AFSL Exemptions for Foreign Financial Service Providers

New AFSL Exemptions for Foreign Financial Service Providers in Australia

by Dario Sabljak | 7 May 2026

The landscape for Foreign Financial Service Providers (FFSPs) in Australia has undergone its most significant shift in two decades. With the passing of the Treasury Laws Amendment (Genetic Testing Protections in Life Insurance and Other Measures) Act 2026 (Cth) (Amendment Act), the era of temporary “regulatory limbo” is officially over.

For global financial services firms wishing to provide financial services to clients in Australia, understanding the new AFSL (Australian Financial Services Licence) exemptions is no longer optional — it is a critical compliance requirement for 2027 and onwards.

Key Takeaways

Legislation Passed: The Amendment Act was passed on 1 April 2026 and received Royal Assent on 8 April 2026.
Effective Date: The new statutory exemptions commence on 9 April 2027.
Transitional Relief: Current ASIC relief (sufficient equivalence and limited connection) remains valid until 31 March 2027.
Core Exemptions: Three new pathways: Comparable Regulator, Professional Investor, and Market Maker.
Notification: Relying on these exemptions requires a formal ASIC notification.

The New Statutory Framework

A person who carries on a financial services business in Australia is required to hold an AFSL covering the provision of the financial service. Schedule 2 of the Amendment Act amends the Corporations Act 2001 (Cth) (Corporations Act) to provide new licensing exemptions for FFSPs. After multiple lapsed bills and years of consultation, Schedule 2 of the Amendment Act formalises the exemptions that were previously managed through “stop-gap” ASIC instruments. This provides a permanent, legal footing for FFSPs to operate in Australia without an AFSL.

Professional Investor Exemption

Topic	New Bill	Current regime
Eligibility	The new professional investor exemption is available where the FFSP, subject to other eligibility criteria: provides a financial service from a place outside Australia to ‘professional investors’ (as defined in s9 of the Corporations Act); and has its head office and principal place of business located at one or more places outside Australia. Notably, this now includes ‘financial services’ broadly, rather than limiting the applicability of the exemption to a specific list of financial services.	The new professional investor exemption will replace the existing professional investor exemption under s911A(2E) of the Corporations Act. The existing professional investor exemption applies only to FFSPs dealing in, providing advice on, or making a market in derivatives, foreign exchange contracts, carbon units, Australian carbon credit units or eligible international emission units to professional investors.
Conditions	An FFSP that relies on the professional investor exemption must comply with the following conditions: notification to ASIC: notifying ASIC that it intends to rely on the exemption. efficient, honest, and fair provision of financial services: doing all things necessary to ensure that financial services provided predominantly inside Australia are provided efficiently, honestly and fairly. notice to recipients of financial services: giving each investor a notice, prior to the provision of financial services, which states that the FFSP is exempt from the requirement to hold an AFSL under the relevant exemption. ASIC requests for assistance: complying with reasonable requests for assistance from ASIC in relation to the performance and exercise of ASIC’s functions and powers. ASIC requests for information: complying with ASIC’s written direction to provide ASIC with specified information on the financial services provided or the FFSP’s related financial services business. breach reporting: within 30 business days of becoming aware, notifying ASIC of a contravention of a condition of the relief. change of details: notifying ASIC of any change to the FFSP’s contact details as soon as practicable after the change happens.	These conditions do not apply under the existing exemption.

Topic

New Bill

Current regime

Eligibility

The new professional investor exemption is available where the FFSP, subject to other eligibility criteria:

provides a financial service from a place outside Australia to ‘professional investors’ (as defined in s9 of the Corporations Act); and
has its head office and principal place of business located at one or more places outside Australia.

Notably, this now includes ‘financial services’ broadly, rather than limiting the applicability of the exemption to a specific list of financial services.

The new professional investor exemption will replace the existing professional investor exemption under s911A(2E) of the Corporations Act.

The existing professional investor exemption applies only to FFSPs dealing in, providing advice on, or making a market in derivatives, foreign exchange contracts, carbon units, Australian carbon credit units or eligible international emission units to professional investors.

Conditions

An FFSP that relies on the professional investor exemption must comply with the following conditions:

notification to ASIC: notifying ASIC that it intends to rely on the exemption.
efficient, honest, and fair provision of financial services: doing all things necessary to ensure that financial services provided predominantly inside Australia are provided efficiently, honestly and fairly.
notice to recipients of financial services: giving each investor a notice, prior to the provision of financial services, which states that the FFSP is exempt from the requirement to hold an AFSL under the relevant exemption.
ASIC requests for assistance: complying with reasonable requests for assistance from ASIC in relation to the performance and exercise of ASIC’s functions and powers.
ASIC requests for information: complying with ASIC’s written direction to provide ASIC with specified information on the financial services provided or the FFSP’s related financial services business.
breach reporting: within 30 business days of becoming aware, notifying ASIC of a contravention of a condition of the relief.
change of details: notifying ASIC of any change to the FFSP’s contact details as soon as practicable after the change happens.

These conditions do not apply under the existing exemption.

