AFSL stands for Australian Financial Service Licence and is a requisite for being a part of the financial services industry in Australia. As a business entity offering financial services, AFSL compliance protects your venture from being penalised in many circumstances and holds you to certain obligations and duties to the clients.
Why Apply for AFSL?
As issued by the Australian Securities and Investment Commission (ASIC), having policies compliant with the AFSL means that your business can offer a wide range of services. From operating investment funds to holding and providing advice about financial products, these services require this licence as dictated by the Corporations Act (2001). The AFSL broadly covers a whole selection of services, including non-cash payments and financial risk management.
Even though there are exemptions for some businesses from obtaining the AFSL, it is mandatory for others, even if the establishment does not have a physical address in Australia. Without AFSL, fines, penalties, and even criminal charges have been brought against businesses in Australia.
Until April 2020, foreign financial service providers (FFSP) could function on passport relief, but this is not the case anymore. By April 2022, even the FFSP is completely regulated by an extension of the AFSL called the FAFSL or Foreign Australian Financial Service Licence.
Preparing to Apply for AFSL.
You can always get acquainted with applying for the licence by going through a sample. After looking at a sample application and understanding the application process, the next step is to collect and prepare the core documents and proofs required. You can also draft answers to the questions in the application.
Following this, depending on the type of business you own, you can always prepare any additional documents you might need. Curating all the documents beforehand can make the application process smoother and hassle-free.
Procedure for AFSL Application.
Since you have already prepped all the documents earlier, the online application procedure will go easier for you.
- The first section of the application asks you for basic details like the applicant’s name and the range of financial services that need to be licenced.
- Followed by the section for licensee requirements, you need to display that your business meets the standards in terms of resources, organisational competence, risk management, employees, andAFSL compliance.
- Depending on the services that you are seeking authorisation for, the next section asks you specific questions regarding selected products or services. Compared to the sample application, this section is mostly smaller and easier to complete.
- In this upcoming section, you are required to make a few declarations about the information provided throughout the application. If the application calls for it, you might also have to show some certifications.
- In the final section of the AFSL application, all you need to do is provide the core proofs that you have prepared. With these documents to support your application, your application is complete.
Once you have completed your application, the ASIC assesses whether your business is competent enough to carry out the services you described. It also looks if you have the necessary insurance, financial resources, training, and personnel to meet obligations to the clients. Even though the ASIC evaluates a business based on various factors, the application should go through easily if you have provided the right information and the required proofs.