AFS licence applications: Providing information for fit and proper people and certain authorisations

We need:

• additional information to be satisfied that there is no reason to believe that the applicant, or any relevant persons associated with the applicant, are not fit and proper people
• additional non-core proof documents when an applicant is intending to provide certain financial services and financial products. 

Information on the application process

The AFS Licensing Kit (RG 1–RG 3) provides applicants with information on how to apply for an AFS licence or a variation to their existing licence, how to complete the online application forms, how to prepare ‘core’ supporting proof documents, and what further additional non-core proof documents may be required.

Fit and proper people

On 18 February 2020, the Financial Sector Reform (Hayne Royal Commission Response—Stronger Regulators (2019 Measures) Act 2020 amended the Corporations Act to improve the regulatory tools available to ASIC.

The amendments require ASIC to obtain additional information to consider when assessing applications for either a new or varied AFS licence. Until 18 February 2020, we had to consider whether we had no reason to believe that the ‘responsible officers’ of an applicant were not of good fame and character. Now we must assess whether a wider range of people are ‘fit and proper persons’ as set out in section 913BA of the Corporations Act.

Who ASIC must consider as fit and proper persons

We must consider whether we have no reason to believe that the applicant, or any of the following people, are not fit and proper to perform one or more of their functions:

• any officers of a body corporate applicant (see paragraph below for the definition of ‘officer’)
• any partners or senior managers of a partnership applicant
• any trustees or senior managers of a multiple trustee of a trust applicant
• any controller of the applicant
• if a controller is a body corporate, any officer of the controller
• if a controller is a partnership, any partner or senior managers of the controller.

Note: We refer to the people who ASIC must have no reason to believe are not ‘fit and proper persons’ as the applicant’s ‘fit and proper people’.

An ‘officer’ is defined in the Corporations Act, and includes:

• a director or secretary of the body corporate
• a person who makes, or participates in making, decisions that affect the whole, or a substantial part, of the body corporate’s business, or who has the capacity to significantly affect the body corporate’s financial standing
• a person whose instructions or wishes the directors of the body corporate are accustomed to act on (excluding advice given by the person in a professional capacity or as part of their business relationship with the directors or the body corporate).

Note: For the full definition of ‘officer’, see section 9 of the Corporations Act.

A ‘senior manager’ is defined in the Corporations Act as a person who:

• makes, or participates in making, decisions that affect the whole, or a substantial part, of the applicant’s business, or
• has the capacity to affect significantly the financial standing of the applicant.

For further information on who is a controller, see our webpage Change in control of AFS licensee.

What information must be provided

So that we can consider the applicant’s fit and proper people, all applicants seeking an AFS licence, or a variation to their existing licence, must give ASIC the following details about each of their fit and proper people:

• their full name
• their position and a short description of their duties
• their residential address
• if they are fit and proper people due to their relationship with the controller of the applicant, the details of the controlling entity.

We have provided a template to help applicants set out their fit and proper people (Word 101 KB) and provide ASIC with the information we require, depending on the type of entity making the application.

For each of their fit and proper people, an applicant must provide the following People Proofs (which must be no more than 12 months old):

• a national criminal history check
• a bankruptcy check
• a completed Statement of Personal Information (Word 87 KB).

In all cases, we will require People Proofs for:

• a natural person applicant
• all officers of a body corporate applicant
• all partners of a partnership applicant
• all trustees of a multiple trustee applicant
• natural person controllers (see Note 2 below).

Note 1: For further guidance on the People Proofs, see Section E of Regulatory Guide 2 AFS Licensing Kit: Part 2—Preparing your AFS licence or variation application (RG 2).

Note 2: Exceptions to the required People Proofs may be available in relation to controllers and officers of intermediate entities of a corporate group that controls the applicant, and natural person officers and controllers of the ultimate holding entity of a corporate group that controls the applicant (see below).

Permissible certification for some fit and proper people

In lieu of criminal history checks, bankruptcy checks and statements of personal information, we will accept a certification in relation to officers, partners, trustees and senior managers of an intermediate controller (permissible certification): see section 913BA(1)(e)–(f) of the Corporations Act. To help applicants, we have provided a certification template.

