Financial regulation

As a rule, only brokers may engage in securities and derivatives investment services and activities in a professional capacity.

However, the following are excluded from this rule:

• the Central Bank (BNA), the State and other public entities within the scope of the management of public debt and State reserves;
• people who provide investment services exclusively to its dominant company, its subsidiary, or to its own subsidiary;
• people who provide investment advice as a normal, non-specifically remunerated supplement to the provision of investment services;
• people whose only investment activity is dealing on own account, provided they are not market makers or entities dealing on own account outside a regulated market in an organized, frequent and systematic manner, providing a system accessible to third parties for the purpose of dealing with them.

ASIC, APRA and the ACCC have the power to grant a large variety of exemptions in relation to authorisation and licensing requirements.

ASIC may exempt an individual or entity from the requirement to hold an Australian Financial Services license under the Corporations Act 2001 (Cth). For example, product providers are not required to hold an Australian Financial Services (AFS) license when providing general financial product advice on their own products. It must be noted that when an individual or entity relies on this exemption they must disclose to the recipient that the provider does not hold an AFS license. There are a wide variety of other exemptions that may apply.

APRA has the power to grant exemptions to certain institutions (such as charitable, religious and other registered entities) to engage in 'banking business' without violating the Banking Act 1959 (Cth).

The ACCC may exempt an individual or entity from the requirement to hold a Credit License under the National Consumer Credit Protection Act 2009 (Cth). For example, a public body or authority constituted under legislation, is not required to hold a credit license for any credit activities they engage in.

For each type of regulated activity there are a number of specific exemptions that could also apply, such as the provision of investment services on an ancillary basis.

No.

The Investment Canada Act (Canada) and the Competition Act (Canada) each contain limited exemptions from the application of the Act.

Generally, the applicable legislation in each of Alberta, Saskatchewan, Manitoba, Québec and Prince Edward Island set forth certain exemptions regarding the investment in farm land or land, in case of Prince Edward Island. If one of the exemptions does not apply, non-Canadians can apply for an exemption or authorization from the regulatory authority responsible for administering the relevant regime.

Even though it is a regulated activity, there are exceptions such as non-banking factorings whose focus is to provide capital to small- and medium-sized enterprises.

No financial, banking or credit institution may operate in Colombia without the prior approval of the Superintendency of Finance.

The incorporation of private equity funds is not subject to the authorization of the Superintendency of Finance.

There are two types of exclusions available when regulated activities may be undertaken without authorization.

General exclusions

Certain persons may carry on a regulated activity without being authorized. For example, in certain cases regulated activities carried on by foreign (EU member-based) persons may be undertaken without authorization.

Specific exclusions

For each type of regulated activity there are a number of specific exemptions that could also apply, such as specific consumer credits.

Authorizations are regulated in the Credit Institutions Act, Investment Services Act, Alternative Investment Fund Manager Act, Mutual Funds Act, Insurance Companies Act and Act on Virtual Currency Providers. However, some of these acts include provisions which include conditions which also apply when the operations are not regarded as authorized business.

Certain exemptions are available depending on the entity providing the regulated activities (such as certain public entities, etc.).

Certain exemptions are available depending of the type of activity contemplated (such as intercompany lending, loans granted by non-profit associations, etc.).

Activities that are otherwise regulated may be undertaken without authorization if general or specific exemptions are available.

General exclusions

Certain persons may carry on a regulated activity without being authorized if they are granted an exemption granted by the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin)).

Specific exclusions

For certain types of regulated activities specific exemptions can apply, for example:

• for undertakings whose sole financial service within the meaning of section 1 para 1a sentence 2 of the German Banking Act (Kreditwesengesetz – KWG) comprises carrying out financial leasing activities, if they act only as an asset-leasing vehicle for a single leased asset, do not make their own business policy decisions and are managed by an institution domiciled in an EEA state which is authorized to conduct financial leasing operations under the laws of the home member state; and
• for undertakings whose sole financial service within the meaning of section 1 (1a) sentence 2 of the German Banking Act (Kreditwesengesetz – KWG) is dealing in foreign notes and coins, unless their principal activity is foreign currency dealing.

