For Cyprus Investment Firms (CIFs), compliance is often treated as a reporting requirement. In reality, CySEC’s expectations extend well beyond the preparation of annual reports or the maintenance of policies.

The regulator’s focus is increasingly directed toward whether firms can demonstrate a coherent, functioning control environment, supported by proper oversight, documented testing, and consistent internal reporting. In this context, regulatory reports are not assessed in isolation, but as a reflection of how effectively the firm manages compliance in practice.

Reporting as an Indicator of Control Effectiveness:

CIFs are required to prepare a number of recurring reports, including the Compliance Officer Report, the Annual AML Report, the Risk Management Report, and prudential assessments such as Pillar II / ICARA.

These reports are expected to be:

• aligned with the firm’s actual operations and risk profile;
• supported by documented testing and verifiable data; and
• consistent across compliance, AML, and risk functions.

Where this is not the case, weaknesses in reporting often point to broader gaps in governance or control processes.

Where Firms Commonly Face Difficulties:

In practice, challenges tend to arise not from a lack of regulatory awareness, but from how compliance is structured and implemented internally.

Typical issues include:

• reliance on generic templates that are not tailored to the firm’s business model;
• findings that are not clearly supported by underlying testing;
• inconsistencies between internal reports, policies, and Board documentation; and
• limited linkage between identified risks and concrete remediation actions.

These gaps can become evident during CySEC reviews and may lead to increased supervisory scrutiny. 

The Shift Toward Evidence-Based Compliance:

Supervisory expectations have evolved toward a more evidence-driven approach. It is no longer sufficient to confirm that controls exist; firms must be able to demonstrate how those controls operate in practice.

This includes:

• clearly defined monitoring and testing methodologies;
• documented evidence supporting key conclusions;
• regular assessment of control effectiveness; and
• structured escalation and follow-up of identified issues.

This shift reinforces the need for a more organised and integrated compliance framework.

How FiveComply Adds Value:

At FiveComply, our approach to CySEC compliance support is focused on substance rather than form. We work closely with firms to ensure that regulatory reporting reflects actual operations, risks, and controls.

Our support includes:

• preparation and review of the Annual Compliance Report, ensuring alignment with CySEC expectations and Circular C553;
• drafting of the Annual AML Report, including risk analysis, client profiling, and assessment of monitoring systems;
• preparation of the Risk Management Report, with emphasis on risk identification, measurement, and mitigation;
• support with Pillar II / ICARA assessments, including capital adequacy analysis and stress testing considerations;
• development and enhancement of Compliance Monitoring Programmes and testing frameworks;
• alignment of reports with Board of Directors minutes, ensuring consistency and proper governance documentation.

Particular attention is given to ensuring that findings are clear, evidence-based, and linked to practical and proportionate recommendations. 

Enhancing Board Oversight and Regulatory Readiness:

Well-structured compliance reporting supports more effective Board oversight. It allows directors to:

• understand the firm’s key regulatory risks;
• assess the adequacy of internal controls;
• make informed decisions on remediation and resource allocation; and
• demonstrate active involvement in the firm’s compliance framework.

From a supervisory perspective, consistent and well-documented reporting also enhances the firm’s regulatory credibility and readiness for CySEC reviews or inspections. 

A Continuous Process, Not a One-Off Exercise:

Compliance reporting under the CySEC framework is not a static requirement. It requires ongoing monitoring, periodic reassessment, and timely updates to reflect changes in the firm’s operations, risk profile, and regulatory landscape.

Firms should therefore ensure that:

• reporting processes are embedded within their governance structure;
• control functions operate in a coordinated and consistent manner; and
• identified weaknesses are tracked and addressed in a timely and documented way.

Final Remarks:

CySEC compliance is not assessed based on the existence of documents alone, but on the strength and consistency of the framework behind them.

Structured compliance support plays a critical role in ensuring that firms can demonstrate this in practice. By aligning reporting, monitoring, and governance processes, firms are better positioned to meet regulatory expectations and manage risk effectively.

FiveComply supports Cyprus Investment Firms with practical, structured, and tailored compliance support, ensuring that reporting obligations are met in a way that is both regulator-ready and operationally meaningful.

The introduction of the Data Protection Act, 2023 in Seychelles marks a significant step toward strengthening data privacy and regulatory compliance across the financial services sector. For Securities Dealers, the Act brings increased scrutiny on how personal data is collected, processed, stored, and protected, particularly in an environment where digital onboarding, cross-border operations, and continuous client monitoring are standard practice.

One of the most frequently asked questions is whether a Data Protection Officer (DPO) must be appointed. The answer is not absolute. The legislation does not impose a blanket obligation on all entities. Instead, it introduces a conditional requirement, meaning that the need to appoint a DPO depends on the nature, scale, and scope of the organisation’s data processing activities.

The Data Protection Act applies broadly to both public and private entities operating in Seychelles that process personal data through structured or automated systems. Its primary objective is to protect individuals’ right to privacy while ensuring that organisations handle data in a transparent and accountable manner. For Securities Dealers, this includes handling client onboarding documentation, conducting KYC and AML checks, monitoring transactions, maintaining client communication records, and storing financial and identification data over extended periods.

Under the Act, a Data Protection Officer is required in situations where an organisation’s core activities involve large-scale processing of personal data, regular and systematic monitoring of individuals, or the processing of sensitive personal data on a significant scale. In the context of Securities Dealers, these criteria may become relevant given the continuous nature of transaction monitoring, the volume of client data processed, and the sensitivity of financial information handled. However, whether a specific firm meets these thresholds is not automatic and should be assessed on a case-by-case basis, taking into account factors such as client base, transaction volume, system architecture, and operational complexity.

Even in cases where the appointment of a DPO is not strictly required, many Securities Dealers choose to designate one as part of a broader compliance and governance framework. This reflects a growing recognition that data protection is closely linked to regulatory risk, operational integrity, and client trust. A DPO can provide oversight on how personal data is handled across the organisation, ensure that policies and procedures remain aligned with regulatory expectations, and act as a central point of coordination for data protection matters.

The role of a DPO also becomes particularly relevant in managing interactions with the Information Commission, which is the competent authority responsible for enforcing the Act. In practice, this may include supporting the firm during regulatory inspections, responding to queries, and facilitating communication in the event of a data protection concern or incident. In addition, the DPO plays an important role in ensuring that data subject rights such as access, rectification, deletion, and objection to processing are handled efficiently and in accordance with the law.

The Act places considerable emphasis on accountability. Securities Dealers are expected to implement appropriate technical and organisational measures to safeguard personal data, maintain accurate records of processing activities, and ensure that data is processed lawfully and for clearly defined purposes. This includes adopting internal controls, access restrictions, data retention policies, and security safeguards that are proportionate to the risks associated with their operations. Firms are also expected to assess potential risks through mechanisms such as data protection impact assessments, particularly where processing activities may affect the rights and freedoms of individuals.

