Introduction

4.1. The AFSA may have regard to all relevant matters, whether arising in the AIFC or elsewhere. The AFSA may determine the materiality of any information for the purposes of considering whether an Authorised Person has demonstrated, or continues to demonstrate, that it is fit and proper.

4.2. The AFSA may request or require any information which it considers relevant to its consideration of an application by an Authorised Person.

Background and history

4.3. In respect of the background and history of an Authorised Person, the AFSA may have regard to any matters including, but not limited to, the following:

a) any matter affecting the propriety of the Authorised Person’s conduct, whether or not such conduct may have resulted in the commission of a criminal offence or the contravention of the law or the institution of legal or disciplinary proceedings of whatever nature;

b) whether an Authorised Person has ever been the subject of disciplinary procedures by a government body or agency or any self-regulatory organisation or other professional body;

c) a contravention of any provision of financial services legislation or of rules, regulations, statements of principle or codes of practice made under it or made by a recognised self-regulatory organisation, Financial Services Regulator or regulated exchange or clearing house;

d) whether an Authorised Person has been refused, or had a restriction placed on, the right to carry on a trade, business or profession requiring a licence, registration or other permission;

e) an adverse finding or an agreed settlement in a civil action by any court or tribunal of competent jurisdiction;

f) whether an Authorised Person has been censured, disciplined, publicly criticised or the subject of a court order at the instigation of any regulatory authority, or any officially appointed inquiry, or any other Financial Services Regulator; and

g) whether an Authorised Person has been open and truthful in all its dealings with the AFSA.

Ownership and Group

4.4. In respect of the ownership and Group structure of an Authorised Person, the AFSA may have regard to:

a) the Authorised Person’s position within its Group, including any other relationships that may exist between the Authorised Person’s affiliates, Controllers, Associates or other Persons;

b) the financial strength of the Group and its implications for the Authorised Person;

c) whether the Group has a structure which makes it possible to:

i       exercise effective supervision;

ii      exchange information among regulators who supervise Group members; and

iii     determine the allocation of responsibility among the relevant regulators;

d) any information provided by other regulators or third parties in relation to the Authorised Person or any entity within its Group; and

e) whether the Authorised Person or its Group is subject to any adverse effect or considerations arising from a country or countries of incorporation, establishment and operations of any member of its Group. In considering such matters, the AFSA may also have regard to the type and level of regulatory oversight in the relevant country or countries of the Group members, the regulatory infrastructure and adherence to internationally held conventions and standards that the AFSA may have adopted in its Rules.

Controllers

4.5. In respect of the Controllers of an Authorised Person, the AFSA may, considering the nature, scale and complexity of the firm’s business and organisation, have regard to:

a) the background, history and principal activities of the Authorised Person’s Controllers, including that of the Controller’s Directors, Partners or other officers associated with the Authorised Person, and the degree of influence that they are, or may be, able to exert over the Authorised Person and/or its activities;

b) where the Controller will exert significant management influence over the Authorised Person, the reputation and experience of the Controller or any individual within the Controller;

c) the financial strength of a Controller and its implications for the Authorised Person’s ability to ensure the sound and prudent management of its affairs, where such a Controller agrees to contribute any funds or other financial support such as a guarantee or a debt subordination agreement in favour of the Authorised Person; and

d) whether the Authorised Person is subject to any adverse effect or considerations arising from the country or countries of incorporation, establishment or operations of a Controller. In considering such matters, the AFSA may have regard to, among other things, the type and level of regulatory oversight which the Controller is subject to in the relevant country or countries and the regulatory infrastructure and adherence to internationally held conventions and standards that the AFSA may have adopted in its Rules.

4.6. Where the AFSA has any concerns relating to the fitness and propriety of an applicant, for a licence stemming from a Controller of such a person, the AFSA may consider imposing licence conditions designed to address such concerns. For example, the AFSA may impose, in the case of a start-up, a licence condition that there should be shareholder agreement to resort to an effective shareholder dispute resolution mechanism.

Resources, Systems and Controls

4.7. The AFSA may have regard to whether the Authorised Person has sufficient resources, including the appropriate systems and controls (including those set out in chapter 5 of the GEN module or, if applicable, chapter 2 of the AMI module), such as:

a) the Authorised Person’s financial resources and whether it complies, or will comply, with any applicable financial Rules, and whether the Authorised Person appears in a position to be able to continue to comply with such Rules;

b) the extent to which the Authorised Person is or may be able to secure additional capital in a form acceptable to the AFSA where this appears likely to be necessary at any stage in the future;

c) the availability of sufficient competent human resources to conduct and manage the Authorised Person’s affairs, in addition to the availability of sufficient Approved Individuals as applicable, to conduct and manage the Authorised Person’s Regulated Activities;

d) whether the Authorised Person has sufficient and appropriate systems and procedures in order to support, monitor and manage its affairs, resources and regulatory obligations in a sound and prudent manner;

e) whether the Authorised Person has appropriate anti money laundering procedures and systems designed to ensure full compliance with AIFC and Kazakhstan AML/CTF laws and regulations and other applicable money laundering and counter terrorism legislation, and relevant UN Security Council sanctions and resolutions, including arrangements to ensure that all relevant staff are aware of their obligations;

f) the impact of other members of the Authorised Person’s Group on the adequacy of the Authorised Person’s resources and in particular, though not exclusively, the extent to which the Authorised Person is or may be subject to consolidated prudential supervision by the AFSA or another Financial Services Regulator;

g) whether the Authorised Person can provide sufficient evidence about the source of wealth and source of funds available to it, to the satisfaction of the AFSA. This is particularly relevant in the case of a start-up entity; and

h) the matters specified in paragraph 4.5(c).

Authorised Persons - Collective suitability of individuals or other persons connected to the Authorised Person

4.8. Notwithstanding that, individuals performing Controlled Functions are required to be Approved Individuals and that an Authorised Person is required to appoint certain Approved Individuals to certain functions, as stated in chapter 2 of the GEN module, the AFSA will also consider:

a) the collective suitability of all of the Authorised Person’s staff taken together, and whether there is a sufficient range of individuals with appropriate knowledge, skills and experience to understand, operate and manage the Authorised Person’s affairs in a sound and prudent manner;

b) the composition of the Governing Body of the Authorised Person. The factors that would be considered by the AFSA in this context include, depending on the nature, scale and complexity of the firm’s business and its organisational structure, whether:

i       members of the Governing Body have relevant knowledge, skills and expertise to provide effective leadership, direction and oversight of the Authorised Person’s business. For this purpose, the members of the Governing Body should be able to demonstrate that they have, and would continue to maintain, including through training, necessary skills, knowledge and understanding of the firm’s business to be able to fulfil their roles;

ii      the individual members of the Governing Body have the commitment necessary to fulfil their roles, demonstrated, for example, by a sufficient allocation of time to the affairs of the firm and reasonable limits on the number of memberships held by them in other Boards of Directors or similar positions. In particular, the AFSA will consider whether the membership in other Boards of Directors or similar positions held by individual members of the Governing Body has the potential to conflict with the interests of the Authorised Person and its customers and stakeholders; and

c) the position of the Authorised Person in any Group to which it belongs;

d) the individual or collective suitability of any Person or Persons connected with the Authorised Person;

e) the extent to which the Authorised Person has robust human resources policies designed to ensure high standards of conduct and integrity in the conduct of its activities;

f) whether the Authorised Person has appointed auditors, actuaries and advisers with sufficient experience and understanding in relation to the nature of the Authorised Person’s activities; and

g) whether the remuneration structure and strategy adopted by the Authorised Person is consistent with the requirements in GEN Rule 4.2.13.