How is Fintech Regulated in the Isle of Man?

Article written by Katherine Garrood, Counsel, Appleby (Isle of Man) LLC August 2023

Which regulatory framework applies will depend upon the activities undertaken:

• The Gambling Supervision Commission (GSC) regulates gambling activities.
• The Financial Services Authority (FSA) regulates banks, payment service providers, investment businesses, funds, insurers, corporate and trust service providers, crowdfunding platforms, pension scheme administrators and other ‘designated businesses’ including cryptocurrency businesses.
• The Office of Fair Trading (OFT) oversees lending.
• The Communications and Utilities Regulatory Authority (CURA) regulates telecommunications, broadcasting and utilities.
• The Isle of Man Information Commissioner (IC) oversees compliance with data protection legislation.

DOES THE ISLE OF MAN HAVE ANTI-MONEY LAUNDERING REQUIREMENTS COMPLIANT WITH INTERNATIONAL STANDARDS?

The Isle of Man is marked positively in 39 out of the 40 FATF Recommendations, with its compliance with international standards overseen by Moneyval.

Businesses operating in the regulated sector must comply with the Anti-Money Laundering and Countering the Financing of Terrorism Code 2019 or, for those licensed by the GSC, the Gambling (Anti-Money Laundering and Countering the Financing of Terrorism) Code 2019.

The Codes set out prescriptive requirements which include appointing a Money Laundering Reporting Officer (MLRO), collecting and monitoring customer due diligence, and establishing and operating a number of procedures and controls.

Isle of Man businesses must also comply with anti-bribery laws and international sanctions.

DOES THE ISLE OF MAN HAVE CYBER SECURITY LAWS?

The Isle of Man has applied the General Data Protection Regulation (GDPR) into domestic law.  Businesses that control or process personal data are required to implement appropriate technical and organisational measures to ensure a level of security appropriate to risk, and are also required to register with the IC and notify them of breaches.

ARE REGULATORS RECEPTIVE TO INNOVATION?

The GSC continuously adapts to new technologies and the needs of industry.  For example, regulation changes in 2017 made it possible to open an account with an Isle of Man gambling operator using anything which has a value in money’s worth, including convertible and non-convertible virtual currencies.

The FSA is a member of the Global Financial Innovation Network (GFIN) and has an innovation hub on its website offering guidance to applicants using innovative technology in delivering regulated activities.  A regulatory sandbox is also available, allowing financial services products to be tested in a controlled environment with reduced risks to consumers.

CAN I MOVE OR SET UP A COMPANY IN THE ISLE OF MAN?

The Isle of Man has its own companies laws, with the Companies Act 2006 offering a flexible form of company without many of the formalities of traditional company law.

There is also legislation allowing companies incorporated in other jurisdictions (with corresponding laws) to re-domicile to the Isle of Man, so becoming an Isle of Man company without creating a new legal entity.

There is a well-established network of licensed corporate service providers in the Isle of Man who can assist with incorporating companies and ongoing administration.

The level of local presence required varies between regulatory frameworks, with some requiring a minimum of two local directors and management and control in the Isle of Man.  To benefit from the Isle of Man’s corporate tax regime, companies in some sectors (particularly IP) must also have adequate substance in the Isle of Man.