APRA has filed for an injunction in the Federal Court of Australia to prevent an individual from engaging in unauthorised banking activities and using the term “bank” without the appropriate licence.
The respondent in the case is Andrew Morton Garrett, who is allegedly associated with several purported businesses, including Dynamic Capital Bank, Banque de Capital Dynamique, and Banca di Como.
APRA alleged that Garrett operated and marketed these businesses in Australia as banks, despite lacking the necessary authorisation to conduct banking operations.
Despite a prior demand from APRA to cease referring to these entities as “banks” and to discontinue any unauthorised banking activities, Garrett has allegedly not complied, according to APRA which released a statement about the case on Wednesday.
Under the Banking Act 1959, only authorised deposit-taking institutions (ADIs) licensed by APRA are legally permitted to carry on banking business in Australia, including referring to themselves as “banks” or describing their services as banking.
APRA deputy chair Margaret Cole (pictured above) said APRA urged consumers to do their research before handing money over to unfamiliar businesses describing themselves as banks.
“APRA’s licensing regime, prudential framework and supervision protect bank depositors by requiring any business wanting to conduct banking business to meet stringent standards and requirements in areas such as capital, liquidity, governance and risk management,” Cole said.
“Deposits in APRA-regulated banks are also protected by the Government’s Financial Claims Scheme (FCS) up to $250,000 per account holder.”
Cole said APRA had “limited information” about Garrett’s businesses, including how many customers they have, because “we don’t regulate them, and they don’t report data to us”.
“However, we are taking action to help prevent Australians mistakenly believing they are depositing money with an APRA-regulated institution and receiving the same protections,” Cole said.
On its website, Dynamic Capital Bank claimed it was a “Private Investment and Trading Bank” with “global reach”.
The website claimed the business was under a “Banking License granted by the Crown Attorney General (“the CAG”) acting for the Liquidator and Managing Controller Appointed to the Liquidator and Managing Controller Appointed Crown Globally and the Secretariat of the Commonwealth of Nations (Liquidator and Managing Controller Appointed)”.
APRA said that if people were unsure whether a financial institution is a bank, they can check the list of all APRA-regulated ADIs at Register of authorised deposit-taking institutions or contact APRA.
More information about the FCS is available at Financial Claims Scheme.