A representative of a market maker or operator who does not deal directly with clients may be exempted from holding a representative’s license. 

A foreign bank or company may be exempt from registration as a financial holding company where the Bank of Ghana is satisfied that it is subject to satisfactory supervision and regulation in its home jurisdiction.

As a general rule, every person carrying out finance and/or investment activities must apply for authorization, however, certain entities, such as the European Investment Fund or European Investment Bank are exempt from this obligation.

There are certain exceptions and exemptions to the general requirements to be regulated. Therefore, the relevant legislation, rules and guidance should be examined to ascertain whether any exception/exemption applies.

In addition, a firm that is authorized to provide certain services by the regulatory authority of another country in the European Economic Area may also be permitted to provide financial products and services into Ireland without the need to apply to the Central Bank of Ireland for authorization through the free provision of services on a cross-border basis, i.e. by “passporting” into Ireland, from its home Member State.

In relation to the possible authorization exemptions, in general terms, the above-mentioned activities do not trigger authorization requirements and can be freely exercisable if they are not performed vis-à-vis the public.

For instance, activities carried out exclusively vis-à-vis the group to which the intermediary belongs, upon certain conditions, do not fall within the scope of activity requiring authorization.

Moreover, activities carried out on an occasional basis, without any stable organization and continuity, do not fall within the definition of activities performed on a 'professional basis' and, therefore, are not required to be authorized.

However, according to Italian case law, the granting of one loan can fall within the scope of authorized activity if the lender has a framework in place which presumes the potential continuation of the relevant activity.

Without prejudice to the above, certain specific exemptions are provided for with regard to consumer credit activities.

Also in relation to other type of intermediaries, upon certain conditions, some regulatory exemptions could be invoked, provided that such exemptions widely reflect those already provided at the European level.

As regards the provision of payment services, it has to be considered that, after the implementation of Directive 2015/2366/EU (PSD2), operators willing to invoke the so called “limited network exemption” or the so called “electronic communication exclusion” shall submit a notification to the Bank of Italy – should some volumes and thresholds be exceeded – are enrolled in a separate section of the register as “exempted entities” and are subject to an annual assessment.

All transfers of securities listed on the Regional Stock Exchange are made through an SGI, except in the case of an exemption granted by the Regional Stock Exchange (Article 37 of the General Regulation of the CREPMF).

Moreover, pursuant to article 95, no one may, as a usual profession, without the prior authorization from the Regional Council, provide investment advice, in particular of a stock market nature, to third parties.

However, SGIs and banking institutions are authorized to exercise the activity of stock market investment advice by way of derogation from the preceding article (Article 96).

Registration is not required for a non-resident financial instruments businesses or financial instruments intermediary service providers conducting investment advisory or investment management business in foreign countries, in respect of certain financial instruments businesses.

A person or corporation conducting a private placement to qualified institutional investors or a fund manager consisting of qualified institutional investors may notify the Prime Minister in advance of the placement in lieu of registration.

A lending business or intermediary service is exempt from registration for the following activities under the Money Lending Business Act:

• non-business loans;
• loans subsidiary to the sale, transportation, storage and intermediation of sale of goods; and
• loans by a business operator to its employees; and
• loans between affiliated companies or to a joint-venture company by its shareholders subject to satisfaction of statutory requirements.

Regulated activities may be undertaken without authorization if either a general or specific exclusion applies.

General exclusions

General exclusions include:

• one-off and ancillary regulated activities;
• intra-group activities;
• loans granted to a ‘restricted circle of previously known persons’ (cercle restreint de personnes préalablement connues), which are not deemed to be granted to the ‘public’, which is generally defined as a multitude of non-identifiable persons; or
• the exercise of a financial sector activity or a connected or ancillary activity, which is not carried out on a regular basis (legal assessment required).

