Legislative Regulatory Framework Applicable on Bank of America Corp

This study explores the legislative regulatory framework applicable on Bank of America Corp in Australia. It discusses the authorized structure for banking regulations and the impact of treaties, conventions, and agreements on the products and services of banking corporations. The study also provides information about the company's operations, assets, and branches in Australia.

Business Law
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Table of Contents
Introduction......................................................................................................................................3
Legislative regulatory framework applicable on Bank of America Corp........................................3
Authorized structure for banking regulations..............................................................................4
Treaties, conventions or agreements that have impacted on the products or services of banking
corporations.....................................................................................................................................7
References......................................................................................................................................11
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EXECUTIVE SUMMARY
The present study is related with the evaluation of financial institution named Bank of America
Corp. The company is engaged in managing the wealth, investment, and consumer banking
services throughout the world. For the protection of the consumers, it is essential that Banking
Corporations must comply with the relevant rules and regulations. With this aspect, the present
study states the legislative regulatory framework of Australia. It shows that government made
various rules for governing the banking organizations of Australia. Further, this study explains
about the treaties, conventions, and agreements that made the impact on the financial industry of
country. It depicts that financial market of the country has expanded with the increasing
governance of the treaties and agreement between the countries.
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INTRODUCTION
Bank of America Corporation throughout its Subsidiaries Company offers financial and banking
products as well as administration services in the whole world to their customers including
business investors, small and middle –market companies, huge companies. Operations that are
performed by the company are wealth and investment planning in the worldwide market in terms
of consumer banking as well as global banking. The numbers of employee that are employed in
the banks are around 46,000 employees. Global Headquarter of the company is situated in
Melbourne. As per the survey of 2016, the total assets that are within the company are of
US$726 billion and recorded total income was US$4,106 million. Local branches of Bank of
America, in Australia, are (Sydney NSW 2000Mlc Center Sydney NSW 2000, Australia), (Ba
Securities Australia LtdGovernor Phillip Tower Sydney NSW 2000, Australia) and (Head
OfficeMlc Centre Sydney 2000, Australia).
LEGISLATIVE REGULATORY FRAMEWORK APPLICABLE ON BANK
OF AMERICA CORP
In Australia, it is mandatory for the entities to take permission from the Australian Prudential
Regulatory Authority for conducting the banking business. The authority may grant permission,
based on some conditions. Any foreign branch, which is permitted for accepting any authorized
deposit-taking organizations, cannot accept funds or initial deposits less than AU $25000 from
the individual as well as non-corporate organizations. However, from the non-resident,
incorporated entities, and their worker, foreign branches can accept initial deposit and funds of
any amount (Howell, 2015). Generally, the foreign bank does not require permission for a
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license from the APRA to conduct the business with counterparties of Australia from its offshore
offices. Further, the authority also grants some exemption related to the licensing requirement in
Australia. It consists of limited class order exclusions of normal application for foreign financial
service providers which are governed by definite foreign regulators in an area that have an
identical level of investor protection to Australia (Davis, 2016).
Any foreign organization running banking business in Australia has to register with the
Australian Securities Investment Commission. Further, if any foreign company maintains a bank
account, invest any of its funds, keep any property, and create any charge on any property, then it
is not regarded as carrying business in Australia (Berg, 2016).
Authorized structure for banking regulations
The main acts of governing the banking system in Australia, are Banking regulations Act 1959,
Reserve Bank Act 1959, Corporations Act 2001, Financial Sector (Collection of Data) Act 2001,
Financial Sector (Shareholding Act) 1998, Financial Sector (Transfer and Restructure Act 1999).
These Acts defines the regulatory framework such as guidelines, standards which must be
followed by the banking corporations.
