ASIC RG 176 — ASIC Regulatory Guide – RG 176 Foreign financial services providers

Page 1 REGULATORY GUIDE 176 Foreign financial services providers March 2020 About this guide This guide is for foreign financial services providers (FFSPs) that wish to provide financial services to wholesale clients or professional investors in Australia. It explains:  when an FFSP may be eligible to apply for a modified form of an Australian financial services (AFS) licence, known as a ‘foreign AFS licence’;  how to apply for a foreign AFS licence; and  when an FFSP may be eligible for other AFS licensing relief when providing ‘funds management financial services’ to certain types of professional investors in Australia (funds management relief). Note: From 27 July 2020, applications for relief should be submitted through the ASIC Regulatory Portal. For more information, see how you apply for relief. Page 2 REGULATORY GUIDE 176: Foreign financial services providers © Australian Securities and Investments Commission March 2020 Page 2 About ASIC regulatory documents In administering legislation ASIC issues the following types of regulatory documents. Consultation papers: seek feedback from stakeholders on matters ASIC is considering, such as proposed relief or proposed regulatory guidance. Regulatory guides: give guidance to regulated entities by:  explaining when and how ASIC will exercise specific powers under legislation (primarily the Corporations Act)  explaining how ASIC interprets the law  describing the principles underlying ASIC’s approach  giving practical guidance (e.g. describing the steps of a process such as applying for a licence or giving practical examples of how regulated entities may decide to meet their obligations). Information sheets: provide concise guidance on a specific process or compliance issue or an overview of detailed guidance. Reports: describe ASIC compliance or relief activity or the results of a research project. Document history This guide was issued in March 2020 and is based on legislation and regulations as at the date of issue. The note on the front page was inserted on 27 July 2020. In June 2025, we updated references to reflect changes to RG 1 and related guidance. Previous versions:  Superseded Regulatory Guide 176, issued June 2012  Superseded Policy Statement 176, issued September 2003, reissued May 2005, rebadged as a regulatory guide 5 July 2007 Disclaimer This guide does not constitute legal advice. We encourage you to seek your own professional advice to find out how the Corporations Act and other applicable laws apply to you, as it is your responsibility to determine your obligations. Examples in this guide are purely for illustration; they are not exhaustive and are not intended to impose or imply particular rules or requirements. Page 3 REGULATORY GUIDE 176: Foreign financial services providers © Australian Securities and Investments Commission March 2020 Page 3 Contents A Overview ........................................................................................... 4 Who this guide is for .......................................................................... 4 Purpose of this guide ......................................................................... 4 Our regulatory framework for FFSPs ................................................. 5 The foreign AFS licensing regime ..................................................... 6 B The foreign AFS licensing regime ................................................. 8 Authorisation in a sufficiently equivalent regulatory regime .............. 8 Obligations of a foreign AFS licensee ............................................. 16 C Applying for a foreign AFS licence .............................................. 19 The streamlined application process ............................................... 19 Ensure that you are eligible to apply for a foreign AFS licence ....... 20 Register as a foreign company (if required) .................................... 21 Provide ‘proof’ documents ............................................................... 22 Ensure that you can comply with your obligations .......................... 22 Lodge your application..................................................................... 23 D Applying to extend the foreign AFS licensee relief to another overseas regulatory regime .......................................................... 24 Our approach to extending the foreign AFS licensee relief ............. 24 Regulation of financial services by overseas regulatory authority... 25 ‘Sufficient equivalence’ of overseas regulatory regime ................... 26 Effective cooperation arrangements ................................................ 29 How to apply for an extension of the foreign AFS licensee relief .... 31 E Transitional arrangements for entities relying on the previous sufficient equivalence relief.......................................................... 34 The previous sufficient equivalence relief........................................ 34 Who the transitional arrangements apply to .................................... 35 F Funds management relief ............................................................. 37 Who the funds management relief may be available to .................. 37 Meaning of ‘funds management financial services’ ......................... 38 Circumstances when the funds management relief applies ............ 40 Transitional arrangements ............................................................... 42 Key terms ............................................................................................... 43 Related information ............................................................................... 46 Page 4 REGULATORY GUIDE 176: Foreign financial services providers © Australian Securities and Investments Commission March 2020 Page 4 A Overview Key points This guide explains the regulatory framework for foreign financial services providers (FFSPs) that wish to provide financial services to wholesale clients or professional investors in Australia. An FFSP that is authorised to provide financial services under a ‘sufficiently equivalent’ overseas regulatory regime may be eligible to apply for a modified form of Australian financial services (AFS) licence, known as a ‘foreign AFS licence’. A foreign AFS licensee is exempt from certain provisions in Ch 7 of the Corporations Act 2001 (Corporations Act) on the basis that it is subject to sufficiently equivalent overseas regulatory requirements that would achieve similar regulatory outcomes to the exempted provisions (foreign AFS licensee relief). This guide explains: • when an FFSP may be eligible to apply for a foreign AFS licence; • the obligations associated with holding a foreign AFS licence; • how to apply for a foreign AFS licence; and • certain transitional arrangements. This guide also explains when other AFS licensing relief may be available to an FFSP providing ‘funds management financial services’ to certain types of professional investors in Australia (funds management relief). Who this guide is for RG 176.1 This guide is for FFSPs that wish to provide financial services to wholesale clients or professional investors in Australia. Note: In this guide, references to sections (s), chapters (Chs) and parts (Pts) are to the Corporations Act, unless otherwise specified. References to regulations are to the Corporations Regulations 2001 (Corporations