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AML & Financial Services Regulatory

European Union: AIFMD II state of play – preparing for change

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In brief

On 25 November 2021, the European Commission published its long-awaited proposals to amend the Alternative Investment Fund Managers Directive (AIFMD), along with changes proposed to the UCITS Directive and ELTIF Regulation (AIFMD II). The Commission’s proposals follow ESMA’s August 2020 letter of recommendations for changes that could be made to the AIFMD framework (for more detail on those recommendations, please see our earlier blog post). Tripartite negotiations on AIFMD II are ongoing, following agreement by the Council of the EU on its general approach in June 2022, and adoption by the European Parliament’s Economic and Monetary Affairs Committee (ECON) of its negotiating position in January 2023. In this alert we aim to help prepare the industry for the forthcoming changes, focusing on some of the Commission’s key original proposals for amendments to the AIFMD and how the current positions taken by the Council and ECON diverge from the Commission’s proposals.

The changes set out in AIFMD II relate to, among other topics:

  • Delegation arrangements and substance requirements
  • Liquidity risk management
  • Loan origination activities
  • Fund marketing
  • Depositary and custody services
  • Data collection and reporting

Subject to the outcome of the negotiations and finalization, we expect that AIFMD II may enter into force in late 2023. EU Member States will then have 24 months to transpose the legislation and new requirements into national legislation, with legislative changes expected to take effect in late 2025.

Click here to read the full alert.  

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Caitlin McErlane is a partner in Baker McKenzie’s Financial Services & Regulatory Group in the London office. Caitlin's practice focuses on advising a range of global financial institutions on complex and high value regulatory matters. She advises banks, major corporates, payment institutions and asset managers on navigating UK and EU financial services regulation. She has particular experience in advising clients on regulatory implementation projects, day-to-day compliance issues, and regulatory issues arising in the context of large-scale transactions. She also expertise in the areas of banking and wholesale financial markets regulation, in particular in the FX and fixed income space, alongside experience advising market infrastructure providers, including major international exchanges, trading platforms, clearing systems and payment services providers, on a variety of compliance issues. Caitlin is also a member of the Baker's ESG and sustainability taskforce, and advises a range of clients on the drafting and implementation of ESG policies and the implications of becoming a signatory to the UNPRI and the Stewardship Code. Caitlin is an authority on regulatory reforms in the sustainability space and sits on a number of trade association working groups. She has recently been interviewed by Climate Action on her work and is a frequent speaker on the subject.

Author

Kimberly Everitt is Baker McKenzie's knowledge lawyer for Financial Services Regulation & Enforcement, covering the EMEA region, and brings over a decade of experience to the team in both knowledge and fee-earning roles. Prior to joining Baker McKenzie, Kim held roles specializing in contentious financial services regulation knowledge, and her fee-earning roles covered non-contentious regulation in the private equity and general financial services sectors.

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