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AIFC GENERAL RULES
AIFC RULES NO. FR0001 OF 2017
(with amendments as of 24 April 2022, which commence on 1 July 2022)
Approval Date: 17 October 2017
Commencement Date: 1 January 2018
Nur-Sultan, Kazakhstan
CONTENTS
1. LICENSING OF CENTRE PARTICIPANTS
1.1. Authorised Firms
1.2. Authorised Market Institutions
1.3. Ancillary Service Provider
1.4. FinTech Lab Activities
2. CONTROLLED AND DESIGNATED FUNCTIONS
2.1. Mandatory appointments
2.2. Controlled Functions
2.3. Designated Functions
3. CONTROL OF AUTHORISED PERSONS
3.1. Definitions
3.2. Approval process
3.3. Notification requirements
3.4. Obligations of Authorised Persons
4. CORE PRINCIPLES
4.1. Application
4.2. Principles for Authorised Persons
4.3. Principles for Approved Individuals and Designated Individuals
5. SYSTEMS AND CONTROLS
5.1. General requirements
5.2. Outsourcing
5.3. Corporate governance
5.4. Compliance
5.5. Internal audit
5.6. Conflicts of interest
5.7. Information barriers
5.8. Management of risks
5.9. Recordkeeping
6. SUPERVISION
6.1. Power to require the production of a report
6.2. Obligation of disclosure to the AFSA
6.3. Accounting /Auditing
SCHEDULE 1: REGULATED ACTIVITIES
SCHEDULE 2: ANCILLARY SERVICES
SCHEDULE 3: FORMS
SCHEDULE 4: MARKET ACTIVITIES
Guidance: Purpose of this rulebook
The purpose of this rulebook, «GEN», is to complement the regulatory framework established by the Financial Services Framework Regulations («the Framework Regulations»).
• GEN 1.1 complements Part 3, Chapter 1 of the Framework Regulations by describing the process of application for a Licence to carry on Regulated Activities (і.e. to become an Authorised Firm) and the criteria that the AFSA will apply in considering an application.
• GEN 1.2 complements Part3, Chapter 2 of the Framework Regulations by describing the process of application for a Licence to carry on Market Activities (і.e. to become an Authorised Market Institution) and the criteria that the AFSA will apply in considering an application.
• GEN 1.3 contains an application process for a Licence to carry on Ancillary Services (і.e. to become an Ancillary Service Provider) and the criteria that the AFSA will apply in considering an application.
• GEN 2 creates two categories of employees who attract regulatory attention. Approved Individuals occupy the most critical roles in an Authorised Person, which are referred to as «Controlled Functions». GEN 2.1 identifies a number of roles that an Authorised Person must fill. Their appointment requires the approval of the AFSA. Designated Individuals occupy less critical roles, referred to as «Designated Functions», and do not require AFSA approval, but may only be appointed by an Authorised Person after it has applied a fit and proper test.
• GEN 3 contains rules restricting the circumstances in which significant shareholders in an Authorised Person may change.
• GEN 4 contains two sets of core principles. The first are applicable to Authorised Persons, the second to Approved Individuals and Designated Individuals.
• GEN 5 contains the key System and Controls requirements that apply to all Authorised Persons.
• GEN 6 complements Part 8 of the Framework Regulations (Supervision of Authorised Persons). The chapter begins with guidance setting out a non-exhaustive list of the circumstances in which the AFSA is likely to exercise the supervisory powers granted to it by sections 96 to 101 of the Framework Regulations. GEN 6.1 adds details to section 97 of the Framework Regulations which gives the AFSA the power to require an Authorised Person to provide it with a report on a specified matter. GEN 6.2 identifies a large number of instances in which an Authorised Person is obliged to make a notification to the AFSA. Finally GEN 6.3 contains requirements relating to accounting and auditors, including requirements to prepare financial reports, keep accounting records, make certain notifications to the AFSA and cooperate with an auditor.
1. LICENSING OF CENTRE PARTICIPANTS
1.1. Authorised Firms
1.1.1. Definition of Regulated Activities
An activity shall be a Regulated Activity that may be carried on by an Authorised Firm, subject to the terms of its Licence, if that activity:
(a) is specified in the list of activities in Schedule 1; and
(b) is carried on by way of business as described in GEN 1.1.9; and
(c) is not otherwise excluded in accordance with any other provision in GEN 1.1.
