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Regulatory Services

EU Regulations

AIFMDAlternative Investment Fund Managers Directive

The Alternative Investment Fund Managers Directive (AIFMD) was published in the Official Journal of the European Union on 1 July 2011 and became UK law on 22 July 2013. The attached memos explain the directive depending upon the location of the manager and the fund and, in certain situations, whether the fund’s shares are being marketed in the EU.

Since managers may have funds in different domiciles with several marketing strategies, all of the memos are included here.  If both the manager and fund are outside the EU and the shares have not and will not be marketed in the EU, or held by EU residents, the directive has no effect.

The terms in the memos match those in the directive – AIFM being “Alternative Investment Fund Manager” and AIF being “Alternative Investment Fund”.

AIFM & AIF in EU (81 KB) AIFM in EU - AIF not in EU (Marketing in EU) (81 KB) AIFM in EU - AIF not in EU (No Marketing in EU) (79 KB) AIFM not in EU - AIF in EU (79 KB) Both AIFM & AIF not in EU (Marketing in EU) (79 KB)

 


Depositary Lite Services

We provide the following services to support the depositary lite regime.


Cashflow Monitoring

All the cash flows of each AIF must be monitored, either on a daily basis or, if monies move less frequently, then as frequently as monies move into or out of the AIF.

Cash movements can be divided into three types of activity:

  • Shareholder cash movements – subscriptions, redemptions, dividends
  • Trading activity – acquisition and disposal of financial instruments
  • Expense and other miscellaneous payments

For each AIF there must be cash flow monitoring procedures and controls, which must include periodic review of effectiveness, a mechanism to detect issues and any non-compliance with law or fund rules and escalation procedures to both the AIFM and to competent authorities when appropriate.

Leveraging our existing daily operating model we have implemented specific procedures and controls to meet the standards outlined in the directive.


Fund Oversight

The directive introduces formal requirements for an AIFM to engage a third party to ensure that independent oversight is carried out. The key aspects are:

  • All shareholder transactions are processed in accordance with the rules in the constitutive and offering material
  • The valuation is carried out in accordance with the terms set out in the constitutive and offering material
  • The instructions of the AIFM are carried out unless they conflict with the constitutive and/or the offering material
  • All transactions of the AIF are settled within normal time limits
  • All income due to the AIF is applied in accordance with the constitutive and offering material

As with cash flow monitoring we have introduced specific procedures and controls to ensure all fund oversight requirements are met.

 

Global Taxation Regulations

US and UK Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standards (CRS) (together ‘Global Taxation Regulations’), Registration, Due Diligence Collection, Reporting and Filing Services.

Custom House can assist the Investment Manager in compliance and reporting in line with the Global Taxation Regulations. The services we can provide are outlined below;

  • Advise and assist with US FATCA registration
  • Registration with local tax authority
  • Provision of US and local domicile Point of Contact
  • Assistance to ensure all documentation sufficient to comply with Global Tax Regulations
  • Collection and analysis of specified due diligence documentation
  • Accounts Holder Classification – Categorization of each account holder for FATCA and CRS purposes.
  • Filing – Submission of report detailing each reportable account.

Regulatory Reporting

Regulatory Reporting services are provided for AIFMD Annex IV, Dodd Frank Form PF, CFTC PQR reporting.

Custom House has established a global regulatory reporting team to support alternative investment fund managers (“AIFMs”) and private fund advisers in completing the relevant transparency reporting under:

  • EU Alternative Investment Manager Directive (“AIFMD) for Annex IV reporting
  • US Dodd Frank’s Act for Form PF
  • CFTC CPO-PQR reporting

As the fund administrator, we have most of the information required to complete the reports and PFS-Paxus has developed a reporting module to support the ESMA xml format. We rely on the manager to provide risk and liquidity information but in the future will leverage our risk reporting capabilities to provide this detail.

The tool will enable end-to-end reporting through data collection up to final filing to the relevant National Competent Authority (“NCA”).

These reports will contain information for the overall fund manager’s Assets under Management (“AuM”), including the fund exposure, leverage and risk application.

A  key measure is the  Regulatory Asset under Management (“RAuM”), as it  determines the reporting frequency and scope of information required.

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