FINANCIAL ACTIVITIESFinancial Service Providers

Financial service providers in New Zealand may legally offer services that include:

  • Checking accounts
  • Savings accounts.
  • Deposits.
  • Credit services.
  • Loans and Insurance.
  • Wire transfer and payment processing services.
  • Managing funds, investing, and securities.
  • Handling investment portfolios on behalf of third parties.
  • Foreign currency exchange.
  • Issuing of financial guarantees and instruments.
  • Entering into or trading on an exchange, in an over-the-counter market or otherwise, the following on behalf of another person:

o Money market instruments (including checks, bills, certificates of deposits).

o Foreign exchange (including forward foreign exchange contracts).

o Derivative products including, but not limited to, futures and options.

o Exchange rate and interest rate instruments, including products such as swaps and forward rule agreements.

o Transferable securities.

o Other negotiable instruments and financial assets.

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NEW ZEALAND

Having minimal or no limitations on the quantity of customers, deposits, amounts or currencies, New Zealand Financial Service Providers offer banking services to its individual and corporate clients around the world. It offers all of the benefits of any offshore financial center while being identified as a legitimate onshore financial center.

The New Zealand FSP is relatively comparable to a bank with the products and services a bank provides without the sizeable initial costs, capital or risks involved with a corporate bank. Having respectable profit potential, the New Zealand FSP can also operate as a hedge fund as well as invest directly into New Zealand Government Treasuries. Additionally, it offers a modern legal framework and English banking law that supports the capability of opening your own bank.

Many jurisdictions prevent establishing new banks by way of excessive regulation, requirements and formalities. New Zealand is a premium jurisdiction due to several reasons:

  • Has been rated the most business friendly nation in the world by the World Bank in 2005.
  • Is a signatory to the 1922 Hague Convention and can provide Apostilled and Notarized documentation.
  • A member of the O.E.C.D., World Trade Organization, and British Commonwealth.
  • Not blacklisted by any jurisdiction or authority in the world, not subject to supervision by the Reserve Bank of New Zealand, not a member of the European Union, not influenced by the EU Savings Tax Directive, and any other future developments.
  • Employs a common law system established under British law.
  • It is not viewed as a harmful tax jurisdiction by the O.E.C.D, has no tax haven implications, and has not been blacklisted by any jurisdiction or authority in the world.
  • Has a Westminster style Government, a well-developed infrastructure, a progressive and robust economy, offers long-term security, efficient telephone and internet services, and competitive and frequent air travel.
  • Allows the development of offshore finance companies (OFC), can accept global deposits, earn high interest, and pay the depositors a lesser interest rate providing that it is independent of the depositors.
  • Consisting of experienced reliable professionals serving global clients with trust and company requirements which include legal opinions on tax, trust and company matters, and has reliable internet global banking services.
  • In 1995, repealed its entire Banking Act promoting free entry into the business of banking without qualification, capital, or excessive supervisory requirements.
  • Requirements of prospectus, supervisory trustee and investment statements as set out in Part II of the Securities Act of 1978 do not apply if banking services are not provided for the public.
  • As defined by the Reserve Bank of New Zealand Act 1989, FSPs offering services to non-residents can also function outside of the geographical scope of the Non-Bank Deposit Taker (NBDT) regulations.
  • Few limitations on who may own a New Zealand Finance Company. No capital reserve requirements, any residency and any nationality is accepted, have at least one shareholder, and foreign corporations can be a shareholder in your finance company.

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REGISTER YOUR COMPANY

If your company provides financial services to residents and non-residents of New Zealand with a New Zealand based company, it is mandatory to register your company as an FSP in the new Register. When registering, the title of your Company may not have the word “bank” in it. Words such as, “Trust”, “Financial Services”, “Savings & Loans”, etc. may be used.

Registration as a financial service provider (FSP) must be done by 1 December 2010, or 31 March 2011 for financial advisers. All financial advisers must have completed their training and obtained authorization from the Securities Commission by July 2011.

Companies offering services to retail customers must join a government approved Dispute Resolution Scheme (DRS) prior to applying for FSP registration. To strengthen consumer protection in the financial industry, a DRS is an authorized Arbitrator who assists in settling any client disputes.