The Regulated Activities that may be carried on by an Authorised Firm, subject to the terms of its Licence, are specified in Schedule 1 and 1.4.1 (b)
1.1.2. Form and content of application for a Licence
A Person may apply to the AFSA for a Licence authorising a Centre Participant to carry on one or more Regulated Activities by:
(a) completing the form prescribed in Schedule 3 and filing the form with the AFSA accompanied by such documents as are specified in the form;
(b) providing such further information as the AFSA may require; and
(c) paying the fee prescribed in the Fees Rules.
Guidance: AFSA discretion to waive requirements
A Person may apply to the AFSA to waive the requirements as to the contents of the Form prescribed in Schedule 3 pursuant to section 32(4) of the Framework Regulations.
1.1.3. Adequate and appropriate financial resources
In assessing whether an applicant has adequate and appropriate financial resources for the purposes of section 34(1)(a) of the Framework Regulations, the AFSA will consider:
(a) how the applicant will comply with the applicable provisions of the Prudential Rules (PRU);
(b) the applicant's liabilities, including contingent and future liabilities;
(c) the means by which the applicant manages the risks to its business;
(d) the applicant's business plan;
(e) whether the applicant's assets are appropriate given the applicant's liabilities;
(f) the liquidity of the applicant's resources;
(g) the nature and scale of the business which will be carried on by the applicant; (h) the risks to the continuity of the services which will be provided by the applicant;
(і) the applicant's membership of a Group and any relevant effect which that membership may have; and
(j) whether the applicant is capable of meeting its debts as they fall due.
1.1.4. Adequate and appropriate non-financial resources
In assessing whether an applicant has adequate and appropriate non-financial resources for the purposes of section 34(1)(a) of the Framework Regulations, the AFSA will consider:
(a) the skills and experience of those who will manage the applicant's affairs;
(b) the applicant's resources to identify, monitor, measure and take action to remove or reduce risks as to its safety and soundness;
(c) the effectiveness of the applicant's business management; and
(d) whether the applicant's non-financial resources are sufficient to enable the applicant to comply with the Regulations and Rules that are likely to be relevant to the applicant.
1.1.5. Fitness and propriety
In assessing whether an applicant is fit and proper for the purposes of section 34(1)(b) of the Framework Regulations, the AFSA will consider:
(a) the fitness and propriety of the members of its Governing Body;
(b) the applicant's connection with any Person or membership of any Group;
(c) the fitness and propriety of the applicant's Controllers or any other Person associated with the applicant;
(d) the impact a Controller might have on the applicant's ability to comply with the applicable requirements;
(e) the Regulated Activities undertaken or to be undertaken by the applicant and the risks to their continuity;
(f) the nature (including the scale and complexity) of the activities of the applicant and any associated risks that those activities pose to the AFSA's Regulatory Objectives;
(g) the complexity of any products or services that the applicant may offer or provide in carrying on those activities;
(h) whether the applicant's business model will allow for its affairs and business to be conducted and managed in a sound and prudent manner, having regard to, amongst other things, the interests of its Clients and the integrity of the AIFC;
(і) any matter which may harm or may have harmed the integrity or the reputation of the AFSA or AIFC, including through the carrying on of a business by the applicant for a purpose connected with a Financial Crime; and
(j) any other relevant matters.
1.1.6. Effective supervision
In assessing whether an applicant is capable of being effectively supervised by the AFSA for the purposes of section 34(1)(c) of the Framework Regulations, the AFSA will consider:
(a) the nature, including the complexity, of the Regulated Activities that the applicant will carry on;and
(b) the way in which the applicant's business is organised; and
(c) (if the applicant is a member of a Group) whether membership of the Group is likely to prevent the AFSA's effective supervision of the applicant; and
(d) whether the applicant is subject to consolidated supervision.
1.1.7. Compliance arrangements
In assessing whether an applicant has adequate compliance arrangements for the purposes of section 34(1)(d) of the Framework Regulations, the AFSA will consider whether it has:
(a) clear and comprehensive policies and procedures relating to compliance with all applicable legal requirements; and
(b) adequate means to implement those policies and procedures and monitor that they are operating effectively and as intended.