We will not accept a certification for the officers of any ultimate holding company of an applicant.

Even when the applicant provides a permissible certification, we may subsequently request information (including criminal history and bankruptcy checks and statements of personal information) against one or more of these permissible certification people when assessing the application.

Evidence that some fit and proper people are subject to equivalent requirements

We may accept alternative evidence in lieu of police checks, bankruptcy checks and statements of personal information for any officers, partners, trustees and senior managers of the ultimate controller of an applicant where the applicant provides sufficient evidence that the relevant natural person is subject to an equivalent fit and proper person requirement in another regulatory regime. If an applicant cannot demonstrate this to our satisfaction, the applicant will need to provide a criminal history check, bankruptcy check and statement of personal information for each relevant person.

Please note, we may subsequently request information (including criminal history and bankruptcy checks and statements of personal information) against one or more of the applicant’s fit and proper people even if they are subject to a fit and proper person requirement in another regime.

Applicants intending to provide certain financial services and certain financial products

As part of an application for an AFS licence or variation, applicants must specify the licence authorisations that cover the financial services and financial products that they intend to provide.

Applicants that want to provide the financial services and financial products in Table 1 and Table 2 must include the additional non-core proofs listed in those tables in their applications.

We have set out further guidance on the non-core proofs that we need to assess applications in Regulatory Guide 3 AFS Licensing Kit: Part 3—Preparing your additional proofs (RG 3).

Authorisations requiring additional non-core proofs

An applicant applying for an authorisation specified in Table 1 must provide the listed additional non-core proofs.

Table 1: Additional non-core proofs required for specified authorisations

Authorisation	Additional non-core proof
Corporate director (operate the business and conduct the affairs of a retail or wholesale corporate collective investment vehicle (CCIV)) (see note 2 below)	C13: CCIV Operating Capacity Statement C13: CCIV Asset Statement
Crowd-sourced funding intermediary	B5: Information Technology Capacity Statement C11: Crowd-Funding Service Statement
Custodial and depository provider (not applicable when the provider will only be authorised to provide incidental custody services)	C1: Custodial/ Depository Service Statement C1: Funds under Management/Custody Statement C1: Product/Service Distribution Statement
Derivatives – where the applicant is seeking a make a market authorisation for derivatives. For the avoidance of doubt, the C4 proof is not required when the applicant will only use the derivative authorisation for the purposes of managing a financial risk – see section 763C of the Corporations Act for an explanation of when a person ‘manages financial risk’	C4: Derivatives Statement
Financial product advice – personal advice only (not applicable when four or fewer ‘relevant providers’ will provide the advice – see section 910A of the Corporations Act – or when the applicant will only use the authorisation for wholesale clients)	B4: Program for Monitoring, Supervision and Training of Representatives
Foreign exchange contracts – where the applicant is seeking a make a market authorisation for foreign exchange contracts. For the avoidance of doubt, the C5 proof is not required when the applicant will only use the foreign exchange contract authorisation for the purposes of managing a financial risk – see section 763C of the Corporations Act for an explanation of when a person ‘manages financial risk’	C5: Foreign Exchange Operating Statement
General insurance issuer where the applicant will be acting under a binder agreement (not applicable when the applicant will only use the authorisation for wholesale clients)	C8: Underwriting Agency Capacity Statement
Investor directed portfolio service (IDPS) operator (not applicable when the applicant will only use the authorisation for wholesale clients)	C1: IDPS Statement C1: Funds under Management/Custody Statement C1: Product/Service Distribution Statement
Life insurance issuer (not applicable when the applicant will only use the authorisation for wholesale clients)	C7: Life Insurance Capacity Statement
Make a market	C3: Market Maker Statement B3: Arrangements for Managing Conflicts of Interests B3: Compliance Arrangements B7: Risk Management System Statement
Managed discretionary account (MDA) issuer (not applicable when the applicant will only use the authorisation for wholesale clients)	C9: MDA Operator Capacity Statement
Margin lending issuer (not applicable when the applicant will only use the authorisation for wholesale clients)	C10: Margin Lending Facilities
Market participants	A4: Membership of a Licensed Market
Miscellaneous financial facility	A4: Miscellaneous Financial Facility Statement
Operator of registered managed investment scheme (responsible entity)	C2: Scheme Operating Capacity Statement C2: Scheme Property Statement C2: Funds under Management Details
Registrable superannuation entity (RSE) licensees that have applied for or already hold an authorisation to operate a registered management investment scheme	B5: Financial Statements and Financial Resources B7: Risk Management System Statement

Note 1: We may still request the additional non-core proofs referred to in Table 1, depending on the application. This includes the non-core proofs for authorisations that will only be used for wholesale clients.

