Conducting Regulated

AIFC Business: Scope of

Permitted Activities

ANDREW OLDLAND QC
MEMBER OF THE AIFC LEGAL ADVISORY COUNCIL
SENIOR PARTNER AT MICHELMORES (UK)

RAZAAK BUSARI
HEAD OF AUTHORISATIONS DIVISION, AFSA

9 JUNE 2020
Structure of Presentation

1. What are the Permitted Activities?

2. Participants & Recognition
3. Conducting Permitted Activities “in or
from” the AIFC
4. Ancillary Service Providers
Regulation of Financial Services
Rulebooks (current at April 2020)
Collective General
Investment Rules Rep Office
Taxation
Schemes GEN REP
Banking
CIS Authorised Conduct of Business
Rules for Market Business Prudential
Pre-IPO Institutions Rules
Listings Financial COB
Co-Operation AMI
Services Anti Money BBR
and Exchange Sovereign
of Information Fees Framework Laundering Bonds
Rules FEE Regulations AML
Insurance
COOP and Market FSFR Islamic Financial
Reinsurance Rules Finance Technology
Rules Takaful and Rules
MAR IFR
PIN Prudential Retakaful
Recognition
PRU (INV) Rules Prudential
Rules
PRU (INT) REC Islamic
Banking TRR
Auditor Business Currency
AUD Prudential
IBB 3
Licensed AIFC Participants
Authorised Ancillary
Authorised
Market Service
Firms
Institutions Providers
Regulated Market Ancillary
Activities Activities Services
(See GEN Sch 1) (See GEN Sch 4) (See GEN Sch 2)
Capital Markets • Investment Exchange
Asset Management • Clearing House • Legal Services
Banking Business • Private e-Trading • Audit Services
Insurance Business Facility • Accountancy Services
Islamic Finance • Crowdfunding • Consulting Services
Fintech platform • Credit Rating Services
See Schedule 1 • MTFs, OTFs & PFPs

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GEN Schedule 1:
Regulated Activities
1. Dealing in Investments as Principal
2. Dealing in Investments as Agent
3. Managing Investments
4. Managing a Collective Investment
Scheme
5. Providing Custody
6. Arranging Custody
7. Providing Trust Services
8. Providing Fund Administration
9. Acting as the Trustee of a Fund
10. Advising on Investments
11. Arranging Deals in Investments
12. Managing a Restricted Profit Sharing
Investment Account
General
Rules
GEN
13. Islamic Banking Business
14. Providing Islamic Financing
15. Insurance Intermediation
16. Operating a Representative Office
17. Accepting Deposits
18. Providing Credit AIFC
19. Advising on a Credit Facility
20. Arranging a Credit Facility
21. Providing Money Services
22. Effecting Contracts of Insurance
23. Carrying on Contracts of Insurance
24. Insurance Management
25. Takaful Business
26. Opening and Operating Bank Accounts
27. Operation of a Payment System
AIFC Participants
Article 1(5) of the AIFC Constitutional
Statute:
“legal entities registered under the Acting
Law of the AIFC and legal entities
recognised by the AIFC”
- Branches of legal entities “recognised”
by AFSA can become participants
- Certain types of foreign “recognised”
entities may operate in the AIFC without
becoming participants (Regs 89-91 FSFR)
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Non-financial AIFC Participants

• E-commerce
• IT
• Other support services

AFSA also holds the Company Registrar function

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Recognised non-AIFC Participants
Recognition
Rules
REC

• Relates only to the operation of the capital

markets
• Requires grant of a Recognition Order by AFSA
• Market Institutions (Investment Exchanges
& Clearing Houses) (Sct 89 FSFR)
• Members (can be individuals –
traders/brokers) (Sct 91 FSFR)

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Recognition in the
Authorisation Process

• Firms authorised by financial regulators in other

jurisdictions are required to seek authorisation from AFSA
if conducting Regulated Activities in the AIFC
• In order to ensure adequate supervision AFSA requires
some limited presence within the AIFC territory by way of a
‘branch’
• Such branches must be registered with AFSA
• However, AFSA can have regard to the firm’s existing
authorised status and waive certain requirements (eg
capital requirements) under the Threshold Conditions
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Representative Offices
Rep Office
REP

• The Operation of a Representative Office is a Regulated

Activity (no 16), so any RO must be licensed by AFSA
• The RO must have a head office authorised by a foreign
financial regulator
• Regulatory requirements are limited, in the main, to having
some physical presence in the AIFC & a ‘fit & proper’
Principal Representative
• Activities are restricted to financial promotions, other
marketing activities & reporting back AIFC trends &
developments
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AIFC Territory
(Presidential Decree #614 of 28 December 2017)

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Conducting business “in or from”
the AIFC
• AIFC Rules & Regulations do not prevent AIFC
Participants from operating outside the AIFC,
including in RoK
• However, whether dual regulation for FS activities
is required will be a question of fact and degree
• Factors likely to be important in this regard could
include 1) extent of the activities and presence in
the other jurisdiction and 2)whether the business
is “booked” in the AIFC & governed by AIFC law.
• Vice versa is also true – Sct 6(1)(c) FSFR gives AFSA
powers over ‘deemed’ activities carried out by
non-participants 12
Mutual Recognition

• Most financial regulators cooperate in the

exchange of information
• Many operate mutual recognition and some, like
EU, are integrated
• 20 May 2020 MoU with the National Bank and
Agency for Regulation and Development of the
Financial Market

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Ancillary Service Providers

Auditor
• Proving Audit Services - function of auditors subject to AUD
specific rules overseen by AFSA
• Providing Accountancy Services
• Proving Legal Services - law firms are currently licensed
by AFSA but Legal Services Regulations are under consideration
• Providing Credit Rating Services
• Providing Consultancy Services

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Questions?

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