Regulations), unless otherwise specified. Purpose of this guide RG 176.2 This guide explains: (a) the foreign AFS licensee relief in ASIC Corporations (Foreign Financial Services Providers—Foreign AFS Licensees) Instrument 2020/198, including: (i) eligibility requirements for a foreign AFS licence; and (ii) the obligations and conditions that apply to a foreign AFS licensee (see Section B); Page 5 REGULATORY GUIDE 176: Foreign financial services providers © Australian Securities and Investments Commission March 2020 Page 5 (b) how to apply for a foreign AFS licence (see Section C); (c) our approach to extending the foreign AFS licensee relief in ASIC Corporations (Foreign Financial Services Providers—Foreign AFS Licensees) Instrument 2020/198 to cover other overseas regulatory regimes and how to apply for an extension of this relief (see Section D); (d) the transitional arrangements for FFSPs that have previously relied on the relief available under ASIC Corporations (Repeal and Transitional) Instrument 2016/396 and ASIC Corporations (CSSF-Regulated Financial Service Providers) Instrument 2016/1109 (see Section E); and (e) which FFSPs may be eligible for other AFS licensing relief when providing ‘funds management financial services’ to certain types of professional investors in Australia under the funds management relief (see Section F). Our regulatory framework for FFSPs RG 176.3 Generally, if you carry on a financial services business in Australia, you will need to hold an AFS licence, unless relief is granted by ASIC or an exemption applies. RG 176.4 This guide explains the regulatory framework for FFSPs that wish to provide financial services to wholesale clients or professional investors in Australia. Note: See also Regulatory Guide 121 Doing financial services business in Australia (RG 121) for more general guidance on the financial services regime in Australia for people or companies from overseas who propose to conduct a financial services business in Australia. RG 176.5 Table 1 sets out the three types of regulatory arrangements applicable to FFSPs that this guide addresses. Table 1: The regulatory framework for FFSPs Regulatory arrangement Description For more information Funds management relief An FFSP is exempt from the requirement to hold an AFS licence when the FFSP is only carrying on a financial services business in Australia because of the operation of s911D in relation to the provision of ‘funds management financial services’ to certain types of professional investors in Australia, subject to conditions that apply to the operation of the relief. See Section F of this guide and ASIC Corporations (Foreign Financial Services Providers—Funds Management Financial Services) Instrument 2020/199. Page 6 REGULATORY GUIDE 176: Foreign financial services providers © Australian Securities and Investments Commission March 2020 Page 6 Regulatory arrangement Description For more information Foreign AFS licence An FFSP that is authorised by an overseas regulatory authority that regulates the FFSP under a sufficiently equivalent regime (as assessed by ASIC) may be eligible to apply for a foreign AFS licence to provide specified financial services to wholesale clients in Australia. Foreign AFS licensees are exempt from certain provisions in Ch 7 of the Corporations Act on the basis that they are subject to sufficiently equivalent overseas regulatory requirements that would achieve similar regulatory outcomes to the Australian provisions from which we have issued an exemption. See Sections B–E of this guide and ASIC Corporations (Foreign Financial Services Providers—Foreign AFS Licensees) Instrument 2020/198. Standard AFS licence If an FFSP is not eligible for the funds management relief or a foreign AFS licence, and no other licensing exemption applies, the FFSP must hold a standard AFS licence in order to carry on a financial services business in Australia. It must comply with all the applicable general obligations under s912A, and all the applicable provisions of the Corporations Act and the Corporations Regulations. See Regulatory Guide 1 Applying for and varying an AFS licence (RG 1) and the AFS Licensing Kit and related regulatory guides. The foreign AFS licensing regime RG 176.6 The foreign AFS licensing regime is a modified AFS licensing regime for FFSPs that: (a) hold a relevant authorisation in a sufficiently equivalent overseas regulatory regime to provide financial services to wholesale clients; and (b) wish to provide those financial services to wholesale clients in Australia. Note: See Sections B–E of this guide and Regulatory Guide 54 Principles for cross- border financial regulation (RG 54) for guidance on our approach to recognising overseas regulatory regimes for the purposes of facilitating cross-border financial regulation. RG 176.7 A foreign AFS licensee is exempt from certain provisions in Ch 7 of the Corporations Act on the basis that it is subject to sufficiently equivalent overseas regulatory requirements that would achieve similar regulatory outcomes to the exempted provisions (foreign AFS licensee relief). Note: In this guide, foreign AFS licensee relief means the relief contained in ASIC Corporations (Foreign Financial Services Providers—Foreign AFS Licensees) Instrument 2020/198 or any individual relief instrument provided on substantially the same terms. RG 176.8 A streamlined application process applies to applications for a foreign AFS licence. This recognises that foreign AFS licensees are authorised under a Page 7 REGULATORY GUIDE 176: Foreign financial services providers © Australian Securities and Investments Commission March 2020 Page 7 sufficiently equivalent overseas regulatory regime to provide the relevant financial services (or substantially equivalent financial services) and are expected to be complying with relevant obligations imposed by the foreign regime for the financial services they provide. Eligibility for a foreign AFS licence RG 176.9 To be eligible to apply for a foreign AFS licence, an FFSP must hold a relevant authorisation in an overseas regulatory regime that is specified in Schedule 1 of ASIC Corporations (Foreign Financial Services Providers— Foreign AFS Licensees) Instrument 2020/198 or an individual relief instrument provided on substantially the same terms as this instrument. Extension of foreign AFS licensee relief to other regulatory regimes RG 176.10 We will assess applications to extend the foreign AFS licensee relief in ASIC Corporations (Foreign Financial Services Providers—Foreign AFS Licensees) Instrument 2020/198 to cover additional overseas regulatory regimes. RG 176.11 Generally, we will only extend the foreign AFS licensee relief if: (a) the relevant financial services are regulated by an overseas regulatory authority; (b) the regulatory regime overseen by the overseas regulatory authority is sufficiently equivalent to the Australian regulatory regime; and (c) there are effective cooperation arrangements between the relevant overseas regulatory authority and ASIC. RG 176.12 Section D provides guidance on how to apply to extend the foreign AFS licensee relief to cover additional regulatory regimes. This guide deals only with applications from FFSPs or their industry associations to extend the relief to another regulatory regime. RG 176.13 If an overseas regulatory authority wishes to initiate an approval process to extend the foreign AFS licensee relief to cover its regime, it