Note 2: Applications for an AFS licence or variation from prospective corporate directors and for any other financial services relating to securities in a CCIV will be assessed from 1 July 2022. We will prioritise the assessment of any application received from prospective corporate directors between 1 July 2022 and 31 December 2022. For existing AFS licensees seeking a variation to be a corporate director we will accept, as an alternative to our standard lodgement requirements:

• the relodgement with the application of a previously provided B1 Organisational Competence proof that covers the nominated responsible manager’s competence in operating registered or unregistered managed investment schemes of the same asset type as proposed to be held by the CCIV
• the relodgement with the application of fit and proper person documentation that was previously provided to ASIC since 18 February 2020 for responsible managers and officers of the licensee (the documentation must be accompanied by a certification that the prior documentation remains true and correct)
• if an existing responsible entity proposes to operate its CCIV activities separately from its responsible entity business, the A5 Business Description proof is only required to address the licensee’s new CCIV-related business activities (if it proposes some cross-over between its CCIV and responsible entity activities, the details of these activities should be included in the A5 Business Description proof, including any material changes).

Circumstances requiring additional non-core proofs

Additionally, an applicant for an AFS licence or variation that intends to provide financial services in the circumstances specified in Table 2 must include the listed additional non-core proofs in their application.

Table 2: Additional non-core proofs required in specified circumstances

Specified circumstances	Additional non-core proof
The applicant has nominated a responsible manager that is an officer of another AFS licensee, or is employed or engaged by another AFS licensee	B3: Arrangements for Managing Conflicts of Interests Note: We expect this proof to include specific details about the arrangements for managing the responsible manager’s conflicts of interest that arise because of their various roles.
The applicant intends to outsource a key activity required to provide the financial service or product	B3: Outsourcing Statement
The applicant has nominated a single responsible manager for a particular authorisation or authorisations	B5: Human Resources Capacity Statement Note: We expect this proof to include specific details about how the applicant will deal with the temporary, periodic or permanent absence of that responsible manager.
The applicant intends to conduct a remittance business and seeks an AFS licence that includes authorisations to deal or arrange to deal by issuing: Deposit and Payment Products – Non-cash payment products and Foreign Exchange Contracts, or Deposit and Payment Products – Non-cash payment products.	The applicant must provide written confirmation that it has: determined whether it is subject to the requirements of the Australian Transaction Reports and Analysis Centre (AUSTRAC) contacted AUSTRAC and been advised of its obligations by AUSTRAC if required to do so by AUSTRAC, applied to AUSTRAC for enrolment or registration as a remittance service provider. If the applicant applies to AUSTRAC for enrolment or registration as a remittance service provider and AUSTRAC has approved that application, the applicant must provide evidence of the approval. If we have determined that we will grant the AFS licence or variation to the applicant, but they have not included this information in their application, they must undertake the steps identified above before we will grant the licence or variation.

Where can I get more information?

• Read the AFS Licensing Kit (RG 1–RG 3)
• Call ASIC on 1300 300 630 or ask a question online

Important notice

Please note that this information sheet is a summary giving you basic information about a particular topic. It does not cover the whole of the relevant law regarding that topic, and it is not a substitute for professional advice. We encourage you to seek your own professional advice to find out how the applicable laws apply to you, as it is your responsibility to determine your obligations.

You should also note that because this information sheet avoids legal language wherever possible, it might include some generalisations about the application of the law. Some provisions of the law referred to have exceptions or important qualifications. In most cases, your particular circumstances must be taken into account when determining how the law applies to you.