Due to the evolving regulatory environment, fund compliance is expected to become more challenging in the coming years. Previously, the alternative asset market was not as heavily regulated as it has become currently. This is due to governments worldwide proposing and enacting compliance regulations to increase transparency in the market and protect investors and fund managers.  

Intergovernmental organisations such as the Financial Action Task Force (FATF) act as global watchdogs whose aim is to prevent money laundering and terrorist financing. The FATF is present in 200 jurisdictions and sets international standards to promote legislative and regulatory reforms through compliance rules.  

Beyond the protection that fund compliance regulations offer to managers, investors and the financial industry, a culture of compliance allows asset managers to benefit from the industry’s growth. Below, we discuss some of the most significant regulatory compliance in major financial hubs.  

Financial Services and Markets Act 2022 (Singapore) 

The Financial Services and Markets Act 2022 is a comprehensive regulation that oversees financial services and markets. It exercises control over the resolution of financial institutions, licensing and regulation of digital token providers and other related matters.  

The Monetary Authority of Singapore passed the legislation to mitigate sector-wide financial risks, create provisions for an anti-money laundering framework and enhance the MAS efficiency of its activities. The act applies to market players from financial institutions, including alternative assets such as funds and digital tokens. 

Alternative Investments Fund Manager Directive (EU)

The AIFMD streamlines fund management and cross-border distribution in Europe. It applies to EU and non-EU fund managers with EU-registered alternative investments. In exchange for regulatory compliance, it provides a marketing passport for fund managers to market their funds across the EU. This passport is also accessible to non-EU fund managers, meeting the AIFMD regulatory requirements. The reporting requirements for AIFMD include identification materials, illiquid profiles, principal markets, instruments, and exposures, asset valuation, risk profiles and management strategies, and investment strategies. Regulatory authorities may also request other information relevant to compliance.  

Markets in Financial Instruments Directive (EU) 

The MiFID II aims to regulate EU financial markets and investment services. It applies to everyone who wishes to buy and sell investments in the EU – including fund managers. In particular, MiFID II establishes requirements for ‘authorisation and operating conditions for investment firms and regulated markets, provision of investment services or activities by third-country firms and supervision, cooperation and enforcement by competent authorities.’ 

The Dodd-Frank Reform and Consumer Act (US)

The Dodd-Frank Reform and Consumer Act was established in the US to prevent an economic crisis. The Securities and Exchange Commission adopted sections of this act to urge transparency for hedge funds and other alternative assets. The SEC requires stricter reporting obligations for private funds, such as detailed information on fees, performance and expenses. It also has a necessary threshold for assets under management (AuM) and regulatory reporting schedules.  

Fund Manager Code of Conduct (Hong Kong) 

Hong Kong outlines the compliance requirements for fund managers in its code of conduct. The conduct applies to all fund managers who manage investment schemes and are registered with the Securities and Futures Commission (SFC). Fund managers must establish and maintain effective risk management procedures and comply with internal control guidelines. They must also have a compliance function, including a compliance officer, to ensure adherence to internal policies and legal requirements.  

Compliance in the Digital Asset World 

Alternative assets also include new currencies, such as digital assets. Regulations for digital assets are still developing, but according to experts, these will soon progress to keep up with industry growth. The European Union recently passed the Markets in Crypto Assets regulation (MiCA), which seeks to regulate crypto-asset transfers. Compliance becomes more complex as the EU demands transparency when dealing with cryptocurrencies, tokens and other digital assets. Understanding regulatory requirements and risk mitigation strategies is required to ensure compliance for market players.

Bolder Group as your partner in compliance

Prioritising compliance amidst an evolving regulatory landscape for funds can be beneficial in retaining integrity and transparency for fund managers. Partnering with Bolder Group can help you meet your fund compliance obligations across multiple regions. We provide expert compliance solutions for various alternative assets including hedge funds, private equity, venture capital funds, real estate funds and digital assets. Contact our team to learn more about our services.

Disclaimer: Bolder Group does not provide financial, tax or legal advice and the information contained herein is meant for general information purposes only. We strongly recommend that before acting on any of the information contained herein, readers should consult with their professional advisers. The Bolder Group accepts no liability for any errors or omissions in the information, or the consequences resulting from any action taken by a reader based on the information provided herein.

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