should contact us by email at international@asic.gov.au to express its interest and discuss an appropriate process. In considering an application from an overseas regulatory authority, we will: (a) be guided by our approach in RG 54; and (b) consider whether it would be appropriate to pursue a mutual recognition arrangement with that authority. RG 176.14 We may provide an opportunity for public comment on a proposed extension of the foreign AFS licensee relief. For example, we may invite comment on whether there is any reason to believe that the overseas regulatory regime is not sufficiently equivalent to Australia’s regulatory regime. Page 8 REGULATORY GUIDE 176: Foreign financial services providers © Australian Securities and Investments Commission March 2020 Page 8 B The foreign AFS licensing regime Key points The foreign AFS licensing regime is a modified AFS licensing regime for FFSPs that: • are authorised in a ‘sufficiently equivalent’ overseas regulatory regime to provide financial services to wholesale clients; and • wish to provide those financial services to wholesale clients in Australia. This section explains the foreign AFS licensing regime, including: • the foreign AFS licensee relief; and • the obligations and conditions that apply to foreign AFS licensees. Authorisation in a sufficiently equivalent regulatory regime RG 176.15 To be eligible to apply for a foreign AFS licence, an FFSP must hold a relevant authorisation in an overseas regulatory regime that is specified in Schedule 1 of ASIC Corporations (Foreign Financial Services Providers— Foreign AFS Licensees) Instrument 2020/198 or an individual relief instrument provided on substantially the same terms as this instrument. RG 176.16 Table 2 lists the overseas regulatory regimes that are currently specified. RG 176.17 ASIC Corporations (Foreign Financial Services Providers—Foreign AFS Licensees) Instrument 2020/198 recognises that the overseas regulatory regimes set out in Table 2 have been assessed by ASIC as sufficiently equivalent to the Australian regulatory regime for the regulation of the relevant financial services. It exempts foreign AFS licensees that hold specified authorisations in those jurisdictions from the provisions set out in Table 3 on the basis that they are subject to: (a) sufficiently equivalent overseas regulatory requirements that would achieve similar regulatory outcomes to the exempted provisions; and (b) supervision and, when required, enforcement action by an overseas regulatory authority for those requirements. RG 176.18 The foreign AFS licensee relief is available to foreign AFS licensees that seek to provide one or more of the financial services specified in ASIC Corporations (Foreign Financial Services Providers—Foreign AFS Licensees) Instrument 2020/198. Page 9 REGULATORY GUIDE 176: Foreign financial services providers © Australian Securities and Investments Commission March 2020 Page 9 Table 2: Specified overseas regulatory regimes as set out in ASIC Corporations (Foreign Financial Services Providers—Foreign AFS Licensees) Instrument 2020/198 Sufficiently equivalent overseas regulatory regime Financial services and/or products for which foreign AFS licensee relief is available Denmark—if regulated by the Danish Financial Supervisory Authority The relief applies to providing financial advice, dealing, making a market or providing a custodial or depository service, in respect of the following financial products:  derivatives;  foreign exchange contracts;  securities;  debentures, stock or bonds issued by or proposed to be issued by a government;  managed investment products; or  interests in a managed investment scheme that is not required to be registered under Ch 5C. France—if regulated by the Autorité des marchés financiers of France The relief applies to providing financial advice and dealing in respect of the following financial products:  securities;  managed investment products; or  interests in a managed investment scheme that is not required to be registered under Ch 5C. France—if regulated by the Autorité de contrôle prudentiel et de resolution of France The relief applies to providing financial advice, dealing, making a market or providing a custodial or depository service, in respect of the following financial products:  eligible deposit products;  derivatives;  foreign exchange contracts;  securities;  debentures, stocks or bonds issued or proposed to be issued by a government;  managed investment products;  interests in a managed investment scheme that is not required to be registered under Ch 5C; or  facilities through which a person makes non-cash payments. Page 10 REGULATORY GUIDE 176: Foreign financial services providers © Australian Securities and Investments Commission March 2020 Page 10 Sufficiently equivalent overseas regulatory regime Financial services and/or products for which foreign AFS licensee relief is available Germany—if regulated by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) The relief applies to providing financial advice, making a market or providing a custodial or depository service, in respect of the following financial products:  derivatives;  foreign exchange contracts;  securities;  debentures, stocks or bonds issued or proposed to be issued by a government;  managed investment products;  interests in a managed investment scheme that is not required to be registered under Ch 5C;  deposit-taking facilities that are not deposit products—if the FFSP holds a German Banking Licence; or  facilities through which a person makes non-cash payments—if the FFSP holds a German Banking Licence. Hong Kong—if regulated by the Securities and Futures Commission The relief applies to providing financial advice, dealing or making a market in respect of the following financial products:  derivatives;  foreign exchange contracts;  securities;  debentures, stocks or bonds issued or proposed to be issued by a government;  managed investment products; or  interests in a managed investment scheme that is not required to be registered under Ch 5C. Luxembourg—if regulated by the Commission de Surveillance du Secteur Financier The relief applies to providing financial advice, dealing, making a market or providing a custodial or depository service, in respect of the following financial products:  eligible deposit products;  derivatives;  foreign exchange contracts;  securities;  debentures, stocks or bonds issued or proposed to be issued by a government;  managed investment products;  interests in a managed investment scheme that is not required to be registered under Ch 5C; or  facilities through which a person makes non-cash payments—if the FFSP is a credit institution. Page 11 REGULATORY GUIDE 176: Foreign financial services providers © Australian Securities and Investments Commission March 2020 Page 11 Sufficiently equivalent overseas regulatory regime Financial services and/or products for which foreign AFS licensee relief is available Ontario, Canada—if regulated by the Ontario Securities Commission The relief applies to providing financial advice and dealing in respect of the following financial products:  derivatives;  foreign exchange contracts;  securities;  debentures, stocks or bonds issued by or proposed to be issued by a government;  managed investment products; or  interests in a managed investment scheme that is not required to be registered under Ch 5C. Singapore—if regulated by the Monetary Authority of Singapore