Another important aspect of the framework is the handling of personal data breaches. Where a breach occurs, firms may be required to notify the regulator within a specified timeframe and, in certain cases, inform affected individuals. This further highlights the importance of having clear internal procedures and defined responsibilities for incident management, whether or not a formal DPO has been appointed.

Failure to comply with the Data Protection Act can expose firms to regulatory action, including enforcement measures and financial penalties. The Information Commission has the authority to investigate, issue enforcement notices, and impose sanctions where necessary. Beyond regulatory consequences, there is also a clear reputational dimension. In an industry built on trust, the ability to demonstrate strong data protection practices is increasingly seen as a key element of sound governance and responsible business conduct.

In conclusion, while the appointment of a Data Protection Officer is not universally mandatory under the Data Protection Act, 2023, it becomes relevant in specific circumstances tied to the scale and nature of data processing. For many Securities Dealers, evaluating this requirement is an important step in aligning with regulatory expectations and strengthening their overall compliance framework. Taking a proactive approach to data protection not only supports compliance but also contributes to long-term operational resilience and client confidence.

Need guidance on how to comply with the requirements, or tailored advice on data protection and the appointment of a DPO? Contact FiveComply today.

Disclaimer

This article is provided for general informational purposes only and does not constitute legal or tax advice.

 On 18 April 2026, Mauritius introduced a significant legislative reform with the enactment of the Anti-Money Laundering, Combatting the Financing of Terrorism and Countering Proliferation Financing (Miscellaneous Provisions) Act 2026 (“AMLA 2026”).

This landmark legislation represents a major advancement in Mauritius’ AML/CFT/CPF framework, strengthening the jurisdiction’s alignment with international standards and reinforcing its position as a robust and credible international financial centre.

Key Changes Under AMLA 2026

AMLA 2026 introduces wide-ranging amendments across multiple legislative frameworks, impacting financial institutions, virtual asset service providers (VASPs), securities dealers, and other regulated entities.

Key developments include:

• Introduction of proliferation financing risk into the AML/CFT framework, requiring firms to expand their risk assessments and controls
• Enhanced powers of authorities, including the Financial Crimes Commission and the Financial Intelligence Unit (FIU)
• Revised statutory timelines (24h / 48h) for responding to regulatory and investigatory requests
• Expanded beneficial ownership (BO) definitions, capturing control beyond direct shareholding
• Strengthened customer due diligence (CDD) requirements, particularly for complex structures
• Increased inter-agency information sharing, including with the Mauritius Revenue Authority
• Introduction of a Centralised Information Management System (CIMS) to enhance data collection, analytics, and regulatory coordination

Impact on Companies

AMLA 2026 is not merely a regulatory update; it represents a fundamental shift in how AML/CFT/CPF compliance must be approached.

Companies should prioritise:

1. Gap Analysis
Conduct a comprehensive review of existing AML/CFT frameworks to identify gaps against AMLA 2026 requirements.

2. Policy & Procedure Updates
Update internal documentation to reflect:

• Proliferation financing risk integration
• Revised beneficial ownership definitions
• Enhanced CDD and monitoring procedures
• 24h/48h regulatory response protocols

3. Governance & Board Oversight
Ensure:

• Board approval of updated policies
• Clear accountability structures
• Proper documentation and audit trails

Why AMLA 2026 Matters

The reforms introduced under AMLA 2026 highlight four key regulatory themes:

• Speed – Immediate response expectations
• Transparency – Enhanced beneficial ownership visibility
• Accountability – Stronger enforcement powers
• Integration – Increased coordination across authorities

For regulated entities, compliance must now be proactive, dynamic, and embedded across all business functions.

How FiveComply Adds Value

At FiveComply, we support financial institutions, and specifically Investment Dealers in navigating complex regulatory changes.

We can support you with:

• AMLA 2026 gap analysis and implementation roadmaps tailored to your business
• Full review and drafting of AML/CFT/CPF policies and procedures
• Beneficial ownership and CDD framework structuring aligned with regulatory expectations
• Design of regulatory response frameworks to meet 24h / 48h deadlines
• Board and governance advisory to ensure regulatory alignment
• Ongoing compliance support, including compliance, reporting, and audits

Final Thoughts

Mauritius continues to strengthen its position as a well-regulated and internationally aligned financial centre. AMLA 2026 is a decisive step forward, but it also raises the bar for compliance expectations.

For firms operating in or through Mauritius, the focus must now shift from reactive compliance to strategic implementation. The question is no longer whether firms should adapt, but how quickly and effectively they can do so.

Those who act early will not only ensure compliance but gain a strategic advantage in an increasingly demanding regulatory landscape.

Get in touch with FiveComply to ensure your framework is fully aligned.

Disclaimer: This article is provided for general informational purposes only and does not constitute legal or tax advice.

The Seychelles Code of Corporate Governance is now in force and should be a priority area of focus for all affected FSA-regulated entities. Issued by the Financial Services Authority of Seychelles, the Code provides a formal governance framework intended to strengthen board accountability, internal controls, risk oversight, audit independence, corporate reporting, and conflict management across regulated businesses. The Code came into effect on 1 January 2026.

For regulated entities in Seychelles, this is not merely a governance guideline or best-practice recommendation. The Code expressly states that it has the force of law under section 33 of the Financial Services Authority Act, and failure to comply may expose a licensee, its directors, and its officers to regulatory consequences.

In practical terms, affected licensees should now be assessing whether their current governance arrangements are adequately aligned with the Authority’s expectations, including the structure and effectiveness of the board, committee oversight, internal audit arrangements, risk management systems, disclosure controls, and conflict of interest procedures.

1. Scope of Application

The Code applies to licensees under the following legislative frameworks:

• International Corporate Service Providers Act
• Securities Act (subject to limited exceptions)
• Mutual Fund and Hedge Fund Act (subject to stated exceptions)
• Virtual Asset Service Providers Act
• Seychelles Gambling Act
• Insurance Act

Accordingly, the Code is of direct relevance to a broad range of Seychelles-regulated entities, including securities dealers, VASPs, insurers, corporate service providers, and other licensed financial services businesses.

2. A Flexible Framework, But Not Optional Compliance

One of the key features of the Code is that it applies on an “apply or explain an alternative” basis. This allows some flexibility, recognising that governance structures may vary depending on the size, complexity, and operational model of the regulated entity. However, this should not be misunderstood as optional compliance. Where a principle cannot be implemented as written, the firm is expected to provide a proper explanation together with an appropriate alternative.

From a governance and regulatory perspective, firms should ensure that any alternative adopted is not only reasonable in theory, but also clearly documented, operationally effective, and capable of being justified to the Authority.

