Unauthorised banker hit with injunctions

The Australian Prudential Regulation Authority (APRA) pursued an injunction in the Federal Court of Australia against Mr Garrett last month (July 2023) in order to prevent him from engaging in alleged unauthorised banking businesses, including using the word “bank” without a licence.

Mr Garrett’s supposed businesses include Dynamic Capital Bank, Banque de Capital Dynamique, and Banco di Como.

According to APRA, Mr Garrett had ignored requests from the regulator to cease in referring to his businesses as “banks” and carrying out any banking business without proper authorisation.

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.

Justice Michael Lee handed down the decision that made immediate orders to permanently restrain Mr Garrett from carrying on a banking business and “assuming or using the words ‘bank’ (or similar words) in relation to any purported bank, business or purported business or advertising, representing, or stating that any purported bank, business, or purported business will carry on banking business”.

In addition, the Federal Court has ordered Mr Garrett to pay APRA’s cost of the proceedings.

APRA deputy chair Margaret Cole stated at the time of the injunction request that consumers should research unfamiliar businesses describing themselves as banks before handing over money.

“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,” Ms Cole added.

“We have limited information about Mr Garret’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.”

This injunction followed APRA acting against BNK Banking Corporation Limited (BNK), issuing a fine of $247,500 for failing to meet reporting obligations.

According to APRA member Therese McCarthy Hockey, this action sent a message to the industry of the importance of meeting reporting standards.

“We expect all entities to be compliant with our reporting standards to ensure APRA always has the most up-to-date information on the industries we regulate,” she said.

“Access to accurate and timely data is critical for APRA to effectively monitor the safety and stability of Australia’s banking, insurance and superannuation systems.”

[RELATED: APRA takes action against ‘unauthorised’ bank]