Specific exclusions

A Luxembourg Reserved Alternative Investment Fund (RAIF) is exempt from being authorized by the Commission de Surveillance du Secteur Financier. However, a RAIF will have to appoint an alternative investment fund manager, who is in turn authorized and supervised be the Commission de Surveillance du Secteur Financier.

Loan origination and loan participation and/or acquisition are permissible activities for Luxembourg entities subject to due compliance by the manager and the Luxembourg entity, where applicable, with the requirements set forth in the Commission de Surveillance du Secteur Financier Frequently Asked Questions, version 10, dated 9 June 2016, concerning the Luxembourg Law of 12 July 2013 on alternative investment fund managers. However, a Luxembourg court may still find otherwise based on the law dated 5 April 1993 on the financial sector, as amended from time to time.

Generally 

There are no general exemptions but discretionary exemptions may be granted by the regulators on a case-by-case basis. 

Moneylending

There is a list of exemptions provided in the Banking Act 2004 for entities that can carry on the business of moneylending without a license.

Mexican Non-Bank Financial Entities (Sociedades Financieras de Objeto Múltiple or SOFOMs) are allowed to provide financing through direct loans, financial leasing and factoring without needing to obtain authorization from Mexican regulators, however, these entities are not allowed to obtain deposits from the general public. There are two types of SOFOMs:

• regulated SOFOMs which are entities with a capital link to a banking or other regulated institution; and
• non-regulated SOFOMs which lack such a capital link.

For each type of regulated activity there are a number of specific exemptions that could also apply, including for activities carried out by family offices, private equity entities and other private wealth management entities.

Moroccan law provides exemption from licensing for certain limited transactions.

Thus, any person can perform the following operations:

• grant its contractors, in the exercise of its professional activity, payment deadlines or advances, in particular in the form of commercial credit;
• conclude lease with option to purchase contracts for housing;
• carry out treasury transactions with companies that have, directly or indirectly, capital ties with it and giving to one of them effective control over the other companies;
• issue securities and debt securities negotiable on a regulated market;
• grant advance on salaries or loans to its employees for social reasons;
• issue vouchers and cards issued for the purchase of specified goods or services from it;
• take or repurchase securities listed on the stock exchange, negotiable debt securities or securities issued by the public treasury;
• provide cash as a guarantee of securities lending transactions.

Yes, to certain regulated activities specific exemptions/exclusions may apply.

General exclusion

Firms that have obtained authorization in another EEA member state to perform regulated activities, in principle, would not need to obtain a Dutch authorization. These firms could, in principle, ‘passport’ their EEA authorization into the Netherlands and perform the regulated activities there.

Specific exclusions

For each type of regulated activity there are a number of specific exemptions that could also apply (eg an exemption to the requirement to obtain an authorization to provide banking activities may be available for group finance companies and an exemption to the requirement to obtain an authorization to provide investment services or perform investment activities may be available for the intragroup provision of these activities/services).

The Governor General may make regulations exempting any service or person from registration under the Financial Service Providers (Registration and Dispute Resolution) Act 2008 (FSP). He or she can prescribe specific terms and conditions of the exemption if required.

The minister responsible for the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 may exempt requirements of the Act such as reporting obligations.

The Financial Markets Authority (FMA) can grant exceptions to having to register under the FSP or to having to comply with obligations under the Financial Advisors Act 2008; this is provided when the cost of compliance would be unreasonable or not justified by the benefit of compliance or that the relevant person, transaction or service was adequately regulated by an overseas jurisdiction to the standard of the FMA.

Under the Financial Markets Conduct Act 2013 general exemptions apply for services being provided to wholesale investors and for certain other types of offers. Specific exemptions can also be granted by the FMA on an individual or class basis.

Exemptions exist regarding the use of a restricted word under the Reserve Bank of New Zealand Act 1989 where the word signifies a geographic place name, the name of a natural person or that it could not be reasonably mistaken as being the name of a financial institution.

Yes.

‘Financial Activities’ that are exempt include:

• business related to public institutions or a fund that is intended for special credit purposes;
• business conducted by a foundation that does not have as its purpose to conduct business activities, or the county administrator's management of financial assets pursuant to the act on custody (Vergemålsloven);
• credit or guarantees provided on behalf of the company's or the group's employees;
• credit provided by the seller of a good or service;
• business conducted as a financial agent or a financial advisor; or
• financial services that are conducted only in isolated cases.