1.1.8. Modification or withdrawal of an Authorised Firm's Licence
An Authorised Firm may apply to the AFSA to change the scope of its Licence, to have a condition or restriction varied or withdrawn, or to have its Licence withdrawn by:
(a) completing the form prescribed in Schedule 3 and filing the form with the AFSA accompanied by such documents as are specified in the form;
(b) providing such further information as the AFSA may require; and
(c) paying the fee prescribed in the Fees Rules.
1.1.9. Activities carried on by way of business
A Person carries on an activity byway of business for the purposes of GEN 1.1.1 if that Person:
(a) engages in the activity in a mannerwhich in itself constitutes the carrying on of a business;
(b) holds himself out as willing and able to engage in that activity; or
(c) regularly solicits other Persons to engage with him in transactions constituting that activity.
1.1.10. Exclusion in respect of Dealing in Investments as Principal
A Person does not carry on the Regulated Activity specified in paragraph 1 of Schedule 1 by entering into a transaction, unless that Person:
(a) holds himself out as willing, as principal, to buy, sell or subscribe for Investments at prices determined by him generally and continuously rather than in respect of each particular transaction;
(b) holds himself out as engaging in the business of buying Investments with a view to selling them;
(c) holds himself out as engaging in the business of underwriting Investments; or
(d) regularly solicits members of the public with the purpose of inducing them to enter into transactions.
1.1.11. Exclusion in respect of acting as nominee
A Person does not carry on any of the Regulated Activities specified in paragraphs 1, 2, 3, 5, 6, 10, 11, 12 or 15 of Schedule 1 where that Person enters into a transaction solely as a nominee for another Person and is bound to and does act on that other Person's instructions.
1.1.12. Exclusion in respect of acting with or for Group companies
A Person does not carry on any of the Regulated Activities specified in paragraphs 1, 2, 3, 5, 6, 10, 11, 12, 15 or 18 of Schedule 1 where that Person is a Body Corporate and carries on that activity solely as principal with or for other Bodies Corporates:
(a) which are within the same Group as that Person; or
(b) which are or propose to become participators in a joint enterprise and the transaction is entered into for the purposes of or in connection with that enterprise;
and for the purposes of the activities specified in paragraphs 3, 5, 6 and 12 of Schedule 1 the assets in question belong to a Body Corporate falling within (a) or (b).
1.1.13. Exclusion in respect of non-financial business
A Person does not carry on any of the Regulated Activities specified in paragraphs 1, 2, 3, 5, 6, 10, 11, 12 or 15 of Schedule 1 where that the Person carries on the activity solely for the purposes of or in connection with the sale of goods or the supply of services to a customer of the Person or a member of the same Group, provided that:
(a) the supplier's main business is to sell goods or supply services and not to carry on any Financial Service; and
(b) the customer is not an individual;
and for the purposes of the activities specified in paragraphs 3, 5, 6 and 2 of Schedule 1 the assets in question belong to that customer or member.
1.1.14. Exclusion in respect of dealing in commodity derivatives
A Person who is a Body Corporate does not carry on the Regulated Activity specified in paragraphs 1 or 2 of Schedule 1, where:
(a) the Person carries on such activities as a member of an Authorised Market Institution or Recognised Non-AIFC Market Institution;
(b) the Person carries on such activities for its own account or for another Body Corporate which is in the same Group as the Person, provided that any such member of the Group for which the Person acts is a wholly-owned Subsidiary of a Holding Company within the Group or is the Holding Company itself;
(c) the Person restricts such activities to transactions involving or relating only to commodity derivatives on that Authorised Market Institution or Recognised Non-AIFC Market Institution;
(d) the main business of the Person is dealing in relation to Commodity Derivatives; and
(e) the Person is not part of a Group whose main business is the provision of financial services.
1.1.15. Exclusion in respect of acquisition or disposal of a Body Corporate
A Person does not carry on a Regulated Activity specified in paragraphs 1,2, 10 or 11 of Schedule 1 if the activity is carried on solely for the purposes of or in connection with the acquisition or disposal of Shares in a Body Corporate, other than an Investment Company, provided that:
(a) such Shares carry at least 50 per cent of the voting rights or the acquisition will take an existing holding to at least 50 per cent; or
(b) the object of the transaction may reasonably be regarded as being the acquisition of day to day control of the Body Corporate.
1.1.16. Exclusion in respect of acting as a trustee
(a) A Person who is a trustee does not carry on a Regulated Activity specified in paragraphs 1, 3, or 5 of Schedule 1 in circumstances where he is acting as a trustee.
