Banker Customer Relationship - … viewAuthorised by Australian Prudential Regulations Authority...

BANKER/CUSTOMER RELATIONSHIPWhat is a bank?

No real statutory definition; the Banking Act 1959 restricts entry into ‘the business of banking’. ss 8, 9(3) BA, they must be:

a) an ADI (Authorised deposit-taking institution)b) A companyc) Authorised by Australian Prudential Regulations Authority (APRA) to carry on

banking business and utilise the word “bank”.

Bills of Exchange Act defines a “banker” as a “person who carries on the business of banking” s. 4 BEA

Restrictions on use of the word “Bank” s. 66 Banking Act s. 66(1) – A person is guilty of an offence if: (a) the person carries on a financial business and (b) the person assumes or uses, in Australia, a restricted word or expression and (d) APRA did not consent to that assumption or use of that word…s. 66(4)(a) – a reference to a restricted word or expression is a reference to

i) the word bank, banker or banking

What is a banking business?

Section 5 Banking Act (mats pg. 1)Banking business means a business that is carried on by a corporation that consists of:Both taking money on deposit and making advances of money; and

- current accounts & cheque collection – established by UDT v Kirkwood- safekeeping of valuables

Who is a customer?

No statutory definition, but includes:- Minors- Companies, trustees, partners (s. 30(1), (3) Corporations Act)- Other banks

Customer relationship usually begins upon opening an accountCommissioners of Taxation v ESA Bank

Accounts opened under false names (materials p. 64)s. 24 Fair Transactions Reports Act 1988- Deals with persons opening under false names- Persons who have more than 1 name

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THE BANKING CONTRACT

Basis of banker/customer relationship- Based on contract law- Terms are implied by banking practice- Other services:

o Liabilities for other services are based on other relationships, eg:o Duty of care (tort of negligence)o Principal/agent relationshipo Mortgagor/mortgageeo Bailor/bailee

Debtor/Creditor relationshipFoley v Hill (1848)

- Summary of Lord Cottenham: When a banker receives money from a customer, or receives money from a 3rd party for the account of a customer, the bank is acting as a borrower. The ownership of the money is transferred to the banker who is under a contractual obligation to repay the money to the customer.

Care in giving adviceHedley Byrne v Heller (Tyree 5.52)Foreseeability, assumption of responsibility and reliance are all intrinsic.In Hedley Byrne:

- Written opinion was sent by Heller & partners to the Nat Provincial Bank- Opinion was in response to a request from the bank which was itself in reply to a

request from Hedley Byrne concerning the financial standing of one of Heller’s customers. Reference was headed ‘for your private use’, containing an express disclaimer of liability.

- House of Lords held that the relationship between the ultimate inquirer and the banker raised a duty to exercise due care when providing requested information.

Duty of Secrecy

Tournier’s v NPUB – establishes that it is an implied term of the contract that the banker will not divulge to 3rd parties, without the consent of the customer, any information relating to the customer, the state of his accounts, or any transactions he had with the bank.

- further affirmed in clause 22 Code of Banking Practice

Exceptions to SecrecyExceptions are warranted only when:

- Compelled by law- Duty to the public- Where interests of the bank require disclosure- Customer consent, guarantors (as per Privacy Act)



Failure of BankCustomer receives no preferential treatment in the event of bank failureIf account is in credit, must prove for the amount of the debt and will rank behind secured creditors of the bank

Case: Re Russian Commercial and Industrial BankThe relationship is terminated and any amount standing to the credit of the customer becomes immediately due and payable

New implied TermsCtts are reluctant to agree with the argument that suggests terms are for the benefit of the bank or for the customer

Implied terms of the banking ContractQualified in Joachimson v Swiss Bank – a recognition of the fact that there is a single contract between the banker and the customer which has many terms: ie.

