Introduction

1.The Astana Financial Services Authority (AFSA) has issued this Consultation Paper to seek suggestions from the market on the proposed approach on the application of the AIFC regulatory fees.

2.The proposals in this Consultation Paper will be of interestto current and potential AIFC participants who are interested in exercising business activities in or from the AIFC.

3.All comments should be in writingand sent to the addressor email specified below. If sending your comments by email, please use “Consultation Paper AFSA-P- CE-2020-0009” in the subject line. You may, if relevant,identify the organisation you represent when providing your comments. The AFSA reserves the right to publish, including on its website, any comments you provide, unless you expressly request otherwise. Comments supported by reasoning and evidence will be given more weight by the AFSA.

4.The deadline for providing comments on the proposals is 20 December 2020. Once we receive your comments, we shall consider if any refinements are required to this proposal.

5.Comments to be addressed by post: Policy and Strategy Division

Astana Financial Services Authority (AFSA)

55/17 Mangilik El, building C3.2, Kazakhstan or emailed to: consultation@afsa.kz

6.The remainder of this Consultation Paper contains the following:

(a)Background to theproposal;

(b)Key proposals on the application of the AIFC regulatory fees;

(c)Annex 1: Proposed supervision fees tables.

Background

1.AFSA have not been applying application fees for authorisation and recognition as well as supervision fees, stipulated by the AIFC Fees Rules (FEES). This proposal comes as AIFC is approaching the end of waiver for application fees granted in June 2018 expiring on 1 January 2021.

2.There are two types of supervision fees in FEES: initial annual supervision fee and subsequent standard annual supervision fees.

3.According to FEES, initialannual supervision fee must be paid for the initialperiod of regulation after the grant of licensed status. The initial annual supervision fee is calculated as the fee which was payable at the time of application for authorisation, pro-rated over the whole months remaining between the date of authorisation and the end of the year.

4.Subsequent annual supervision fees must be paid for any period of regulation after the period described above. The standard annual supervision fee is:

(i)the highest of the fees specified in the fees table corresponding to the activities which the relevant entity is licensed to carry on; and

(ii)an amount as may be determined by the AFSA for each Approved Individual employed by the relevant entity at 30 September in the previous year, or on the date of the grant of authorisation, whichever is the later.

5.The proposed approach on the application of the AIFC regulatory fees is discussed in the next section of this document. Annex 1 includes the proposed supervision fees tables.

Key proposals on the application of the AIFC regulatory fees

1.    With the focus on the currentdevelopment stage of the AIFC, it is proposed to remove authorisation and recognition application fees and introduce only annual supervision fees that will take effecton 2021 and will be applied after1 year from the AIFC entity’s commencement of operations. Annex 1 sets out the proposed supervision fees.

2.    This proposal does not require upfront payments for new potential participants and maintains the AIFC attractiveness. This proposal also allows the AIFC participants to operate 1 year without supervision fees further increasing the ease of setting up a business in the AIFC.

3.    For existing AIFC participants, the proposal is to apply supervision fees starting from 2021 if such participants have been operational for more than 1 year. For those companies that have not yet commenced operations, the supervision fees will be applied after 1 year from their commencement of operations. Therefore, the application of supervision fees includes the “commencement of operations” ratherthan the “date of a Licence” since the AIFC entity may obtain a Licence but do not commence its operations in the AIFC.

4.Additionally, thereare proposals to introduce the following fees starting from 2021 that were not earlier introduced:

(a)  fees at the level of 50% of the revised fees in Annex 1 for post-authorisation processes such as applications to vary the scope of a Licence;

(b)in an amount of 300 USD for withdrawal of a Licence; and

(c)in an amount of 50 USD for modification and withdrawal of Approved Individual’s registration.

5.    It is proposed to waive all fees, including authorisation and supervision fees, for FinTech Lab participants until further notice from AFSA.

6.    Proposed supervision fees in Annex1 are based on currentapplication fees set out in Schedules 1-4 of FEES by applying to them risk-based approach and reducing them noting the nature, scale and complexity of businesses. Therefore, the proposed reductions are:

(a)90% for AIFC Participants not holding Client Money/Asset and with the lowest Base Capital Requirements;

(b)50% for other AIFC Participants not holding Client Money/Asset;

(c)   20% for AIFC Participants holding Client Money/Asset;

(d)20% for Ancillary Service Providers, Authorised Market Institutions and entities for recognition regime.

Annex 1

1. Proposed supervision fees for Regulated Activities

90% reduction is proposed for the following AIFC Participants not holding Client Money/Asset and with the lowest Base Capital Requirements:

50% reduction is proposed for the following AIFC Participants not holding Client Money/Asset:

20% reduction is proposed for AIFC Participants holding Client Money/Asset:

2.Proposed supervision fees for Market Activities

20% reduction is proposed for AIFC Participants carrying on Market Activities:

3.Proposed supervision fees for Ancillary Services

20% reduction is proposed for AIFC Participants providing Ancillary Services

4. Proposed supervision fees for Recognised Non-AIFC Market Institution and Recognised Non-AIFC Member

20% reduction is proposed for Recognised Non-AIFC Market Institution and Recognised Non- AIFC Member