In accordance with Article 87 of the Political Constitution of Peru, the Superintendence of Banking, Insurance and Private Pension Fund Management Companies (SBS) authorizes, supervises and controls the activities of all banks, financial firms, insurance companies and any other firms that receive money from the public.

Credit Unions (cooperativas de ahorro y crédito no autorizadas para captar recursos del público) which can receive deposits and grant loans from/to their members do not need for a business license;nevertheless, they must register in the National Credit Unions Registry conducted by the SBS.

Without prejudice to the foregoing, unless otherwise expressly provided for by a special law, agreements relating to private financial and investment activities that do not involve public money can be executed without permit or authorization, in addition to other activities that may be excepted for having a different nature, such as making introductions (that is, making arrangements under which clients can, under certain circumstances, be introduced to another person).

There are two types of exclusions permitting the performance of regulated activities without authorization:

General exclusions

Certain persons may carry on a regulated activity without being authorized, for instance EU-based payment institutions do not require authorization to conduct business activity within the scope of authorization granted by their domestic regulator.

Specific exclusions

For each type of regulated activity there are a number of specific exemptions that could also apply, for instance banks may conduct certain securities trading activities without securities trader license.

Some financial and investment activities ordinarily requiring authorization by the applicable regulator may not be subject to authorization if certain exemptions apply. For example, financial activities carried out on a professional basis may be exempt from authorization and certain investment activities, such as companies providing investment services exclusively to their subsidiary or controlling parent entity may be exempt from authorization.

Also, activities that are merely accessory to the main activity of the entity might in some cases be provided without previous authorization.

Yes.

For each type of non-depository regulated activity there are a number of specific exemptions that could apply, such as de minimis transactions being registered under other statutes or engaging in certain transactions.

Individuals or legal entities that are not credit institutions are not permitted to carry on activities such as taking deposits or other repayable funds from the public. This prohibition is not applicable to taking of deposits or other funds repayable by a member state of the EU, or by a member state's regional or local authorities, or by public international bodies provided that one or more member states are members to the public international body. The prohibition also does not apply to cases expressly covered by national or EU legislation, provided that those activities are subject to regulations and controls intended to protect depositors and investors, and applicable to those cases.

To the extent that lending activities are performed incidentally and not on a professional basis, they may be freely undertaken by any individual or entity (not necessarily by regulated entities). The National Bank of Romania has a monopoly in determining, on a case-by-case basis, whether a determined activity constitutes professional lending, by applying the criteria provided by Law No 93/2009 regarding non-banking financial institutions.

If regulated activities are performed in the territory of Russia, they require an appropriate form of authorization with no exemptions.

Transfers of securities listed on the Regional Stock Exchange are made through an SGI, except in the case of an exemption granted by the Regional Stock Exchange (Article 37 of the General Regulation of the CREPMF).

 The provision of investment advice, in particular of a stock market nature, as a usual profession to third parties, is subject to prior authorization from the Regional Council (Article 95 of the General Regulation of the CREPMF).

However, SGIs and banking institutions are authorized to exercise the activity of stock market investment advice by way of derogation from the preceding article (Article 96).

Where finance and investment activities, taken as a whole, fall within the remit of multiple pieces of legislation, entities may be exempt from the multiple authorization and/or licensing requirements under applicable legislation. For example, where banks provide capital markets and financial advisory services, the Financial Advisers Act, the Securities and Futures Act and the Banking Act are applicable to their regulated activities but they are generally exempt from licensing requirements pursuant to the Financial Advisers Act and the Securities and Futures Act.

 

The available exemptions relate to the nature of the agreement, the lender and the borrower, the number of repayments to be made and the total charge for credit. In case of consumer credit exemptions do not apply, according to the Slovak Act on Consumer Credits and Other Credits and Loans for Consumers, no one shall, in the course of his business, offer or provide consumer loans without authorization or beyond the scope of the authorization of banking licence or other authorization to carry out banking activities.

