The government has legislated amendments to the Corporations Act 2001 that will see increased civil and criminal penalties apply to financial institutions found to have manipulated financial benchmarks, according to a statement from Treasurer Scott Morrison.
“The manipulation of any financial benchmark or product used to determine such a benchmark is now a specific offence and subject to civil and criminal penalties,” Mr Morrison said in the statement.
“This includes maximum penalties of up to $945,000 and/or 10 years imprisonment for individuals and up to $9.45 million for bodies corporate.”
He added that the penalties would also apply to “foreign nationals and bodies corporate” even if the conduct happened overseas but resulted in financial loss or disadvantage by an Australian entity.
Mr Morrison said that financial benchmarks had “proven to be a weak spot in the international system of financial regulation”.
All four of the Australian major banks have been taken to court by ASIC after the corporate regulator found instances in which they manipulated the bank bill swap rate (BBSW).
ANZ and NAB have already settled their cases with ASIC, with Westpac still awaiting judgement.
Meanwhile, CBA faced fresh claims in late February for rigging the BBSW, which it denied.
Mr Morrison said in the statement that administrators of “significant financial benchmarks” would have to have a “benchmark administrator licence” and comply with ASIC regulation.
ASIC would also gain a new power and be able to “compel submission to a significant financial benchmark — as a last resort — in the case that other calculation mechanisms have failed and the continued generation of the financial benchmark is threatened”.
“I am pleased these reforms will bolster critical components of our market architecture and improve the integrity, resilience and fairness of the Australian financial system,” Mr Morrison said.
“Furthermore, they will align our regulatory regime with international best practice, including regimes in the United Kingdom, the European Union, Japan, Singapore and Canada.”