3. Key Governance Areas Covered by the Code

The Code is built around nine core principles:

1. Board Role and Responsibilities
2. Independence
3. Composition and Appointment
4. Corporate Culture
5. Remuneration
6. Risk Oversight
7. Corporate Reporting
8. Internal and External Audit
9. Management of Conflict of Interest

Taken together, these principles require regulated entities to adopt a more disciplined and demonstrable governance framework. This includes effective board oversight, proper segregation of roles, formal committee structures where appropriate, annual risk assessments, internal control review mechanisms, and clear reporting lines across key control functions.

4. Internal Audit Requirements Under the Seychelles Code of Corporate Governance

One of the most significant aspects of the Code is its express focus on internal audit.

The Code provides that the board should oversee the establishment and maintenance of an effective system of internal control to properly manage risk, assets, and capital, measured against internationally accepted internal audit standards and tested annually for adequacy. It further states that companies should have a dedicated internal audit function with clearly defined oversight and reporting structures. Where such a function has not been established, the full reasons should be disclosed to the regulator, together with an explanation of how adequate assurance is otherwise being obtained in relation to the effectiveness of the internal control framework.

This requirement significantly elevates internal audit from a secondary control function to a central component of the company’s governance architecture.

5. Why the Internal Audit Function Deserves Attention

For many regulated entities, internal audit has historically been treated as a secondary or developing function. Under the current framework, however, internal audit is clearly positioned as part of the company’s governance architecture and as an important component of board assurance.

A properly structured internal audit function supports:

• independent assessment of internal controls;
• stronger board oversight and accountability;
• better identification and escalation of governance weaknesses;
• more effective monitoring of operational, compliance, and regulatory risk;
• improved audit committee effectiveness; and
• greater regulatory credibility.

In practical terms, internal audit is no longer simply about review. It is about demonstrating that the business has an independent and structured mechanism for testing whether its control environment is functioning as intended.

6. How FiveComply Can Assist

For many entities, aligning with the new Seychelles corporate governance requirements will require more than minor amendments to existing documentation. It may involve a wider governance review covering board arrangements, committee structures, risk oversight, internal control frameworks, internal audit readiness, and reporting lines.

At FiveComply, we support firms with practical and commercially grounded assistance in relation to:

• corporate governance gap assessments;
• review of board and committee structures;
• governance documentation and policy enhancement;
• risk and internal control framework support;
• internal audit readiness assessments;
• design of internal audit reporting structures; and
• support in developing proportionate and defensible approaches where alternative arrangements are being relied upon.

Particular attention should now be given to the internal audit requirement, especially where no dedicated function currently exists or where the firm’s control assurance model remains informal or insufficiently documented.

7. Annual Disclosure and Ongoing Governance Monitoring

The Code also includes a disclosure form requiring licensees to confirm compliance with specific governance requirements, including committee arrangements, board evaluation, risk oversight, contingency planning, internal audit, external audit, audit committee matters, and conflict of interest controls. The form is required to be submitted by 31 December every year.

This reinforces that compliance under the Code is not a one-off implementation exercise. It requires continuous monitoring, board-level attention, and adequate documentation throughout the year.

8. Final Remarks

Now that the Seychelles Code of Corporate Governance came into effect on 1 January 2026, affected licensees should ensure that their governance framework is aligned with the Authority’s expectations and that any gaps are identified and addressed without delay.

For regulated entities, this is an important opportunity not only to meet a legal requirement, but also to strengthen governance standards, improve internal accountability, and enhance operational resilience.

FiveComply supports Seychelles-regulated entities with practical and tailored assistance in relation to corporate governance implementation, internal audit structuring, committee framework review, and overall regulatory readiness.

Disclaimer: This article is provided for general informational purposes only and does not constitute legal or tax advice.

Mauritius Investment Dealer Licence Requirements: Capital, Structure & FSC Framework

Mauritius has established itself as a credible and well-regulated international financial centre, supported by a clear legal framework, a recognised regulator, a strong corporate and banking infrastructure and an attractive tax regime. For firms seeking to carry out brokerage and dealing activities through Mauritius, the relevant licensing regime is regulated by the Financial Services Commission Mauritius (FSC) under the Securities Act 2005 and the Securities (Licensing) Rules 2007.

For applicants, obtaining a Mauritius Investment Dealer Licence is not simply a filing exercise and without the correct partners it might prove burdensome. With a strong track record and extensive experience in licensing matters, we understand that the FSC assesses the proposed structure holistically, taking into account the licence category, the competence and experience of key individuals, the adequacy of capital, the robustness of internal controls, and the operational readiness of the business. The quality of the initial structuring is therefore a key determinant of licensing efficiency and long-term regulatory stability.

At FiveComply, together with AllServ Management Ltd, our licensed Management Company in Mauritius, we assist clients with the full licensing lifecycle from initial structuring and pre-assessment through to application submission, FSC interaction, and post-licensing implementation. Our approach is designed not only to support approval, but to build structures that are commercially workable and regulator-ready from day one.

1. What is a Mauritius Investment Dealer Licence?

A Mauritius Investment Dealer Licence authorises a company to undertake regulated securities activities, depending on the category of licence granted.

For firms operating in brokerage, securities execution, portfolio management, or advisory-linked dealing models, Mauritius offers a recognised and structured regime that is often attractive for cross-border financial services businesses seeking a balance between regulatory credibility and operational flexibility.

2. Mauritius Investment Dealer Licence Categories & Capital Requirements

Under the FSC framework, the applicable licence category depends on the nature and scope of the proposed activities. Each category carries its own regulatory requirements, including the applicable fee structure and capital expectations.

From a structuring perspective, selecting the correct category at the outset is critical. The FSC will expect the proposed activities, governance arrangements, financial resources, and internal controls to be fully aligned with the licence category being sought.

From a practical perspective, the applicable Mauritius Investment Dealer Licence requirements go beyond the minimum capital threshold alone. The FSC will also consider whether the proposed applicant has the financial substance, governance framework, and internal controls necessary to support the activities to be licensed.

For this reason, selecting the correct Mauritius Investment Dealer Licence category should not be approached as a mere formality. It is a core structuring decision that affects the capital position, compliance obligations, and overall strength of the application.

At FiveComply, together with AllServ Management Ltd, we assist clients in identifying the most suitable Investment Dealer Licence in Mauritius and in structuring the application in a manner that is both commercially workable and aligned with FSC expectations from the outset.

3. Key Regulatory Considerations for a Mauritius Investment Dealer Licence

The FSC places substantial weight on governance and the competence of key individuals.

Under the licensing rules, the applicant must satisfy the FSC that its internal structures, technical and financial means, staffing, and organisation are appropriate and sufficient for the efficient operation of the proposed business.

From a practical perspective, Mauritius Investment Dealer structures implemented by FiveComply and AllServ typically require the following setup:

• at least one shareholder, whether individual or corporate;
• at least one foreign director;
• at least two Mauritius-resident directors;
• a Compliance Officer and Money Laundering Reporting Officer (MLRO), typically provided by the Management Company;
• an Investment Dealer team comprising of two dealing team members.