The relief applies to providing financial advice, dealing, making a market or providing a custodial or depository service, in respect of the following financial products:  derivatives;  foreign exchange contracts;  securities;  debentures, stocks or bonds issued or proposed to be issued by a government;  managed investment products; or  interests in a managed investment scheme that is not required to be registered under Ch 5C. Sweden—if regulated by the Finansinspektionen The relief applies to providing financial advice, dealing, making a market or providing a custodial or depository service, in respect of the following financial products:  eligible deposit products;  derivatives;  foreign exchange contracts;  securities;  debentures, stocks or bonds issued by or proposed to be issued by a government;  managed investment products; or  interests in a managed investment scheme that is not required to be registered under Ch 5C. Page 12 REGULATORY GUIDE 176: Foreign financial services providers © Australian Securities and Investments Commission March 2020 Page 12 Sufficiently equivalent overseas regulatory regime Financial services and/or products for which foreign AFS licensee relief is available United Kingdom—if regulated by the Financial Conduct Authority The relief applies to providing financial advice, dealing, making a market or providing a custodial or depository service, in respect of the following financial products:  eligible deposit products;  derivatives;  foreign exchange contracts;  securities;  debentures, stocks or bonds issued or proposed to be issued by a government;  managed investment products; or  interests in a managed investment scheme that is not required to be registered under Ch 5C. United States—if regulated by the Commodity Futures Trading Commission The relief applies to providing financial advice, making a market or providing a custodial or depository service, in respect of the following financial products:  derivatives;  foreign exchange contracts;  managed investment products; or  interests in a managed investment scheme that is not required to be registered under Ch 5C. United States—if regulated by:  the Federal Reserve; and  the Office of the Comptroller of the Currency The relief applies to providing financial advice, dealing, making a market or providing a custodial or depository service, in respect of the following financial products:  any deposit-taking facility, including a deposit product;  derivatives;  foreign exchange contracts;  securities;  facilities for making non-cash payments;  debentures, stocks or bonds issued or proposed to be issued by a government;  managed investment products; or  interests in a managed investment scheme that is not required to be registered under Ch 5C. United States—if regulated by the US Securities and Exchange Commission The relief applies to providing financial advice, dealing, making a market or providing a custodial or depository service, in respect of the following financial products:  derivatives;  foreign exchange contracts;  securities;  debentures, stocks or bonds issued or proposed to be issued by a government;  managed investment products; or  interests in a managed investment scheme that is not required to be registered under Ch 5C. Page 13 REGULATORY GUIDE 176: Foreign financial services providers © Australian Securities and Investments Commission March 2020 Page 13 Conditions of the relief RG 176.19 The foreign AFS licensee relief is subject to the following conditions: (a) the foreign AFS licensee must carry on a business in the relevant foreign jurisdiction—this condition is aimed at ensuring that the licensee is subject to overseas regulatory oversight in that jurisdiction; (b) unless the foreign AFS licensee is a company, it must have an agent appointed at the time it purports to rely on the relief and not fail to have an agent for any consecutive period of 10 business days; (c) the foreign AFS licensee must reasonably believe that it would not contravene any laws of its home jurisdiction relating to the provision of financial services if it were to provide the wholesale financial service in its home jurisdiction; (d) the foreign AFS licensee must notify ASIC, as soon as practicable and in any event within 15 business days after it becomes aware or should reasonably have become aware, and in such form if any as ASIC may from time to time specify in writing, of the details of: (i) each significant change to, including the termination of, the licensee’s relevant registration or authorisation in the licensee’s home jurisdiction; (ii) each significant exemption or other relief that the licensee obtains from the regulatory requirements in its home jurisdiction; and (iii) each significant investigation, enforcement or disciplinary action undertaken by any overseas regulatory authority against the licensee in a foreign jurisdiction in relation to financial services provided by the licensee in that jurisdiction. RG 176.20 These requirements are intended to: (a) ensure that the foreign AFS licensee’s conduct and status are such that it remains entitled to the foreign AFS licensee relief; and (b) give us sufficient information to enable us to assess: (i) whether the foreign AFS licensee is complying with its obligations in the relevant overseas regulatory regime; (ii) whether the relevant overseas regulatory regime continues to satisfy our ‘equivalence test’; and (iii) whether the foreign AFS licensee is in compliance with its obligations under its foreign AFS licence. What do we mean by a ‘significant’ investigation, enforcement or disciplinary action? RG 176.21 The requirement in RG 176.19(d)(iii) is designed to ensure that we are aware of any significant investigation, enforcement or disciplinary actions against the Page 14 REGULATORY GUIDE 176: Foreign financial services providers © Australian Securities and Investments Commission March 2020 Page 14 foreign AFS licensee in an overseas regulatory regime in relation to financial services provided by the licensee in that jurisdiction. RG 176.22 In determining whether an investigation, enforcement or disciplinary action is significant, a foreign AFS licensee should consider whether it is serious enough that it may affect our assessment that the licensee may continue to rely on the foreign AFS licensee relief or raise questions about compliance by the licensee with its obligations under its foreign AFS licence. RG 176.23 An investigation, enforcement or disciplinary action may be significant even if it relates to relatively minor breaches of the obligations in the overseas regulatory regime, because those breaches may indicate inadequate compliance arrangements due to their number or frequency. If you are not sure whether an investigation, enforcement or disciplinary action is significant, we encourage you to notify us about it within the requisite timeframe. RG 176.24 An investigation, enforcement or disciplinary action in a foreign jurisdiction does not have to be completed before it must be notified to us—that is, it does not need to have concluded in a finding, settlement or an outcome by the relevant regulatory authority to be reportable by the foreign AFS licensee. The fact that the overseas regulatory authority has commenced a significant investigation, enforcement or disciplinary action may trigger the notification requirement. It becomes notifiable when the licensee knows, or should reasonably have known, of its