YANML-filter: Some colleagues and I are thinking of starting a service that distributes incoming payments amongst multiple recipients. So imagine something like
, but instead of splitting a monthly budget between several people, you pay several people at once with a one-off payment. My question is: What do we need to do to avoid needing a Financial Services License? The answer might be 'nothing' but I'd rather not pay $$$$ to find that out, at least while other options are on the table.
I'm in Australia, but I'd appreciate US advice too in case it tips the balance in favour of basing this in the US instead.
The concept is fairly simple: one payment goes in from a donor. We deduct running costs, then split the remainder among several recipients. The payment is for something that the recipients have provided for free to the payers, and the payers are contributing in thanks.
My Australian lawyer would like to research whether we need to get an Australian Financial Services License
, and would charge several thousand bucks to do so, which I would rather avoid.
If the answer is "Yes, you will need a license", then it's a dealbreaker. But I have a hunch that the answer is "no, you don't" because surely there are many organisations (which?) that seemingly take and pay money without needing it, usually at arm's length by using something like Payal. On the other hand, I worry that the service we're building falls under the "custodial or depository service" in ASIC's definition. But I'm not sure where the boundary lies.
I assume organisations like Gittip and the various Paypal Marketplace clients, don't have such a license. Is that because they're incorporated in the US? Is it because they're flying under the radar of the regulatory bodies? Is it because they don't handle the cash directly? Is it because they are collecting payments for a product, not just providing a way of moving money? Are there Australian organisations already collecting and redistributing payments who don't have an AFSL that we can model ourselves after?
I'd appreciate any non-legal advice or anecdata to support either position, as well as where I might be able to find a lawyer with the experience to answer this question more quickly.