The experience threshold for dealer roles is a key component of the Mauritius Investment Dealer licensing framework. Both dealers should demonstrate at least two years’ relevant experience in brokerage services within a regulated environment. From a regulatory perspective, this experience should evidence hands-on involvement in core dealing activities, including the receipt and handling of client orders, the execution and monitoring of trades, and client interaction in relation to trade confirmations and contract notes.

This is why the pre-assessment stage is critical. At FiveComply, we assess CVs and role suitability at an early stage to determine whether the proposed individuals are likely to meet FSC expectations before structuring the application.

4. Mauritius Investment Dealer Licence Timeline

The Mauritius Investment Dealer Licence process is a structured regulatory process overseen by the Financial Services Commission Mauritius (FSC). While each application is assessed on its own merits, timing will generally depend on the proposed business model, the complexity of the structure, and the quality and readiness of the documentation submitted.

We maintain a strong approval track record, supported by the consistently high quality of applications submitted. Typically, and based on our extensive track record, a Mauritius Investment Dealer Licence application can be assessed within approximately 1 to 3 months from submission. The speed of the process will largely depend on how efficiently the structure is organised from the outset and how complete, consistent, and regulator-ready the application is at the point of submission.

This is precisely where early planning makes a material difference. A properly structured application not only supports a more efficient FSC review process but also reduces avoidable delays and strengthens the overall regulatory positioning of the business.

This is where our experience adds value. This is where our experience comes in. As FiveComply and AllServ Management Ltd, we work closely with clients to streamline the Mauritius Investment Dealer Licence process and to position each application for the most efficient possible turnaround, without compromising regulatory quality or long-term compliance integrity. While these considerations may appear straightforward to us, they can often be more complex in practice.

5. Why to Work with FiveComply

At FiveComply, together with AllServ Management Ltd, we support clients with:

• strategic assessment of the appropriate Mauritius Investment Dealer Licence category;
• structuring of governance and key appointments in line with FSC expectations;
• preparation and coordination of regulator-ready application packages; and
• practical guidance designed to support both approval efficiency and post-licensing viability.

Our role is to ensure that the proposed structure is not only licensable, but commercially workable and credible under regulatory review.

For firms considering Mauritius Investment Dealer licensing, the opportunity is clear. Mauritius offers a respected regulatory environment, international credibility, an attractive tax regime and a well-established financial services ecosystem. But success depends on how the structure is built from the outset.

If Mauritius forms part of your expansion strategy, FiveComply and AllServ Management Ltd can assist you in building the structure properly, efficiently, and in line with FSC expectations.

Disclaimer: This article is provided for general informational purposes only and does not constitute legal or tax advice. All applications are submitted through AllServ Management Ltd, duly licensed Management Company in Mauritius. Website: https://allserv.mu/

Seychelles has become a leading jurisdiction for investment firms seeking a Securities Dealer Licence due to its efficient regulatory framework, reasonable operational costs, and evolving tax environment. However, recent regulatory developments and international standards have shifted the focus from simple licensing structures to properly substantiated, operationally sound entities.

One of the key advantages available to Seychelles Securities Dealers is access to a preferential tax regime under the Seventh Schedule of the Business Tax Act. This may include a preferential tax rate (commonly referenced as 1.5% on gross revenue), depending on the structure and activity of the licensee. However, this benefit is not automatic and is strictly conditional upon meeting the substantial activity requirements and obtaining confirmation from the Financial Services Authority (FSA).

Where the substantial activity requirements are not met, the licensee will not be eligible for the preferential tax regime and will instead be subject to the standard Seychelles corporate tax rates, currently applied on a progressive basis as follows:

• 15% on taxable income up to SCR 1,000,000; and
• 25% on taxable income above SCR 1,000,000.

Economic Substance Requirements in Seychelles

Economic substance is no longer a procedural or administrative requirement. It is a central regulatory and tax condition applicable to licensees under the Securities Act, 2007, as amended, and the Securities (Substantial Activity Requirements) Regulations, 2018.

In line with the FSA Substantial Activity Requirements Guidelines, a licensee will only be eligible to benefit from the preferential tax regime where it can demonstrate that:

• Core income generating activities (CIGA), as defined under Regulation 4 of the Securities (Substantial Activity Requirements) Regulations, are conducted in Seychelles;
• The licensee employs a reasonably adequate number of suitably qualified persons in Seychelles; and
• The licensee incurs an adequate level of operating expenditure within Seychelles, proportionate to the nature, scale, and complexity of its business.

Importantly, the assessment of adequacy is conducted on a case-by-case basis by the Financial Services Authority (FSA), taking into consideration the size, revenue, and operational complexity of the licensee.

Critical Requirement: FSA Confirmation

A key legal requirement often overlooked is that the preferential tax treatment is only available where the licensee obtains annual written confirmation from the Financial Services Authority (FSA) that the substantial activity requirements have been met for the relevant financial year.

In practice:

• The licensee must submit a formal request to the FSA (typically by 31 January of the following year);
• This includes a self-declaration form, organisational structure, and employee establishment list; and
• The FSA will assess and issue its determination, which must be submitted to the Seychelles Revenue Commission (SRC) together with the Annual Tax Return.

Without this confirmation, the preferential tax regime does not apply, and the licensee will be subject to the standard Seychelles business tax rates.

Outsourcing and Operational Structure

The Regulations provide flexibility in structuring operations, but with clear limitations.

Core income generating activities may be outsourced to third-party service providers only where:

• The activities remain physically performed in Seychelles; and
• The licensee demonstrates adequate supervision and control over such outsourced functions.

Where core income generating activities are outsourced outside Seychelles, the substantial activity requirements will generally be considered not to have been met.

Front-Office vs Back-Office Activities

The regulatory framework recognises that certain front-office activities may be conducted outside Seychelles. However, this is subject to strict conditions.

Specifically:

• Front-office activities may be performed outside Seychelles;
• Provided that the corresponding middle-office and back-office functions relating to the same activities are undertaken in Seychelles.

This distinction is critical when structuring international brokerage operations and must be carefully assessed to ensure compliance.

Operational Presence in Seychelles

In practical terms, demonstrating substantial activity typically involves establishing a meaningful operational footprint in Seychelles.

This may include:

• Maintaining an appropriate operational presence in Seychelles (which includes office facilities);
• Ensuring active involvement of locally based personnel in core business functions;
• Demonstrating real decision-making and operational execution within the jurisdiction; and
• Maintaining adequate local expenditure aligned with the scale of operations.

It is important to note that the law does not prescribe a “one-size-fits-all” model but rather requires proportionality between the business activity and the level of substance maintained.

Not Meeting the Substantial Activity Requirements

Failure to meet the substantial activity requirements has direct tax implications.

Where a licensee does not satisfy the substance requirements and/or does not obtain FSA confirmation:

• The preferential tax regime will not apply; and
• The entity will be subject to the standard Seychelles business tax rates.