(b) A Person does not carry on a Regulated Activity specified in paragraph 7 of Schedule 1 by way of business where he is:
(і) acting as trustee, enforcer or protector; or
(ii) where he is arranging for a Person to act as trustee,
in respect of less than three (3) trusts.
(c) A Person falling within paragraph (d) or (e) of the definition of a DNFBP does not provide Trust Services where it only:
(і) arranges for a Person to act as trustee in respect of an express trust; or
(ii) provides services with respect to the creation of an express trust; provided that:
(1) the provision of such services is solely incidental to the practice of law or accounting as the case may be; and
(2) the DNFBP is not holding itself out as Providing Trust Services.
(d) A Person is not Providing Trust Services if that Person is the Trustee of a Fund and the activities are in connection with, or arise from, acting as the Trustee of the Fund.
Guidance
Acting as trustee, protector or enforcer are not activities incidental to the practice of law or accounting and require a Licence.
1.1.17. Exclusion in respect of Single Family Offices
A Person does not carry on a Regulated Activity specified in paragraphs 1,2,3, 4, 5, 6, 7, 8, 9, 10, 11, or 15 of Schedule 1 if:
(a) that Person is a Single Family Office; and
(b) the activity is carried on exclusively for the purposes of, and only in so far as it is, carrying out its duties as a Single Family Office.
1.2. Authorised Market Institutions
Guidance: Definition of Market Activity
Market Activity is defined in the section 18 of the Framework Regulations as:
(a) Operating an Exchange;
(b) Operating a Clearing House;
(c) Operating a Digital Asset Trading Facility;
(d) Operating a Loan Crowdfunding Platform;
(e) Operating an Investment Crowdfunding Platform.
1.2.1. Form and content of application for a Licence
A Person may apply to the AFSA for a Licence for a Centre Participant to carry on one or more Market Activities in the AIFC by:
(a) completing the form prescribed in Schedule 3 and filing the form with the AFSA accompanied by such documents as are specified in the form;
(b) providing such information and documents as the AFSA may require; and
(c) paying the fee prescribed in the Fees Rules.
1.2.2. Adequate and appropriate financial resources
In assessing whether an applicant has adequate and appropriate financial resources for the purposes of section 37(1)(a) of the Framework Regulations, the AFSA will consider:
(a) how the applicant will comply with the applicable provisions of AMI 2.2;
(b) the provision the applicant makes in respect of any liabilities, including contingent and future liabilities;
(c) the means by which the applicant manages the risks to its business;
(d) the rationale for, and basis of, the applicant's business plan;
(e) whether the applicant's assets are appropriate given the applicant's liabilities;
(f) the liquidity of the applicant's resources;
(g) the nature and scale of the business which will be carried on by the applicant; (h) the risks to the continuity of the services which will be provided by the applicant;
(і) the applicant's membership of a Group and any relevant effect which that membership may have; and
(j) whether the applicant is capable of meeting its debts as they fall due.
1.2.3. Adequate and appropriate non-financial resources
In assessing whether an applicant has adequate and appropriate non-financial resources for the purposes of section 37(1)(a) of the Framework Regulations, the AFSA will consider:
(a) the skills and experience of those who will manage the applicant's affairs;
(b) the applicant's resources to identify, monitor, measure and take action to remove or reduce risks as to its safety and soundness;
(c) the applicant's resources to control and monitor access to, and the use of, its facilities in a manner designed to protect the orderly functioning of the market and the interests of investors;
(d) the applicant's resources to reduce the extent to which its facilities can be used for a purpose connected with Market Abuse, Financial Crime or money laundering, and to facilitate their detection and monitor their incidence;
(e) the applicant's resources to monitor and take action in the event of a member of an applicant being unable to meet his obligations in respect of one or more Market Contracts;
(f) the effectiveness of the applicant's business management; and
(g) whether the applicant's non-financial resources are sufficient to enable the applicant to comply with the Regulations and Rules that are likely to be relevant to the applicant.
1.2.4. Adequate and appropriate technology resources
In assessing whether an applicant has adequate and appropriate technology resources for the purposes of section 37(1)(a) of the Framework Regulations, the AFSA will consider:
(a) the applicant's resources for the evaluation, selection and on-going monitoring of the information technology systems used by the applicant;
(b) the applicant's willingness and ability to use development and testing methodologies in line with internationally accepted testing standards in order to test the viability and effectiveness of such systems; and
(c) the means by which the applicant will secure and maintain the confidentiality of the data and ensure that the systems used by the applicant are reliable and adequately protected from external attack or incident.