Comparable Regulator Exemption

Topic	New Bill	Current regime
Eligibility	The new comparable regulator exemption applies where an FFSP provides financial services only to wholesale clients and holds equivalent authorisations granted by a comparable regulator. The financial services can be provided from within Australia or from the comparable jurisdiction. Subject to the Minister’s decision, the initial list of comparable regulators and jurisdictions will most likely be the US (SEC, the Fed, OCC and CFTC), Singapore (MAS), Hong Kong (SFC), Germany (BaFin), Luxembourg (CSSF), UK (FCA and PRA), Denmark (DFSA), Sweden (SFSA), France (AMF and ACPR) and Ontario (OSC). This list adopts the regulatory authorities specified in ASIC Corporations (Foreign Financial Services Providers—Foreign AFS Licensees) Instrument 2020/198, which allows FFSPs regulated by certain regulators to apply for a foreign AFSL.	The new comparable regulator exemption will replace the existing sufficient equivalence relief. The existing sufficient equivalence relief (including relevant individual relief instruments that were issued on the same terms as the sufficient equivalence relief) applies where an FFSP provides certain financial services only to wholesale clients and is regulated by an overseas regulatory regime that is sufficiently equivalent to the Australian regime. ASIC has assessed the United Kingdom, United States, Singapore, Hong Kong, Germany, Luxembourg and others to have sufficiently equivalent regulatory regimes.
Conditions	In addition to the obligations imposed on FFSPs relying on the professional investor exemption, FFSPs relying on the comparable regulator exemption must also: submission to Australian jurisdiction: submit to the non-exclusive jurisdiction of the Australian courts when proceedings are brought by ASIC or a Commonwealth authority. Australian agent: have a local agent in Australia. information sharing consent: consent to information sharing between ASIC and the comparable regulator. notification of significant actions against FFSP: notify ASIC of any significant enforcement action, disciplinary action or investigation undertaken against itself by any relevant regulator or government authority overseas.	FFSPs relying on the existing exemption must comply with similar conditions, which may vary depending on the individual relief instrument issued by ASIC.

Topic

New Bill

Current regime

Eligibility

The new comparable regulator exemption applies where an FFSP provides financial services only to wholesale clients and holds equivalent authorisations granted by a comparable regulator. The financial services can be provided from within Australia or from the comparable jurisdiction. Subject to the Minister’s decision, the initial list of comparable regulators and jurisdictions will most likely be the US (SEC, the Fed, OCC and CFTC), Singapore (MAS), Hong Kong (SFC), Germany (BaFin), Luxembourg (CSSF), UK (FCA and PRA), Denmark (DFSA), Sweden (SFSA), France (AMF and ACPR) and Ontario (OSC).

This list adopts the regulatory authorities specified in ASIC Corporations (Foreign Financial Services Providers—Foreign AFS Licensees) Instrument 2020/198, which allows FFSPs regulated by certain regulators to apply for a foreign AFSL.

The new comparable regulator exemption will replace the existing sufficient equivalence relief.

The existing sufficient equivalence relief (including relevant individual relief instruments that were issued on the same terms as the sufficient equivalence relief) applies where an FFSP provides certain financial services only to wholesale clients and is regulated by an overseas regulatory regime that is sufficiently equivalent to the Australian regime. ASIC has assessed the United Kingdom, United States, Singapore, Hong Kong, Germany, Luxembourg and others to have sufficiently equivalent regulatory regimes.

Conditions

In addition to the obligations imposed on FFSPs relying on the professional investor exemption, FFSPs relying on the comparable regulator exemption must also:

submission to Australian jurisdiction: submit to the non-exclusive jurisdiction of the Australian courts when proceedings are brought by ASIC or a Commonwealth authority.
Australian agent: have a local agent in Australia.
information sharing consent: consent to information sharing between ASIC and the comparable regulator.
notification of significant actions against FFSP: notify ASIC of any significant enforcement action, disciplinary action or investigation undertaken against itself by any relevant regulator or government authority overseas.

FFSPs relying on the existing exemption must comply with similar conditions, which may vary depending on the individual relief instrument issued by ASIC.

Market Maker Exemption

Topic	New Bill	Current regime
Eligibility	The new market maker exemption is available where the FFSP, subject to other eligibility criteria: provides financial services from a place outside Australia and the financial services involve making a market for derivatives able to be traded on a specified licensed market to be prescribed by the regulations; and has its head office and principal place of business located at one or more places outside Australia.	No current equivalent relief.
Conditions	In addition to submitting to the jurisdiction of Australian courts, an FFSP that relies on the market maker exemption must comply with substantially the same conditions as those relying on the professional investor exemption, save for providing notice to recipients of the financial services.	Not applicable.

Topic

New Bill

Current regime

Eligibility

The new market maker exemption is available where the FFSP, subject to other eligibility criteria:

provides financial services from a place outside Australia and the financial services involve making a market for derivatives able to be traded on a specified licensed market to be prescribed by the regulations; and
has its head office and principal place of business located at one or more places outside Australia.

No current equivalent relief.

