ASIC’s New AFS Licensing Requirements

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In July 2019, ASIC released Information Sheet 240 AFS licensing – Requirements for certain applicants to provide further information (Info Sheet 240) outlining the recent changes to ASIC’s Australian Financial Services (AFS) licensing assessment procedures.

These changes require additional information to be provided to ASIC upon submission of an AFS licence application. These changes will apply to new applicants who are:

  • body corporates;
  • regulated by the Australian Prudential Regulation Authority; and
  • proposing to offer certain financial services or to operate in specific circumstances.

ASIC has stated these changes are designed to streamline its assessment process and avoid unnecessary delays.

How the Changes will Impact Applicants?

Previously, ASIC requested non-core proofs as part of their assessment process. However, these changes require applicants to ensure that all information and ancillary documents required by ASIC, including core proofs and additional information and non-core proofs are ready prior to submission of their application.

Applicants will need to carefully identify their Responsible Officers and ensure they have obtained all necessary police and bankruptcy checks prior to submitting their application. (Please see our earlier article on the new definition of Responsible Officers)  These checks may take up to 6 weeks to obtain or longer should the Responsible Officer reside overseas.

Applicants will also need to consider whether they need to be enrolled or registered with another regulatory body or scheme and make the necessary arrangements to complete the registration/enrolment prior to submitting the AFS licence application. For example, where an applicant intends to conduct a remittance business they are required to provide written confirmation of enrolment and registration with AUSTRAC.

ASIC has advised that it is currently updating its AFS licensing application portal and until this process is finalised, ASIC will not reject an application for lodgement because it does not include the additional information or non-core proofs as required in Info Sheet 240, however applicants should be aware that ASIC will only complete its assessment once the required information and documents are provided.

What are the Changes?

Category 1: Body Corporate ApplicantsBody Corporate Applicants must now provide ASIC with:
• the full names of the applicant’s Responsible Officers;
• a national criminal history check and bankruptcy check for each Responsible Officer who is not also nominated as a Responsible Manager;
• the names and current addresses of each director and secretary of the body corporate applicant; and
• the applicant’s Australian Business Number (ABN) if it has one, or a statement that the applicant does not have an ABN.

This change was introduced at the beginning of 2019 – for further information see our blog article: ASIC Introduces Additional Information Requirements for AFSL Applicants.

Category 2: APRA Regulated Body ApplicantsASIC must be provided with the following documents about the applicant’s Responsible Managers:
• a national criminal history check that is no more than 12 months old;
• a bankruptcy check that is no more than 12 months old; and
• two business references that are no more than 12 months old.

*ASIC notes that this new requirement is currently in conflict with the guidelines in Regulatory Guide 2 which will be updated shortly.

Category 3: Applicants intending to provide certain financial services and certain financial productsASIC now requires applicants applying for certain authorisations or intending to provide certain financial services to provide additional non-core proofs with their initial application documents – at the time of submitting their AFSL application.

Applicants applying for any of the following authorisations will need to provide additional non-core proofs as noted in Table 1 of Info Sheet 240:
• Crowd-sourced funding intermediary;
• Custody;
• Derivatives;
• Financial product advice (personal advice only);
• Foreign Exchange Contracts;
• Investor directed portfolio services (IDPS) operator;
• Life insurance company;
• Life or general insurance underwriters;
• Make a market;
• Margin lending issuer;
• Market participants (stockbrokers);
• Managed discretionary account (MDA) providers;
• Responsible Entity;
• Registrable superannuation entity (RSE) licensees that have applied for or already hold an authorisation to operate a registered management investment scheme.

Additionally, applicants that intend to provide financial services in the following circumstances, must include the listed additional information and non-core proofs in their application, as specified in Table 2 of Info Sheet 240:
• Where the applicant has nominated a Responsible Manager who is an officer of another AFS licensee, or is employed or engaged by another AFS licensee;
• Where the applicant intends to outsource a material activity required to provide the financial service or product;
• Where the applicant has nominated a single Responsible Manager for a particular authorisation or authorisations;
• Where the applicant intends to conduct a remittance business.

Further Reading

For further information on the new AFS Licensing requirements refer to the following information:

Sophie Grace is equipped to assist you in all aspects of applying for Australian Financial Service Licence and implementing required documentation including agreements and policy and procedural documents, please contact us directly for further information.

About The Author

Quynh Truong

Quynh works across both Sophie Grace Pty Ltd and Sophie Grace Legal Pty Ltd with a particular focus on compliance and legal services. She manages the licensing and compliance aspects of the business. She is responsible for AFSL and ACL applications, variations and assists the compliance team in the implementation of compliance reviews. She provides ongoing compliance support and assists with the preparation of legal advice, commercial agreements and disclosure documents.

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