1.2.5. Fitness and propriety
In assessing whether an applicant is fit and proper for the purposes of section 37(1)(b) of the Framework Regulations, the AFSA will consider:
(a) the fitness and propriety of the members of its Governing Body;
(b) the applicant's connection with any Person or membership of any Group;
(c) the fitness and propriety of the applicant's Controllers or any other Person associated with the applicant;
(d) the impact a Controller might have on the applicant's ability to comply with the applicable requirements;
(e) the Market Activities concerned and the risks to their continuity;
(f) the nature (including the scale and complexity) of the activities of the applicant and any associated risks that those activities pose to the AFSA's objectives;
(g) whether the applicant's business model will allow for its facilities to function in a fair and orderly manner, having regard to, amongst other things, the orderly functioning of the market and the interests of investors;
(h) any matter which may harm or may have harmed the integrity or the reputation of the AIFC or AFSA, including through the carrying on of a business by the applicant for a purpose connected with Market Abuse or a Financial Crime; and
(і) any other relevant matters.
1.2.6. Effective supervision
In assessing whether an applicant is capable of being effectively supervised by the AFSA for the purposes of section 37(1)(c) of the Framework Regulations, the AFSA will consider:
(a) the nature, including the complexity, of the Market Activities that the applicant will carry on;
(b) if the applicant seeks a licence to carry on the Market Activity of Operating an Exchange, a Digital Asset Trading Facility, a Loan Crowdfunding Platform or an Investment Crowdfunding Platform, the size, nature and complexity of any markets in respect of which the applicant will offer its facilities in carrying on that Market Activity;
(c) if the applicant seeks a licence to carry on the Market Activity of Operating a Clearing House, the complexity of the Investments and transactions, and the size of the likely transaction values and volumes in respect of which the applicant will offer clearing and settlement services in carrying on that Market Activity;
(c) the way in which the applicant's business is organised;
(d) (if the applicant is a member of a Group) whether membership of the Group is likely to prevent the AFSA's effective supervision of the applicant; and
(e) whether the applicant is subject to consolidated supervision.
1.2.7. Compliance arrangements
In assessing whether an applicant has adequate compliance arrangements for the purposes of section 37(1)(d) of the Framework Regulations, the AFSA will consider whether it has:
(a) clear and comprehensive policies and procedures relating to compliance with all applicable legal requirements;
(b) adequate means to implement those policies and procedures and monitor that they are operating effectively and as intended;
(c) effective arrangements for monitoring and enforcing compliance of its Members with its own rules and, if relevant, its clearing and settlement arrangements;
(d) if the applicant seeks a licence to carry on the Market Activity of Operating an Exchange, effective arrangements to verify that issuers admitted to trading on its facilities comply with the Market Rules; and
(e) if the applicant seeks a licence to carry on the Market Activity of Operating a Digital Asset Trading Facility, effective arrangements to verify that members admitted to trading on its facilities comply with the Conduct of Business Rules and the Authorised Market Institution Rules.
1.2.8. Modification or withdrawal of an Authorised Market Institution's Licence
An Authorised Market Institution may apply to the AFSA to change the scope of its Licence, to have a condition or restriction varied or withdrawn, or to have its Licence withdrawn by:
(a) completing the form prescribed in Schedule 3 and filing the form with the AFSA accompanied by such documents as are specified in the form;
(b) providing such further information as the AFSA may require; and
(c) paying the fee prescribed in the Fees Rules to the AFSA.
1.3. Ancillary Service Provider
1.3.1. Definition of Ancillary Service
The Ancillary Services that may be carried on by an Ancillary Service Provider, subject to the terms of its Licence, are specified in Schedule 2.
1.3.2. Form and content of application for a Licence
A Person may apply to the AFSA for a Licence authorising a Centre Participant to carry on one or more Ancillary Services in the AIFC by:
(a) completing the form prescribed in Schedule 3 and filing the form with the AFSA accompanied by such documents as are specified in the form;
(b) providing such further information as the AFSA may require; and
(c) paying the fee prescribed in Schedule 4 to the AFSA.