There are two types of exclusions available when regulated activities may be undertaken without authorization from National bank of Slovakia, as follows:

General exclusions

Certain persons may carry on a regulated activity without being authorized. In certain cases regulated activities carried on by overseas persons may be undertaken without authorization. For example, exercising passporting rights allows firms, provided they are authorized to provide financial services in one jurisdiction, to provide such services in another jurisdiction without the need for authorization in this host jurisdiction.

Specific exclusions

For each type of regulated activity there are a number of specific exemptions that could also apply. For instance persons that provide investment services exclusively for their parent undertakings, for their subsidiaries or for the subsidiaries of their parent undertakings do not require authorization.

Certain persons may carry on business as a credit provider without having to register with the National Credit Regulator, for example, where that person carries on business in only one province in South Africa and it has complied with the provincial regulations applicable to it.

Financial services may also be provided without having to obtain a license if that person has been exempted from having to obtain a license under the Financial Advisory and Intermediaries Services Act.

Depending on the nature of the regulated activity, and how this is performed with Spanish resident investors, such regulated activity can be undertaken without authorization.

For example, for banking services generally, the criteria used is the ‘characteristic performance test’, which focuses on whether the characteristic performance is fulfilled in Spain. For investment services, the criteria used is the ‘solicitation or initiative test’ which focuses on which party has taken the initiative to contact the other.

There are exemptions available for certain entities and for certain types of financing activities, as listed in Chapter 2, Section 2 and 3 of the Banking and Financing Act 2004 (Lag (2004:297) om bank och finansieringsrörelse), which mean that such entities and activities can be undertaken without authorization. Exemptions include certain activities by licensed foreign undertakings, intra-group loan activities and financings in connection with the sale of certain goods or services.

Lending as such does not require a license unless it involves deposit-taking. But other rules may become applicable, such as payment services etc.

There are also exemptions available for certain consumer credit-related activities, as listed in Section 5 of the Act Concerning Certain Activities with Consumer Credit 2014 (Lag (2014:275) om viss verksamhet med konsumentkrediter), which are similar to the exemptions in the Banking and Financing Act 2004 but which also include an exemption for legal entities engaged in small-scale business that involves the provision of credit to consumers but not with a view to making a profit.

There are two types of exclusions available when regulated activities may be undertaken without authorization.

General exclusions

Certain persons may carry on a regulated activity provided such activity does not fall into a category of operating a securities business which requires authorization. For example, providing general advice on securities investment to foreign investors or providing advice to closed groups or institutional investors may be undertaken without authorization.

Specific exclusions

For each type of regulated activity there are a number of specific exemptions that could also apply, such as making introductions (that is, making arrangements under which clients can, under certain circumstances, be introduced to another person). 

Generally, financial services may only be provided by funds, banks and financial institutions, unless an exemption applies.

Corporates and individuals are exempt and are able to give loans and suretyships for their commercial needs.

There are two types of exclusions available when regulated activities may be undertaken without authorization.

General exclusions

Certain persons may carry on a regulated activity without being authorized. For example, in certain cases regulated activities carried on by overseas persons may be undertaken without authorization.

Specific exclusions

For each type of regulated activity there are a number of specific exclusions that could also apply, such as making introductions (that is, making arrangements under which clients can, under certain circumstances, be introduced to another person, who is authorized).

There are two types of exclusions available when regulated activities may be undertaken without authorization:

• General exclusions – Certain persons may carry on a regulated activity without being authorized. For example, in certain cases regulated activities carried on by overseas persons may be undertaken without authorization.
• Specific exclusions – For each type of regulated activity there are a number of specific exemptions that could also apply, such as making introductions (that is, making arrangements under which clients can, under certain circumstances, be introduced to another person).

Tolerated practices

While the relevant legislation clearly prohibits entities or persons from engaging in regulated activities (unless licensed to do so), under the Old Banking Laws (i.e. Federal Law No 10 of 1981 and Federal Law No. 6 of 1985) the UAE Central Bank would not always strictly monitor performance within the regulations. These are generally referred to as the ‘tolerated practices’ in the UAE.