Additionally, inaccurate or misleading information provided to the FSA in relation to substance may result in enforcement action under the Financial Services Authority Act.

Conclusion

Seychelles continues to position itself as a competitive and credible jurisdiction for Securities Dealers. However, the regulatory landscape has clearly evolved from a registration-based approach to a substance-driven framework aligned with international standards (including OECD BEPS Action 5 principles).

For Securities Dealers, economic substance should not be viewed as a regulatory burden, but rather as a fundamental component of building a compliant, credible, and tax-efficient international structure.

Licensees that properly implement and evidence their substantial activity in Seychelles are able to access the available preferential tax regime, while strengthening their overall regulatory standing and operational resilience.

How FiveComply Can Assist

Navigating the substantial activity requirements and aligning operational structures with both regulatory and tax expectations, requires a careful and practical approach.

At FiveComply, we support Securities Dealers in establishing and maintaining compliant, substance-driven structures in Seychelles. Our services include:

• Advising on substance requirements and operational structuring in line with the Securities (Substantial Activity Requirements) Regulations;
• Assisting with the preparation and submission of the annual FSA substance confirmation request;
• Providing resident Compliance Officer and corporate governance support;
• Supporting the establishment of local operational presence, including coordination of office setup and staffing; and
• Ongoing regulatory and post-licensing advisory to ensure continued compliance.

Our approach is practical and tailored to each client’s business model, ensuring that regulatory requirements are met without overcomplicating operations.

For further information or to discuss your structure, feel free to reach out to our team.

Disclaimer

This article is provided for general informational purposes only and does not constitute legal or tax advice.

The introduction of Regulation (EU) 2023/1114 on Markets in Crypto-Assets (MiCA) marks a fundamental transformation in the regulatory treatment of crypto-assets within the European Union. While crypto activities were previously subject to fragmented national frameworks, MiCA establishes, for the first time, a harmonised licensing regime governing both the issuance of crypto-assets and the provision of related services.

This shift reflects a broader regulatory objective: to integrate crypto-assets into the existing financial regulatory architecture, while addressing risks related to investor protection, market integrity, and financial stability.

As with other major EU regulations, MiCA is not simply an additional layer of compliance. It introduces a new operating model, requiring firms to reassess their structure, governance, and service offering in order to continue operating within the EU.

A New Licensing Perimeter for Crypto Activities

MiCA introduces a clear distinction between different categories of crypto-assets and activities, each subject to specific requirements.

At its core, the regulation applies to:

• crypto-assets other than asset-referenced tokens (ARTs) and e-money tokens (EMTs),
• asset-referenced tokens (commonly referred to as stablecoins), and
• crypto-asset services provided on a professional basis.

The latter introduces the concept of Crypto-Asset Service Providers (CASPs), which now fall within a formal licensing regime under Title V of MiCA.

The scope of regulated services is deliberately broad and mirrors, to a significant extent, the structure of investment services under MiFID II. These include:

• custody and administration of crypto-assets
• operation of trading platforms
• exchange of crypto-assets for funds or other crypto-assets
• execution, reception and transmission of orders
• placing of crypto-assets
• portfolio management and advice and
• transfer services on behalf of clients

This alignment is not incidental. It signals a regulatory intention to treat crypto-asset services with a level of scrutiny comparable to traditional financial services.

Authorisation as a Precondition for Market Access

Under MiCA, the provision of crypto-asset services within the EU is conditional upon authorisation as a CASP, unless the entity already holds a licence under another EU financial services framework and opts to use the notification regime.

This represents a significant departure from existing national regimes. Entities currently registered under local crypto frameworks are required to undergo a full authorisation process in order to continue operating post-MiCA.

Although MiCA provides for a transitional period, this is limited in scope. Importantly, firms operating under transitional arrangements do not benefit from passporting rights and may face restrictions on cross-border activities.

In parallel, MiCA introduces a notification-based regime (Article 60) for already authorised entities, such as investment firms or UCITS management companies. These entities may provide crypto-asset services upon notifying their competent authority, subject to strict procedural requirements.

The notification process itself is structured and time-bound. Firms must submit the required information at least 40 working days prior to commencing services, with the competent authority conducting an initial completeness assessment within 20 working days. Any requests for additional information may temporarily suspend the process.

From Licensing to Substance: Governance and Operational Requirements

The MiCA authorisation process is not merely formal. It is designed to assess whether firms are capable of operating in a safe, transparent, and resilient manner.

Applicants are required to provide detailed information covering:

• their legal structure and organisational setup,
• governance arrangements and internal control mechanisms,
• safeguarding of client assets and segregation arrangements,
• risk management and compliance frameworks, and
• the suitability and integrity of management and shareholders.

In addition, MiCA introduces specific expectations in relation to operational resilience and ICT risk. CASPs must implement security measures covering access controls, system integrity, and incident management, as well as business continuity arrangements and recovery planning.

The emphasis is clear: licensing is conditional on the existence of an operationally effective framework, not merely documented policies.

Ongoing Obligations and Investor Protection

MiCA establishes an extensive set of ongoing obligations that extend well beyond the point of authorisation.

These include requirements relating to:

• conduct of business, including the obligation to act honestly, fairly, and professionally,
• management of conflicts of interest,
• transparent and non-misleading communications, and
• the maintenance of adequate systems and controls.

Investor protection is a central element of the framework. Where firms provide advice or portfolio management, they are required to conduct suitability assessments, taking into account the client’s knowledge, objectives, and risk tolerance. These assessments must be reviewed on an ongoing basis and supported by periodic reporting to clients.

At the same time, MiCA introduces requirements aimed at preserving market integrity, including the detection and reporting of market abuse and the disclosure of inside information.

Passporting and the EU Single Market

One of the most significant features of MiCA is the introduction of passporting rights for authorised CASPs.

Once authorised in one Member State, a CASP may provide services across the EU without the need for additional licences. This creates, for the first time, a truly single market for crypto-asset services.

However, this benefit is conditional upon full MiCA authorisation. Firms operating under transitional regimes or relying on national registrations do not benefit from this passporting framework, which reinforces the importance of timely authorisation.

Reverse Solicitation: A Narrow and Controlled Exemption

MiCA also addresses the concept of reverse solicitation, which has historically been used by firms to provide services without local authorisation.

Regulatory guidance makes clear that this exemption is interpreted narrowly. Any form of marketing or communication targeting EU clients, including through digital channels, may be considered solicitation.

In practice:

• marketing through social media, affiliates, or influencers may fall within the scope of solicitation,
• the exemption applies only to the initial client request, and
• firms cannot rely on this exemption to offer additional or different services over time.

This significantly limits the ability of non-EU firms to access the EU market without authorisation.

Fees and Supervisory Costs

MiCA introduces a structured fee framework, covering both authorisation and ongoing supervision.

