Why AIFMD reporting after Brexit shouldn’t be a problem for UK AIFMs
After Brexit and the end of the “Implementation Period”, UK firms lost their financial services passport rights to EU Member States. Nonetheless, UK Alternative Investment Fund Managers (AIFMs) who continue their financial services and business activities in EU Member States, will now need to report into each jurisdiction under the Alternative Investment Fund Managers Directive (AIFMD).
The fundamental change in regime: AIFMs need to adapt to the local approach in each jurisdiction
With the financial services passport, UK firms were granted domestic market access in certain areas of financial services. The financial services passport was based on the principle of equivalence, meaning it enabled UK firms to comply in countries where they are based because the regimes are equivalent in outcome. This no longer applies as of January 2021: UK and EU financial services institutions no longer have free access to each other’s market as they did prior to the Brexit Implementation Period. Therefore, UK firms will need to adapt to the local approach within each jurisdiction. This loss of passporting rights will have an impact on both UK and EU firms across various sectors and financial services.
How UK AIFMs can continue their financial services in 2021 within the EU Member States
As UK AIFMs are no longer able to use the AIFMD domestic marketing or passport regimes, they will now need to market their funds into the EU Member States. In order to do so, UK AIFMs need to follow the NPPR (national private placement regime) to obtain approval for marketing their funds in the relevant EU Member State. This may require AIFMs to adapt their activities and operational structures accordingly.
The reporting obligation for UK AIFMs that continue their financial services in EU Member States
UK AIFMs that want to continue their financial services and business activities in EU Member States will be operating under the AIFMD regime. Your firm will need to report into each jurisdiction where the AIF is established and where the AIFM is operating.
How UK AIFMs can easily report into multiple EU jurisdictions under AIFMD
AIFMD reporting into multiple jurisdictions is considered challenging because the required reporting XML for reporting into each jurisdiction will be validated differently per EU-Member State. This means that the fund manager will need to file a different reporting XML for each jurisdiction. In order to help fund managers set-up their reporting efficiently, we have made an easy-to-use AIFMD reporting template in which you can link all your fund data. Our software then let’s you export the correct AIFMD reporting XML for each jurisdiction, enabling you to report into multiple jurisdictions from one single data stream. You can take the free AIFMD reporting template here as part of our 2-week trial, and you are invited to join one of our webinars to get all the relevant information you need when setting up reporting for your funds.