To fall within the scope of the tolerated practices, the activity in question must be:

• carried out from offshore and not involve local currencu (being dirhams);
• ‘low profile’ (that is, targeted and marketed to a defined and select group of non-retail customers); and
• one-off (anything that involved approaching residents on an unsolicited basis, road shows etc are less likely to fall within the scope of these tolerated practices).

It is important to note that the concept of ‘tolerated practices’ is neither a legal concept nor officially recognized by the UAE Central Bank. While it has not been tested in the UAE courts, we are not aware of any examples of any action being taken against foreign entities under the Old Banking Laws. Whether these tolerated practices will be more closely regulated or supervised by the Central Bank under the New Banking Law remains to be seen..

Lending

It will depend on the jurisdiction in which the products are being offered.

Broker-dealers

Federal

There are certain very limited exemptions from the broker-dealer registration requirements, including:

• exemptions for officers and employees of issuers engaged in the offer and/or sale of their employers’ own securities (subject to strict limitations including compensation restrictions);
• exemptions for certain non-US broker-dealers operating from outside the US, engaging in certain limited activities with certain institutional investors (in most cases, the participation of a US registered broker-dealer in key parts of the process is required); and
• other exemptions provided from time-to-time by the Securities and Exchange Commission (SEC) through 'no-action' letters and similar relief.

State

A number of states have exemptions from registrations for broker-dealers and their individual personnel that engage in limited activities from outside the state with certain types of investors (in most cases institutional investors only) in the state. The existence, terms, and conditions of each state’s exemption may differ.

Investment Advisers (as defined in the Investment Advisers Act of 1940)

The following Investment Advisers are exempt from authorization requirements:

• any Investment Adviser (other than an Investment Adviser who acts as an Investment Adviser to any private fund), all of whose clients are residents of the State within which the Investment Adviser maintains his or its principal office and place of business, and who does not furnish advice or issue analyses or reports with respect to securities listed or admitted to unlisted trading privileges on any national securities exchange;
• any Investment Adviser whose only clients are insurance companies;
• any Investment Adviser that is a private fund advisor, i.e. an advisor solely to private funds with less than USD150 million in assets under management in the US;
• any Investment Adviser that is a venture capital advisor;
• any Investment Adviser that is a charitable organization as defined in the Investment Company Act of 1940 (ICA), or is a trustee, director, officer, employee, or volunteer of such a charitable organization acting within the scope of such person’s employment or duties with such organization, whose advice, analyses, or reports are provided only to one or more of the following:
  • any such charitable organization;
  • a fund that is excluded from the definition of investment company under the ICA; or
  • a trust or other donative instrument, or the trustees, administrators, settlors (or potential settlors), or beneficiaries of any such trust or other instrument;
• any plan described in section 414(e) of the US Internal Revenue Code of 1986 (Revenue Code), any person or entity eligible to establish and maintain such a plan under the Revenue Code, or any trustee, director, officer, or employee of or volunteer for any such plan or person, if such person or entity, acting in such capacity, provides investment advice exclusively to, or with respect to, any plan, person, or entity or any company, account, or fund that is excluded from the definition of an investment company under section 3(c)(14) of the ICA;
• any Investment Adviser that is registered with the Commodity Futures Trading Commission (CFTC) as a commodity trading advisor whose business does not consist primarily of acting as an Investment Adviser, as defined in the Investment Advisers Act of 1940 (IAA), and that does not act as an Investment Adviser to certain registered investment companies or business development companies;
• any Investment Adviser that is registered with the CFTC as a commodity trading advisor and advises a private fund, provided that, if after the date of enactment of the Private Fund Investment Advisers Registration Act of 2010, the business of the advisor should become predominately the provision of securities-related advice, then such advisor must register; and
• any Investment Adviser, other than any entity that has elected to be regulated or is regulated as a business development company, who solely advises certain small business investment companies.