At the authorisation stage, fees vary depending on the type of services provided. For example, operating a trading platform entails higher fees compared to execution or advisory services, reflecting the increased complexity and risk.

On an ongoing basis, CASPs are subject to annual supervisory fees comprising:

• a fixed component, determined by the services provided, and
• a variable component, based on the firm’s turnover from crypto-asset services.

The variable component applies progressively, with percentages decreasing as turnover increases, and is capped at €500,000 annually.

This structure introduces a proportional approach, aligning supervisory costs with the scale of the firm’s activities.

A Shift from Access to Accountability

MiCA represents more than a licensing exercise. It reflects a broader shift from a relatively open and lightly regulated environment to one characterised by accountability, governance, and operational robustness.

Firms can no longer rely on minimal structures or fragmented compliance approaches. The regulation requires:

• integration of governance, risk, and compliance functions,
• clear allocation of responsibilities at management level, and
• continuous monitoring and adaptation of operational frameworks.

In this sense, MiCA aligns crypto-asset regulation with the broader expectations applied to financial institutions.

FiveComply’s Perspective

From an implementation perspective, the main challenge under MiCA is not the interpretation of the regulation, but its practical application within complex and evolving business models.

Firms are often required to reassess fundamental aspects of their operations, including their service classification, outsourcing arrangements, and technological infrastructure.

In particular, the interaction between MiCA requirements and existing regulatory frameworks (such as MiFID II or AML obligations) introduces an additional layer of complexity that must be carefully managed.

Experience shows that the most effective approaches are those that focus not only on regulatory alignment, but on operational readiness, ensuring that governance, systems, and controls are capable of supporting ongoing compliance in practice.

Get in touch with our team to discuss your MiCA licensing strategy or CASP authorisation process:
📞 +357 25 34 00 25
📧 regulatory@fivecomply.com

The Digital Operational Resilience Act (DORA) marks a significant evolution in the European Union’s regulatory approach to ICT risk within the financial sector. While financial institutions have long been subject to requirements relating to operational risk, outsourcing, and cybersecurity, DORA introduces, for the first time, a harmonised and enforceable framework specifically focused on digital resilience.

This shift reflects a broader regulatory recognition that financial entities are no longer exposed solely to traditional operational risks, but to increasingly complex and interconnected digital vulnerabilities driven by technological dependence, third-party providers, and cross-border infrastructures.

As a result, DORA is not simply an additional compliance obligation. It represents a structural change in how firms are expected to design, operate, and oversee their ICT environment.

A Structural Shift in Regulatory Expectations

DORA establishes a comprehensive framework covering ICT risk management, incident reporting, operational resilience testing, and third-party risk oversight. Its objective is not limited to ensuring that firms maintain adequate policies, but to ensure that they are capable of withstanding, responding to, and recovering from ICT disruptions that may impact critical or important functions.

This reflects a transition from fragmented regulatory requirements to a unified model that places digital resilience at the core of supervisory expectations. Increasing reliance on external ICT providers, particularly cloud services, has also introduced new dimensions of systemic risk, prompting regulators to extend their focus beyond individual firms to the stability of the financial system as a whole.

In this context, DORA introduces a level of rule-based approach and operational depth that goes beyond previous frameworks, requiring firms to move from theoretical compliance to demonstrable resilience.

Implementation Is Not Merely Technical

Despite the clarity of its objectives, many firms continue to approach DORA as a technical or documentation-driven exercise. In practice, this approach often leads to frameworks that are formally aligned with regulatory requirements but lack operational effectiveness.

A key challenge lies in the fact that DORA is not limited to IT functions. It requires coordination across risk management, compliance, internal audit, and senior management, as well as alignment with business strategy and operational processes. Where ICT risk remains isolated from broader organisational decision-making, firms face difficulties in achieving the level of integration required by the regulation.

The implementation of DORA therefore requires a shift from isolated structures to a holistic and integrated approach, where ICT risk is embedded across all relevant functions.

Common Pitfalls in Practice

In practice, several recurring challenges have emerged across financial entities implementing DORA.

A primary issue is the tendency to prioritise policy development over operational capability. While firms may establish comprehensive ICT risk management frameworks on paper, these frameworks are not always supported by effective processes, tools, and controls capable of functioning under stress conditions. This disconnect between documentation and execution undermines the core objective of ensuring continuity of critical services.

Fragmentation also remains a significant concern. Many organisations continue to operate with separate frameworks for cybersecurity, IT operations, outsourcing, and business continuity, resulting in inconsistencies in how risks are identified, assessed, and managed. DORA requires these elements to be integrated into a single, coherent framework, capable of addressing risks in a consistent and comprehensive manner.

Another area frequently underestimated is the integration of ICT risk into governance structures. DORA places clear responsibility on the management body, requiring active oversight and involvement in ICT risk management. Where senior management engagement is limited, decisions relating to outsourcing, technology, and operational models may not fully reflect resilience considerations.

Operational Challenges: Incident Reporting and Testing

The requirements relating to ICT incident reporting introduce a level of complexity that many firms have not previously encountered. DORA requires the classification of incidents based on defined criteria, as well as the submission of initial, intermediate, and final reports within strict timelines. Implementing these requirements requires not only clear internal procedures, but also the ability to detect incidents promptly, assess their impact accurately, and ensure effective internal escalation.

Similarly, the expectations surrounding resilience testing have significantly increased. DORA requires firms to adopt a risk-based approach to testing that reflects their operational dependencies and threat landscape. This includes scenario-based testing and, for certain firms, advanced techniques such as threat-led penetration testing. Basic technical testing alone is insufficient to capture the broader operational impact of disruptions, particularly in environments characterised by interconnected systems and external dependencies.

Third-Party Risk: A Central Regulatory Focus

One of the most significant areas of focus under DORA is ICT third-party risk management. The growing reliance on external providers, particularly in the context of cloud computing and technology platforms, has introduced new forms of concentration and systemic risk.

DORA requires firms to maintain a detailed register of ICT third-party providers, including information on services provided, criticality, and contractual arrangements. In practice, many organisations face challenges in obtaining a complete and accurate view of their outsourcing landscape, particularly where subcontracting chains are involved.

Importantly, DORA reinforces that outsourcing does not transfer responsibility. Financial entities remain fully accountable for ensuring that outsourced services meet regulatory expectations, requiring continuous monitoring, robust contractual arrangements, and effective oversight mechanisms.

Assurance, Continuity, and Ongoing Compliance

The effectiveness of the ICT risk management framework must be supported by independent assurance. DORA requires regular internal audit and review processes to assess the adequacy and effectiveness of controls. This introduces additional expectations in terms of expertise, independence, and the integration of ICT risk into audit planning.

At the same time, DORA is not designed as a one-time implementation exercise. The regulation introduces a continuous obligation to monitor, review, and update frameworks in response to changes in the firm’s operations, technological environment, and threat landscape. A static approach to compliance is incompatible with the dynamic nature of ICT risk.