Conditions

In addition to submitting to the jurisdiction of Australian courts, an FFSP that relies on the market maker exemption must comply with substantially the same conditions as those relying on the professional investor exemption, save for providing notice to recipients of the financial services.

Not applicable.

Funds Management Relief

Topic	New Bill	Current regime
Eligibility	An FFSP that does not have a place of business in Australia and is carrying on a financial services business in Australia only because it ‘engages in inducing, or intending to induce, a person in Australia to use its financial services’, does not have to hold an AFSL in respect of certain funds management financial services provided to eligible Australian users. ‘Eligible Australian users’ are defined as a sub-set of professional investors that include, amongst others, responsible entities of registered schemes, trustees of approved deposit funds, pooled superannuation trusts and superannuation funds (in each case with net assets of at least $10 million), and trustees of wholesale equity schemes. In reliance on this relief, FFSPs may deal in, provide financial product advice in relation to, make a market in (as a result of redeeming or buying back financial products), or provide a custodial or depository service either: (i) in respect of offshore fund financial products; or (ii) in respect of financial products under a portfolio management mandate, to eligible Australian users. This relief is intended to enable offshore fund managers who do not have a presence in Australia to continue to offer investments in funds to Australian institutional investors.	The new funds management relief will replace the existing limited connection relief, but will be narrower in its scope. The existing limited connection relief applies where an FFSP is deemed to be carrying on a financial services business in Australia only because it ‘engages in inducing, or intending to induce, a person in Australia to use its financial services’ and provides financial services only to wholesale clients in Australia.
Conditions	In addition to similar obligations to appoint a local agent, consent to information sharing and comply with ASIC directions or requests for assistance, ASIC imposes the following further conditions on FFSPs who rely on the funds management relief: notification to ASIC: notifying ASIC of the FFSP’s intention to rely on the funds management relief, and giving ASIC a written description of the funds management services it intends to provide. home jurisdiction: identifying the home jurisdiction of the FFSP and confirming that the FFSP would not contravene any laws of its home jurisdiction. comparable regulator: confirming that there is an overseas regulator in its home jurisdiction that is a signatory to the International Organisation of Securities Commissions’ Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information.	Not applicable.

Topic

New Bill

Current regime

Eligibility

An FFSP that does not have a place of business in Australia and is carrying on a financial services business in Australia only because it ‘engages in inducing, or intending to induce, a person in Australia to use its financial services’, does not have to hold an AFSL in respect of certain funds management financial services provided to eligible Australian users.

‘Eligible Australian users’ are defined as a sub-set of professional investors that include, amongst others, responsible entities of registered schemes, trustees of approved deposit funds, pooled superannuation trusts and superannuation funds (in each case with net assets of at least $10 million), and trustees of wholesale equity schemes.

In reliance on this relief, FFSPs may deal in, provide financial product advice in relation to, make a market in (as a result of redeeming or buying back financial products), or provide a custodial or depository service either: (i) in respect of offshore fund financial products; or (ii) in respect of financial products under a portfolio management mandate, to eligible Australian users.

This relief is intended to enable offshore fund managers who do not have a presence in Australia to continue to offer investments in funds to Australian institutional investors.

The new funds management relief will replace the existing limited connection relief, but will be narrower in its scope.

The existing limited connection relief applies where an FFSP is deemed to be carrying on a financial services business in Australia only because it ‘engages in inducing, or intending to induce, a person in Australia to use its financial services’ and provides financial services only to wholesale clients in Australia.

Conditions

In addition to similar obligations to appoint a local agent, consent to information sharing and comply with ASIC directions or requests for assistance, ASIC imposes the following further conditions on FFSPs who rely on the funds management relief:

notification to ASIC: notifying ASIC of the FFSP’s intention to rely on the funds management relief, and giving ASIC a written description of the funds management services it intends to provide.
home jurisdiction: identifying the home jurisdiction of the FFSP and confirming that the FFSP would not contravene any laws of its home jurisdiction.
comparable regulator: confirming that there is an overseas regulator in its home jurisdiction that is a signatory to the International Organisation of Securities Commissions’ Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information.

Not applicable.

Fit and Proper Test Exemption

The new legislation introduces a ‘Fast-Track’ licensing process. Foreign companies or partnerships formed outside Australia that are authorised, registered, or licensed (as necessary) to legally provide the same or substantially the same financial services by a comparable regulator and only provide financial services to wholesale clients are exempt from the requirement to satisfy the fit and proper test when applying for an AFSL under section 913A of the Corporations Act.

How We Can Help

FFSPs that are currently operating in Australia, as well as FFSPs who are seeking to expand their operations into Australia, are highly recommended to obtain professional guidance to navigate the new legislation to remain compliant with the provision of financial services to wholesale clients in Australia. This may include obtaining a formal legal opinion to ensure that a new exemption applies to your financial services business and submitting a notification to ASIC on the intention to rely on a new exemption.

Adria Group are expert financial services lawyers and compliance consultants and can assist FFSPs in navigating the new legislation and how it applies to FFSPs to ensure compliance with the provision of financial services to wholesale clients in Australia.

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