In August 2022, the Financial Sector Conduct Authority (FSCA) published draft amendments to the exemption of significant owners of FSPs from Joint Standard 1 of 2020 which deals with the fitness and propriety requirements. Significant owners of particular FSPs, and the FSPs themselves, were already exempted from Joint Standard 1 of 2020 (through General Notice 3 of 2020). The draft amendments, that were open for public comment, proposed to withdraw the exemption in as far as it relates to the honesty and integrity requirements.
The FSCA has since completed the consultation phase concerning the draft amendments to the exemption. Based on the comments received from the industry, no additional amendments were necessary. The comments received were mostly requests for clarity on certain aspects of the Exemption and Joint Standard 1 of 2020. Accordingly, the FSCA has finalised the amendments that remove the exemption in part.
The effect of the amendment of the exemption is that Joint Standard 1 of 2020 will now apply to the significant owners of FSPs – however only part of the exemption has been removed.
The Significant Owners of FSPs will now have to comply with the honesty and integrity requirements (i.e. this exemption has been withdrawn), whilst they are still exempt from the competence and financial standing requirements (these exemptions currently remain in place).
The FSCA has added that they remain of the view that withdrawing the exemption is a necessary step to ensure that regulatory measures aimed at preventing criminals or their associates from controlling financial institutions are put in place, and the relevant finding reflected in the Financial Action Task Force Mutual Evaluation Report is addressed.
Click to read our previous article: Proposed amendments to the Joint Standard for Significant Owners of FSPs