Legal Alert - "Known to the Commission" Concept

A push for efficiency

The primary objective of the KTC framework is to improve operational efficiency and reduce regulatory turnaround times. In practice, entities already holding a licence issued by the FSC apply for additional licences as part of their business expansion. Historically, such applications required the resubmission of full Know Your Customer (“KYC”) documentation, resulting in lengthy processing periods—often extending to six months or more.

This duplication of KYC requirements has placed licensees at a disadvantage, as applications were subject to extended review periods due to enhanced due diligence, despite the FSC already holding relevant information. The Circular Letter therefore seeks to standardise regulatory procedures and business practices, promote a uniform approach, and foster more efficient collaboration between the FSC, management companies, and other stakeholders, thereby reducing unnecessary processing delays.

Who qualifies?

At the initial stage, the KTC concept applies to entities holding or applying for the following licences, as well as their relevant officers and beneficial owners:

·        Investment Funds

·        Investment Adviser (Restricted)

·        Investment Adviser (Unrestricted)

An applicant, or its relevant officer or beneficial owner, will be deemed to fall within the KTC ambit where the following criteria are satisfied:

a)           The applicant has held at least one valid financial services activity licence issued by the FSC for a minimum period of three (3) years.

b)           The applicant is in good standing with the FSC, including compliance with all fee payments and reporting obligations, and no adverse hits or red flags have been identified.

c)           The relevant officer or beneficial owner has not been subject to any adverse hit or red flag impacting their fitness and propriety.

d)      The FSC already holds the relevant data and due diligence documentation relating to the applicant and its known officers or beneficial owners.

New reforms

As part of the implementation of the KTC concept, Rule 7 of the Financial Services (Consolidated Licensing and Fees) Rules 2008—which governs the validity period of the Personal Questionnaire (“PQ”) — has been amended.

Previously, a fresh PQ was required for every new licence application. Under the new framework, PQs remain valid for two years, provided no material changes have occurred. Applicants deemed “Known to the Commission” can therefore rely on previously submitted PQs, reducing administrative repetition.

To maintain transparency, eligible entities must submit a letter of confirmation or undertaking, signed by a director and compliance officer (“Letter”). This Letter affirms the applicant’s good standing, the validity of PQs, and includes an undertaking to promptly disclose any material changes. The FSC, however, retains full discretion to request additional documents whenever necessary.

Balancing speed with oversight

While the KTC framework promises faster turnaround times and reduced bureaucratic hurdles, it does not dilute compliance obligations. Applicants must remain vigilant about PQ validity, as eligibility under KTC does not exempt them from submitting updated documentation when required. In this sense, KTC should be seen as a procedural facilitation rather than a relaxation of standards.

Looking ahead

The introduction of the KTC concept represents a welcome and progressive development. By cutting red tape while maintaining robust oversight, the FSC is signalling its intent to support business growth and attract new investment.

The KTC initiative represents a progressive evolution in regulatory practice: one that balances efficiency with accountability, and innovation with integrity. For licence holders, it offers a welcome reprieve from repetitive paperwork and a clearer path to expansion. For the FSC, it reinforces its role as a modern regulator, committed to both safeguarding the financial system and enabling its growth.

The true benefit of the KTC will depend on the practical application of the concept by the FSC. The FSC’s discretion to request additional documents could reintroduce uncertainty, leaving applicants unsure of whether their “Known to the Commission” status will truly translate into faster approvals. For the reform to succeed, the FSC will need to strike a delicate balance between efficiency and vigilance, ensuring that streamlined processes do not inadvertently weaken regulatory safeguards.