General Considerations

5.1. In assessing the fitness and propriety of a person, the AFSA may consider, as appropriate, the particular function that the Authorised Person is applying for the person to perform, the particular function that the person is performing, and the activities of the Authorised Person or applicant. As such, a person who is fit and proper for a particular role in an Authorised Person or in an applicant may not necessarily be considered fit and proper for any other role in the same Authorised Person or with another Authorised Person.

5.2. The fit and proper assessment is both an initial test undertaken during consideration of an application for authorisation or registration and a continuing test in relation to the conduct of the business and the person’s relationship with the AFSA.

5.3. As such, where a person has previously been regarded as fit and proper, the AFSA reserves the right to reassess whether that person continues to be fit and proper to hold either current or proposed positions.

5.4. Part of the ongoing fit and proper assessment entails a review of any material changes affecting the probity questions in the Application for Approved Individual status. Persons are required to notify the AFSA of any material changes within a period of twenty-one (21) days.

5.5. When assessing the fitness and propriety of a person, each case will be considered on its own merits, and may consider all relevant matters, including, but not limited to, those set out in this Guidance.

5.6. When considering each application or when subsequently assessing the fitness and propriety of persons, the AFSA may have regard to current, past and prospective matters. Additionally, the AFSA may have regard to the cumulative effect of a number of factors which, when considered in isolation, may not be sufficient to show that the person is not fit and proper to perform a Controlled Function. The fit and proper factors are non-exhaustive and apply to each person on a case-by-case basis.

5.7. When considering an application, the AFSA will review the fit and proper documentation provided in support of the application. To prevent delays in the process for consideration of a person, all information should be provided in the form requested. Where there is any doubt by the person completing the application of the relevance of information, it should be included.

5.8. There is a range of sanctions available to the AFSA where the AFSA is of the opinion that a person is not a fit and proper person. This Guidance provides the foundation on which the AFSA will base its decision on fitness and propriety. The list of considerations is not exhaustive, and each application is considered on a case-by-case basis.

5.9. When assessing the fitness and propriety of a person, the burden is on the Authorised Person, ASP or applicant sponsoring the application to satisfy the AFSA that the person is fit and proper to perform the function for which the person is proposed to be engaged.

5.10. Applicants and persons are expected to provide complete and truthful information.

5.11. Persons approved by the AFSA are expected to remain fit and proper. Where it may come to light that there is evidence of the person no longer being fit and proper, the Authorised Person, ASP should immediately inform the AFSA. The AFSA will endeavour to maintain adherence to international standards relating to fitness and propriety and will review this Guidance as needed.

5.12. Failure to satisfy the AFSA in relation to any of these criteria may result in the Authorised Person being unable to appoint or continue to appoint the person to perform a Controlled Function.

Obligations of the Authorised Person or Applicant

5.13. When an Authorised Person seeks to appoint a person to perform a Controlled Function, the burden is on the Authorised Person sponsoring the application to satisfy the AFSA that the person is fit and proper to perform the function for which the person is engaged.

5.14. It is expected that the assessment conducted by the Authorised Person or applicant will take place during the recruitment stage and on an ongoing basis, and that the Authorised Person make every effort to verify qualifications, experience, references and membership of professional bodies. It is also expected that the Authorised Person or applicant will conduct probity checks on criminal history, sanctions, legal proceedings, and other similar matters. The Authorised Person or applicant should be able to satisfy the AFSA that the person proposed to act in a Controlled Function possesses sufficient competence and capability for the proposed Controlled Function.

5.15. The AFSA expects that third parties providing the AFSA with documentation for the fit and proper assessment on behalf of a person, obtain and submit information in the form requested and ensure that only complete applications are submitted to the AFSA.

Integrity

5.16. When assessing a person’s integrity, honesty and reputation, the AFSA will consider matters including, but not limited to, those items listed below, which may have arisen in the Republic of Kazakhstan or elsewhere:

a) Whether the person has been convicted of any criminal offence. This may include, where particular, any offences of dishonesty, fraud, financial crime or other offences relating to financial services or financial institutions;

b) Whether the person has been the subject of any adverse finding or any settlement in civil proceedings, particularly in connection with investment or other financial business, misconduct, fraud or the formation or management of a body corporate;

c) Whether the person has been the subject of, or interviewed in the course of, any existing or previous investigation or disciplinary proceedings, by the AFSA, by other regulatory authorities, clearing houses and exchanges, professional bodies, or government bodies or agencies;

