How DMS streamlines AIFMD Compliance in Financial Services Sector

In this article, we’ll explore what the Alternative Investment Fund Managers Directive (AIFMD) is, and the stress it has caused the financial sector in the European Union. Then we’ll talk about how document management can help financial companies manage the administrative components of this law and release some of the burden it is creating.

What Is AIFMD?

The Alternative Investment Fund Managers Directive (AIFMD), an asset management reform, was published in the Official Journal of the European Union on July 1, 2011. By July 22, 2013, all European Union member countries were supposed to have transposed AIFMD into law. However, by 2014, some members still had not complied with these requirements. The European Commission issued a warning for several countries, including Spain and Poland, for not complying with AIFMD in December 2014.

What Does AIFMD Entail?

AIFMD covers the management, administration, and marketing of alternative investment funds (AIFs). AIFMD’s scope is broad, but it focuses mainly on regulating the Alternative Investment Fund Manager (AIFM) rather than the AIF.

The AIFMD aims to establish an EU-wide framework for monitoring and supervising risks posed by the AIFM and the AIF they manage. It includes regulations on hedge funds, private equity funds, retail investment funds, investment companies, and real estate funds. The Directive also includes new requirements for firms that are acting as a depository for an Alternative Investment Fund.

The Aims of the AIFMD

The AIFM Directive aims to enhance supervisory practices among competent authorities. This in turn should support timely and preemptive action to keep the European financial market stable and reduce risk.

The Directive also aims to improve the protection of investors. This is accomplished by imposing new depositary standards and enhancing the reporting transparency with new disclosure rules. Additionally, the Directive requires mandatory reporting to competent authorities.

Last but not least, AIFMD aims to foster efficiency and cross-border competition. This can only be accomplished by the deregulation of national barriers and creating level playing fields. That’s why AIFMD includes harmonized rules that all EU member nations have to comply with.

AIFMD Requirements

AIFMD requirements are vast and complicated because they cover everything from marketing to the administration of alternative investment funds. Under AIFMD, fund managers have to comply with their conduct of business regulations. AIFMD proposes regulations on the fair treatment of investors, avoiding conflicts of interest, remuneration, risk management, valuation, as well as disclosure to investors and regulators.

AIFMD poses regulations on regulatory capital, initial capital, and professional indemnity insurance requirements. The main aim is keeping the investment safe, which is done with the mandatory appointment of depositaries and custodians. The Directive also sets controls over the delegation of certain tasks, such as portfolio management and risk management. Last but not least, the Directive imposes rules on the use of leverage by AIFMs for all alternative investment funds under their management.

What Will Change for Individual Firms

It’s possible that a number of firms have to requalify under AIFMD regulations to receive the permission to manage investment funds. Some fund managers may find that they are being regulated for the first time with AIFMD in effect. Depending on the country the firm operates in, there may be substantial differences to the management and administration of alternative investment funds before and after the AIFMD regulations.

Meeting the New Challenges

The global financial services industry has to meet many new challenges. Complying with new regulations is becoming an everyday occurrence. Not every new regulation is as complex as the AIFMD, but your firm has to be prepared to comply with new requirements. Fortunately, your company can use document management systems to manage the administrative components of AIFMD and other new laws.

Manage Your Documentation

It can be difficult to keep track of documentation your company is required to create and store to fulfill the requirements set by new regulations such as the AIFMD. Fortunately, you can use enterprise content management to make sure that nothing falls through the cracks.
Increase Employee Efficiency with Workflows
With the use of workflows, you can increase efficiency inside of your company. Workflows also help you ensure that your reporting deadlines are met. As a nice side effect, workflows keep your employees on tasks. Additionally, workflows help managers better oversee the workload of each employee and plan accordingly.
Keep Your Documents Accessible
One of the biggest problems with adhering to regulations is finding the right documents at the right time. With document management, it has never been easier to keep track of your paperwork. If you don’t know where to look for a specific document, it only takes a few clicks to find what you’re looking for with the full-text search function. The best part is that everything you need is accessible from anywhere, even from mobile devices.
Save Time and Money with eFileCabinet
The best part is that eFileCabinet helps you save time and money while helping you stay in compliance with AIFMD and other regulations. We can help you manage your documents safely and securely.

By | 2016-12-15T11:58:41+00:00 January 19th, 2016|
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