Treasury Laws Amendment (2016 Measures No. 1) Act 2017 (25 of 2017)

Schedule 5   Client money

Part 2   Client money reporting rules

Corporations Act 2001

14   After Subdivision A of Division 2 of Part 7.8

Insert:

Subdivision AA - Client money reporting rules

981J Client money reporting rules

(1) ASIC may, by legislative instrument, make rules (the client money reporting rules ) dealing with matters as permitted by this Subdivision, for purposes relating to derivative retail client money.

(2) The regulations may provide that the client money reporting rules:

(a) cannot impose requirements (or certain kinds of requirements) in relation to certain classes of persons or money; or

(b) can only impose requirements (or certain kinds of requirements) in relation to certain classes of persons or money in certain circumstances.

981K Matters that may be dealt with in client money reporting rules

(1) The client money reporting rules may impose any of the following kinds of requirements:

(a) requirements to report information (see also paragraph (2)(b));

(b) reconciliation requirements (see also paragraph (2)(c));

(c) requirements that are incidental or related to the requirements mentioned in paragraph (a) or (b).

(2) The client money reporting rules may also deal with matters incidental or related to requirements referred to in subsection (1), including any of the following:

(a) the classes of money in relation to which particular requirements apply;

(b) for requirements to report information:

(i) to whom information is required to be reported; and

(ii) the information that is required to be reported;

(c) for reconciliation requirements:

(i) the information that is required to be reconciled; and

(ii) how reconciliations are required to be reviewed or approved, including who is required to review or approve reconciliations; and

(iii) to whom reconciliations are required to be submitted;

(d) the financial services licensees who are required to comply with requirements imposed by the rules;

(e) the manner and form in which persons must comply with requirements imposed by the rules;

(f) the circumstances in which persons are, or may be, relieved from complying with requirements in the rules that would otherwise apply to them;

(g) the keeping of records, or the provision of records or other information, relating to accounts maintained for the purposes of section 981B;

(h) the keeping of records, or the provision of records or other information, relating to compliance with (or determining whether there has been compliance with) the rules;

(i) any matters that the regulations provide, for the purposes of this paragraph, may be dealt with in the client money reporting rules;

(j) any other matters that the provisions of this Act provide may be dealt with in the client money rules.

(3) The client money reporting rules may include a penalty amount for a rule. A penalty amount must not exceed $1,000,000.

981L ASIC to consult before making rules

(1) ASIC must not make a client money reporting rule unless ASIC has consulted the public about the proposed rule.

(2) Without limiting the ways in which ASIC may comply with the obligation in subsection (1) to consult the public about a proposed rule, ASIC is taken to comply with that obligation if ASIC, on its website:

(a) makes the proposed rule, or a description of the content of the proposed rule, available; and

(b) invites the public to comment on the proposed rule.

(3) A failure to consult as required by subsection (1) does not invalidate a client money reporting rule.

981M Complying with client money reporting rules

(1) Financial services licensees must comply with the client money reporting rules.

Note: This subsection is a civil penalty provision (see section 1317E). For relief from liability to a civil penalty relating to this subsection, see section 1317S.

(2) If there is an inconsistency between the client money reporting rules, and any of the following other rules:

(a) the market integrity rules;

(b) the derivative transaction rules;

(c) the derivative trade repository rules;

those other rules prevail to the extent of the inconsistency.

Note: If there is an inconsistency between the client money reporting rules and the operating rules of a licensed market or of a licensed CS facility, the client money reporting rules prevail: see subsections 793B(2) and 822B(2).

981N Alternatives to civil proceedings

(1) The regulations may provide for a person who is alleged to have contravened subsection 981M(1) (complying with client money reporting rules) to do one or more of the following as an alternative to civil proceedings:

(a) pay a penalty to the Commonwealth;

(b) undertake or institute remedial measures (including education programs);

(c) accept sanctions other than the payment of a penalty to the Commonwealth;

(d) enter into a legally enforceable undertaking.

(2) The penalty payable under regulations made for the purposes of paragraph (1)(a) in relation to a client money rule must not exceed three-fifths of the penalty amount set out in the client money rules for the rule.

(3) Without limiting regulations that may be made for the purposes of paragraph (1)(d), those regulations may provide for one or more of the following kinds of undertakings:

(a) an undertaking to take specified action within a specified period;

(b) an undertaking to refrain from taking specified action;

(c) an undertaking to pay a specified amount within a specified period to the Commonwealth or to some other specified person.

981P Compliance with requirements to provide data or other information to ASIC: protection from liability

If:

(a) a financial services licensee, or a person acting on behalf of a financial services licensee:

(i) provides data or information to ASIC; or

(ii) otherwise allows ASIC access to data or information; and

(b) the licensee or person does so, in good faith, in compliance with a requirement imposed by or under a provision of the client money reporting rules;

the licensee or person is not liable to an action or other proceeding, whether civil or criminal, for or in relation to the conduct mentioned in paragraph (a).