FAQs

Yes, the exemption makes it clear that funds are held that represent the advanced payment of fees, this does not constitute business in the regulated sector. The Act does not limit to whom those fees are payable to. This is limited to fees only, such as registry fees, fees for expert witnesses or court fees, it does not extend to funds held to purchase assets such as property or funds held in escrow

Whether a business is in the regulated sector by virtue of managing client assets depends very much on what those assets are being managed for:

• Matters which would not normally be considered to be managing assets belonging to a client:
  1. Where the assets are being managed by way of a pooled client account which is purely for the advance payment of fees. Paragraph 2(14) of Schedule 4 to the Proceeds of Crime Act 2008 specifically defines this business as being outside the regulated sector.
  2. Where funds are being held and not managed (eg as a security or surety).
  3. Where funds are taken onto the lawyers own balance sheet (through a debtor/creditor position (and outside of a segregated client account)) such as payments in advance
• Matters which normally would be considered to be managing assets belonging to a client:
  1. Where funds are taken into a pooled or segregated account from one party and applied to another by the business eg during conveyancing.
  2. Where a power of attorney is in place and the advocate is responsible for the management of a client’s assets (and other affairs).
  3. Where funds are held on behalf of a company or trust structure being managed by the business.
  4. Where assets are held and managed or maintained such as real estate, investments or other such property requiring maintenance or management.

Matters which would not normally be considered to be managing assets belonging to a client.

This will depend on your plans:

1. If you have a date in mind of when you would like to expand your business then you should apply to register, we can set the registration to take effect from the date you plan to commence designated business.
2. If your plan is at an early stage feel free to contact the Authority to make us aware of your intentions, but you should only apply for registration when your plans are more established. The Authority only has the power to register those actually undertaking designated business and this must be from a set date.
3. If you would like to register “just in case” you undertake designated business in the future, the Authority will consider this on a case by case basis. The test will be around whether the business is simply seeking an enabling power or permissions to undertake non-standard business from time to time. For example a lawyer who only does litigation thinking they may wish to start conveyancing in the future or a lawyer who only does litigation doing the odd conveyancing from time to time.

Where you are undertaking business in the regulated sector, (no matter how infrequently) you must register under the Act. This only applies where the activity is undertaken by way of business. A key indicator of whether a proposed activity is by way of business is whether you receive remuneration or compensation for such activity.

No, this would not appear to be by way of business and so falls outside of business in the regulated sector. If you begin doing this regularly and for a level of compensation, this assessment may change. If you still have doubts, feel free to contact the Authority to discuss the situation.

This is something which would need to be considered on a case by case basis. In general terms where you are simply helping out a customer and that customer gives a small token in thanks, this is unlikely to be considered “by way of business”. If you are providing services in return for an expected fee (even if it’s relatively small) then there is a much stronger argument that this is by way of business.

If you have no plans to undertake business in the regulated sector you should not register until you are required to do so. Merely having permission or a right to undertake an ordinarily controlled designated business does not require you register.

If you are advertising as a designated business, this would be considered “holding out” under section 7 of the Act. Therefore you would be required to be registered.

If you have been undertaking designated business without being registered, ensure you contact the Authority as soon as possible to correct the position.

Registration must be completed prior to commencing business.

Yes, the request for registration in 2013 by the Department of Home Affairs was a research gathering exercise in order to ascertain the size of the industry, this is distinct from the requirement to be registered to undertake designated business under the Act.

The application process is all online, if you do not have access to a computer please contact the Authority at your earliest convenience to discuss your options.

During the application process the business will be asked to choose which body they would like to oversee their compliance with the AML/CFT framework. Where there are multiple professional bodies available, the business may choose which one best suits their own needs.

Where a business is not a member of a body to whom the Authority has delegated its oversight powers, the Authority will be responsible for their oversight as the default body.

Yes, a business may choose to be overseen by the Authority, this may be because the business has a related party which holds a financial services licence or simply because oversight by the Authority is considered to be in the best interests of the business.

Click here for questions and answers in respect of persons seeking to issue convertible virtual currency (such as via an Initial Coin Offering) in or from the Island.

Click here for questions and answers for consumers in relation to Convertible Virtual Currency (including via an Initial Coin Offering).