What are the most important investor related compliance requirements in 2016?
The continually evolving regulatory environment is a major priority of investment managers. The size and scale of funds’ compliance obligations continues to increase. We therefore expect more managers to pass on the management of their requirements to a third party.
Here are four types of regulations that investment managers may need to be on top of in 2016.
| Regulation | Objective | Obligations |
| Foreign Account Tax Compliance Act (FATCA) | To increase sharing of information by national tax authorities to prevent tax evasion by US persons. | Conduct due diligence and reporting on the tax status of investors. |
| Anti-money laundering (AML) and counter-terrorism financing (CTF) provisions | To detect and deter money laundering and prevent the financing of international terrorism. | Maintain an AML/CTF program to identify and verify the identity of investors, monitor their transactions and report suspicious matters to the relevant authority. Steps must be taken to identify whether the beneficial owner or a connected party is a politically exposed person (PEP). |
| Know Your Customer (KYC) obligations | To ensure a business verifies the identity of its customers and monitors their accounts and transactions to prevent or detect illegal activities. | Ensure customers and their transactions are identified, verified and monitored. Manage the risks posed by customers trying to misuse facilities. |
| Common reporting standards (CRS) | To tackle and deter cross-border tax evasion through the exchange of information about financial accounts between tax authorities. | Be able to identify the tax residency of account holders and make sure that the reporting obligations under CRS are understood and managed appropriately. |
The expense of complying with these regulatory changes is likely to drive more managers to outsource their investor reporting obligations. Fund administrators have better economies of scale in this regard as software and process changes are shared across clients.
To better understand how your investment business could better screen and monitor its customers and their connected parties, contact FundBPO.
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This article is not intended to be financial advice and is of a general nature only that does not take into account your individual objectives, financial situation or needs. While all efforts have been made to ensure the information contained in this article is accurate, errors may occur.
