an Australian Financial Services License (AFSL).The request for an AFSL is submitted for review to ASIC. If monetary services or products are offered to retail clients, the corporations act imposes disclosure requirements and more onerous compliance obligations.

Requesting for Australian banking license

The procedure of obtaining a license in Australia encompasses the next steps:

  1. Submitting an application form. The initial step in enrolling an Australian banking institution, creating an affiliate office, international branch, or national ADI involves requesting to APRA for authorization. Such approval prolongs to the usage of terminology as "bank," "banking services," and similar expressions in the enterprise's name.
  2. Considering the request.APRA regards a series of requirements when considering an organization's request to attain a license as an ADI in Australia, encompassing:
    • Capital adequacy;
    • Property Standards;
    • Management standards;
    • Vulnerability management and inside oversight mechanisms;
    • Relevant adherence procedures and protocols;
    • Stipulations for the data and bookkeeping system;
    • Mechanisms of outer and inner audit.

APRA reserves the right, at its discretion, to reject a request for reasons unrelated to the aforementioned categories.

  1. Upon authorization to serve as a monetary institution, it is worth mentioning that transnational candidates must adhere to a set of extra conditions. For a non-resident to get a monetary establishment permit in Australia, apart from any other stipulations, they should:
    • Have the right to do banking services in your judicature;
    • Acquire consent from your country's controlling body to initiate a bank in Australia;
    • Confirm that appropriate prudential supervision is in place in his country;
    • Conform with ownership protocols relating to the international bank itself and its major shareholders.

Conclusion

The procedure of authorization and permitting for financial transactions in Australia may take anywhere from nine to twelve months (or longer in peculiar situations). Applicants for authorization as ADIs should pay an initial licensing fee and a yearly supervision fee. The initial licensing fee amounts to 110,000 AUD.

Applicants for authorization as a restricted ADI must also remit an initial licensing fee (80,000 AUD) and an annual supervision fee.

If you have any further inquiries regarding this subject, you can address them to our specialists by scheduling a consultation on banking regulation in Australia. We are prepared to offer you a comprehensive range of consulting and support services throughout the establishment of your business in Australia, Asia, and Europe.