FX - Remittance dealers
This page provides pointers to help you understand how the law might apply to your innovation.
Are you a foreign exchange provider or remittance dealer?
Foreign exchange providers buy and sell foreign currencies for consumers.
Remittance dealers operate a network of affiliates who provide remittance services to customers of the network (e.g. money transfer services) and provide these services through a shared or common platform or operating system.
Licensing of foreign exchange providers
Whether or not foreign exchange businesses need to be regulated by ASIC often depends on the type of contracts they are providing.
An important distinction is when and how the contracts settle. Foreign exchange contracts that settle immediately are not financial products. This means businesses providing just these contracts, or services relating to them, don’t need an AFS licence. Other foreign exchange providers may need an AFS licence.
Licensing of remittance dealers
Although some remitters may need an AFS licence, there is an exemption that is relevant to remittance dealers with products that meet the following criteria:
- The issuer is an operator of a payment system or an authorised deposit-taking institution (e.g. well-established and substantial remittance dealers);
- Payment is made (i.e. money is available to the recipient) within two business days;
- The funds are transferred electronically; and
- There is no standing arrangement with the client under which funds may be transferred electronically.
To learn more about this exemption see Regulation 7.1.07G of the Corporations Regulations.
Australian Transaction Reports and Analysis Centre (AUSTRAC) is the primary regulator of remittance service providers. You will be required to be registered with AUSTRAC and can learn more about their regulatory framework on their website.
Your general obligations if you need an AFS licence
If you need an AFS licence you will need to meet certain general requirements relating to your organisational capacity, education and training levels, risk management systems and financial position. You must also comply with certain conduct and disclosure obligations. Refer to Regulatory Guide 104 Licensing: Meeting the general obligations and Regulatory Guide 168 Disclosure: Product Disclosure Statements (and other disclosure obligations) for more information.
For guidance about how to satisfy some of the other AFS general licensee obligations, see Regulatory Guide 165 Licensing: Internal and external dispute resolution and Regulatory Guide 166 Licensing: Financial Requirements and RG 181 Licensing: Managing conflicts of interest.