There are three main regulatory authorities, who have responsibility for supervision and
administration of the banking corporations, namely the Australian Prudential Regulatory
Authority, Australian Security and Investment Commission, and Reserve Bank of Australia. The
obligation and responsibility of APRA are to supervise the life, and general insurance companies
authorized deposit-taking institutions, and the superannuation industries (Arner, Barberis and
Buckey, 2016). Further, the ASIC is responsible for the safety and security of investor and
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conduct of market. Moreover, the Reserve Bank of Australia is responsible for the management
of financial system consistency, payment system and monetary policy.
The main objective of Australian Prudential Regulatory Authority is to set up and apply the
prudential principles and practices considered to make sure that, financial promises created by
the financial institutions are according to the consistency, stable and competitive financial
system of the country (D’Avino, 2017). The authority has several powers to govern the banking
corporation of the country, which is as follows –
 The authority has the power to revoke the license of any entity if it fails to comply with
the regulatory requirement or standards.
 It has the power to create, amend and implement the prudential principles.
 It has the power to collect the information, carry onsite investigation and may order for
audit by the third party.
 It may also intervene in the operation with authorized deposit-taking institutions.
In addition, the authority also created the norms for authorized deposit-taking institution and
non-operating holding companies on the basis of banking supervision rules published by BCBS
(Basel Committee on Banking Supervision). This framework consists of several aspects such as
liquidity, credit risk, market risk, adequacy of capital, covered bonds, business continuity
management, large exposures, risk management related with the credit card operations,
governance and proper management, audit and reporting and many others. All principles are
regularly reviewed and updated by the APRA (Yao et al. 2018).
The Australian Securities Investment and Commission directs the Corporation Act, consisting
the rules prevailing the financial reporting, activities of companies and other organizations in
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Australia (along with the foreign company running a business in Australia), corporate
fundraising, outside administration and insolvency and several other aspects. The rules and
regulation of the Corporation Act administered by the ASIC related with the market delinquency
provisions, consisting of insider trading, market manipulation, fraud conduct. Further, ASIC also
reviews the assessment for the enhancement of financial adviser according to that act (Hunt,
2016).
Moreover, the central bank of Australia is known as the Reserve Bank of Australia. It promotes
the security and effectiveness of the payment system in the country. Overall monetary policy and
consistency in the financial system are maintained by the RBA. In addition, it also issues the
financial consistency standard for settlement and clearing facilities and observes the compliance
with those standards (Hargovan, 2019). As per the RBA Act, the RBA has to apply its power
with the intention to make the participation in the consistency of the currency, management of
full employment, and economic growth, prosperity and welfare of the people of the country.
There is specific provision contain in the Australian securities and investment commission act
2001, which prohibit the unethical conduct, unfair practice, misleading representation, and
deceptive conduct by the banking corporation, which leads to the consumer protection. Further,
it is also mandatory for banking corporations to secure private and confidential information
about their customers. It is regulated by the Australian Privacy Principles which contain schedule
1 to privacy act 1988. The banking corporation of Australia has to comply with all provision
regarding the collection, disclosure and use of private information of the customers (Nassios et
al. 2016). Further, for the prevention of money laundering practice, the government made the
Australian Transaction Reports and Analysis Centre, which oversee the compliance with
provisions related with the anti-money laundering. Moreover, any entity carry the financial
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operations in Australia have to hold the Australian Financial Service License. The consumer
interest is protected by the National Consumer Credit Protection Act 2009.
TREATIES, CONVENTIONS OR AGREEMENTS THAT HAVE
IMPACTED ON THE PRODUCTS OR SERVICES OF BANKING
CORPORATIONS
In Australia, the Banking system is consistent, trustworthy and transparent; however, it is
different from the international banking system in terms of structure and operations. There is a
slight difference in the retail bank and investment bank in Australia. The government of
Australia has entered into several treaties and agreements with other countries (Millar, 2015).
Due to this, there is increasing deregulation and privatization is taking place in the banking
system of Australia. Therefore, foreign banks are permitted to carry their operations in Australia
(Keenan, Kemp, and Ramsay, 2016). It assists in the enhancement of the financial market and a
broad range of financial services, consisting of stockbroking, underwriting of security to retail
customers, life and general insurance services, and various other services. It also includes
making of consumer loan as well as corporate loan. It also helps in increasing the competitive
market for banking system with merchant banks and brokerage house.
