Australian Treasury consults on ASIC enforcement powers under new client money regime

Maria Nikolova

ASIC will be provided with alternatives to civil proceedings: in particular, the ability to issue infringement notices and enter into enforceable undertakings with licensees.

Sydney Australia

As FinanceFeeds has earlier reported, from April 4, 2018, Australian financial services (AFS) licensees are no longer able to use retail derivative client money for a range of purposes, such as their own working capital.

Today, the Australian Treasury opened a consultation on the draft Corporations Amendment (Client Money Reporting Rules Enforcement Powers) Regulations 2018. These Regulations complete the Government’s client money reform agenda, which aims to boost the protection of retail clients of financial services.

In particular, the proposed regulations propose to give the Australian Securities and Investments Commission (ASIC) necessary tools to enforce the ASIC Client Money Reporting Rules 2017. These Rules make Australian financial services licensees more accountable for the way they hold client money.

The Corporations Act 2001 already permits ASIC to impose a pecuniary penalty of up to $1 million for non-compliance with the ASIC Rules. In a nutshell, the draft Regulations give ASIC alternatives to civil proceedings: in particular, the ability to issue infringement notices and enter into enforceable undertakings with licensees.

Under the draft regulations, ASIC is able (but not required) to accept enforceable undertakings from persons alleged to have contravened a client money reporting rule, as an alternative to civil proceedings. Such persons may undertake to perform or refrain from performing a specific action, or pay a specified amount to a specified party. These undertakings are able to be varied or withdrawn with ASIC’s agreement.

If a person breaches their undertakings, ASIC is able to apply to a Court to make an order. The Court may direct the person to comply with the undertaking; pay the Commonwealth an amount not exceeding the amount of financial benefit attributed to the breach; compensate a person who has suffered loss or damage as a result of the breach; or any other order it deems appropriate.

In addition, ASIC will be allowed to issue a client money reporting infringement notice to persons alleged to have contravened a client money reporting rule, as an alternative to civil proceedings. The liability of a person to civil proceedings is not affected if a notice is not given, or if a notice is withdrawn or not complied with.

Before an infringement notice can be issued, ASIC must advise the intended recipient in writing why it believes a contravention has occurred. ASIC must also give them the opportunity to attend a private hearing, give evidence and make submissions in relation to the alleged contravention. During this process the intended recipient may bring new evidence, including witnesses, before ASIC.

Recipients must be given detailed information about each alleged contravention and the corresponding rule; the maximum applicable pecuniary penalty or penalties; the immediate repercussions of their conduct (penalties, remedial measures, sanctions, and/or terms of an undertaking); how to comply with ASIC’s terms, and the effect of that compliance.

Responses to this consultation are expected until April 26, 2018.

Read this next

Digital Assets

Point72 invests $77.5 million in Bitcoin, Morgan Stanley holds $269.9 million

Point72, the $34 billion hedge fund owned by billionaire and New York Mets owner Steven Cohen, held $77.5 million in the Fidelity Wise Origin Bitcoin Fund (FBTC) at the end of the first quarter, according to a recent filing.

Digital Assets

Binance claims Nigerian officials sought $150 million bribe

A Nigerian court has ruled that Tigran Gambaryan, a Binance executive detained on charges of tax evasion and money laundering, can stand trial on behalf of the world’s largest cryptocurrency exchange.

Digital Assets

Kraken reviews Tether listing in Europe ahead of MiCA adoption

Cryptocurrency exchange Kraken is “actively reviewing” whether to delist the stablecoin Tether (USDT) from its European platform, according to a report by Bloomberg.


Discover How MoonBag Coin Presale Stacks Up Against Dogecoin & Litecoin

Discover how the MoonBag Coin presale compares to Dogecoin and Litecoin, with unique features, a robust presale structure, and new opportunities in 2024.

Fundamental Analysis, Market News, Tech and Fundamental

Global FX Market Summary: Federal Reserve Policy, USD, May 17 ,2024

Overall, both the Federal Reserve’s policy and the US dollar’s outlook are shrouded in some degree of uncertainty.

Market News, Tech and Fundamental, Technical Analysis

Ethereum Technical Analysis Report 17 May, 2024

Ethereum cryptocurrency can be expected to rise further toward the next resistance level 3200.00, which is the top of the previous impulse wave i.

Digital Assets

Hong Kong adopts digital yuan payments through Chinese banks

Hong Kong has launched a pilot program enabling digital yuan payments through major Chinese banks, marking the first instance of China’s digital currency project being deployed outside the mainland.

Retail FX

Saxo Bank increases client assets five-fold to $116 billion

Copenhagen-based broker Saxo Bank has achieved a major milestone, surpassing $116 billion (DKK 800 billion) in client assets.

Inside View

ISDA says US Basel III “endgame” to heighten market risk capital

ISDA further explained that, by requiring banks to hold additional capital that is misaligned with levels of risk, the proposal would significantly reduce capital market access for US end users and businesses, restrict the ability of businesses to hedge exposures to changes in commodity prices, and increase the cost of everyday consumer goods, including food and gasoline.