existence. RG 176.25 The foreign AFS licensee does not have to comply with this requirement if it is prohibited by law from giving the notification (but only to the extent of the prohibition). How to send your notifications to ASIC RG 176.26 An FFSP must send us notifications by email to FFSP@asic.gov.au. You can also contact ASIC on 1300 300 630 (or +61 3 5177 3988 if dialling from overseas) for general information and assistance. What happens when an overseas regulatory regime ceases to be sufficiently equivalent RG 176.27 The types of changes that may result in the overseas regulatory regime ceasing to be sufficiently equivalent include changes to: (a) the regulatory structure in the overseas regulatory regime; (b) the supervisory arrangements for FFSPs operating under the overseas regulatory authority; (c) the obligations or requirements imposed on FFSPs in the overseas regulatory regime; Page 15 REGULATORY GUIDE 176: Foreign financial services providers © Australian Securities and Investments Commission March 2020 Page 15 (d) the overseas regulatory authority’s supervision or legislative responsibility for activities of the FFSP in Australia, or in relation to wholesale clients; and (e) the rights and remedies that are practically available to investors in Australia under the overseas regulatory regime. Note: This is not an exhaustive list. Relevant considerations will always depend on the applicable facts and circumstances. In assessing whether an overseas regulatory regime has ceased to be sufficiently equivalent, we may engage with the relevant overseas regulatory authority. RG 176.28 If we form the preliminary view that the overseas regulatory regime ceases to be sufficiently equivalent to the Australian regime for some or all of the relevant financial services, we will notify the relevant foreign AFS licensees that are authorised in that regime for those financial services. We will provide them with a reasonable period to put to us submissions concerning our preliminary finding that the regime is not sufficiently equivalent. RG 176.29 If, after considering any submissions on our preliminary finding, we still consider that there is not sufficient equivalence, we will take steps to remove the overseas regulatory regime from the list of overseas regulatory regimes in ASIC Corporations (Foreign Financial Services Providers—Foreign AFS Licensees) Instrument 2020/198 or repeal any individual relief instrument on similar terms. RG 176.30 The relevant foreign AFS licensee will be provided with a reasonable period to cease providing financial services under its licence. If the licensee does not cease to provide financial services under its licence within the specified timeframe, we will take steps to suspend or revoke the licence. RG 176.31 If the relevant foreign AFS licensee wishes to continue to provide financial services under its licence, it may: (a) Apply to vary its foreign AFS licence into a standard AFS licence covering those financial services—To be eligible for a standard AFS licence, the foreign AFS licensee must provide us with the requisite proofs so that we can be satisfied that there is no reason to believe the applicant will not comply with the applicable provisions in the Corporations Act for the financial services that it wishes to continue to provide after it ceases to be eligible for the foreign AFS licensee relief. If we are not satisfied of this, we will refuse the variation application and take steps to revoke the foreign AFS licence. Note: For guidance on how to vary an AFS licence and the proofs that may be required, see RG 1 and the AFS Licensing Kit. Page 16 REGULATORY GUIDE 176: Foreign financial services providers © Australian Securities and Investments Commission March 2020 Page 16 (b) Apply for transitional relief to enable the foreign AFS licensee to continue to provide financial services under its foreign AFS licence while an application to vary its licence is being made or assessed—We will assess any applications for transitional relief on a case-by-case basis having regard to the foreign AFS licensee’s specific circumstances. RG 176.32 If the relevant foreign AFS licensee does not wish to continue to provide financial services under its licence, a cancellation request should be made to ASIC. Obligations of a foreign AFS licensee RG 176.33 While a foreign AFS licensee is exempt from specified provisions of the Corporations Act (see RG 176.34 and Table 3), a foreign AFS licensee must comply with: (a) all other applicable provisions under the Corporations Act (see RG 176.37–RG 176.38); and (b) the applicable conditions on its foreign AFS licence and the Corporations Regulations other than those applying under reg 7.6.04(1)(a) and (d) (see RG 176.39–RG 176.40). Provisions that do not apply to foreign AFS licensees RG 176.34 Foreign AFS licensees are exempt from specified provisions in Ch 7 of the Corporations Act on the basis that they are subject to: (a) sufficiently equivalent overseas regulatory requirements that would achieve similar regulatory outcomes to the exempted provisions; and (b) supervision and, when required, enforcement action by an overseas regulatory authority in a sufficiently equivalent overseas regulatory regime in relation to those requirements. RG 176.35 The foreign AFS licensee relief does not provide any exemptions from obligations that apply to a person as a result of providing financial services to a retail client because the foreign AFS licence only authorises the FFSP to provide financial services to wholesale clients. RG 176.36 Table 3 sets out the exempted provisions. Page 17 REGULATORY GUIDE 176: Foreign financial services providers © Australian Securities and Investments Commission March 2020 Page 17 Table 3: Corporations Act provisions that foreign AFS licensees are exempt from under ASIC Corporations (Foreign Financial Services Providers—Foreign AFS Licensees) Instrument 2020/198 Provision Description of exempted provision s912A(1)(b), to the extent it requires compliance with reg 7.6.04(1)(a) and (d) Obligations about notifying ASIC of events that may cause a material adverse change to financial position and maintaining records of training for representatives s912A(1)(d) Have adequate resources s912A(1)(e) Maintain the competence to provide the financial services s912A(1)(f) Ensure that representatives are appropriately trained s912AAC Meet minimum standards for custodial or depository service providers s912AAD Have agreements with sub-custodians to hold custodial property s912AC Have adequate financial resources for custodial or depository service providers All the provisions in Subdivs A and B, Div 2 of Pt 7.8, and Div 3 of Pt 7.8 Obligations about handling client money and client property when the sufficiently equivalent protections in the overseas regulatory regime apply to client money paid to, and client property held by, the foreign AFS licensee from a wholesale client in Australia relating to the exempt financial service s991E Obligations of licensees in relation to dealings with non-licensees (to the extent the financial product transaction is entered into or arranged outside Australia) s991F Dealings involving employees of licensees—if the foreign AFS licensee is only carrying on a financial services business in Australia because it carries on the business of providing eligible financial services under the instrument in Australia s1017E Obligations about dealing with money