d) Whether the person is or has been the subject of any proceedings of a disciplinary or criminal nature, or has been notified of any potential proceedings or any investigation, which might lead to such proceedings;

e) Whether the person has contravened any of the AFSA’s regulatory requirements or the rules, regulations, statements of principle, guidance or codes of practice of other regulatory authorities, clearing houses and exchanges, professional bodies, or government bodies or agencies;

f) Whether the person has been the subject of any justified complaint relating to Regulated Activities in the AIFC or in another jurisdiction;

g) Whether the person has been involved with a company, partnership or other organisation that has been refused registration, authorisation, membership or a licence to carry out a trade, business or profession, or has had such registration, authorisation, membership or licence revoked, withdrawn or terminated, or has been expelled by a regulatory body or government body;

h) Whether, because of the removal of the relevant licence, registration or other authority, the person has been refused the right to carry on a trade, business or profession requiring a licence, registration or other authority. The AFSA should be informed about all such occurrences, but will consider the circumstances only where relevant to the regulatory requirements;

i) Whether the person has been a person in a Controlled Function, of a business that has gone onto insolvency, liquidation or administration while the person has been connected with that organisation or within one year of such a connection;

j) Whether the person, or any business with which the person has been involved, has been investigated, disciplined, censured, or suspended by a regulatory or professional body, a court or tribunal, whether publicly or privately. Persons subject to a lifetime censorship or suspension in any jurisdiction will not be approved by the AFSA;

k) Whether the person has ever been disqualified from acting in a Controlled Function;

l) Whether, in the past, the person has been candid and truthful in all his/her dealings with any regulatory body and whether the person demonstrates a readiness and willingness to comply with the AFSA’s regulatory requirements and with other legal, regulatory and professional obligations and ethical standards; and

m) Whether the person has been convicted of money laundering, fraud, theft, other financial crime or crime involving dishonesty. Such persons will not be approved if there are negative findings in this regard. Unless stated otherwise in the AIFC Rules and Regulations, the record of any other type of conviction will not automatically disqualify a person from being deemed fit and proper. The seriousness of the offence, the restitution, circumstances surrounding the offence, explanation offered by the person, passage of time, and other relevant factors will be taken into account.

Competence and Capability

5.17. The type of Regulated/Market activity conducted by the Authorised Person; the nature, complexity and volume of business; the jurisdictions in which products and services will be offered; the level of responsibility; and the collective competence and experience of those who will govern the Authorised Person or applicant will be considered when assessing whether a person is competent and capable of performing a Controlled Function:

a) Whether the person has the technical knowledge to perform the Controlled Function for which the person is employed or is proposed to be employed. Academic and professional qualifications and memberships in professional institutions will be particularly relevant;

b) Whether the person has demonstrated by experience through years of employment and positions held that the person is able, or will be able if approved, to perform the Controlled Function for which the person is employed or for which the Authorised Person or applicant intends to employ him/her; and

c) Whether the person has the appropriate training necessary to fulfil the role for which the person is employed or for which the Authorised Person or applicant intends to employ him/her.

d) Persons performing a Controlled Function should understand the regulatory and legal environment relevant to the Controlled Function and be knowledgeable about the business affairs of the Authorised Person or applicant, the industry and products associated with the Authorised Person or applicant and the duties of the Controlled Function.

Financial Soundness

5.18. The assessment of financial soundness is aimed at determining whether the person can meet his/her personal liabilities when they become due and mitigate financial risks on a constant basis. In the case of shareholders, the financial strength will be considered. In addition, the AFSA is committed to international efforts to detect and prevent financial services from being used to launder the proceeds of crime. To help with this, the AFSA may ask applicants and their shareholders, using a risk-based approach, for information on how they acquired wealth and funds or other assets that are the subject of the business relationship. In determining a person’s sound management of financial affairs, the AFSA may, where relevant, consider matters including, but not limited to:

a) Whether in the Republic of Kazakhstan, or elsewhere, the person has made any arrangements with his/her creditors, filed for bankruptcy, been adjudged bankrupt, had assets sequestrated, or been involved in proceedings relating to personal solvency and that of any entity in which they had a controlling interest;

b) Whether the person has been subject to any judgement of debt payment that remained outstanding for a substantial period of time or is presently outstanding;

c) Whether the person has persistently failed to manage financial affairs in a manner that has caused detriment to others;

d) Whether the person met capital and/or solvency requirements applicable to it;

e) Whether the person was able to manage any previous business dealings in a sound and prudent manner; and

f) The source of wealth and source of funds for individuals (natural persons) and corporate shareholders/ controllers.