A Strategic Perspective on Digital Resilience

Beyond its technical and regulatory dimensions, DORA reflects a broader strategic shift in the financial sector. It recognises that digital resilience is not only a matter of individual firm stability, but a key component of financial system integrity.

The increasing interconnection between financial institutions and shared ICT infrastructures means that disruptions can extent rapidly across markets. As such, DORA requires firms to consider their role within a wider ecosystem, extending beyond internal risk management to the management of systemic dependencies.

Firms that approach DORA solely as a compliance obligation may achieve formal alignment with the regulation, but risk overlooking its broader implications. By contrast, those that embed digital resilience within their operating model can enhance operational robustness, improve incident response capabilities, and strengthen stakeholder confidence.

FiveComply’s Perspective

At FiveComply, we observe that the primary challenge in DORA implementation is not the interpretation of the regulation itself, but its practical application across complex organisational structures.

Firms increasingly recognise that achieving compliance requires more than aligning documentation with regulatory requirements. The focus has shifted towards ensuring that ICT risk frameworks are operational, integrated, and capable of supporting real-world resilience under stressed conditions.

Our experience shows that the most effective implementation approaches are those that prioritise:

• alignment between ICT risk management and business strategy,
• clear governance structures with active management body involvement,
• comprehensive mapping and oversight of ICT third-party providers, and
• the development of testing and incident response capabilities that reflect actual operational dependencies.

DORA implementation is therefore not a standalone exercise, but part of a broader process of strengthening operational resilience and regulatory positioning. Firms that approach it strategically are better positioned to adapt to ongoing regulatory developments and evolving technological risks.

Looking Ahead

DORA represents a fundamental transformation in how ICT risk is regulated within the European financial sector. Its implementation requires more than policy updates or procedural adjustments; it requires a reassessment of how risk is identified, managed, and integrated across the organisation.

The distinction between compliance and resilience is central. While compliance can be achieved through documentation and formal alignment, resilience requires operational capability, integration, and continuous adaptation.

As regulatory expectations continue to evolve, firms that successfully operationalise DORA will be better positioned to navigate an increasingly complex and technology-driven environment, where the ability to withstand disruption is not only a regulatory requirement, but a defining characteristic of sustainable financial institutions.

Get in touch with our team to discuss your DORA implementation or regulatory strategy:
📞 +357 25 34 00 25
📧 regulatory@fivecomply.com

The Seychelles Securities Dealer License continues to serve as a widely used regulatory framework for international brokerage firms offering online trading, forex, and CFD services. Regulated by the Financial Services Authority (FSA) of Seychelles, the regime has recently undergone significant legislative updates following the enactment of the Securities (Amendment) Act, 2024 and accompanying amendment regulations.

These amendments introduce several important changes affecting Securities Dealer Licensees, including strengthened corporate governance requirements, increased capital thresholds, enhanced investor protection measures, and revised licensing fees. Firms operating under the Seychelles Securities Dealer regulatory framework must ensure that their compliance systems, operational procedures, and governance structures are updated to reflect these changes.

The amendments entered into force on 30 December 2024. However, entities that were already licensed prior to the introduction of the amendments have been granted a transitional period of eighteen (18) months to comply with the new provisions, ending on 30 June 2026.

A.  Changes to the Licensing Framework and Corporate Governance Requirements

One of the most significant regulatory developments introduced by the amendments is the transition to a perpetual licensing regime for Securities Dealer licenses. Under the revised framework, a Seychelles Securities Dealer License will remain valid unless it is suspended, revoked, or surrendered, replacing the previous system where licenses were issued for a fixed annual period.

Despite the introduction of a perpetual license model, license holders must still meet ongoing regulatory obligations. In particular, Securities Dealer licensees are now required to pay their annual license fees and submit a compliance certificate to the Financial Services Authority by 31 January of each year.

The amendments also introduce enhanced corporate governance requirements. Securities Dealer licensees must appoint two individual directors, with at least one director required to be a resident of Seychelles. Additionally, the framework requires that there be at least two resident fit and proper individuals in Seychelles, which may include directors, compliance officers, or other managerial staff responsible for overseeing the operations of the licensed entity.

These provisions are intended to strengthen regulatory oversight and ensure that licensed brokerage firms maintain sufficient operational substance within the jurisdiction.

Investor Protection Measures and Operational Requirements

The amendments also introduce several important measures aimed at strengthening investor protection and operational oversight within the Seychelles securities sector.

One of the key changes relates to client classification requirements for restricted speculative investments, as per the FSA definition. Securities Dealer licensees offering leveraged products (e.g. CFDs) should now classify their clients as either retail clients or professional clients before offering access to leveraged products. Professional clients may include regulated financial institutions, institutional investors, governments, large corporate entities meeting specific financial thresholds, or high-net-worth individuals who satisfy the relevant asset and experience criteria.

Where clients are classified as retail clients, Securities Dealer licensees must conduct an appropriateness assessment to determine whether the client possesses the knowledge and experience necessary to understand the risks associated with the specific leveraged products e.g. CFDs.

The amendments also introduce negative balance protection for retail clients, meaning that the liability of a retail client trading restricted speculative investments is limited to the funds held in the client’s trading account. This provision ensures that retail investors cannot incur losses exceeding the amount deposited with the securities dealer.

Additional regulatory obligations include enhanced advertising and risk warning requirements, under which Securities Dealer licensees must ensure that promotional materials prominently display risk warnings explaining the potential losses and complexity associated with trading financial instruments such as securities, derivatives, and other leveraged products.

The amendments further strengthen oversight of outsourcing arrangements. While support functions may be outsourced to external service providers, core operational functions may only be delegated to affiliated entities and require prior approval from the Financial Services Authority.

Capital Requirements and Revised Licensing Fees

The updated regulatory framework also introduces an increase in the minimum capital requirement for Securities Dealer licensees. The minimum issued and paid-up share capital has been increased from USD 50,000 to USD 100,000, and this capital must be maintained at all times in a bank account with a bank licensed under the Financial Institutions Act or another equivalent jurisdiction approved by the FSA. More information on how the FSA interprets ‘equivalent jurisdictions’ can be provided from FiveComply during your next consultation session.

In addition to the increased capital threshold, the amendments introduce revised regulatory fees.

The application fee for a Securities Dealer license has increased from USD 1,500 to USD 3,000, while the annual license fee has increased from USD 3,000 to USD 6,000. The fees for the Securities Dealer Representative remain the same for both the application and ongoing maintenance of the license. Additional fees have also been introduced for matters such as additional trade names, domain names, and regulatory approvals for changes in shareholding or corporate structure.

These changes reflect the continued evolution of the Seychelles financial services regulatory framework, with a focus on strengthening governance standards and investor protection within the jurisdiction.