received for a financial product before the product is issued when sufficiently equivalent protections in the overseas regulatory regime apply to the money received from wholesale clients in Australia relating to the exempt financial service Note: Foreign AFS licensees may also have the benefit of relief from certain financial reporting and record-keeping obligations under ASIC Corporations (Financial Licensees and ADIs) Instrument 2016/186. Provisions that apply to foreign AFS licensees RG 176.37 Except for the provisions listed in Table 3, a foreign AFS licensee is subject to all other applicable provisions under the Corporations Act, including fundamental conduct obligations to: (a) provide financial services efficiently, honestly and fairly (see s912A(1)(a)); (b) have in place adequate arrangements for the management of conflicts of interest (see s912A(1)(aa)); (c) comply with the conditions on its licence (see s912A(1)(b)); Page 18 REGULATORY GUIDE 176: Foreign financial services providers © Australian Securities and Investments Commission March 2020 Page 18 (d) comply with applicable financial services laws (see s912A(1)(c)); Note: ‘Financial services laws’ is defined in s761A, and includes Commonwealth, state or territory legislation that covers conduct relating to the provision of financial services. (e) take reasonable steps to ensure that representatives comply with applicable financial services laws (see s912A(1)(ca)); and (f) have adequate risk management systems (see s912A(1)(h)). Note 1: The obligation in RG 176.37(f) does not apply to a body regulated by the Australian Prudential Regulation Authority (APRA). Note 2: This is not a comprehensive list of obligations that apply to foreign AFS licensees. For further guidance, see our regulatory guides. For a list of some of the relevant regulatory guides, see ‘Related information’ at the end of this guide. You may wish to seek independent legal advice on the obligations that may apply to you. RG 176.38 A foreign AFS licensee will also be subject to supervisory and enforcement provisions applicable to standard AFS licensees, including: (a) our power to direct a licensee to provide a written statement (see s912C); (b) breach reporting requirements (see s912D); (c) the requirement to give us reasonable assistance during surveillance checks (see s912E); and (d) the powers available to us in relation to AFS licences, such as the powers to: (i) impose or vary conditions on a licence (see s914A); and (ii) vary, suspend or cancel a licence (see s915A and 915B). Licence conditions that apply to foreign AFS licensees RG 176.39 Pro Forma 209 Australian financial services licence conditions (PF 209) sets out the licence conditions that apply to standard AFS licensees and foreign AFS licensees (as applicable to their individual circumstances). The prescribed conditions under reg 7.6.04 also apply (except those that foreign AFS licensees are exempted from complying with under the foreign AFS licensee relief—that is, reg 7.6.04(1)(a) and (d)). RG 176.40 In addition to the applicable conditions in PF 209 and the prescribed conditions in the Corporations Regulations, a foreign AFS licensee must comply with all the conditions under ASIC Corporations (Foreign Financial Services Providers—Foreign AFS Licensees) Instrument 2020/198. These conditions are outlined in RG 176.19. Page 19 REGULATORY GUIDE 176: Foreign financial services providers © Australian Securities and Investments Commission March 2020 Page 19 C Applying for a foreign AFS licence Key points This section explains the streamlined application process for eligible FFSPs, including: • how to determine if you are eligible to apply for a foreign AFS licence; • what information you need to provide with your application; and • how to lodge your application. The streamlined application process RG 176.41 The application process for a foreign AFS licence is streamlined in recognition of the applicant’s existing authorisation to provide the relevant financial services in a sufficiently equivalent overseas regulatory regime. RG 176.42 In assessing your application, we will consider whether you can meet the obligations applicable to a foreign AFS licensee: see RG 176.33 and RG 176.37–RG 176.38. Accordingly, the streamlined process means that the application has fewer questions and requires fewer ‘proofs’. Note: RG 1 and the AFS Licensing Kit provide guidance for applicants applying for an AFS licence. RG 176.43 To apply for a foreign AFS licence, you need to: (a) ensure that you are eligible to apply for a foreign AFS licence (see RG 176.45–RG 176.47); (b) ensure that you are registered as a foreign company if you are required to do so under the Corporations Act (RG 176.48–RG 176.49); (c) provide the required ‘proof’ documents with your application (see RG 176.50–RG 176.53); (d) understand and be able to comply with your obligations as a foreign AFS licensee and with your licence conditions (see RG 176.54– RG 176.56); and (e) lodge your application and pay the application fee (see RG 176.57– RG 176.58). Note 1: For information on fees for commonly lodged documents, see Information Sheet 30 Fees for commonly lodged documents (INFO 30). Note 2: Annual industry funding levies may also apply: see Regulatory costs and levies for more information. RG 176.44 Figure 1 provides an overview of the application process. Page 20 REGULATORY GUIDE 176: Foreign financial services providers © Australian Securities and Investments Commission March 2020 Page 20 Figure 1: Overview of the foreign AFS licence application process Note: This flowchart is described in RG 176.43 (accessible version). Ensure that you are eligible to apply for a foreign AFS licence RG 176.45 To be eligible to apply for a foreign AFS licence, you must be covered by the foreign AFS licensee relief if the licence is granted. This means an FFSP must hold a relevant authorisation in an overseas regulatory regime specified Are you covered by the foreign AFS licensee relief if the foreign AFS licence is granted? Have you provided the necessary information to ASIC about your business and the financial services and products you will provide to wholesale clients in Australia? We will assess your application and advise you of the outcome in accordance with the ASIC Service Charter. Have you provided the required ‘proof’ documents with your application? Do you understand, and are you able to comply with, your obligations as a foreign AFS licensee and with your licence conditions? Have you lodged your completed application at www.asic.gov.au/afsl and paid the application fee? NO You may apply to extend the foreign AFS licensee relief to cover your overseas regulatory regime. If you are required to do so, have you registered as a foreign company? We will ask for your consent to notify your regulatory authority of your application. When you apply online, you will be advised on which proof documents you need to provide. We may also ask for additional proofs. You will need to make declarations and certifications to this effect. YES YES YES YES YES YES Page 21 REGULATORY GUIDE 176: Foreign financial services providers © Australian Securities and Investments Commission March 2020 Page 21 in Schedule 1 of ASIC Corporations (Foreign Financial Services Providers— Foreign AFS licensees) Instrument 2020/198: see Table 2. RG 176.46 You need to check that the foreign AFS licensee relief covers: (a) the overseas regulatory regime