Australian Regulators Weekly Wrap — Monday, 6 March 2023

Keeping on top of the latest financial services regulatory & compliance trends? Investing time in your professional development within a rapidly changing financial services industry is challenging. To meet that challenge, the Australian Regulators Weekly Wrap is designed to keep you at forefront of your practice by quickly setting out the top 5 developments from the past week, analysis and practical considerations for the future.

1. Cyber security: RACQ: A new Coordinator for Cyber Security will be created, who will be given new powers to protect Australians from mass attacks under the Hon. Clare O’Neill. The coordinator will be located within the Department of Home Affairs, with the exact nature of their powers to be decided upon following a roundtable of industry experts and department heads. Designed to combat moves by State-sponsored actors, in part, it is a great move by the Albanese Government.
2. CBDCs (RBA): The Reserve Bank of Australia (RBA) has announced a collaboration with the Digital Financial Cooperative Research Centre (DFCRC) on a research project to explore potential use cases of CBDCs in Australia. It is big news! This project involves selected industry participants – many of them co-sponsored by large banks from what I have observed e.g. ANZ – and will explore several use cases in a limited-scale pilot CBDC. The main ones I have seen are those connected with corporate bond settlement, tokenised FX settlement, GST automation, CBDC custodial models, livestock auction (which I love, very Aussie!), high quality liquid assets securities trading, interoperable CBDC for trusted web3 commerce, funds custody, construction payments and tokenised bills.
3. Token mapping (Treasury): The token mapping papers are now all in with Treasury, which has a large task ahead sorting through them and figuring out which ideas are good ones and which can safely be left behind. Ours is here, and we favour an iteration on the existing AFSL regime instead of new licences / approaches to licensing e.g. ‘token systems’ – we want to keep the existing products perspective, we stress the need for an effective definition of digital assets to define our regulatory perimeter (much like the UK has) and also call for some sweeteners for the Web3 industry e.g. tax incentives like the US has. We’d love your feedback and can’t wait to see the other feedback papers!
4. FAR (Parliament): Assistant Minister Stephen Jones has committed to getting FAR through this Autumn sitting, and the only days both houses are sitting is in March. That means that the bill is highly likely to go through in its original form soon then i.e. no fines. There are outstanding questions e.g. retrospectivity of matters for consideration when it comes to ASIC / APRA approvals, but this is one to focus on this month. FAR is the biggest financial services regulatory change in a generation, and those banks, super funds and insurers who haven’t started to engage with its implementation will need to do so soon.
5. Terracom (ASIC): ASIC has commenced civil penalty proceedings in the Federal Court against TerraCom Limited and its directors / officers. The case concerns the conduct of those parties following whistleblower allegations made by a former employee – ASIC alleges that TerraCom and its senior company employees engaged in conduct that harmed a whistleblower who revealed the alleged falsification of coal quality certificates. It is the first time ASIC has taken action for alleged breaches of the whistleblower provisions, and so will be one to watch closely. ASIC is seeking declarations of contravention, pecuniary penalties, disqualification orders and costs. Deputy Chair Court said that combatting governance failures will remain a key priority for ASIC, and it appears to share that focus in common with APRA this year.

Thought for the future: A big week in Australia for blockchain technology, and one that demonstrates its potential beyond currencies. It is worth a look at the breadth of projects on the RBA here, as this is the future in action,

Published on Australian Regulators Weekly Wrap. 

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Authored by:

Liam Hennessy, Partner