If properly registered, you will not be dependent on legal interpretations and regulatory exemptions when required to prove the legitimacy of your company. Registration forms are issued by the New Zealand Ministry of Economic Development and legalized with Apostil for international recognition.

Note: The New Zealand Registrar has recently formed the view that “place of business” for the purpose of the Financial Service Providers (Registration and Dispute Resolution) Act 2008 (“the FSP Act”) requires the company to have a physical presence at an address in New Zealand from which the financial services are provided. In other words, the Registrar and/or the Financial Markets Authority (FMA) need to be able to visit the business address and make enquiries of management of the companies or its employees in the event that a complaint is received. The key wording here is “from which the financial services are provided”. There is an expectation that the financial service is actually provided from the physical place of business in New Zealand. According to this new legislation all Companies wishing to carry on financial services they will be required to show proof of their physical presence in New Zealand as its place of management and business.

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THE MEANING OF FINANCIAL SERVICES

The meaning of ‘financial service’ is defined in section 5 of the Financial Service Providers (Registration and Dispute Resolution) Act 2008. There are some exceptions set out in section 7 of the Act, such as lawyers and accountants who provide financial services as an incidental part of their business.

Common examples of financial service providers required to register are:

  • Building Societies.
  • Credit Providers.
  • Credit Unions.
  • Financial Advisers (including financial planners).
  • Finance Companies.
  • Foreign Currency Exchange Dealers.
  • Fund Managers.
  • Insurers.
  • Investment Portfolio Managers.
  • Issuers.
  • Money Changers.
  • Registered Banks.
  • Some professional trustees (such as trustees of debt securities or superannuation scheme trustees).

Individuals or companies unsure as to whether or not they will be required to register should seek their own independent legal advice.

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WHO DOES NOT HAVE TO REGISTER?

Some individuals and entities that provide a financial service may not have to register:

  • Certain types of financial advisers.
  • Lawyers, chartered accountants, tax agents, or real estate agents who provide a financial service as a necessary incident of their practice.
  • A non-profit organization providing free financial services.
  • A trustee of a family trust providing financial services to beneficiaries.

WHO IS THE CONTROLLING OWNER?

  • A controlling owner of a financial service provider (FSP) is any person (including another company or entity) who beneficially owns 50% or more of the FSP.
  • For the purposes of the FSPR, the controlling owner is the person who enjoys the benefits of owning the majority interest in the FSP, not necessarily the person named in official documents – such as a company’s share register – as the legal owner. The beneficial owner is not always the registered owner (often otherwise known as the nominee owner).
  • The name of the controlling owner will not be made public on the FSPR. It is collected by the Registrar for the purposes of disqualification checks.

WHO IS A SENIOR MANAGER?

  • A senior manager of a financial service provider is a person who is not a director but occupies a position that allows the person to exercise significant influence over the management or administration of that provider (for example, a chief executive or a chief financial officer), and to be the link between the company and FSPR, engaged to provide regular and annual reports as legally required.

WHO CANNOT REGISTER?

There are some people who cannot register on the Financial Service Providers Register.

People who have been convicted of crimes involving dishonesty under the Crimes Act 1961, in the last five years, such as fraud, as well as anyone convicted of a money laundering, or financing of terrorism offence, will be excluded from registering or from being involved in the management of a registered financial service provider

Undischarged bankrupts and banned directors will also not be able to register.

WHAT HAPPENS IF ONE DOES NOT REGISTER?

Financial service providers must be registered to legally provide financial services. If they provide, or offer to provide, financial services without current registration, they are in breach of section 11 of the Financial Service Providers (Registration and Dispute Resolution) Act 2008.

If a financial service provider provides, or offers to provide, financial services while in breach of the Act:

  • Individuals face up to 12 months imprisonment or a fine not exceeding NZ$100,000
  • Body corporates such as companies, building societies and credit unions face a fine not exceeding NZ$300,000.

REGULATIONS

The opening of the register is the beginning of the conversion to the complete implementation of the Financial Advisers Act and the Financial Service Providers Act.

The New Zealand Financial Service Provider is also regulated by several acts listed below:

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