3.13.1. Obligation to report to the AFSA

(1) A Digital Asset Service Provider must submit to the AFSA a quarterly report that should include its financial statement, its income statement, a calculation of its relevant capital resources and  a statement of its compliance and any non-compliance with these Rules.

(2) A Digital Asset Service Provider must provide the following information to the AFSA within 6 months after financial year end:

(a) the number of prospective clients which the Digital Asset Service Provider rejected during the reporting period;

(b) the number of Clients which were offboarded during the reporting period;

(c) the number of Clients where enhanced due diligence was applied;

(d) the total number of the Digital Asset Service Provider’s Clients;

(e) the number of Clients originating from a high risk jurisdiction;

(f) the number of Clients on-boarded on a face-to-face basis;

(g) a description of any changes to the Client onboarding process;

(h) the number of suspicious transaction reports filed during the reporting period;

(i) the number of individuals supporting the MLRO;

(j) when the Digital Asset Service Provider’s risk assessment was last updated and if there were any additional risks;

(j) (if applicable) the number of private keys held;

(k) (if applicable) whether Client’s Digital Assets are held with a third party custodian;

(l)whether the Digital Asset Service Provider forms part of a group, and if so, the group structure;

(m) whether the Digital Asset Service Provider entered into any resource sharing agreements and, if so, the names of the counterparty/company;

(n)whether the Digital Asset Service Provider outsources any of its functions and, if so, any changes to the functions outsourced and to which companies;

(o) an overview of any involvement of the Digital Asset Service Provider’s shareholders in the day-to-day operations of the Digital Asset Service Provider during the reporting period; and

(p) an overview of any instances of market abuse encountered by the Digital Asset Service Provider during the reporting period.

(3) The AFSA may request a Digital Asset Service Provider to submit other returns. The AFSA from time to time may prescribe the required list of returns to be submitted and the returns templates to be used.

(4)  Returns submitted to the AFSA must be signed by two (2) Approved Individuals and one of them must be approved to exercise the Finance Officer function.

3.13.2. Obligation to notify the AFSA

If a Digital Asset Service Provider becomes aware, or has a reasonable ground to believe, that it is or may be (or may be about to be) in breach of any of these Rules it must:

(a) notify the AFSA in writing about the breach and the relevant circumstances immediately and not later than within 1 business day of becoming aware of it; and

(b) not make any cash transfers or payments or transfers of liquid assets to its Affiliates or Related Persons, whether by way of dividends or otherwise, without the AFSA’s written consent. 

 

Guidance:

In dealing with a breach, or possible breach, of this part, the AFSA’s primary concern will be the interests of existing and prospective Clients, the potential adverse impact on market participants,  and market stability. The AFSA recognises that there will be circumstances in which a problem may be resolved quickly, for example, by support from a parent entity, without jeopardising the interests of Clients and other stakeholders. In such circumstances, it will be in the interests of all parties to minimise the disruption to the firm’s business. The AFSA's will normally seek to work cooperatively with the Digital Asset Service Provider in stressed situations to deal with any problems. There will, however, be circumstances in which it is necessary to take regulatory action to avoid exposing market participants, Clients and other stakeholders to the potential adverse consequences of the Digital Asset Service Provider’s Failure, and the AFSA will not hesitate to take appropriate action if it considers this necessary.