CRIMINAL JUSTICE (MONEY LAUNDERING AND TERRORIST FINANCING) ACT 2010
The Third Anti-Money Laundering Directive was transposed into Irish law on 5 May, 2010 by the Criminal Justice (Money Laundering and Terrorist Financing) Act, 2010 (the "CJA 2010") and has been effective as of 15 July, 2010.
The period of consultation in respect of the final draft of the industry Money Laundering Guidance Notes has now closed. Once the core guidance notes have been published, it is expected that the process of finalising the sectoral guidance notes will commence.
On the 25 March, 2011 Council Regulation (EU) No 296/2011 amending Regulation EU No 204/2011 came into effect. This concerns restrictive measures to be applied in view of the situation in Libya. Designated persons are required to have appropriate procedures in place to meet with the requirements of this Regulation.
If you would like further information on anti-money laundering requirements or any changes arising out of the CJA 2010, Dillon Eustace regularly advises on all aspects thereof and provides training sessions on this topic. Training can be held either at Dillon Eustace's office at 33 Sir John Rogerson's Quay, Dublin 2 or in house training can be provided at a venue of your choosing.
UCITS, NON-UCITS & HEDGE FUNDS
EC's Draft Directive on Alternative Investment Fund Managers
The consultation period for the European Securities and Markets Authority's ("ESMA") call for evidence on the Alternative Investment Fund Managers Directive Level 2 implementing measures ended in January. ESMA is to provide further details in due course in relation to any public consultation it will carry out in light of responses to the call for evidence.
The European Commission wrote to ESMA on the 21 February, extending the deadline for ESMA's Level 2 technical advice for a further month (to 16November, 2011).
For detailed information on the Directive including how it may impact your business, please refer to your usual contact in the Asset Management and Investment Funds Unit of Dillon Eustace.
ISE Approves Additional Requirements for Listing Actively Managed ETFs
Further to an application by Dillon Eustace to list the first actively managed ETF on the Irish Stock Exchange (the "ISE"), the ISE has issued a policy note addressing a number of rule changes facilitating such listings going forward. A review of these changes is available on our website:
European Systemic Risk Board Holds First Meeting
The European Systemic Risk Board ("ESRB") held its first meeting on 20 January, 2011.
The ESRB is aimed at contributing to the prevention or reduction of systemic risks to financial stability in the EU that arise from developments within the financial system.
The European Central Bank has commented that the ESRB will also contribute to the smooth functioning of the internal market and is aimed to ensure a sustainable contribution of the financial sector to economic growth.
However, the European Commission has stated that the ESRB will not have any binding power to impose measures on Member States or national authorities. It has been conceived as a "reputational" body with a high level composition that should influence the actions of policy makers and supervisors by means of its moral authority.
The seat of the ESRB will be in Frankfurt, Germany. The Chair of the ESRB is the President of the European Central Bank, Jean-Claude Trichet, while Mervyn King, Governor of the Bank of England, was elected as first Vice-Chair of the ESRB by the members of the General Council of the European Central Bank.
ESMA's Definition of European Money Market Funds
ESMA has published its guidelines on a common definition of "European money market funds" (the "Guidelines").
The Guidelines aim to improve investor protection by setting out criteria to be applied by any fund that wishes to market itself as a money market fund. The criteria reflect the fact that investors in money market funds expect the capital value of their investment to be maintained while retaining the ability to withdraw their capital on a daily basis. A common definition will also help provide a more detailed understanding of the distinction between funds which operate in a very restricted fashion and those which follow a more 'enhanced' approach.
The Guidelines set out two categories of money market fund: Short-Term Money Market Funds and Money Market Funds. This approach recognises the distinction between short-term money market funds, which operate a very short weighted average maturity and weighted average life; and money market funds which operate with a longer weighted average maturity and weighted average life. For both categories of fund, ESMA expects that there should be specific disclosure to explain clearly the implications of investing in the type of money market fund involved. For Money Market Funds, for example, this means taking account of the longer weighted average maturity and weighted average life of such funds. For both types of money market fund, this should reflect any investment in new asset classes, financial instruments or investment strategies with unusual risk and reward profiles.
The Guidelines will enter into force in line with the transposition deadline for the revised UCITS Directive (1 July, 2011).
However ESMA has provided that money market funds existing prior to 1 July 2011 will have until 31 December 2011 to comply with certain provisions of the Guidelines.
Please contact your usual contact at Dillon Eustace for further information.
Re-domiciliation of Collective Investment Schemes to Ireland
The Companies (Miscellaneous Provisions) Act 2009 amended the Companies Act 1990 and the European Communities (Undertakings for Collective Investments in Transferable Securities) Regulations 2003, to provide an efficient legislative mechanism for corporate investment funds to re-domicile into Ireland. The Companies Act 1990 (Relevant Jurisdictions under Section 256F) Regulations 2010, identified the following as relevant jurisdictions from which corporate CIS could re-domicile into Ireland: Bermuda, BVI, Cayman Islands, Guernsey, Isle of Man and Jersey.
Since the introduction of this legislation a number of funds have re-domiciled and more are in the process of re-domiciling. The first such re-domiciliation in respect of a Guernsey investment fund company to Ireland took place in this quarter. While the legislation provided an efficient legal mechanism for funds to re-domicile to Ireland, the Central Bank has now provided further guidance regarding the regulatory process and procedure for re-domiciling funds into Ireland e.g. the documentation that must be submitted to the Central Bank, confirmations required, etc.
In addition, although there are no legislative provisions which specifically address the re-domiciliation of unit trusts to Ireland, the Central Bank has determined that a re-domiciliation process similar to that in place for corporate CIS should apply in respect of unit trusts.
Please contact a member of the Regulatory and Compliance Department in Dillon Eustace should you need further information on the regulatory process and procedure for re-domiciling investment funds into Ireland.
Consultation on Revised UCITS Notices, NU Notices and Guidance Notes
In February 2011, the Central Bank issued a consultation paper on amendments to UCITS Notices, NU Notices and Guidance Notes to reflect the changes necessary under the UCITS IV Directive and other changes. Submissions by interested parties were to be made no later than 15 March 2011.
Corporate Governance Code for Irish Domiciled CIS
In late September, 2010, the IFIA published the voluntary Corporate Governance Code for Irish Domiciled Collective Investment Schemes (the "SI 450 Code").
The SI 450 Code may be adopted by Irish domiciled collective investment schemes on a voluntary basis but the SI 450 Code does reflect existing practices imposed under the Companies Acts 1963 to 2009 and the Central Bank's UCITS & Non-UCITS Notices along with Guidance Notes.
Adoption of the SI 450 Code should enable Irish domiciled collective investment schemes with shares admitted to trading on a regulated market to refer to the SI 450 Code in a specific section in the Directors' Report of that collective investment scheme's Annual Report and in doing so comply with the provisions of the S.I. No. 450 of 2009 (as amended). Back in January 2010, the IFIA had published template corporate governance statement disclosures which might be included in an investment funds financial statement to ensure compliance with the provisions of S.I. No. 450 of 2009 (as amended). As the SI 450 Code is now available, the IFIA has revised the template corporate governance statement disclosures.
The SI 450 Code covers general requirements applicable to a board of directors including its composition, meetings, its role and committees. It further deals with...