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Australia has seen active regulatory changes lately affecting all financial institutions operating in the country. This blog post focuses on the key financial regulation updates in Australia that should be considered by those deciding to start a business in this state. Also, we would like to emphasize that Australia is now experiencing its worst economic downturn since the Great Depression due to coronavirus outbreak. To help cushion the blow to the economy from the pandemic, the Reserve Bank of Australia (RBA) cut rates to a record low 0.25% and launched an unlimited bond-buying program.

Licensing of foreign financial service providers in Australia

Earlier this year, the Australian Securities and Investments Commission initiated a new licensing regime for financial institutions, including foreign ones. To provide service providers with a better understanding of the innovation, the Commission is consulting on the Australian financial services licensing regime for foreigners wishing to conduct financial activities in Australia.

The new licensing regime includes two aspects:

  • Foreign AFS License

A foreign financial services provider that is authorized by a foreign regulatory body in a specific list of countries can now apply for a foreign AFS license.

If you are planning to start a financial activity in Australia, please note that the list of these countries has been significantly expanded and now includes:

  1. Canada;
  2. Denmark;
  3. France;
  4. Germany;
  5. Great Britain;
  6. Hong Kong;
  7. Luxembourg;
  8. Ontario;
  9. Singapore;
  10. Sweden;
  11. The USA.

This list is expected to expand further.

If you intend to obtain a financial license in Australia, it is worth considering that an updated online application and guidelines for licensing financial institutions in this jurisdiction are now available to the public.

  • Simplified fund management

The new regulation includes a licensing exemption for fund management financial service providers seeking to attract local users. However, the exemption is limited.

IMPORTANT

For a comfortable transition to the new regime, a transition period is provided until mid-2022.

Other changes in the funds regulation in Australia

At the end of last year, the financial regulator issued the updated Regulatory Disclosure Guidelines which introduces major changes to Australia's disclosure regime on fees and charges for products for retail customers.

Provision of digital currency services

The Australian Center for Accounting and Analysis of Financial Transactions (AUSTRAC) is a state authority that regulates the work of cryptocurrency companies. If you want to provide digital currency exchange services, you must register with AUSTRAC before you start. It is illegal to provide cryptocurrency exchange services in Australia without registration.

Moreover, if registered cryptocurrency exchanges fail to meet their AML / CFT obligations, AUSTRAC may take enforcement action up to license revocation.

Conclusion

If you are interested in establishing a fund in Australia, you should carefully study the regulatory requirements, which are in a constant mode of adjustments. To keep abreast of developments, we recommend that you sign up for a consultation on the regulation of financial activities in Australia with experienced legal experts of our company. We monitor the latest news in this area and are ready to provide the necessary support at all stages of registering your business in Australia or another jurisdiction of your choice.