A GFSO licence cannot issue, or be kept, without named individuals holding the Senior Executive Officer, Compliance Officer and Money Laundering Reporting Officer functions, and a small firm rarely has three such people ready at the start. Basnet Law Pte. Ltd., the first law firm incorporated in the Gelephu Mindfulness City, advises Licensed Firms and applicants on the Approved Person regime under the Financial Services Act 2025 and builds the compliance and AML function around the people they appoint. This page explains what the Rules allow to be shared or outsourced and what must stay inside the firm.
Our legal advisory
- Mapping every role to the Controlled Functions, from Senior Executive Officer to Responsible Officer, and advising which combinations the Regulator is likely to accept.
- Advising on Approved Person applications and the firm's own fitness and competence enquiries.
- Advising on the residence requirement for the SEO, Compliance Officer and MLRO, and on waiver applications where a Compliance Officer or MLRO will sit outside GMC.
- Advising on structuring shared Compliance Officer arrangements and group-hub outsourcing so the firm stays within the outsourcing rules.
- Advising the appointed officers on their legal obligations: compliance manual, monitoring programme, AML manual, whistleblowing policy and training records.
- Advising on changes: extensions of approval, temporary cover, withdrawal requests and replacement appointments within the deadlines.
How the Approved Person regime works in GMC, in plain terms
The Financial Services Act 2025 regulates individuals as well as firms. No person may perform a Controlled Function in a Licensed Firm unless GFSO has approved that person, and the duty binds both the firm and the individual. The General Rulebook names eight Controlled Functions: Senior Executive Officer, Licensed Director, Licensed Partner, Finance Officer, Compliance Officer, Senior Manager, Money Laundering Reporting Officer and Responsible Officer. The last is the one groups overlook: a hub executive employed by a group company who directs the GMC firm needs approval even though the firm does not employ them.
Four appointments are mandatory and must be held by Approved Persons at all times: Senior Executive Officer, Compliance Officer, Money Laundering Reporting Officer and, for banks and insurers only, Finance Officer. The Compliance Officer and MLRO must each be a director, partner or senior manager of the firm, so neither function can be handed to an outside contractor as such. The SEO, Compliance Officer and MLRO must be resident in GMC or Bhutan. GFSO may waive residence for the Compliance Officer or MLRO, but not the SEO, weighing the nature, scale and complexity of the firm, time zones, how a remote function is resourced and the officer's ability to liaise with the Regulator; the AML Rulebook has its own MLRO residence rule. The Regulator decides each waiver.
The Rules do leave room for shared and supported models. An Approved Person may perform one or more Controlled Functions for one or more Licensed Firms, and the Guidance contemplates more than one firm sharing the same Compliance Officer. A firm would generally be expected to separate the Compliance Officer and Senior Executive Officer roles, and the Compliance, Finance and MLRO roles are not expected to be combined with other Controlled Functions unless independent monitoring is in place. Outsourcing of functions, including to a group company, is permitted, but the firm is not relieved of its obligations and the outsourced function is treated as carried out by the firm itself. Material outsourcing must be notified to GFSO, supported by a written contract and rights of access for the Regulator. The Compliance Officer must have sufficient resources and unrestricted access to records and the Governing Body.
Approval turns on fitness and propriety: integrity, competence and capability, financial soundness and the proposed role. Before lodging an application the firm must make its own reasonable enquiries and keep the records for six years. Approval may be conditional or time-limited, GFSO may withdraw, vary or suspend it, and the firm remains responsible for the conduct of its Approved Persons.
Departures from the firm are regulated as well. A non-approved individual may cover a temporary or unforeseen absence for a maximum of twelve weeks in any twelve months, with GFSO notified of the stand-in. When an Approved Person leaves, the firm must request withdrawal of status within seven days, reassign the function on an interim basis and complete a replacement appointment within three months.
Who this is for
- Licence applicants assembling a first management team before the In-Principle Approval condition on key personnel falls due.
- Small Licensed Firms, fund managers and advisers that want a proportionate compliance function.
- International groups placing a hub executive over a GMC subsidiary or running due diligence from abroad.
- Existing Licensed Firms replacing a Compliance Officer or MLRO at short notice.
How a legal advisory engagement runs
- Role design. We agree the organisation chart against the Controlled Functions and mandatory appointments, and identify who needs approval, who can be shared and what can be outsourced.
- Internal assessment. We advise on the firm's own fitness, propriety and competence enquiries on each candidate and the six-year record.
- Applications and waivers. We advise on the prescribed forms, countersignatures and any residence waiver case.
- Function build. We put the compliance manual, monitoring programme, AML manual, whistleblowing policy, outsourcing contracts and training records in place around the appointed officers.
- Lifecycle. We advise on the ongoing competence reviews, notifications to GFSO, cover, withdrawals and replacements within the deadlines.
Frequently asked questions
Can Basnet Law act as our Compliance Officer or MLRO?
The Rules require each function to be held by an Approved Person who is a director, partner or senior manager of your firm, so the appointment itself must sit inside the firm. We advise on the design, documentation and monitoring around that person, and on the applications and waiver cases.
Can one Compliance Officer serve several firms?
The Guidance contemplates more than one firm sharing the same Compliance Officer, and an Approved Person may perform Controlled Functions for more than one Licensed Firm. GFSO assesses each appointment on fitness, propriety and capacity, and decides whether the arrangement is acceptable.
Can our MLRO be based at the group office abroad?
This is possible only with a waiver. The SEO, Compliance Officer and MLRO must be resident in GMC or Bhutan; GFSO may waive residence for the Compliance Officer or MLRO after weighing the firm's nature, scale and complexity, time zones and remote resourcing. No waiver is mentioned for the SEO.
What happens if our Compliance Officer resigns suddenly?
Request withdrawal of their status within seven days, reassign the function on an interim basis and appoint an approved replacement within three months. A non-approved stand-in may cover for up to twelve weeks in any twelve months.
Contact
Basnet Law Pte. Ltd. is the first law firm incorporated in the Gelephu Mindfulness City.
You may contact Basnet Law at basnet@basnetgmc.com or office@basnetgmc.com for any legal queries related to GMC.
