September 2024 Regulatory Updates

Key dates

September 12, 2024

- AMF Enforcement Committee issued the decision

September 16, 2024

- Public announcement of sanctions

No specified deadline Deadline

- Appeal period remains open (appeals may be lodged against the decision)

Suggested considerations

• *Audit Existing Procedures: Review and document all procedures governing regulatory and marketing materials for alternative investment funds, ensuring they address risk disclosure accuracy and asset return reporting requirements.
• *Formalize Investment Selection Process: Document and implement investment selection procedures that demonstrate application of "high standard of diligence," including documented investment committee decisions, due diligence checklists, and approval workflows.
• *Enhance Conflict of Interest Controls: Map all potential conflicts in asset allocation decisions and implement specific controls (e.g., segregation of duties, documented approvals, independent review) for each identified conflict scenario.
• *Implement Comprehensive AML/CFT: Extend AML/CFT procedures to cover both fund-level investments and individual client subscriptions, with documented customer due diligence, beneficial ownership verification, and transaction monitoring.
• *Strengthen Internal Control Functions: Establish or enhance internal audit/compliance functions with documented monitoring controls covering investments, conflicts of interest, and AML/CFT, with regular reporting to management and governance bodies.

What changed

• The decision does not introduce new regulatory requirements but rather clarifies enforcement expectations across existing obligations:
• Regulatory Documentation Standards: Asset managers must implement documented procedures governing the preparation of all regulatory and marketing materials for alternative investment funds, with...
• Investment Due Diligence Standards: A "high standard of diligence" is required when selecting investments, with formal investment procedures that must be consistently followed and documented.
• Conflict of Interest Management: Specific controls must address conflicts in asset allocation decisions, with documented decision-making processes that demonstrate conflict mitigation.
• AML/CFT Implementation: Anti-money laundering and combating the financing of terrorism procedures must be applied comprehensively to both fund-level investments and individual client subscriptions,...