- Receive money and collect bills and cheques;- Bank borrows and undertakes to repay upon the demand of the customer;- The promised repayment at branch where account is held has been superseded by

electronic banking- Conform strictly with customer’s mandate- Pay & Dishonor cheques ASAP.- Obey counterdemands- Secrecy- Reasonable notice when changing terms/terminating relationship- Duty of care:

o When dealing with operation of accounts, and dealing with chequeso With regards to advice & information

Unilateral alterationBanks may attempt to change terms of the banker-customer contract by using notice of 1 form or another. The problem is to show that the notice was brought to the attention of the customer and the customer indicated agreement to the new term

Case: Burnett v Westminister Bank Customer had 2 a/cs with bank, where changes to a/c’s happened 1 was computerized 1 wasn’t Wrote out a cheque, but then wanted to stop payment He told non-computerized bank to stop Bank didn’t, cause it was done through the computer Held customer won, as the notices by the bank had not been properly brought to

the customers attention

Written agreements



Long terms in contracts cannot be introduced without making the customer aware of the changed responsibilitiesCase: Tai Hing Cotton Mill v Liu Chong Hung Bank

Number of clauses were inserted in written agreements or referenced Customer must check statements of errors (otherwise no blame) Customer failed to notify forgeries

Held that although such terms had a contractual effect, they did NOT prevent the customer from challenging the validity of the statements since their terms didn’t bring home to the customer either the intended importance of the inspection of the a/cs or the fact that they were intended to have conclusive effect against he customer in the event that no timely query should be raised

Other Banking Details (TYREE)

Accounts in Credit – page 55

Dormant accounts – page 55

Term Loans – Page 57

Unsecured Overdraft Debtor – Page 58

Overdraft Account Guarantor – Page 60

Secured Overdraft Account – Page 62

Savings Accounts – page 63

Minors – Page 70

Joint Accounts – Page 71



Customer-Banker RelationshipWhat is the definition of Customer?

No statutory definition Matthews v Williams - ‘continuing relationship of some duration was required

and sufficient to form the relationship’ Great Western Railway Co Ltd v London County Banking – ‘if there is no

account and no intention to open an account, then that person is NOT a customer’

Was there a relationship prior to opening an account? Commission of Taxation v English Scottish Australian Bank – ‘it is determined

that the existence of an account is ordinarily sufficient to establish the banker-customer relationship although this is not limited as there may be circumstances where the relationship is established prior to the opening of an account’

REFER Woods v Martin – PAGE 45 for o Customer no having a bank account, but having a relationship with

bank

Who is the banks customer? When one ‘financial institution’ is collecting money on behalf of another, then it

is no longer important to establish that the other institution is a customer.

Fraud & False Identity Stoney Stantion Supplies v Midland Bank Ltd

o Account was opened with a bank by a person who represented himself as having the authority of a company

o Documents were presented as forgeries from start to endo Held that there had never been a relationship of banker and customer

between the bank and customer.

What is the general customer-banker principle? Normal contract rules apply Great Western Railway Co Ltd v London County Banking - ‘If the bank could

have refused it and didn’t – then the liability remains on the bank’

Terminating the banker-customer relationship Joachimson Case – ‘the bank cannot terminate the banker – customer relationship

without reasonable notification to the customer.’

‘Reasonable Notification’ – Prosperity v Lloyds Bank – Must give at least 1 months notification

On Death – It is assumed that when the bank receives notification, the account is terminated.On Bankruptcy - It is assumed that when the bank receives notification, the account is terminated.



Entity Break-up – It is assumed when a company or partnership breaks up and the banks receives notification – the account is terminated (Re Russian Commercal & Industrial Bank case)

Does the customer have a duty of care?

Reasonable care in drawing cheques:- Macmillan [Tyree 6.3], Sydney Wide Case [6.5], Varker [6.6-7]In Macmillan:Clerk altered a cheque after the partner had signed it as space was left before the currency sign. Court of Appeal held that the customer owed the bank a duty of care when completing cheques, and that in this instance, customer was in breach.

