Asset Management & Investment Funds: Irish Practice Developments - Aug 2021
CBI approach to AIFs or UCITS gaining exposure to crypto-assets
The Central Bank of Ireland (CBI) has updated its AIFMD Q&A (new Q&A, 1145) and UCITS Q&A (new Q&A, 1100). The Q&As set out the CBI's position with respect to Retail Investor Alternative Investment Funds (RIAIFs), Qualifying Investor Alternative Investment Funds (QIAIFs) and UCITS, gaining exposure (directly or indirectly) to crypto-assets.
The CBI Q&As concern crypto-assets that are based on an intangible or non-traditional underlying.
The CBI is open to considering submissions for a QIAIF seeking to gain exposure to crypto-assets. In such cases, the QIAIF would need to make a submission to the CBI outlining how the risks associated with such exposures could be managed effectively by the AIFM. Such risks could include: liquidity risk; credit risk; market risk; operational risk (including fraud and cyber risks); money laundering / terrorist financing risk; and legal and reputation risk.
The CBI notes that it is "highly unlikely" that UCITS or a RIAF investing directly or indirectly in crypto assets would be approved.
The CBI's approach to crypto-assets will be kept under review and will continue to be informed by European regulatory discussions on the topic. Its approach may also change should new information or developments emerge in the future.
CBI end of year timelines
In previous years, the CBI issued details of its deadlines for investment funds seeking authorisation/ approval prior to year-end. From this year, 2021, this practice will no longer apply. Applications will be assessed in accordance with the authorisation process that applies throughout the year. The CBI will notify industry, later in the year, about submission timeframes for QIAIF authorisations/approvals and notings, ICAV registrations and revocation applications.
Cross-border distribution of funds
Directive (EU) 2019/1160 on the cross-border distribution of collective investment undertakings (CBDF) was implemented into Irish law by:
- the European Union (Undertakings for Collective Investment in Transferable Securities) (Amendment) Regulations 2021, S.I.413 of 2021, which mirrors the wording of Article 92 of the CBDF
- the European Union (Alternative Investment Fund Managers) (Amendment) Regulations 2021, S.I. 414 of 2021, which mirrors the wording of Article 43a of the CBDF.
There are no additional provisions in the Irish implementing regulations which extend or elaborate on the provisions detailed in the CBDF.
The CBI published website guidance related to CBDF:
- information on the national laws, regulations and administrative provisions governing marketing requirements (available here for UCITS and here for AIFS); and
- information on the fees and charges levied by the CBI on UCITS management companies, AIFMs, EuSEF managers and EuVECA managers (available here for UCITS and here for AIFs).
Translations of ESMA's Guidelines on marketing communications under the Regulation on cross-border distribution of funds (CBDF) were published on ESMAs website on 2 August 2021. We discussed these guidelines in our May bulletin. These guidelines will apply from 2 Feb (six months after 2 August).
You can read more about CBDF or listen to our podcast here
Money Market Fund stress testing
The CBI published a notice of intention on the application of the ESMA Guidelines on stress test scenarios under the Money Market Fund (MMF) Regulation. The CBI expects full compliance with those Guidelines from 29 August 2021. The CBI will, in due course, consult on the incorporation of a provision in the CBI UCITS Regulations and AIF Rulebook.
CBI markets updates
The CBI published issue 11 2021 of its Markets Update with the following highlights:
- Central Bank publishes a notice of intention in relation to the application of the ESMA Guidelines on stress test scenarios under the Money Market Fund (MMF) Regulation (discussed above)
- Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Guidelines for the Financial Sector (revised 23 June 2021) (as reported our June bulletin) see below for more detail)
- IOSCO publishes results of examination of ETF behaviour during COVID-19 induced market stresses
The CBI published issue 10 2021 of its Markets Update with the following highlights:
- Central Bank publishes website guidance related to Articles 1 and 2 of the Commission Implementing Regulation (EU) 2021/955 (CBDF) (discussed above).
- Central Bank publishes the Fortieth Edition of the Central Bank AIFMD Q&A Document (discussed above in respect of exposure to crypto assets)
- Central Bank publishes the Thirty-Second Edition of the Central Bank UCITS Q&A Document (discussed above in respect of exposure to crypto assets)
- MAR Industry Communication – July 2021 (discussed in our July bulletin)
- “The importance of the role of the Designated Person in Fund Management Companies" - Director General, Financial Conduct, Derville Rowland
CBI's Beneficial Ownership Register for certain financial vehicles
As reported in previous ALG AMIF bulletins, CCFs and ILPs are required to make their submission to the CBI's Beneficial Ownership Register within the following timelines:
- CCFs and ILPs coming into existence after 1 March 2021 must file on the Beneficial Ownership Register within six months of coming into existence
- CCFs and ILPs in existence on 1 March 2021 must file on the Beneficial Ownership Register by 1 September 2021.
The CBI is working towards the mandatory filing of PPSNs for beneficial owners of CFVs to comply with relevant legislation. In due course the CBI will notify industry of its process for beneficial owners who do not have a PPSN. From Q4 2021, the CBI will seek a resubmission of beneficial ownership information by all CFVs, to include the following additional/amended information:
- PPSN data for beneficial owners
- CBI Reference Number (as applicable to non-PPSN holders)
- date the individual left the beneficial ownership register of the CFV (as applicable)
- amendment to wording of PCF question.
The CBI notes that CFVs should consider their obligations under applicable data protection law and should consider reviewing their data protection privacy statement to reflect the use of PPSNs for the purpose of the Beneficial Ownership Register of CFVs.
For more information please contact a member of the Asset Management & Investment Funds team.
Date published: 26 August 2021