CP12/32: Implementation of the Alternative ... - BVCA admin

November 2012
CP12/32
Implementation of the Alternative Investment Fund Managers Directive
firms. MiFID firms becoming AIFMs will need to check their compliance with the rules on
the responsibilities of the governing body, accounting, electronic data processing and
record-keeping.
Compliance function
7.30 We expect that the Level 2 Regulation will require an AIFM to establish a permanent and
independent compliance function commensurate with the size of its business and the types
of AIF it manages. We expect that any such requirements will be similar to those contained
in the MiFID and UCITS Directives. Such requirements are likely to be new for many other
CIS operators becoming AIFMs.
7.31 Respondents to DP12/1 suggested that the following factors should be considered in
deciding whether it would be disproportionate to have a separate compliance function:
• the number of employees in the AIFM;
• the number, size and type of funds under the AIFM’s management;
• the number and type of investors;
• the complexity of the AIFM’s business model;
• whether the AIFM is part of a larger group with a group compliance function;
• the extent of leverage in the AIFs;
• the volume of transactions;
• whether the AIFM operates across several jurisdictions;
• the degree of outsourcing; and
• whether the AIFM may hold client money. 69
7.32 It remains to be seen whether the Level 2 Regulation permits a firm not to maintain a
separate compliance function.
Internal audit function
7.33 Respondents to DP/1 suggested that, in deciding whether an AIFM should have a
permanent internal audit function, similar factors should be taken into account, as in the
decision of whether to have a separate compliance function. One respondent suggested that
an AIFM would need a separate compliance function before it needed a permanent internal
audit function.
69 Question 11 in DP12/1.
Financial Services Authority 53