With our ever-globalizing economy, foreign exchange has become a booming industry. More and more are being created each year, many of which tend to be tech companies taking on the challenges of refining efficient remittance and money transfer processes.

When looking at the legal and regulation pages of any money transfer company, one four-letter acronym is always there: ASIC. The first rule for any customer when choosing which company they want to use, ASIC approved foreign exchange companies is a must. 

What is ASIC?

ASIC stands for Australian Securities & Investments Commission. This is somewhat the Australian equivalent to the UK’s Financial Conduct Authority, but a clear difference is that it’s an independent commission of the Australian government, whilst the FCA is totally independent of the UK government (it’s financed by charging fees to its members).

ASIC’s main role is to regulate financial services and essentially enforce laws that protect consumers and investors. It was founded in 1998 and its secondary goal is to ensure there is investor confidence. Law enforcement and transparency are key to investor confidence.

If you wish to create a foreign exchange business in Australia, that means you want to participate in the financial system. Therefore, you need to be ASIC-approved.

Requirements to be ASIC-approved

In order to be ASIC-approved, a company must be a registered agent. We will discuss the steps below, but first, let’s explore the prerequisites.

In order to be an ASIC registered agent, you must be the holder of a business name, a registered Australian company, or an individual with the business under their name. You must also have an Australian Business Number and you should be qualified for managing corporations regarding the Corporations Act 2001.

In regards to the T&Cs for a registered agent, it’s simply a matter of keeping your details up to date, carrying on the business, and lodging documents with ASIC.

So, as per the requirements to be a registered agent, you will already need to have a registered business to some degree with an Australian Business Number (ABN).

Registered agent: How to apply

Before applying to be a registered ASIC agent, you must forest lodge a notification to register a change in detail, which is the RA01 form. There is no fee. And, after registering to be an agent, an ASIC registered agent number will be sent by email, meaning you can now be appointed as the registered agent for a company and register for the online services.

AFS licenses

ASIC will also issue AFS licenses (Australian Financial Services) which are required for a foreign exchange operation, be it a remittance service or overseas bank transfers. The easiest way to apply for an AFSL is to use the eLicensing system, which will automatically tailor the application to your company. The conditions and guides are here.

AFS-licensed companies have a broad range of obligations, from ensuring authorized representatives comply with financial service laws to having adequate financial and technical resources.

Anti-Money Laundering and Counter-Terrorism

Another seriously important aspect of starting a money transfer service is to comply with anti-money laundering regulations. The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 is the core framework here for all financial companies to comply with in Australia. This essentially means identifying all clients, monitoring and reporting suspicious transactions, maintaining records for X number of years, and training staff to identify suspicious transactions.

No option for off-shore

Money transfer regulation compliance and registration is of course a cost to our time and resources. For this reason, many would operate off-shore to avoid this, yet offer the services in various jurisdictions. But over time, larger economies like Australia have imposed restrictions on off-shore companies offering services to Australians. This is no longer a viable option, plus consumers would not trust handling large amounts of money with a company that is not ASCI-approved.

Payment solutions and Know Your Customer

Connecting with payment solutions is one of the most important aspects of a foreign exchange company. Of course, an FX broker will simply partner with the likes of Visa, MasterCard, and possibly PayPal to help deposit and withdraw funds to customers. But, a money transfer company that helps customers exchange currency and send it overseas, must have a fully-fledged infrastructure and likely be SWIFT-integrated. Global By Local (GBL) can be used for local transfer processing in Australia to avoid complex banking codes.

Secondly, money transfer regulations in Australia also require Know Your Customer (KYC). You’re responsible for your client’s funds and security, and this starts by being able to identify them (i.e. their address, date of birth etc.). It’s also paramount to collect this information in a secure way.