Must notify the Bank of forgeries:- Greenwood v Martin’s Bank [6.9]The Greenwood Duty:Plaintiff’s wife forged series of cheques on his account. When he discovered it, he threatened to notify the bank, but she begged him not to. Eventually when he took action against bank to prevent debits to his account, was held that there was a breach of duty through failing to notify the bank of forgeries. Also extends to reporting any unauthorised transactions on the account (West v Commercial Bank of Australia)

No duty to check bank statements:- Tai Hing Cotton Mill v Liu Chong Hing Bank[2.52, 6.22]In Tai Hing, bank inserted a clause stating that the bank, after sending each monthly statement, could deem the balance to be correct if they did not receive written notification from the customer within ten days. Note, this is persuasive but not binding under Australian law.

Duty to care for credit/ATM card, cheque book:- Westpac v Metlej [6.18]In Metlej, customer left bank-printed chequebook in his lunchbox and cheques were stolen from it & cashed in. Established that there was a duty to care for these items, but very difficult to prove if the lack of care was the cause of the loss/theft/fraud, thus hard to uphold. Finally held that bank should have recognised the forged signature.



Rights of bankersAccount Combination [3.9] / Set-Off – cl. 17 CBPOnly two one contract b/w banker and customer, regardless of the number of accounts.Source of the combination right –Garnett v M’Kewan

o In Garnett, one account was overdrawn, the other in credit.o When a cheque was dishonoured, bank debited the account in credit with

the amount of the overdraft.o No legal obligation to give notice of this, but it is considered proper.o However, if account is governed by CBP, notice must be given.

- This right belongs to the bank, not to the customer – if a customer has more than one account with the bank, he has no right to assume bank will treat them as single entity for the purpose of meeting cheques or payments. (ie. if one account doesn’t have enough funds).

- If the account is insufficient to meet a cheque, bank can dishonour the cheque, even if another account is present, Arab Bank v Barclays Bank. Up to the bank.

There are limitations to the rightIf an agreement stipulates that accounts should be treated separately, this can be held.- People may argue that opening a 2nd account is an implied intention that the right of combination be forfeited, however this argument was destroyed in National Westminster Bank v Halesowern Presswork & Assemblies.

Banker’s Lien (11.165)A Banker’s Lien is a right conferred by law on the banker to hold a customer’s documents as security for debts due to the bank. This right exists without any need for an expressed agreement or even the customer’s awareness of the lien (as in Brandao v Barnett).

The banker’s lien is a general lien, Re Keever (A Bankrupt).Differs from a particular/specific lien, which is restricted to holding the item being dealt with (ie. a mechanic’s lien, where he holds the item being repaired); the banker’s lien is general, meaning they can retain documents until the whole of the customer’s debt is repaid.

Must be an item given to the banker in his capacity as a banker, ie. cannot be something given for safe keeping (as it is not strictly part of the banker/client relationship), but something that the bank ordinarily deals with.

The Power of SaleThis is also an important characteristic of a banker’s lien; where they can sell the documents and recoup debts from the proceeds. However, the precise scope of power of sale is unclear, ie. in Gellibrand v Murdoch, it was said the bank had no power to sell shares but could only hold them until debts repaid.

Power over sale only with regards to a few items:- Negotiable instruments, ie. cheques, bills of exchange, promissory notes



- Maybe semi-negotiable items; ie. shares, insurance policy, share warrants- Quite probably not to conveyances/certificates of title.

CODE OF BANKING PRACTICE [10-1] (CBP)

New Code released by the Australian Bankers Association.- Came into effect 08/2003- Voluntary but contractual effect.- Reviewed every 3 years- Between bank and customer (cl. 40 includes small businesses)

Part B: Key CommitmentsPart C: Information DisclosurePart D: Principles of ConductPart E: Resolution of disputes, Monitoring & Sanctions.

Bank is required to notify customer of changes If the bank intends to:

o Introduce a new fee or chargeo Vary the minimum balance to which an account keeping fee applieso Vary the method by which interest is calculatedo Vary the balance ranges within to which interests rates apply to a deposit

accounto Vary the frequency with which interest is debited or credited

Then it MUST provide 30 days notice to the customer – s18 CBP

If the customer is uncontactable this is waived s18(2)



OMBUDSMEN [10.125]The banking ombudsmen’s role is to facilitate the resolution of disputes between

customers & banks.

