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

This section was added on 2 December 2018.

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;
(i) 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 by way of business for the purposes of GEN 1.1.1 if that Person:

(a) engages in the activity in a manner which 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).

This Exclusion does not apply to a Credit Provider that only provides Commercial Captive Finance.

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.

This Exclusion does not apply to a Credit Provider that only provides Commercial Captive Finance.

1.1.14. Exclusion in respect of dealing in Commodity Derivatives or Environmental Instruments

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 Cerivatives or Environmental Instruments 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 or Environmental Instruments; 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:
(i) 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:
(i) 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 License.

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) [intentionally omitted]
(d) Operating a Loan Crowdfunding Platform;
(e) Operating an Investment Crowdfunding Platform.
(f) Operating a Private Financing 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 to the AFSA.

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;
(i) 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

(i) 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 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; and
(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;
(e) [intentionally omitted]

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 the Fees Rules 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 AIFC 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 AIFC by the applicant’s activities; and
(e) such other matters as the AFSA considers relevant.

1.3.3-1 Effective supervision

In assessing whether an applicant is capable of being effectively supervised by the AFSA for the purposes of section 41(1) of the Framework Regulations, the AFSA will consider:

(a) the nature, including the complexity, of the Ancillary Services 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.

1.3.4. 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.