SIGNIFICANCE OF AIFMD REGULATION FOR NON-EU AIFMs
We all remember the world coming to a standstill in 2008 on the wake of collapse of Lehman Brothers. What started as a bank run in early 2007, slowly spearheaded into banking panic centered due to market liquidity failure. The failure in financial intermediaries saw repercussions across industries & regions, job loss & capital loss were an everyday phenomenon.
It had been more than a decade now, still there are ongoing debates on whether is it due to mismatched incentives by Financial Intermediaries to their employees or wide spread deregulations in the financial sector that happened in the early 2000s.
However it might not need to be a single factor which had induced the crisis, it’s a complex combination of multiple factors which makes 2008 one of the biggest recession in recent times.
Following these events, Regulators realized the importance of due-diligence and control mechanisms required across Financial Investment Institutions ranging from Banks to AIFMs to Investment Firms to protect the investors’ interest & money and thus safeguarding their interest of a stable economy.
AIFMD is a part of this wider EU regulatory effort to bring in more scrutiny to regulate the activities of the managers of investment funds that do not come within the scope of the UCITS IV standard. This includes, among other things, alternative management funds hedge funds, real estate funds, private equity funds, etc.
Apart from EU AIFMs, AIFMD brings in even non – EU AIFMs which are managed or marketed in EU states under its regulatory purview. In fact, non EU – AIFMs are prone to more scrutiny by the AIFMD directive in terms of more requirements & constraints.
As cited under article 42, Non – EU AIFMs which do business across member states, need to report to the national competent authorities only on information pertaining to the AIFs that are marketed in the corresponding member states.
However reporting obligations for non – EU AIFs to the NCA doesn’t exactly depend on the actual marketing period of the AIF but instead on the existence of investors in the AIF in the corresponding jurisdiction of the NCA. Hence, even after the marketing period has ended, reporting of non-AIFMs to a NCA is mandatory as long as there are no investors in the jurisdiction of the respective NCA.
Under article 24(5) of the AIFMD, AIFMs are obliged to report information on non – EU master AIFs which are not marketed in EU but either have EU feeder AIFs or non – EU feeder AIFs marketed in the union under article 42, if Member states apply ESMA’s opinion to collect additional information.
Non – EU AIFMs are obliged by the same principle, if the master AIF is established in the union & not marketed in the union. (i.e. they should report information on the EU master AIF not marketed in the Union).
AIFMD is levied as a moral & legal responsibility on the shoulders of the managers to do their part in evading another similar crisis. Even the most versed fund managers find Annex IV reporting an intricate task which demands collection of data from multiple sources, cumbersome calculations involving hundreds of data elements and finally generating reports in XML format.
DataTracks’ AIFMD solution aims to be a one-stop support tool for filing the AIFMD Annex IV with ESMA. We have designed a fintech solution that addresses all these challenges faced to give you a smooth filing journey.
For filing the same reportable data with different jurisdictions the users need not undergo the struggle to re-enter the data again, instead they can simply change the reporting jurisdictions in couple of steps and download the necessary XML reports to file with different regulators.
Datatracks serves customers across EU regions ranging from UK to Luxembourg to Malta & non-EU regions like The Channel Islands and United states.
Specialists in XBRL and regulatory reports
DataTracks prepares more than 14,000 XBRL statements annually for filing with regulators such as SEC in the United States, HMRC in the United Kingdom, Revenue in Ireland, Eurofiling compliance reports in Europe, ACRA in Singapore and MCA in India. Honed by our experience of preparing more than 185,000 compliance reports, our solutions and services are designed to assure quality, reliability and ease of use.