Moreover, the government of Australia granted permission to non-Australian banks to establish
their branches in the country to offer the wholesale market (.Armstrong, and Nottage, 2016).
Although, as per the banking regulations, non-Australian banks by setting up their subsidiary
company can engage in the retail banking activities in Australia.
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Reserve Bank of Australia governs the payment system and determines the monetary policy in
Australia. Further, the Australian Prudential Regulatory Authority supervises the banks, building
societies, private health insurance, life insurance, credit unions, and members of the
superannuation industry, Reinsurance Company and others (Nottage, 2015).
In addition, Commissioner Hayne focuses the aspect that specific agreement fixed within the
industry, then there is no distinction for poor consumer results. It is required to be a credible
aspect for entrenched agreements, and in connection to a consumer addressing industries, the
reasoning must be founded on the interest of consumers, and the agreement should not be
operating against the interest and benefit of consumers. Along with this, the commissioner also
stipulates that where the participants of the market analyzed that significant amendment should
be made to their activities in the market, even though they did not make any amendment in their
own companies because of a viewpoint of initial mover shortcoming (Nottage, 2015). The
commissioner observes these as being a matter for government intervention relevant throughout
the industry, by which the initial mover shortcoming can be mitigated. In the report of
Commissioner Hayne, it was stated that his contemplation and discoveries on codes of industry,
generally are not to make interruption with wide development or activities of an industry code.
Further, it was also commented by the commissioner that at the time of approving the industry
code of conduct, the Australian Securities and Investment Commission might consider the
several aspects. It may consider that whether the specific provision is considered as enforceable
code provision or not, and ascertained that non-enforceable principles of industry code would
continue to play a significant role in determining the standard of behaviour in the industry
(Nottage, 2015). The important implication of this report is that a fundamental and basic standard
is developed by the commissioner. According to this, a party who is performing the contract
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according to the conditions, and if another party is providing the fee, rate or any discount, then it
is essential for the first party to have administration, supervision and information technology
system in place to fulfil the promise before party make an offer. It ensures the fair and
transparent conduct of parties, which may otherwise mislead. If the party did not fulfill the
promise, then they must rectify the result of default in the earliest possible manner (Widdows,
2017).
Further, the treaties and agreement also create an impact on the income and the charge of income
tax. Any interest earned by the government of another country, from the investments of
government reserve assets and interest earned by the financial institutions resident in the other
country, then in such situation no interest levy in the source country. It also includes the interest
derived by the money institutions, and bank running central banking activities (Kawharu, and
Nottage, 2017).
Along with the above aspect, dividend received by the investor is credited in their bank account.
With this aspect, it is very important to determine the source country in which dividend is
generated and another country in which the investors possess their bank account. Further, a tax
treaty signed between Germany and Australia, which consider the effect in connection to WHTs.
Normally,a dividend of the source country is limited to 15%, condition to an exemption is
provided for the dividend paid to beneficially entitled organizations that fulfil certain public
listing requirements and possess at least 80% of the right of voting in the company paying a
dividend. Further, a limit of 5% is applicable to the dividend paid to organizations with the right
of voting of at least 10% in the dividend paying company. The tax on interest earned on source
country is normally limited with 10%. In addition, if interest is paid to financial institutions and
government body carrying government activities, then Zero interest WHT will be payable.
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Moreover, dividend WHT exemption is applicable in the case, if the dividend is paid to the
government, local authority, the central bank, and political subdivision (Manager,and Peinhardt,
2017).
By considering the above aspect, it has been observed that treaties, agreements between the
countries have expanded the financial market in Australia.
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REFERENCES
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Hunt, C., 2016. A short history of prudential regulation and supervision at the Reserve
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