Do Foreign Financial Services Providers Need an Australian Financial Services Licence

Introduction

Foreign financial services providers (FFSPs) dealing with Australian clients face a core legal requirement: anyone carrying on a financial services business in Australia must hold an Australian financial services licence, unless an exemption applies. With existing transitional relief set to expire on 31 March 2027 and three new statutory exemptions commencing on 9 April 2027, the licensing pathways are being fundamentally reformed.

This article explains the licensing framework FFSPs must work through—from current relief options to the new exemptions and the standard AFSL pathway—so you can assess which route fits your operations.

Interactive Tool: Check Your AFSL Requirements & See If You Are Exempt

Understanding When Your Foreign Financial Services Business Requires an AFSL

What It Means to Carry on a Financial Services Business in Australia

Under Section 911A(1) of the Corporations Act 2001 (Cth) (‘Corporations Act‘), any entity carrying on a financial services business in Australia must hold an Australian financial services licence (AFSL), unless an exemption applies. Australian courts determine whether a foreign entity is carrying on business in Australia by examining the specific facts of each case.

Courts look for the following indicators:

• system, repetition, and continuity of activities in Australia;
• a physical place of business; and
• administration or dealings with property located in Australia.

A foreign entity will generally be seen as carrying on a business in Australia if its regulated activities have a sufficient connection to the country.

How Inducing Conduct Triggers the AFSL Requirement

Under Section 911D of the Corporations Act, a foreign entity is deemed to be carrying on a financial services business in Australia if it engages in conduct intended, or likely, to induce Australian persons to use its financial services. This deeming provision applies even when the FFSP has no local office, staff, or infrastructure in Australia.

The provision captures purely digital or offshore entities that actively market or target Australian residents. An FFSP that reaches out to Australian clients through emails, calls, advertising, or website content encouraging them to use its financial products may trigger the AFSL requirement under Section 911D.

Why the Retail Versus Wholesale Client Distinction Matters

Section 761G of the Corporations Act defines the boundary between retail clients and wholesale clients using thresholds based on asset size, gross income, or the value of the transaction. This distinction carries direct consequences for an FFSP’s licensing position.

The AFSL exemptions available to foreign providers are limited to services provided to wholesale clients or professional investors. An FFSP that intends to provide financial services to retail clients in Australia cannot rely on any of the available exemptions and must hold a standard AFSL covering the provision of those financial services.

Existing Licensing Relief Options Available to Foreign Providers

Class-Based Transitional Relief & the 31 March 2027 Expiry

The class-based sufficient equivalence relief permits FFSPs regulated by certain overseas authorities to provide financial services to wholesale clients in Australia without holding an AFSL. This pathway closed to new entrants on 1 April 2020. Only FFSPs that notified the Australian Securities and Investments Commission of their reliance before that date may continue to use it.

The recognised regulators include:

• the UK Financial Conduct Authority;
• the US Securities and Exchange Commission;
• the US Commodity Futures Trading Commission;
• the US Federal Reserve and Office of the Comptroller of the Currency;
• the Monetary Authority of Singapore;
• the Hong Kong Securities and Futures Commission;
• German BaFin; and
• the Luxembourg Commission de Surveillance du Secteur Financier.

A separate limited connection relief covers FFSPs whose Australian activities involve only inducing conduct aimed at wholesale clients, with no physical business presence locally. Both forms of relief expire on 31 March 2027, under the ASIC Corporations (Foreign Financial Services Providers) Instrument 2025/798 (Cth) (‘ASIC Instrument 2025/798‘).

Individual ASIC Relief for a Sufficiently Equivalent Jurisdiction

FFSPs from sufficiently equivalent jurisdictions may apply for individual licensing relief through the ASIC Regulatory Portal. The first step is determining whether the FFSP is carrying on a business in Australia under Section 21 of the Corporations Act. Entities that are carrying on a business must register as a foreign company under Division 2 of Part 5B.2 of the Corporations Act.

The application must address the requirements in Appendix 2 of INFO 157, including:

• details of the FFSP’s authorisations;
• a description of each financial service to be provided; and
• how services will be restricted to wholesale clients under Section 761G of the Corporations Act.

After relief is granted, the FFSP must provide three documents:

• a letter of intention to provide financial services in reliance on the relief instrument;
• a signed deed of covenant; and
• a letter confirming consent to information sharing between ASIC and the home regulator.

Individual ASIC Relief for a Non-Sufficiently Equivalent Jurisdiction

FFSPs from jurisdictions that ASIC has not assessed as sufficiently equivalent face a more involved application process. ASIC recommends contacting the FFSP team before applying, so the process can be clarified individually.

The application must include a detailed submission addressing nine questions in Appendix 3 of INFO 157 about the FFSP’s home regulatory framework. These questions cover:

• authorisation criteria;
• conduct obligations;
• competence standards;
• supervision of representatives;
• resource adequacy;
• risk management arrangements;
• regulation of services to wholesale clients;
• enforcement powers of the home regulator; and
• the regulator’s ability to enforce rules across borders.

Applicants should refer to Regulatory Guide 54 Principles for cross-border financial regulation (RG 54) and Table 4 of Regulatory Guide 176 (RG 176) when preparing their responses.