under which you are authorised to provide financial services to wholesale clients; and (b) the financial services you wish to provide to wholesale clients in Australia—you must be authorised under the overseas regulatory regime to provide substantially the same financial services. RG 176.47 If the relevant overseas regulatory regime and/or financial services you wish to provide in Australia are not covered under the foreign AFS licensee relief, you may apply to have the relief extended to the overseas regulatory regime and/or financial services that are not covered. If the application is granted, you may then apply for a foreign AFS licence. We will assess applications to extend the foreign AFS licensee relief on a jurisdiction-by-jurisdiction basis: see Section D. Note: We will not accept lodgement of a foreign AFS licence application or proceed to assess such an application until the foreign AFS licensee relief has been extended to the applicable overseas regulatory regime for the relevant financial services. Register as a foreign company (if required) RG 176.48 Generally, an FFSP must register as a foreign company under Div 2 of Pt 5B.2 if, among other things, it: (a) has a place of business in Australia (e.g. a branch office); (b) establishes or uses a share transfer office or share registration office in Australia; or (c) administers, manages or deals with property in Australia as an agent, legal personal representative, or otherwise. RG 176.49 If an FFSP is required to be registered as a foreign company under Div 2 of Pt 5B.2, it must ensure that it has done so. Note 1: Section 601CD and RG 121 provide that a foreign company must not carry on business in Australia unless it is registered under Div 2 of Pt 5B.2 (or it has applied to be registered and the application has not been dealt with). See RG 121 for further guidance on the meaning of ‘carrying on a business in Australia’. Note 2: Information Sheet 32 Foreign companies (INFO 32) provides guidance on how to register as a foreign company and the ongoing obligations that apply to a registered foreign company. Page 22 REGULATORY GUIDE 176: Foreign financial services providers © Australian Securities and Investments Commission March 2020 Page 22 Provide ‘proof’ documents RG 176.50 You will need to provide ‘proof’ documents as part of your application. How many and what type will depend on: (a) the complexity of the financial services and products you apply for; and (b) our analysis of your business and the market you propose to operate in. RG 176.51 Generally, foreign AFS licence applicants are not required to submit proofs relating to the exempted provisions in Table 3. We do not require these proofs because, to obtain its foreign authorisation or licence, the FFSP would have had to satisfy the relevant overseas regulatory authority of its ability to comply with overseas regulatory requirements that are sufficiently equivalent to the exempted provisions. The streamlined process reduces duplication in the regulatory assessment of the FFSP’s ability to comply with those requirements. RG 176.52 The online application form will identify the proof documents you need to send as part of your application. RG 176.53 We may ask you to provide additional proof documents as required: see RG 1 and the AFS Licensing Kit. Depending on the financial services you intend to provide and the complexity of your business, these may include proofs relating to compliance arrangements, risk management, custodial and depository arrangements, making a market, and derivatives and foreign exchange products that the financial services relate to. Ensure that you can comply with your obligations RG 176.54 Other than the exempted provisions in Table 3, a foreign AFS licensee is subject to the same obligations as a standard AFS licensee (as applicable to its individual circumstances). You must have systems and processes in place to enable you to comply with these obligations at the time you apply for your licence. RG 176.55 When you complete your application, you will be asked to make declarations and certifications to this effect. For further guidance, see RG 1 and the AFS Licensing Kit. RG 176.56 We may refuse to grant a foreign AFS licence if we have reason to believe that you will not be able to comply with the obligations applicable to a foreign AFS licensee. Note: For further guidance on refusals to grant a licence, see RG 1. For example, before we can refuse to grant a licence, we will refer your application to an ASIC delegate who is authorised to make the final decision. The delegate will provide you with an opportunity to appear at a hearing and/or make submissions before making a final decision: see Regulatory Guide 98 ASIC’s powers to suspend, cancel and vary AFS licences and make banning orders (RG 98). Page 23 REGULATORY GUIDE 176: Foreign financial services providers © Australian Securities and Investments Commission March 2020 Page 23 Lodge your application RG 176.57 Lodge your application for a foreign AFS licence at www.asic.gov.au/afsl. All supporting proof documents identified by the online form must be lodged at the same time as the application is submitted. If not, the application will be rejected. For further guidance, see RG 1 and the AFS Licensing Kit. RG 176.58 We will assess your application and advise you of the outcome in accordance with the ASIC Service Charter. Page 24 REGULATORY GUIDE 176: Foreign financial services providers © Australian Securities and Investments Commission March 2020 Page 24 D Applying to extend the foreign AFS licensee relief to another overseas regulatory regime Key points We will assess applications to extend the foreign AFS licensee relief to cover other overseas regulatory regimes. This section explains when we will extend the foreign AFS licensee relief to an overseas regulatory regime and how to apply to have the relief extended. Our approach to extending the foreign AFS licensee relief RG 176.59 To be eligible for a foreign AFS licence, an FFSP must hold the relevant authorisation in a specified overseas regulatory regime: see Table 2 for a list of these regimes. RG 176.60 We will assess applications to extend the foreign AFS licensee relief to cover other overseas regulatory regimes. We will extend the relief to cover an overseas regulatory regime for particular financial services only if: (a) the particular financial services (not the financial product) are regulated by an overseas regulatory authority (see RG 176.64–RG 176.69); Note: Examples of financial services that must be regulated include the provision of financial product advice, dealing in financial products, and market making in relation to particular financial products. This extends to where the subject matter regulated under the overseas authorisation is substantially similar to the relevant financial services for which the exemption is sought. (b) the regulatory regime overseen by the overseas regulatory authority is sufficiently equivalent to the Australian regulatory regime in relation to the exempted provisions in Table 3 (see RG 176.70–RG 176.83); and (c) there are effective cooperation arrangements between the overseas regulatory authority and ASIC (see RG 176.84–RG 176.91). RG 176.61 In assessing whether regulation by an overseas regulatory authority is sufficiently equivalent to regulation by ASIC for the purposes of granting foreign AFS licensee relief, we will also be guided by RG 54. RG 176.62 The