Preparing for Compliance with the New Framework

Although the amendments entered into force on 30 December 2024, existing Seychelles Securities Dealer License holders have until 30 June 2026 to fully comply with the new requirements.

During this transitional period, licensees should review their corporate governance arrangements, client onboarding procedures, capital structures, and internal policies to ensure full alignment with the revised legislative framework.

At FiveComply, we support firms operating under the Seychelles Securities Dealer License framework by assisting with regulatory compliance, policy development, and ongoing liaison with the Financial Services Authority of Seychelles. As regulatory expectations continue to evolve, maintaining a robust compliance framework is essential for firms seeking to operate successfully in the Seychelles financial services sector.

Contact us today to learn how FiveComply can support your firm with Seychelles Securities Dealer licensing, regulatory compliance, and ongoing FSA engagement.

📍 Seychelles | Mauritius | Cyprus | UAE

📞 +357 25 34 00 25

📧 info@fivecomply.com

🌐 fivecomply.com

For more than a decade, Cyprus has served as one of Europe’s primary entry points for investment firms seeking access to the European market. While the regulatory landscape has evolved significantly, authorisation by the Cyprus Securities and Exchange Commission (CySEC) continues to represent a strategically important milestone for financial institutions operating within the EU.

 However, the nature of CySEC licensing has changed. What was once viewed primarily as an entry procedure has increasingly become a process centred on operational substance, governance maturity, and long-term regulatory sustainability. 

A Mature Regulatory Environment:

CySEC today operates within a far more demanding European supervisory framework than in previous years. The implementation of MiFID II, the Investment Firms Regulation and Directive (IFR/IFD), enhanced AML obligations, and upcoming crypto-asset regulation under MiCA have collectively reshaped supervisory expectations.

As a result, licensing is no longer assessed solely on documentation completeness. Regulators increasingly evaluate whether applicants demonstrate realistic operational models, effective internal controls, and governance structures capable of supporting ongoing supervision. 

For firms, this means preparation begins well before submission — and extends beyond policies and procedures to the credibility of the people and ownership structure behind the firm.

In practice, one of the most decisive elements in a CySEC licensing application is the suitability of the shareholders. While applicants often focus heavily on documentation and operational setup, CySEC places significant emphasis on whether qualifying shareholders meet the regulator’s fit-and-proper requirements, including experience in a regulated environment, financial soundness, transparency of source of wealth, reputation, and the ability to support the firm’s long-term stability.

Experience shows that shareholder assessment frequently represents the most critical stage of the authorisation process.

The Impact of Crypto Regulation:

The emergence of crypto-asset regulation within the European Union — particularly through the Markets in Crypto-Assets Regulation (MiCA) — has become one of the primary drivers reshaping how investment firms approach CySEC licensing and regulatory strategy.has introduced an additional layer of strategic planning for investment firms.

Rather than operating crypto activities separately, many firms are now evaluating how digital-asset services interact with existing CySEC authorisations, governance structures, and compliance frameworks. This has led to increased demand for licence extensions, structural reviews, and regulatory alignment exercises ahead of MiCA implementation.

The transition highlights a broader trend: regulatory frameworks are converging, requiring firms to adopt integrated compliance approaches rather than siloed licensing strategies.

Licensing Is No Longer One-Dimensional:

A notable shift in recent years is the growing number of firms seeking extensions or modifications to existing authorisations rather than entirely new licences.

These include:

• expansion of investment services and activities
• introduction of new financial instruments
• restructuring of business models
• integration of crypto-related activities
• alignment with evolving EU regulatory frameworks

We have observed a clear increase in demand for licence extensions aligned with MiCA developments, as firms recognise the operational efficiency of expanding existing regulatory permissions rather than establishing separate regulatory structures.

In many cases, firms can strategically position themselves to operate both traditional financial instruments and crypto-asset activities under an aligned regulatory framework, creating operational continuity while reducing regulatory fragmentation. This approach has become increasingly attractive as European regulation moves toward convergence between traditional finance and digital assets.

Regulatory strategy has therefore become continuous rather than transactional. Firms increasingly revisit their authorisations as their business models evolve alongside market and regulatory developments.

Governance Expectations: What Firms Often Underestimate:

Despite CySEC’s well-established framework, applicants frequently underestimate where regulatory scrutiny is primarily focused during the licensing process.

While governance structure and documentation remain important, the assessment begins with the suitability of the Company’s shareholders. In practice, application timelines are frequently impacted not by policies or operational arrangements, but by the shareholder assessment process: CySEC places significant emphasis on qualifying shareholders meeting fit-and-proper requirements.

Beyond ownership assessment, CySEC also expects a management body capable of exercising genuine oversight and independent judgment. This includes meeting minimum structural expectations such as:

• at least two Executive Directors, actively involved in day-to-day management;
• at least two Non-Executive Independent Directors, providing independent oversight; and
• a Board composition demonstrating sufficient local substance and regulatory familiarity, with the majority of directors being Cyprus-based.

Ultimately, regulatory approval is based on the combined assessment of shareholders and directors, ensuring both sound ownership and effective governance capable of sustaining long-term regulatory compliance.

Common Challenges Firms Encounter:

Applicants frequently underestimate the importance of regulatory coherence — ensuring that business plans, policies, staffing arrangements, ownership structure, and governance model present a consistent and credible narrative.

Delays often arise not from regulatory rigidity, but from gaps between commercial ambition and regulatory readiness. Successful applications therefore depend on early strategic planning and alignment with CySEC expectations from the outset.

FiveComply’s Perspective:

At FiveComply, we have observed a clear evolution in how firms approach CySEC authorisation. Increasingly, clients seek not only assistance with initial licensing, but ongoing regulatory guidance as their activities expand across new services, instruments, and regulatory regimes — particularly in connection with MiCA-driven licence extensions.

Our experience shows that successful licensing outcomes depend less on documentation volume and more on correctly structuring:

• shareholder eligibility and transparency,
• governance composition,
• regulatory strategy, and
• operational substance from day one.

Our experience spans new CySEC authorisations, licence extensions, crypto-related regulatory structuring, and ongoing compliance implementation. In each case, the objective remains the same: aligning business growth with sustainable regulatory positioning.

Looking Ahead:

As European financial regulation continues to develop, CySEC remains a key gateway for firms seeking regulated access to the EU market. The regulator’s increasing supervisory maturity reflects broader European trends emphasising transparency, governance, and operational substance.

CySEC licensing is increasingly less about obtaining approval and more about building a structure capable of operating successfully under continuous supervision — where shareholder suitability, governance strength, and strategic regulatory planning play a decisive role.

With extensive experience advising firms across the CySEC regulatory framework, FiveComply supports financial institutions throughout the full licensing lifecycle — from initial authorisation and licence extensions to compliance implementation and ongoing regulatory support. 

Get in touch with our team to discuss your CySEC licensing or regulatory strategy:

📞 +357 25 34 00 25
📧 regulatory@fivecomply.com