1.3.3. Fitness and propriety
In assessing whether an applicant is fit and proper for the purposes of section 41 of the Framework Regulations, the AFSA will consider:
(a) the applicant's standing with any relevant regulatory body;
(aa) registration with the AI FC Legal Services Board of at least one employee of the applicant applying for a Licence to carry on an Ancillary Service of Providing Legal Services;
(b) the applicant's disciplinary record;
(c) the applicant's procedures for monitoring and preventing Financial Crime;
(d) the risk posed to the AI FC by the applicant's activities; and
(e) such other matters as the AFSA considers relevant.
1.3.4. Notifications
An Ancillary Service Provider must promptly notify the AFSA of any change in its:
(a) name; or
(b) legal status; or
(c) address; or
(e) beneficial ownership.
1.3.5. Application to modify or withdraw an Ancillary Service Provider's Licence
An Ancillary Service Provider may apply to the AFSA to change the scope of its Licence, to have a condition or restriction varied or withdrawn, or to have its Licence withdrawn by:
(a) completing the form prescribed in Schedule 3 and filing the form with the AFSA accompanied by such documents as are specified in the form;
(b) providing such further information as the AFSA may require; and
(c) paying the fee prescribed in the Fees Rules.
1.3.6. Withdrawal of an Ancillary Service Provider's Licence by the AFSA
The AFSA may withdraw the Licence of an Ancillary Service Provider:
(a) on the application of the Ancillary Service Provider; or
(b) [intentionally omitted]
(c) following a request by the Registrar of Companies; or
(d) in the event of the insolvency or the entering into administration of the Ancillary Service Provider; or
(e) if the AFSA considers it necessary or desirable in the interests of the AIFC.
1.4. FinTech Lab Activities
1.4.1. Activities performed in FinTech Lab
(a) the Regulated and/or Market Activities that are specified in Schedule 1 and 4 of GEN can be carried on by a Person subject to the terms and Licence issued under FINTECH.
(b) a Person may apply to the AFSA for a Licence authorising a Centre Participant to carry on activities not specified in (a).
(c) For the purposes of (b), the AFSA may grant a Licence for a Person to carry on activities as specified in the Licence.
2. CONTROLLED AND DESIGNATED FUNCTIONS
2.1. Mandatory appointments
2.1.1. Appointments to be filled by Approved Individuals
(1) Subject to (2) an Authorised Person must make the following appointments and ensure that they are held by one or more Approved Individuals at all times:
(a) Senior Executive Officer;
(b) Finance Officer; and
(c) Compliance Officer.
(2) For an Authorised Person Operating a Representative Office the mandatory appointments in (1) may be carried on by its Principal Representative.
2.1.2. Appointments to be filled by Approved Individuals or Designated Individuals
(1) An Authorised Person, except for an Authorised Person Operating a Representative Office, must make the following appointments and ensure that they are held by either an Approved Individual or a Designated Individual at all times:
(a) Money Laundering Reporting Officer; and
(b) such other role or function as the AFSA may direct from time to time.
(2) A Banking Business Firm, as defined in the BBR Rules, must also make the following appointments and ensure that they are held by either an Approved Individual or a Designated Individual at all times:
(a) Risk Manager; and
(b) Internal Audit Manager.
2.2. Controlled Functions
2.2.1. Designation of roles as Controlled Functions
The functions specified in GEN 2.2.2 to 2.2.5 are Controlled Functions.
2.2.2. Senior Executive Officer
The Senior Executive Officer function is carried out by an individual who:
(a) has, either alone or jointly with other Approved Individuals, ultimate responsibility for the day-to-day management, supervision and control of one or more (or all) parts of an Authorised Person's Regulated Activities; and
(b) is a Director, Partner or Senior Manager of the Authorised Person.
2.2.3. Director
The Director function is carried out by an individual who is a director of an Authorised Person which is a Body Corporate.
2.2.4. Finance Officer
The Finance Officer function is carried out by an individual who is a Director, Partner or Senior Manager of an Authorised Person who has responsibility for monitoring the Authorised Person's compliance with the applicable Rules in the Prudential Rulebook.
2.2.5. Compliance Officer
The Compliance Officer function is carried out by an individual who is a Director, Partner or Senior Manager of an Authorised Person who has responsibility for compliance matters in relation to the Authorised Person's Regulated Activities.
