The European Fund and Asset Management Association, Efama, has warned that the draft Regulatory Technical Standards (RTS) developed by the EU’s Anti-Money Laundering Authority (AMLA) pose a cost and operational threat to asset mangers already implementing customer due diligence as part of distribution activities.
Efama stated: “Since its establishment last year, AMLA has been diligently working on a comprehensive list of RTS. While AMLA has acknowledged that asset management requires a different approach compared to other financial services firms, EFAMA has raised concerns regarding their recent RTS consultation related to customer due diligence obligations.”
“To avoid unintended consequences for asset management distribution, further improvements to the draft RTS are essential. The current text would negatively impact the availability of EU investment funds for both EU and global investors, jeopardizing the Ucits framework’s status as a global gold standard.”
“To address this issue, we urge AMLA to recognise the following points:
- Fund distribution primarily occurs through other entities; thus, conducting customer due diligence on underlying investors is redundant and counterproductive. AML rules must take into account the distinctive features of asset management that already significantly mitigate money laundering and terrorist financing risks.
- Without genuine relief from unnecessary compliance burdens, various EU and global fund distribution models risk collapsing under the strain of duplicative and inefficient AML obligations, which include unnecessary insight into their intermediaries’ client base.”
Zuzanna Bogusz, Efama senior regulatory policy advisor, commented: “The new AML Authority has an opportunity to establish harmonised due diligence rules that will, at long last, fully recognise the unique attributes of asset management. The risks of not doing so extend beyond AML obligations, potentially negatively impacting Ucits distribution across the globe.”
The full Efama response to the AMLA consultation process can be found here: https://www.efama.org/sites/default/files/files/26-4026_efama_response-to-the-amla-consultation-on-the-rts-on-cdd.pdf
