21st Aug 2022
Review by Bachir El Nakib
The Qatari Financial Center "Policy"
The QFC Approach to the Authorization of Branches"
Branch application are assessed, in part, on the basis of a jurisdiction review of the applicant firm's home country ( and the country from which the firm is proposing to branch in, if that is different). The review assist the Regulatory Authority to form an opinion on whether the country is one from which a Branch would be considered as acceptable.
Jurisdiction reviews contains an analysis of the relevant jurisdiction’s compliance with the Basel Core Principles or IAIS Insurance Core Principles, as applicable, together with consideration of any findings from the latest International Monetary Fund and World Bank Financial Sector Assessment Program review and other resources. These reviews are updated on regular basis and analyse the following considerations :
- the legal environment and financial services regulatory regime with regard to independence, stability, supervisory methods, capacity to undertake consolidated prudential supervision and équivalence to the QFC.
- the political and economic environment
- the laws governing Anti-Money Laundering, Combating Terrorist Financing, financial crimes prevention and market abuse land their enforcement; and
-the insolvency regime and practice, particularly as it relates to the treatment of non domestic creditors of foreign branches. (A branch can only be accepted from an applicant in a country that has satisfactorily developed insolvency framework and which not disadvantage creditors of a QFC branch. Where access to publicly available information is challenging, the applicant will be required to obtain a legal opinion on the insolvency regime concerned which confirms the treatment of foreign creditors in the case of an insolvency event.)
In addition, the Regulatory Authority considers the institution-specific factors described below :
*those fitness and propriety criteria which have a bearing on legal form including, inter alia the legal status of the applicant, it's group structure, location of offices, controllers close links and other connections.
* the firm's business, its strategy and target market, the proposed QFC branch business and it's scale (including the extent to which this is to the core of the business conducted by the firm) focusing in particular on third party liabilities likely to arise from the proposed business model and the level to which the actual or potential liabilities would be covered by capital, and where applicable, deposits or investments protection, or professional insurance indemnities;
* for banking firms, the proposed liquidity management of the Branch (including stress scenarios) ;
* for insurance firms, the scope of approval in the home state. (Note that the Regulatory Authority does not permit the establishment of composite insurers in the QFC, nor will permit branches of composite insurers in the QFC) ;
* current and past financial statements, the funding and projected revenues of the proposed QFC branch, as well as the legal obligation of its head office to meet the branch's liabilities, and whether a specific guarantee from the firm is needed.
* whether the capitalisation of the parent is sufficiently robust in form, and at least equivalent to the requirements that would be imposed on QFC incorporated firm;
* the governance operational structure of the applicant firm, it's applicable systems and control of oversight regime, as well as the plans for integration of the Branch and its activities into the firm's overall systems, governance and the risk management structure ; and
*staffing proposals, branch organization structure and reporting lines and confirmation of which branch personnel will be residents in Qatar, the residency of the Senior Executive Function ("SEF" ) being a prerequisite.
Depending on the nature, scale and complexity of the proposed branch, a risk assessment visit is undertaken to the applicant firm's head office or regional operational headquarters. This type of visit is generally required for PIIB Ctegory 1 branch applications and PINS Direct Insurers. The costs of such visit are borne by the applicant by way of a supplementary application fees.