The Three New Statutory AFSL Exemptions Commencing 9 April 2027

The Professional Investor Exemption Under Section 911A(2)(eo)

Schedule 2 of the Treasury Laws Amendment (Genetic Testing Protections in Life Insurance and Other Measures) Act 2026 (Cth) (‘2026 Amending Act‘) inserts Section 911A(2)(eo) into the Corporations Act, creating an exemption for FFSPs providing financial services only to professional investors under Section 761G(7)(c). Professional investors include AFSL holders, Australian Prudential Regulation Authority (APRA)-regulated bodies, listed entities, and persons controlling at least $10 million.

To rely on this exemption, the FFSP must satisfy the following conditions:

• provide the financial service from outside Australia.
• maintain its head office and principal place of business offshore.
• cap marketing visits to Australia at 28 calendar days per representative per financial year.
• notify ASIC of its intention to rely on this exemption.
• reasonably believe that providing the service would not contravene any law in the jurisdiction of its head office or principal place of business.

The Comparable Regulator Exemption Under Section 911A(2)(ep)

Section 911A(2)(ep) of the Corporations Act exempts a foreign company or partnership authorised by a comparable regulator to provide the same or substantially the same financial services. The Minister determines which regulators qualify as comparable by legislative instrument. The exemption is limited to services provided to wholesale clients only.

The FFSP must also satisfy several conditions:

• maintain an Australian agent;
• consent to information sharing between ASIC and each comparable regulator; and
• notify ASIC of any significant enforcement action, disciplinary action, or investigation by a foreign regulator, government authority, or financial market operator.

The financial service may be provided from within Australia or the comparable jurisdiction.

The Market Maker Exemption Under Section 911A(2)(eq)

Section 911A(2)(eq) of the Corporations Act provides a narrow exemption for an FFSP making a market in derivatives that are able to be traded on prescribed licensed financial markets. The FFSP must provide the financial service from outside Australia and maintain its head office and principal place of business offshore.

This exemption carries fewer conditions than the comparable regulator exemption. Specifically:

• no Australian agent is required; and
• there is no obligation to notify each client of the exemption being relied upon.

However, the FFSP must still notify ASIC of its intention to rely on this exemption and reasonably believe that providing the service would not contravene any law in the jurisdiction of its head office or principal place of business.

Obtaining a Standard AFSL as a Foreign Financial Services Provider

When a Standard AFSL Becomes Mandatory for Your Business

A FFSP must obtain a standard AFSL when no licensing exemption or relief applies to its operations. This pathway is unavoidable for any FFSP intending to provide financial services to retail clients in Australia.

The AFSL application process requires submitting a detailed online form to ASIC, with supporting evidence of the FFSP’s ability to meet AFSL obligations. Once approved, the licensee is subject to the requirements under Sections 912A and 912B of the Corporations Act. These include:

• ensuring services are provided efficiently, honestly, and fairly; and
• maintaining adequate financial, technological, and human resources.

The Fit & Proper Test Exemption for Eligible Foreign Applicants

The same amending Act also introduces a fast-track pathway for certain FFSPs applying for an AFSL. Foreign companies or partnerships formed outside Australia that are authorised by a comparable regulator to provide the same or substantially the same financial services may be exempt from the fit and proper person assessment when seeking an AFSL or varying an existing AFSL under Section 913A of the Corporations Act.

The exemption is available only where the licence sought is limited to providing financial services to wholesale clients. It removes one element of ASIC’s licensing assessment — the requirement to satisfy the fit and proper person test — while the remainder of the AFSL application framework stays in place.

Ongoing Compliance Obligations for FFSPs Relying on Exemptions

Notification Requirements & Ongoing Reporting to ASIC

FFSPs relying on new statutory exemptions must comply with several notification and reporting obligations:

• Notifying ASIC within 15 business days before or after first providing the financial service.
• Submitting a fresh notification even if the FFSP previously notified ASIC under the sufficient equivalence relief.
• Notifying each client of the exemption being relied upon, where the FFSP relies on the professional investor exemption under Section 911A(2)(eo) of the Corporations Act or the comparable regulator exemption under Section 911A(2)(ep).
• Reporting contact detail changes to ASIC as soon as practicable.
• Reporting contraventions of exemption conditions to ASIC within 30 business days after the FFSP became aware, or would reasonably be expected to have become aware, of the contravention.

Consequences of Failing to Comply with Exemption Conditions

ASIC has several enforcement powers if an FFSP fails to comply with exemption conditions:

• Applying to the court for a civil penalty declaration and a pecuniary penalty order.
• Cancelling the exemption or imposing additional conditions on the FFSP’s future use of the exemption.

Under individual relief instruments, failure to notify ASIC of a breach causes the relief to lapse.

In addition, the efficiently, honestly, and fairly obligation under Section 912A(1)(a) of the Corporations Act is explicitly attached to all three new exemptions. A breach of this conduct standard gives ASIC grounds to revoke exempt status.

Furthermore, unlike the reportable situation regime for AFSL holders, there is no materiality threshold for reporting contraventions of exemption conditions.

Conclusion

FFSPs can access several licensing pathways, from existing transitional relief expiring on 31 March 2027 to three new statutory exemptions under the Corporations Act commencing on 9 April 2027, plus the standard AFSL route. The right option depends on the type of clients served, the provider’s home regulatory status, and whether services are delivered from offshore.

Determining the most suitable pathway requires a careful assessment of your specific operations against the detailed eligibility criteria and ongoing compliance obligations. The team at Click Legal can help you evaluate your position and work through the notification or application process, so you can focus on serving your Australian clients with confidence.

Frequently Asked Questions