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Fintech read more

Fintech continued..

A key focus of the Regulatory Principles is the demonstration of effective corporate governance arrangements. In particular, in the GFSC initial guidance on the application of the principles they state the following:

Areas of focus will include:

•board structure, including composition to ensure that there is a good balance and mix of skills and experience to complement the business;

•adequate application of the four eyes principle; and

•application of mind and management from Gibraltar.

These principles (along with the other Regulatory Principles) are principles which all existing financial services firms, including Acquarius Trust Group will be very familiar.

Company Management

Clients wishing to set up a FinTech business from Gibraltar will need to establish a Gibraltar Limited Company.  Acquarius Trust Group have over 20 years’ experience in Gibraltar Company Management.  We provide a full range of services from Incorporation through to company secretarial, accounting and management of corporate transactions.

Fiduciary Services

Whilst ideally the board of all regulated companies would be made up of local resident directors, the reality is that even for established businesses, a number of the directors usually reside outside Gibraltar. Relocation of senior staff can also be expensive, particularly for companies initially establishing themselves in Gibraltar. To mitigate these issues and satisfy the GFSC’s requirements for balance of skillset, Mind and Management and Four-Eyes Principle, it is common for local regulated companies to appoint appropriately skilled corporate or professional individual directors from the local industry.

Acquarius Trust Group are licensed to provide Corporate Directors and where appropriate the services of resident individual Directors, either as an alternative or in addition to a Corporate Director.

Whether corporate or personal, the individuals carrying out these duties provided by Acquarius Trust Group, are themselves all pre-approved by the commission.  They are all professionally qualified and of varying skillsets.  Where individuals are provided they are mindful of the overall makeup of the board and in selecting an individual we ensure that their skillset is complimentary to the wider board.

Banking Services

Most Businesses looking to set up in Gibraltar will require local banking services.  Banking has become a particularly complicated matter for all industries and this is particularly evident in the FinTech sector.

There are two local banks that are banking in the DLT sector, Turicum Private Bank and Gibraltar International Bank.  Both these banks have stringent criteria for the acceptance of applicants and are following similar principles to the GFSC in the application of the Regulatory Principles.  There will be a particular focus on the applicant’s white paper, use of funds, corporate governance and anti-money laundering procedures.

In the majority of cases the banks will only accept applications from Approved Intermediaries.

For ICOs the Banks will also generally require a legal opinion from an established local lawyer confirming that due diligence has been undertaken and background checks on the ICO.  The legal opinion will also need to confirm that potential investors have been reasonably informed as to the risks of the investment, and opine on the structure of the ICO, the purpose, the persons managing and controlling the firm and the objective of the ICO.

We can provide these legal opinions and we have an excellent relationship with both banks.  In addition, Paul Miles, who heads Acquarius Trust Group’s banking services has over 40 years’ experience with the RBS Group in a variety of positions including, most recently head of business and intermediary banking at Natwest Gibraltar.

Whilst bank account opening can be challenging for FinTech companies between Cruzlaw LLP and Acquarius Trust Group we have an excellent team to assist with all aspects of the application.

What are the nine Regulatory Principles?

Schedule 2 of the DLT Regulations sets out the nine principles that a regulated DLT firm will have to adhere to as follows:

  1. Conduct their business with honesty and integrity.
  2. Pay due regard to the interests and needs of each and all its customers and communicate with them in a way that is fair, clear and not misleading.
  3. Maintain adequate financial and non-financial resources.
  4. Manage and control their business effectively, and conduct their business with due skill, care and diligence; including having proper regard to risks to its business and customers.
  5. Have effective arrangements in place for the protection of customer assets and money when they are responsible for them.
  6. Have effective corporate governance arrangements.
  7. Ensure that all of their systems and security access protocols are maintained to appropriate high standards.
  8. Have systems in place to prevent, detect and disclose financial crime risks such as money laundering and terrorist financing.
  9. Be resilient and have contingency arrangements for the orderly and solvent wind down of its business.

For more information and detail on how these principles are to be applied see the GFSC website or click here.

For a full copy of the DLT Regulations click here.