A supervisory enquiry from the Gelephu Financial Services Office is not routine correspondence. The Financial Services Act 2025 lets the Regulator demand information, commission reports, censure, fine, suspend and prohibit, and a breach of any Principle can put a firm's licence in question. Basnet Law Pte. Ltd., the first law firm incorporated in the Gelephu Mindfulness City, represents Licensed Firms, Approved Persons and controllers in GFSO enquiries and enforcement under the Financial Services Act 2025. This page describes the powers and duties the framework contains and how we defend within it.
How we help
- Responding to information requirements and Skilled Person report requests with a controlled and complete file.
- Advising on the immediate notification duties a breach, control failure or fitness concern triggers.
- Making written and oral representations against proposed censure, penalties, suspension, prohibition or licence cancellation.
- Defending Approved Persons whose approval GFSO proposes to withdraw, vary or suspend.
- Contesting objections to controllers, restriction notices and forced-disposal directions.
- Advising on sanctions and AML exposure, including remediation and the risk that customer information travels to foreign authorities.
- Remediating the systems-and-controls failure behind the enquiry so the firm can show GFSO it has been fixed.
How regulatory enforcement works in GMC, in plain terms
GFSO is the single regulator of financial services and virtual asset activities in GMC and the designated Supervisory Authority for money laundering, a term the Act defines to include terrorist financing and sanctions non-compliance. Its tools start with information: GFSO may require a firm to provide information and may commission a report by a Skilled Person. A Licensed Firm must deal with the Regulator in an open and co-operative manner and keep it promptly informed of significant events. It must advise GFSO immediately of a significant breach of a Rule, any significant failure in its systems or controls, its own failure to meet fit and proper requirements, and any Approved Person who is no longer fit and proper. A firm that has a control failure and does not report it faces two breaches rather than one.
The Principles for Licensed Firms have the status of Rules and apply even in situations no specific Rule covers. Breaching one makes a firm liable to disciplinary action and may indicate it is no longer fit and proper, though the onus is on GFSO to show the firm has been at fault. A contravention of the Rules is a contravention of the Act, which provides for public censure, financial penalties, suspension of a licence and prohibition orders, together with injunctions and restitution orders. GFSO may also vary, suspend or cancel a licence. Agreements made in breach of the General Prohibition are unenforceable against the other party, who may recover what was paid plus compensation. Misleading, deceptive, fraudulent or dishonest conduct in relation to any specified investment, virtual asset or regulated activity is prohibited, as is holding out as licensed.
Individuals face parallel exposure. GFSO may withdraw an approval if it considers the person no longer fit and proper, vary its conditions, or suspend it for up to twelve months; unless immediate effect is considered necessary, the interested parties receive written notice, reasons and a period for representations. Controllers are exposed too: GFSO may object to an existing controller on reasonable grounds, require disposal within a specified period, and issue a restriction notice under which transfers are void, voting rights are suspended and no dividends are paid. Objections carry 14 days for representations and a route to the Appeals Panel.
Virtual asset firms have two further powers to plan for. GFSO may by written notice impose additional obligations or require specified action where it is satisfied that is in the interests of GMC, and it may direct that no dealing or custody in a particular token take place for a period, with immediate effect if the direction says so. On the AML side, every Relevant Person must conduct customer due diligence and keep records as the Rules specify, GFSO may deem any person a Relevant Person by written notice, and it may disclose information to any authority, in GMC or elsewhere, exercising anti-money laundering, counter-terrorist financing or sanctions compliance functions. Disclosures about market abuse made to GFSO or to an employer's nominated officer are protected.
On precedent, GMC can rely on common law precedents from any common law jurisdiction, so the enforcement and judicial-review authority of the common law world is available to firms and to the courts. Every outcome described here is the Regulator's decision, made within that framework.
Who this is for
- Licensed Firms that have received an information requirement, a Skilled Person notice or a proposed enforcement notice.
- Senior Executive Officers, Compliance Officers and MLROs facing a challenge to their approval.
- Shareholders and acquirers dealing with an objection, a restriction notice or a completed acquisition that lacked approval.
- Any firm that has discovered a breach or control failure and must decide how to report it.
How an engagement runs
- Triage. We establish what GFSO has asked or proposed, which notification duties are already running and the deadlines for representations.
- Privileged fact-finding. We gather the documents and accounts of events and identify the Principle or Rule said to be engaged.
- Engagement with GFSO. We manage the information response, arrange any oral representations and put the firm's case in writing within the period allowed.
- Remediation. We fix the responsibilities map, controls, policies or appointments that failed, so the firm can evidence the correction.
- Outcome. We handle conditions, referrals to the Appeals Panel where available, and the notifications the outcome requires.
Frequently asked questions
Do we have to tell GFSO about a breach before we know how bad it is?
A Licensed Firm must advise GFSO immediately of a significant breach of a Rule or a significant failure in its systems or controls. We help you make an accurate first notification quickly and follow it with a fuller account.
Can GFSO fine us for breaching a Principle rather than a specific Rule?
Yes. The Principles have the status of Rules, a contravention of the Rules is a contravention of the Act, and the Act provides for censure, financial penalties and licence suspension. The onus is on GFSO to show the firm was at fault.
Will we get a chance to respond before a decision?
For approval decisions, controller objections and token directions the framework provides for written notice, reasons and a period for representations, with immediate effect reserved for cases GFSO considers necessary. We use that window fully and, where the Rules provide it, the Appeals Panel route.
What counts as a sanctions breach in GMC?
The Act has no stand-alone sanctions list; it folds sanctions non-compliance into the definition of money laundering, so the same supervisory powers, due diligence duties and Rulebook apply, and customer information can lawfully be shared with foreign authorities.
Talk to GMC counsel on the ground
Basnet Law Pte. Ltd. is the first law firm incorporated in the Gelephu Mindfulness City. A short conversation early in a matter usually saves time and cost later. Write to basnet@basnetgmc.com or office@basnetgmc.com with a few lines about your plans, and we will tell you plainly what is needed, how long it takes, and whether we are the right fit.
You may contact Basnet Law at basnet@basnetgmc.com or office@basnetgmc.com for any legal queries related to GMC.
