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UK compliance manager advises all alternative investment managers to apply for AIFMD authorisation or registration asap

Monday, January 06, 2014
Opalesque Industry Update - Anthony Rawlins, compliance manager at Moore Stephens, advises on the top tips to consider in wake of the Alternative Investment Fund Managers Directive (AIFMD) transitional arrangements update.

“While the deadline extension is good news for those firms that have yet to prepare their AIFM variation of permissions, this development should not be viewed as a disincentive to act now. We are advising all of our clients that fall within the scope of an AIFM to make their applications for authorisation or registration as soon as possible in the New Year.

“The Treasury is currently ironing out some of the more intricate details, but it is clear in any event that all AIFMs will be required to comply with all relevant AIFMD requirements from 22 July 2014, even if their application has not yet been determined. Firms looking to vary their permissions or apply to become an AIFM are being required by the FCA to undertake a far deeper evaluation of their business, management and operations and should heed the Treasury’s advice to submit their application well in advance of the July deadline to ensure that their policies and procedures together with their systems and controls reflect this change.

“For a full-scope AIFM, the variation of permission is more akin to a full application for authorisation with the FCA requiring a far deeper evaluation of your business, management and operations. So firms need to consider the following aspects:

- Ensure you have at least the minimum capital adequacy requirement. For a full-scope firm the minimum will be €125,000;
- Consider purchasing Professional Indemnity Insurance;
- Appoint and be able to provide details of your proposed depositary (required to be an authorised depositary);
- Prepare a regulatory business plan which, in addition to outlining your proposed business and operating model and long term strategy will also need to incorporate details of your systems and controls;
- Prepare your compliance manual;
- Be able to provide details of your financial resources and your new financial resources requirements;
- Consider how you are going to demonstrate the segregation of risk management and portfolio management;
- Prepare new policies and procedures relating to leverage, liquidity, valuations, risk management, disclosure and prime brokerage.”

Background information

The Treasury is intending to amend the Alternative Investment Fund Managers Regulations 2013 to provide that, if a transitional AIFM’s application for authorisation or registration is submitted without sufficient time for the Financial Conduct Authority to determine the application by 22 July 2014 (the end of the transitional year), that AIFM will be able to continue managing AIFs until the FCA has determined the application. The requirement to submit an application before 22 July 2014 will remain in place and all AIFMs will, in any event, be required to comply with all relevant AIFMD requirements from 22 July 2014, even if their application has not yet been determined.

The Treasury are working on the details, in particular the status of AIFMs whose applications are yet to be determined after 22 July 2014, however it is their intention to make an amending statutory instrument to this effect in the New Year.

A link to the Alternative Investment Fund Managers Directive transitional arrangements update can be found here:www.gov.uk.

Press release


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