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BSL201-Tyree_Alan_L-Banking_law_in_Australia-Banking_law_in_Australia_Pages_1-18-pp1-18.pdf

BSL201-Tyree_Alan_L-Banking_law_in_Australia-Banking_law_in_Australia_Pages_1-18-pp1-18.pdf

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COMMONWEALTH OF AUSTRALIA Copyright Regulations 1969 WARNING This material has been reproduced and communicated to you by or on behalf of Murdoch University pursuant to Part VB of the Copyright Act 1968 (the Act). The material in this communication may be subject to copyright under the Act. Any further reproduction or communication of this material by you may be the subject of copyright protection under the Act. Do not remove this notice Course of Study: (BSL201) "Finance Law" Title of work: Banking law in Australia, 6th ed. (2008) Section: Banking law in Australia. Pages 1-18 pp. 1--18 Author/editor of work: Tyree, Alan L. Author of section: Alan L. Tyree Name of Publisher: LexisNexis Butterworths
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1 THE AUSTRALIAN BANKING SYSTEM learning objectives When you complete this chapter, you should be able to: 1. explain the structure of the Australian banking system; 2. explain the purpose of prudential supervision and the form that it takes in the Australian financial system; 3. discuss the background of the current anti-money laundering (AML) and counter-terrorist financing (CTF) legislation; 4. explain the different problems in dealing with AML and CTF; and 5. discuss the application of the proceeds of crime legislation. 1.1 Bankers often consider regulation as an unwelcome interference by bureaucratic meddlers. However, history teaches us that banking is an inherently dangerous business. Competitive pressures tempt bankers to engage in risky practices, and bank failures cause hardship far beyond the boundaries of the bank itself. More recent history teaches us that unscrupulous people may use banks for illegal purposes. These purposes include money laundering and financing of terrorism and other criminal activity. Ordinary banking practice has failed to curb the illegal use of bank facilities. Finally, banks and banking are extremely important to the community. There is a natural desire to ensure that banking services do not fall under the control of a single person or group. It is generally believed that a concentration of ownership or control would be against the best interests of society as a whole. This chapter discusses the forms of regulation that attempt to control these three problems. Prudential regulation attempts to ensure good overall banking practice. 1
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BANKING LAW IN AUSTRALIA Shareholding restrictions attempt to ensure that banking is not controlled by too few. Money laundering and anti-terrorist financing legislation attempt to ensure that banking facilities are used for legitimate purposes. Structure of Australian banking 1.2 The Reserve Bank of Australia is the country's central bank. It was created by statute in 1959 and took over the central banking function from the Commonwealth Bank which had exercised that function since the mid-1920s. The Reserve Bank was also responsible for prudential supervision until 1998 when the function was transferred to the Australian Prudential Regulation Authority (APRA).
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