Lately, all financial institutions in Australia were affected by the updates in regulation. These changes may be truly important to take into consideration before starting a business in Australia. It is also worth acknowledging that momentarily Australia is seeing the biggest economic downturn since the times of the Great Depression because of the pandemic. In order to help the economy, RBA (the Reserve Bank of Australia) lowered the rates to a record level of 0.25% and started an unlimited bond-buying program.
Licensing regime for foreign service providers
During this year, the Australian Securities and Investments Commission initiated a new regime for granting licenses to the financial institutions – both domestic and foreign. It is important for the Commission to make sure that the service providers understand it well, and therefore, launched the consultation services for foreign financial services providers wishing to work in Australia.
The new licensing rules
The upgraded regime includes two new aspects.
1) Foreign AFS License
If the foreign financial services provider is authorized by a foreign regulatory body in a country that falls under a specific list, they are able to apply for a foreign AFC license. The mentioned list was considerably lengthened and now consists of Canada, Denmark, France, Germany, Great Britain, Hong Kong, Luxembourg, Ontario, Singapore, Sweden, the USA. The list should still be extended more.
When it comes to the application, the online form and the guidelines are now available to the public and should be helpful to obtain a financial license in Australia.
2) Easier fund management
According to the new regulation, fund management financial service providers who would like to attract local users are exempted from licensing. Yet, this exemption is limited.
To make the whole transition process more comfortable, the transition period is allowed to be finished until mid-2022.
Other modification in the regulation of funds
The end of 2019 saw the financial regulator launch the updated version of Regulatory Disclosure Guidelines. It introduces multiple changes to the disclosure regime concerning fees and charges on products for retail customers in Australia.
Digital currency services
The regulation of the cryptocurrency companies’ activities is a responsibility of the Australian Center for Accounting (AUSTRAC). This state authority gives permissions to the providers of digital currency exchange services. The provision of such services without registration is illegal in Australia.
The license can be revoked by AUSTRAC in the case of the violation of AML / CFT obligations.
The final word
The regulatory requirements for establishing a fund in Australia must be studied carefully by the new services providers, especially considering the fact that they are adjustments all the time. If this topic is relevant for you and you would like to keep your hand on the pulse, the best choice is to sign up for a consultation with specialists from COREDO. Our experts monitor all the latest changes and will inform you about all the new requirements concerning the registration of your business in Australia, or in other jurisdictions.