Other Info:- Free service to customer, developed in 1990 to offset the prohibit the cost of

litigation and due to the inadequate in-house systems in existence at the time- In 2003, it was broadened to include some non-bank members- It is an approved dispute resolution scheme by ASIC (s 912A(1)(g))- Therefore it must provide ASIC with regular reports and other info specified in

ASIC policy statement 139

Powers and functions determined by Limited to hearing disputes where the amount does not exceed $150,000 Extended to exclude claims where the complaint is part of a larger claim and the

aggregate of the claim is greater than $250,000.

Role of the Ombudsmen:An ADR/Appeal mechanism for personal disputes with banks

- no corporate customers, unless small business test satisfied (Clause 2.2)- Intention is to provide service to a consumer where it is similar to the notion of a

“retail client” in s 761G of the Corps Act 2001- The clause gives the Ombudsman the right to exclude an individual from the

operation of the scheme on the basis of the assets or wealth of the person

- Small Buss Test (Clause 2): < 100 full time employees if the buss is or includes the manufacture of goods; or < 20 full time employees for other types of buss.

What is a dispute?- It is a disagreement in relation to the provision of a financial service which has

not been resolved by the parties or certain types of privacy issues- WHERE:

o The financial service must have been provided to the disputant This brings problems with 3rd party cheques (etc)

What type of things does the Ombudsmen cover?- Any act of omission by the financial services provider in relation to a financial

service in Australia (Cl 3.1(a))- Any dispute relating to confidentiality or, in the case of an individual disputant,

relating to privacy (Cl 3.1(b))- The Ombudsman must not consider a complaint unless the senior

management of the financial institution has had an opportunity to consider the complaint. cl. 5.1(h). This is because the BFSO is an appeals system.



- The Jurisdiction arises when the bank advises that a deadlock is reached, or if 3 months passes after the complaint has been made with no response.

What financial services does it cover?- Credit trasactions (include both local and o/s credit cards)- All forms of deposit and financial investments- Any facility for management of financial risk (incl insurance)- Any facility for making non-cash payments- Leasing and hire arrangements- Confidential information (cl 5.2)- Personal info (covered by privacy act)

What can’t the ombudsmen cover?- Any dispute where the amount exceeds $250k (cl 5.1(e)- As the BFSO is intended to be a kind of appeal structure, it may not consider a

complaint UNLESS the snr management of the fin institution have had the opportunity to consider the complain (cl 5.1h)

- Disputes considered by other tribunals or dispute resolving bodies (cl 5.1(c))- Disputes considered more appropriate by other tribunals or dispute resolving

bodies (cl 5.1(d))- Frivolous and/or vexatious claims (cl 5.1(i))- Claims which fall outside certain time limits (cl 5.6, 5.7 5.8)- (typically > 2 months) (must go to BFSO within 2 months)- Any dispute which relates solely to a decision about lending or a security where

the fin services provided has made a commercial judgment (cl 5.1(a))- Complains relating to a general practice or policies (eg fees, interest rates and

other general charges (cl 5.1(b))- Test case notice (cl 8)

Procedure:- BFSO not bound by any legal rules of evidence (cl 6.1(a) and 6.7)- Guidelines are “inquisitorial”- Question and Answer type, to gain information

Bank Obligations, Access and disclosure of information:- The fin provider is obliged to comply to requests to provide any info necessary- UNLESS it breaches a duty of confidentiality owed to a 3rd party (cl 6.3)

- If info is given to the BFSO and is “confidential”, the BFSO cannot disclosure the info to any other party (cl6.5)

- AND if this is the case it may not use the info to reach a decision adverse to any party who does not have access to the info

- NOT bound by any previous decision by the BFSO (cl 6.7 and 6.8)

Settlements, recommendations and awards:- BFSO must take into a/c the relevant law, any applicable industry codes, general

banking practice and fairness in all the circumstances (cl 71)



- May have legal representation, BUT there is no disadvantage in NOT having legal representation as the BFSO uses internal & external legal advisors where appropriate

- Fairness may include considering all external circumstances

- As the BFSO aims to arrive an agreed settlement, they may ay any time seek to promote a settlement or withdrawal of the complain (cl 7.3)