2.2.6. Application for Approved Individual status
An Authorised Person may apply for its officer or Employee or future officer or Employee to be granted Approved Individual status by:
(a) completing the form prescribed in Schedule 3 and filing the form with the AFSA accompanied by such documents as are specified in the form;
(b) providing such further information as the AFSA may require; and
(c) paying the Fee prescribed in the Fees Rules to the AFSA.
Guidance: criteria for approval of Approved Individual
Section 43 of the Framework Regulations provides
(1) The AFSA may only authorise an individual to carry on a Controlled Function if it is satisfied that the individual is fit and proper to be an Approved Individual.
(2) In making this assessment, the AFSA must have regard to:
(a) the individual's integrity; and
(b) the individual's competence and capability; and
(c) the individual's financial soundness; and
(d) the individual's proposed role within the Authorised Person; and
(e) any other matters that the AFSA considers to be relevant to the application.
(3) The AFSA will not regard an individual as fit and proper if the individual:
(a) is bankrupt; or
(b) has been convicted of a serious criminal offence; or
(c) is the subject of an administrative or civil finding; or
(d) is incapable, through mental or physical incapacity, of managing his affairs.
2.2.7. AFSA discretion to waive requirements
An Authorised Person may apply to the AFSA to waive the requirements made pursuant to Section 43(1) of the Framework Regulations in the light of any registration, authorisation or approval the relevant officer or Employee may have in a jurisdiction outside the AI FC.
2.2.8. Modification or withdrawal of an Approved Individual's registration
An Authorised Firm or an Approved Individual may apply to the AFSA to modify or withdraw the Approved Individual's status by:
(a) completing the form prescribed in Schedule 3 and filing the form with the AFSA accompanied by such documents as are specified in the form;
(b) providing such further information as the AFSA may require; and
(c) paying the fee prescribed in the Fees Rules to the AFSA.
2.2.9. Dismissal or resignation of an Approved Individual
In the event of an Approved Individual ceasing to be employed by an Authorised Firm to perform a Controlled Function, the Authorised Firm must:
(a) request the withdrawal of the Approved Individual status within seven days of the Approved Individual ceasing to be employed;
(b) inform the AFSA of any circumstances which lead the Authorised Firm to consider that the individual is no longer fit and proper; and
(c) if the Approved Individual was dismissed or requested to resign, provide the AFSA with a statement of the reason, or reasons, for the dismissal or resignation.
2.3. Designated Functions
2.3.1. Designation of roles as Designated Functions
The functions specified in GEN 2.3.2 to 2.3.4 are Designated Functions.
2.3.2. Senior Manager
The Senior Manager function is carried out by an individual who is responsible either alone or jointly with other individuals for the management, supervision or control of one or more parts of an Authorised Person's Regulated Activities who is:
(a) an Employee of the Authorised Person; and
(b) not a Director or Partner of the Authorised Person.
2.3.3. Responsible Officer
The Responsible Officer function is carried out by an individual who:
(a) has significant responsibility for the management of one or more aspects of an Authorised Person's affairs; and
(b) exercises a significant influence on the Authorised Person as a result of (a); but
(с) is not an Employee of the Authorised Person.
2.3.4. Money Laundering Reporting Officer
The Money Laundering Reporting Officer function must be carried out by an individual who is a Director, Partner or Senior Manager of an Authorised Person and who has responsibility for the implementation of an Authorised Person's anti-money laundering policies, procedures, systems and controls and day to day oversight of its compliance with the Rules in AML and any relevant anti-money laundering Rules.
2.3.5. Risk Manager
The Risk Manager function is carried out by an individual who is a Director, Partner or Senior Manager of an Authorised Person and who has responsibility for all aspects of the risk management function in relation to the Authorised Person's Regulated Activities.
2.3.6. Internal Audit Manager
The Internal Audit Manager function is carried out by an individual who is a Director, Partner or Senior Manager of an Authorised Person and who has responsibility for all aspects of the internal audit function in relation to the Authorised Person's Regulated Activities.
Guidance: criteria for appointment of Designated Individual
Section 46 of Framework Regulations provides:
(1) Before appointing an individual to carry on a Designated Function, an Authorised Person must take reasonable steps to satisfy itself that the individual is fit and proper to be a Designated Individual.
(2) In making this assessment the Authorised Person must have regard to:
(a) the individual's integrity; and
(b) the individual's competence and capability; and
(c) the individual's financial soundness; and