assessment will be outcomes-based and focused on an assessment of whether the overseas regulation produces similar outcomes to the exempted provisions in Table 3, rather than all the regulatory outcomes in Ch 7 of the Corporations Act. Page 25 REGULATORY GUIDE 176: Foreign financial services providers © Australian Securities and Investments Commission March 2020 Page 25 RG 176.63 In approaching such an assessment, the information we would take into account would include: (a) material from recent reviews of relevant overseas regulatory regimes undertaken by other regulatory bodies such as the Financial Sector Assessment Program undertaken by the International Monetary Fund; (b) material we obtain about the overseas regulatory regime through our relationships with international bodies such as the International Organization of Securities Commissions (IOSCO); (c) material we receive from the relevant overseas regulator; and (d) material we obtain from relevant industry associations to assist us with streamlining the assessment process for a particular jurisdiction. Regulation of financial services by overseas regulatory authority RG 176.64 We will: (a) assess the overseas regulatory regime overseen by the relevant regulatory authority against our ‘equivalence test’—that is, we will assess whether the outcomes of the requirements in the overseas regime for the financial services are similar to those outcomes produced by the exempted provisions in Table 3; and (b) require effective cooperation arrangements with the relevant regulatory authority. Why we rely on overseas regulatory authorities RG 176.65 Regulation involves more than the imposition of legal obligations and requirements. A person is only sufficiently regulated by a body if the body has the ability to: (a) monitor compliance with legal obligations and requirements; (b) conduct investigations through the use of compulsory powers; and (c) enforce compliance with legal obligations and requirements. RG 176.66 Generally, an overseas regulatory authority has these powers over persons present in its jurisdiction. Our approach to self-regulatory organisations RG 176.67 When considering whether there is ‘sufficiently equivalent’ regulation by an overseas regulatory authority, we will take into account the role of a self- regulatory organisation (SRO) that has responsibilities delegated to it by an overseas regulatory authority. We note that, in some jurisdictions, SROs often have authority delegated to them by a statutory authority. Page 26 REGULATORY GUIDE 176: Foreign financial services providers © Australian Securities and Investments Commission March 2020 Page 26 RG 176.68 In our view, an ‘overseas regulatory authority’ is a body established by, or for the purpose of, a foreign government, and we therefore consider that this term does not include overseas SROs. RG 176.69 If an overseas regulatory authority delegates its responsibilities to an SRO, the overseas regulatory authority remains the statutory authority. However, we will recognise the role played by SROs with authority delegated to them from a statutory authority and may require effective cooperation arrangements with both the SRO and the overseas regulatory authority. ‘Sufficient equivalence’ of overseas regulatory regime RG 176.70 Extending the foreign AFS licensee relief to cover an overseas regulatory regime may, in part, involve overseas regulatory authorities playing a role in ensuring the integrity of Australian markets and the stability of the Australian financial system. To minimise regulatory and enforcement gaps, it is essential that we assess the nature of the regulatory regime overseen by a relevant overseas regulatory authority before we extend the relief. RG 176.71 An overseas regulatory regime will be sufficiently equivalent to regulation by ASIC if it: (a) achieves sufficiently equivalent regulatory outcomes to the Australian regulatory regime for the regulation of wholesale financial services for the exempted provisions in Table 3 (see RG 176.73–RG 176.75); (b) is clear, transparent and certain (see RG 176.76–RG 176.78); (c) is consistent with the IOSCO Objectives and Principles of Securities Regulation (see RG 176.79–RG 176.80); and (d) is adequately enforced (see RG 176.81–RG 176.83). RG 176.72 These criteria form our outcomes-based ‘equivalence test’. Sufficiently equivalent regulatory outcomes RG 176.73 Whatever its regulatory mechanisms, a sufficiently equivalent regulatory regime must achieve regulatory outcomes that are sufficiently equivalent to the regulatory outcomes achieved by the Australian regulatory regime. We will assess whether these outcomes are sufficiently equivalent from the perspective of Australian markets and the Australian financial system. We will not assess retail consumer protection outcomes because the relief will apply only to services provided to wholesale clients. RG 176.74 An overseas regulatory regime will be assessed as sufficiently equivalent to the Australian regime if it contains regulation that produces similar outcomes to those produced by the exempted provisions in Table 3. Page 27 REGULATORY GUIDE 176: Foreign financial services providers © Australian Securities and Investments Commission March 2020 Page 27 RG 176.75 Table 4 sets out the high-level outcomes produced by the exempted provisions in Table 3—against which we will assess the overseas regulatory regime. We will only assess the outcomes relevant to the financial services in relation to which the equivalence assessment is being undertaken. Table 4: Outcomes that we will assess the overseas regulatory regime against Exempted Corporations Act provision Outcome assessed s912A(1)(d) and 912AC Whether the overseas regulatory regime requires providers to have adequate resources to provide the financial services s912A(1)(e) Whether the overseas regulatory regime requires providers to maintain the competence to provide the financial services s912A(1)(f) Whether the overseas regulatory regime requires providers to ensure that representatives are appropriately trained s912AAC In relation to custodial and depository service providers, whether the overseas regulatory regime requires that:  the client’s assets are not exposed to unnecessary risks because of the way in which they are held; and  efficient operational arrangements exist for holding and dealing with client assets, including assets from clients in Australia s912AAD In relation to custodial and depository service providers, whether the overseas regulatory regime requires providers to have agreements with sub-custodians to hold custodial property that allows the provider to review and monitor the sub-custodian All the provisions in Subdivs A and B, Div 2 of Pt 7.8, and Div 3 of Pt 7.8 Whether the overseas regulatory regime has effective measures to protect money and property provided by the client to the FFSP, including from clients in Australia s1017E Whether the overseas regulatory regime requires providers to separate and protect the money they receive from clients before the issue of relevant financial products, including from clients in Australia Note: See Principle 10 of RG 54 for further details. Clear, transparent and certain RG 176.76 The outcomes-based equivalence test involves an assessment of the outcomes of the overseas regulatory regime against those of the Australian regulatory regime. This includes testing against the following criteria: (a) a ‘clear’ regulatory