- If matter CANNOT be settled by negotiation then BFSO may make a “recommendation” (cl 7.4)

- This must be preceded by 1 months notice in writing (cl 7.6)- During this time parties may make further submissions on the dispute (cl 7.5(b))- At the end of the waiting period, the “recommendation” must be given in writing

and include reasons for the recommendation (cl 7.7)- The parties are given a date of acceptance which must be no more than 1 month

except in exceptional circumstances (cl 7.8)

- If both parties accept eh terms of the “recommendation” then matter ends- If disputant accepts but member rejects, then BFSO may make a determination

against he member (cl 7.9)- This determination may include a some of money not > $150k, which is

considered to be fair and adequate compensation to the disputant for any loss or damage suffered (cl 7.10 and 7.12)

Jurisdiction of the Ombudsmen is limited:- Must be within 2 months and not a matter before the courts- The bank must have attempted resolution- The decision is binding on the bank (includes damages)- Customer is bound only when settlement terms are accepted- No test cases, disputes about interest rates, commercial judgement or policy.

Clause 5.1A (391 FLM)



STATUTORY DUTIES OF BANKS & AUTHORISED DEPOSIT-TAKING INSTITUTIONS (ADI’s)

Statutory duties override common law duties if there is a conflict.

Statutory Duties include those stipulated in:- ASIC Act: applies to most financial services that are ‘financial products’ s.12BA- Trade Practices Act 1974- Financial Transaction Reports Act 1988- TPA still applies to services including banker/customer contracts

o But NOT to ‘financial services’, s. 51AF TPA

MISLEADING AND DECEPTIVE CONDUCT

s. 52 TPA imposes a prohibition on misleading and deceptive conduct.s. 12DA ASIC Act reflects & repeats this prohibition on M & D conduct.

Note, that under some circumstances silence and/or non-disclosure can be considered misleading and deceptive conduct for the purposes of the TPA. Henjo v Collins

ss. 51A – Interpretation of Misleading & Deceptive(1) Where a corporation makes a representation with respect to any future matter (including

the doing of, or the refusing to do, any act) and the corporation does not have reasonable grounds for making the representation, it shall be taken to be misleading

(2) For purposes of applying subsection (1), the company must adduce evidence to the contrary otherwise it will be deemed that they did not have reasonable grounds.

53(e), (f) TPAA company shall not, in trade or commerce, in relation to the supply of goods or services:e) make a false or misleading representation with respect to the price of goods or servicesf) make a false or misleading representation concerning the need for any goods or services

Guarantees, advice and foreign exchange dealings are still dealt with under TPA

IMPLIED WARRANTY OF SERVICES

Section 74 TPA & s. 12ED ASIC Acts. 74(1) – For everyone contract of supply in the course of a business of services to a consumer there is an implied warranty that the services will be rendered with due care and skill and any materials supplied in respect of the services shall be reasonable fit for the purpose for which they are supplied.



CANNOT BE EXCLUDED.

Definition/Test for ‘Consumer’, s. 4B TPA / s. 12BC ASIC Act

Conduct by directors, servants or agents, s. 84In a proceeding against a body corporate in respect of its conduct, it is held that the state of mind of a director, servant or agent who engaged in that conduct and who had the authority to do so is assumed to also reflect the state of mind of the company.

REMEDIES

Section 80 TPA – Injunctions(4) The power of the Court to grant an injunction restraining a person from engaging in conduct may be exercised. [see pg. 37 of Mats]

Actions for damages – s. 82 TPA(1) A person who suffers loss or damage by conduct of another person that was done

in contravention of a provision may recover the amount of the loss or damage by action against that person ro against any person involved in the contravention.

Other orders – s. 87 TPAThe court may, whether or not it has granted an injunction or makes an order under section 86, 86C or 86D, make such order or orders as it thinks appropriate against the person who engaged in the conduct or a person who was involved in the contravention, if the Court considers that the order concerned will compensate the first-mentioned person in whole or in part for the loss or damage or will prevent or reduce the loss or damage.



