KNDI Licensing key terms

The public body empowered by law to grant, refuse, suspend, and revoke licences to carry on regulated activities, and to supervise licence holders against the applicable rules.

A business activity listed in the legislation that may only be carried on by a firm holding a licence or qualifying for an exemption, such as dealing, advising, or managing investments.

The formal submission, with supporting documents and fees, by which a firm seeks authorisation to carry on specified regulated activities before it begins business.

The assessment of whether applicants, controllers, directors, and senior staff have the honesty, competence, financial soundness, and reputation expected of persons in the regulated sector.

The precise set of regulated activities and any client or product restrictions the licence permits, beyond which the firm must not operate without variation.

A restriction or requirement attached to a licence, such as limiting client types, product ranges, or business volumes, with which the holder must comply at all times.

The formal process of adding activities, removing restrictions, or otherwise changing the terms of an existing licence, usually requiring prior approval from the licensing authority.

The mechanism allowing a firm licensed in one jurisdiction to carry on permitted activities in another without obtaining a separate local licence, subject to notification procedures.

The authority in the jurisdiction where a firm is licensed that has primary responsibility for supervising that firm, including its cross-border activities.

The authority in a jurisdiction where a foreign firm operates through a branch or cross-border services, responsible for local conduct and market rules.

The governing body collectively responsible for the firm's strategy, risk appetite, and oversight of senior management, and accountable to the licensing authority for compliance.

The formal allocation of defined areas of the firm's business to named individuals who are personally accountable for managing them and for regulatory compliance in those areas.

A person who, alone or with others, holds a defined level of ownership, voting power, or influence over a licensed firm, triggering notification and approval requirements.

Any acquisition or disposal of a qualifying holding or influence in a licensed firm that must be notified to, and often approved by, the regulator before it takes effect.

A direct or indirect shareholding, usually expressed as a percentage of capital or voting rights, at or above which ownership disclosure and approval rules apply.

A board member free of material business, family, or financial relationships with the firm and its management, brought in to provide objective challenge and oversight.

A board committee, normally chaired by an independent director, that oversees financial reporting, internal controls, and the relationship with external and internal auditors.

The independent unit that identifies, advises on, and monitors the firm's compliance with regulatory obligations, and reports concerns to senior management and the board.

The named individual responsible for day-to-day oversight of the firm's compliance arrangements, including advice, monitoring, and liaison with the licensing authority.

An independent, risk-based assurance function that evaluates the adequacy and effectiveness of the firm's controls, governance, and risk management, reporting to the audit committee.

The requirement that a firm hold capital resources sufficient, relative to the risks it runs, to absorb losses and remain solvent without harming clients or market confidence.

The eligible funds a firm counts toward its regulatory capital, typically comprising paid-up equity, disclosed reserves, and qualifying subordinated debt after prescribed deductions.

The highest-quality capital, mainly ordinary shares and retained earnings, available to absorb losses while the firm continues trading as a going concern.

On-balance-sheet and off-balance-sheet exposures multiplied by risk weights reflecting credit and market risk, used as the denominator of capital ratio calculations.

A measure comparing a firm's holdings of cash and readily realisable assets with its short-term liabilities, showing its ability to meet obligations as they fall due.

A capital rule requiring a firm to hold resources at least equal to a multiple of its annual fixed overheads, so it can wind down in an orderly way.

A documented assessment of the cost and steps of ceasing regulated business in an orderly manner, used to size the capital a firm must hold for that scenario.

Funds a firm holds on behalf of clients that remain client property, must be segregated from the firm's own money, and are subject to strict handling rules.

A bank account, designated and titled as holding client money, into which client funds are paid and from which client payments are made under controlled procedures.

The separation of client assets from the firm's own assets and from assets of other clients, so client property is identifiable and protected if the firm fails.

All money and financial instruments a firm holds or controls for clients, including custody holdings and collateral, which attract safeguarding and recordkeeping duties.

The holding and safekeeping of client financial instruments, involving record maintenance, reconciliation, and protection against loss, misuse, or unauthorised transfer.

The regular comparison of internal records of client money and assets against bank statements and third-party confirmations to detect and correct discrepancies.

Provisions governing how pooled client money is returned to clients, and how shortfalls are shared, if the firm becomes insolvent and cannot repay in full.

The process of concealing the criminal origin of funds by placing, layering, and integrating them into the legitimate financial system so they appear lawful.

The identification and verification of a customer's identity, and assessment of their business and risk profile, required before or during the establishment of a business relationship.

Additional, more intensive checks and monitoring applied to higher-risk customers, such as politically exposed persons or those in higher-risk jurisdictions.

The natural person who ultimately owns or controls a customer or the funds involved, or on whose behalf a transaction is carried out, and who must be identified.

An individual entrusted with prominent public functions, or closely associated with such a person, who presents higher money-laundering risk and requires enhanced scrutiny.

A confidential report filed with the financial intelligence unit when a firm knows or suspects that funds or activity are linked to criminal conduct.

Disclosing to a customer or third party that a suspicious activity report has been made or that an investigation is underway, which is itself a criminal offence.

The evaluation of whether a recommended transaction or service meets a client's investment objectives, financial situation, knowledge, and tolerance for risk.

The broader practice of understanding a client's identity, circumstances, and needs so that services, advice, and risk controls are appropriately tailored.

The duty to take all reasonable steps to obtain the best possible result for clients when executing orders, considering price, cost, speed, and likelihood of settlement.

Situations where the firm's or an employee's interests may harm a client's interests, requiring identification, avoidance, or disclosure and management.

A fee, commission, or non-monetary benefit paid or received in connection with a service, whose acceptance is restricted to prevent bias against client interests.

The rules governing how client orders are recorded, aggregated, allocated, and executed promptly and fairly, including priority between client and firm orders.

The requirement to give clients clear, fair, and not misleading information about a product's nature, risks, costs, and terms before they commit.

The periodic submission of prescribed financial, prudential, and conduct data to the licensing authority in a defined format and within set deadlines.

The duty to inform the regulator promptly of specified events, such as breaches, control changes, or senior staff departures, without waiting for a periodic report.

The requirement to keep specified business, client, and transaction records for a minimum period, in a form that can be retrieved and provided to regulators on request.

A transaction in a financial instrument by an employee or closely connected person, subject to restrictions to prevent misuse of confidential information and conflicts.

Prohibited conduct including insider dealing, unlawful disclosure of inside information, and market manipulation, which undermines market integrity and investor confidence.