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CI funds industry must prepare for the challenge of new regulation

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More than 125 delegates at the Channel Islands Funds Forum, held at the Hotel de France on 28 September and sponsored by KPMG, heard from a number of expert speakers that EU and US laws coming into force over the next few years will significantly increase the burden of regulation.

The event organised by Channel Island business magazine, Business Life, saw experts Margaret Chamberlain, Chair of the British Venture Capital Association, Ben Robins of Mourant Ozannes, James Greig of PWC Legal and Benoît Le Bret, partner at French law firm Gide Loyrette Nouel, speak about the EU’s Alternative Investment Fund Managers’ Directive (AIFMD). There are signs that the latest drafts of the level II regulations appear to have the potential to create a much greater regulatory burden, the suggestion being that there is likely to be more complex regulation than was expected after the first round of consultation.

As well as regulatory changes from the EU, speakers Daniel Dzenkowski, US Tax Senior Manager, KPMG London and Kristina Staples, former Securities and Exchange Commission (SEC) examiner and now Senior Principal Consultant at ACA Compliance, spoke about impending changes to the US regulatory regime. The FATCA and Dodd-Frank legislation will affect the majority of funds and their service providers which have US investors and Channel Islands fund businesses need to be prepared for the new legislation.

The clear message for the CI funds industry was that firms, whether managers, custodians or administrators, should begin looking now at how the new rules are likely to affect them. With some of the legislation coming into force in 2013, this will be the best way to manage the increasing compliance requirements within such a short timeframe.

The first of the afternoon’s roundtable discussions looked at some of the Islands’ competitor jurisdictions, particularly with regard to the role of non-executive directors on the boards of fund management companies.

The final discussion brought the forum to a close on a high note as a panel of fund managers and advisers expressed their belief that there continue to be plenty of opportunities for the Channel Islands to develop their funds industries even further by attracting more fund managers to the islands whilst also targeting specific markets such as Asia and Scandinavia.

Heather MacCallum, Executive Director at KPMG Channel Islands, was impressed by the quality and the in depth industry knowledge shown by the speakers.

“There’s no doubt that a lot of eyes were opened today as the speakers gave clear and practical information about the huge effects that EU and US draft regulations will have on the Channel Islands’ fund industry,” she says. “Many of us thought that the AIFMD had lost most of its teeth after the first round of consultation but Benoît and Margaret gave us the informed view, which made it clear that the Directive’s key provisions were still far from clear and subject to different interpretations.

“Hearing from people who have worked in the EU Commission and the US SEC gave us new insight into the way that these drafting processes work, warning us that we all have our work cut out to comply with these laws and regulations in the future and that sticking our heads in the sand is not an option.”
 

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