UNCONSCIONABILITY IN ‘FINANCIAL SERVICES’

ASIC Act ss. 12CA, CB, CC12CA – Unconscionable conduct within the meaning of the unwritten law (common)A corporation must not, in trade or commerce, engage in conduct in relation to financial services if the conduct is unconscionable within the meaning of the unwritten law.

Overlaps with Amadios Case: the one where the son uses his parent’s home as security for loan, but they couldn’t understand/were influenced by him unconscionably).

12CB – Unconscionable conductFactors to determine Unconscionability:

- bargaining position of the corporation and the consumer (12CB(2)(a))- ability to understand transaction and relevant documents (12CB(2)(c))- any unfair tactics used, or undue influence or pressure applied (12CB(2)(d))- relative costs of other equivalent services (ie. if ripping off) (12CB(2)(e))- if consumer had to comply with unreasonable conditions (12CB(2)(b))

TPA UnconscionabilityTrade practices act unconscionability is word-for-word the same as ASIC Act unconscionability. There are a few extra provisions however for business transactions.

s. 51AA – Unconscionable conduct within meaning of written lawSame as with trade practices act; overlaps with Armadio’s Case

s. 51AB – Unconscionability - bargaining position of the corporation and the consumer (51AB(2)(a))- if consumer had to comply with unreasonable conditions (51AB(2)(b))- ability to understand transaction and relevant documents (51AB(2)(c))- any unfair tactics used, or undue influence or pressure applied (51AB(2)(d))- relative costs of other equivalent services (ie. if ripping off) (51AB(2)(e))

s. 51AC – Business unconscionability – Note: additional factors for businessesAdditional factors for business transactions to consider:

(f) the extent to which the supplier’s conduct towards the business consumer was consistent with the suppliers conduct in similar transactions with other like consumers.(g) the requirements of any applicable industry code; and(h) the requirements of any other industry code, if the business consumer acted on the reasonable belief that the supplier would comply with that code;(i) the extent to which the supplier unreasonably failed to disclose

(ii) any intended conduct of the supplier that might affect consumer’s interests;(ii) any risks to the consumer arising from the supplier’s intended conduct (if the supplier could foresee that they would not be apparent to business consumer)

(j) the extent to which the supplier was willing to negotiate the terms and conditions;(k) the extent to which the supplier and the business consumer acted in good faith.

(10) For business transactions, acquisition of goods or services for the purpose of unconscionable conduct does not include a supply at a price greater than $3 million.



FINANCIAL TRANSACTIONS REPORTS ACT 1988

This Act was brought in, in response to the evasion of tax and financing of drugs through the use of cash transactions. It requires certain ‘cash dealers’ to report information to AUSTRAC (Australian Transaction Reports and Analysis Centre)

The FTRA also imposes obligations on all financial institutions to verify the identity of persons who open accounts with them, or who are seeking to become signatories on existing accounts.

The FTRA makes it an offence to open or to operate an account under a false name, and since 1991, has imposed a statutory identification scheme for the opening of new accounts or changing signatories.

The FTRA imposes reporting obligations on all ‘cash dealers’ and solicitors:A “cash dealer” is someone defined under s. 3 FTRA Interpretations

Generally includes: (See FLM page 52 for the full listing)Financial institutions, insurance companies, bookmakers, casinos, trustee or manager of a unit trust, someone who deals with travellers cheques or currency exchange, fund managers, gambling house.

1. Customer identification procedures – ss. 18, 20-21See below ‘obligations when opening an account’

2. Reporting requirements – To AUSTRAC

TRANSACTIONS THAT MUST BE REPORTED:a) significant cash transactions (s. 7) of $10,000+b) suspect transactions (s. 8) ie. suspected tax-fraud in a transaction, etc.c) international currency transfers of $10,000+d) International funds transfer instructions (IFTIs)e) Solicitor’s reports (s.15A)

EXEMPT TRANSACTIONS – s.9 & 10 (mainly s. 10)

Exempt transactions depend on the maintenance of an ‘exemption register’. Part II of the Act requires financial institutions to create and maintain a register s. 12. Section 11 of the Act authorises specific entries in the register. The entry can relate to a single transaction, or a class of transactions (only if associated with a person).

