Regulators heavy controls on the AIFMD Annex IV reports, what should asset managers do?

Regulators heavy controls on the AIFMD Annex IV reports, what should asset managers do?
The AIFMD review as part of the capital market reunion package proposed by the European commission attracts most market focus. In parallel to the legislative amendments on the level 1 directive, almost all the EU national regulators applied or is planning to apply tighter hands on the level 2 Annex IV reporting under the AIFMD directive. In December 2020, ESMA published the guidelines on Article 25 of the AIFMD Directive, which requires the national competent authorities (NCAs) to apply risk assessments to alternative Investment Funds managed by the AIFMs under their jurisdiction using the data reported from AIFMD Annex IV reports and other sources under a two-steps approach on quarterly basis. Since the application of this guideline, we observe continuously increasing controls from the NCAs on the completeness, correctness and consistency of the reported Annex IV reports. Under this background, It is not too surprising for the market to receive the consultation from the AMF on even tighter controls over the reports.   What should the AIFMs do to be compliant with the growing demands from the regulators? Here are the steps we'd suggest you to consider:
  1. Use data from one data source, ideally a data warehouse
  2. Improve data quality by automatic controls
  3. Build an automated reporting process with transparency to the stakeholders
  4. Have experts helping to update the process and controls on a regular basis
With LPA we assure consistent figures via cross checks and validation rules with country specific add-ons to be compliant before the report goes to the various regulators. You can also trace back backup-data and historical reports and resend them if necessary, within 24 hours. Contact our experts who could advice and guide you through the reporting barriers.
Haojin Ba

Head of Regulatory and Compliance Management

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