This is because financial institutions and others clearly make many, many routine dealings with cash which would be of no interest to AUSTRAC.

List of exempt transactions (s. 10) - Transactions between financial institution and another financial institution;- Transactions between a cash dealer (not a fin. Inst) and a financial institution,- Transactions between financial institution and another person (s. 9(1)), as long as:

o Transaction has been entered into the institutions exemption register; or



Penalties for failing to provide information – s. 28If a cash dealer/solicitor fails to provide information or comply with reporting procedures set out they commit an offence against this section and:s. 28(4) – A person who commits an offence is punishable by imprisonment of not more than 2 years.

Protection – s. 16(5)If a cash dealer suspects a transaction, they MUST prepare a report on the transaction, and if they do they are afforded certain protections under this section for their actions.

Chiefly, they are protected from threat of the Proceeds of Crime Act 1987, as a person who received proceeds that they suspect is from a crime.

Secrecy – ss. 16(5A), s. 25If a cash dealer has communicated to the Director of suspected illegal activity with regards to a cash transaction he is party to, the cash dealer must not disclose that he has formed the suspicion to anyone else (s. 16(5)(a)), or that he has told the Director (s. 16(5)(b)) or any other information that may inform the subject that he is being suspected (s. 16(5)(c)).

Solicitors Reports s. 15A(1)(b)As well as preparing reports of their transactions, solicitors must also communicate the information in their reports to the Director.



OBLIGATIONS WHEN OPENING AN ACCOUNT [Tyree p. 22]The FTRA further requires a person who becomes a signatory to an account with a cash dealer to produce required identification evidence.

Section 3 of the FTRA defines ‘account’ as:Any facility or arrangement by which a cash dealer does any of the following:

- Accepts deposits of currency;- Allows withdrawals of currency;- Pays cheques or payment orders drawn on the cash dealer by, or collects cheques

or payment orders on behalf of, a person other than the cash dealer;

Section 3 defines ‘signatory’ of an account as:- the person, or one of the persons, on whose instructions (whether rquires to be in

writing or not and whether required to be signed or not) the cash dealer conducts transactions in relation to the account.

Must provide ‘account information’ AND ‘signatory information’ which must be VERIFIED by an ‘identifying cash dealer’.

Account information involves:- Information which uniquely identifies the account in question including any

identifying numbers and the name in which the account is held.- Must include information and documents which identify the postal address,

other than a post office box, of the account holder.- Also includes particulars concerning legal personality of the account holder and

must include a certificate of incorporation when the holder is a body corporate.

Signatory information includes:- Information and documents which include the name used by the signatory in

operating the account, and any other names by which the signatory is commonly known.

- Most importantly, it must include an ‘identification record’. This record is known as an identification reference.

Obtaining an identification reference:- An identification reference is a written reference by another person which

conforms to FTRA standards.- Reference must be from a class of ‘acceptable referees’ as published in Gazette.- Reference must contain information that is ‘primary information’ (passport, or a

citizenship certificate) or if that is not possible, certain secondary information with an explanation for failure to sight a primary identification document.

VERIFICATION PROCEDUREMust be carried out by an identifying cash dealer.

- Consists of checking documents which are assigned certain scores to accumulate at least 100 points in order to ascertain appropriate identification.



PRIVACY ACT 1988

Privacy Act applies to certain private sector organisations. The Act regulates the collection, use and disclosure, storage and handling of, and rights of access to ‘personal information’ by organisations. An organisation must not breach their respective privacy Code, or if there is no privacy code, the National Privacy Principles.

National Privacy Principles (NPPs) & Part 111A Privacy Act 1988 [5.35]- Restricts consumer credit information in regards to natural persons- No release of personal information by credit reporting agencies without specific

consent s. 18K- Limits on use of information by credit providers s. 18L.- Limits on the disclosure by credit providers s. 18N

Right to complain to Privacy Commissioner- Can impose fines (up to $35,000) and/or compensation



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