Insights

Funds Bulletin

November 2015

The Deloitte Funds Bulletin delivers you our latest updates and insights on industry developments. We hope you find this edition useful and please contact us if you have any queries.

Cyber Security

The Central Bank of Ireland (CBI) has recently advised the Fund Management industry that it must put in place effective systems to manage cyber security risk. CBI Director of Markets Supervision, Gareth Murphy, has said “ultimate accountability for the robustness of these systems and procedures rests with the boards of these firms.”

A cyber attack can cause rippling brand, reputation, and financial damage within hours. While massive data breaches are commonplace, a growing number of attackers are after more than data and financial gain; they can be out to cause widespread chaos, destroy or disrupt operations, or undermine the competitive standing or market position of their target.

Central Bank of Ireland Anti-Money Laundering Report

Countering the Financing of Terrorism and Financial Sanctions Compliance in the Irish Funds Sector

On November 18th 2015, the Central Bank of Ireland (CBI) issued the long awaited report on Anti-Money Laundering, Countering the Financing of Terrorism and Financial Sanctions Compliance in the Irish Funds Sector. Over the course of 2014 the CBI carried out on-site inspections, supplemented by Risk Evaluation Questionnaire, the outcomes of these inspections and questionnaires are the subject of the report. While the Funds sector in Ireland is the particular focus of the report, many of the matters raised relate to the broader financial services sector in Ireland.

This report issued by the CBI serves to highlight that Anti-money laundering and counter terrorist financing (“AML / CTF”) remains a key priority for them.

This documents sets out a brief summary of the main issue areas identified which we delve into in more detail.

Investor Money or Fund Assets

With approximately four months to go before the Investor Money Regulations come into effect, Fund Services Providers are assessing their business and operating models to determine the best fit for their organisation with regard to managing investor money and fund assets. As a result, a number of operating models are emerging across the industry, which we discuss further in our pdf.

Financial Reporting Exposure Draft 62 (FRED 62)

On 4 November 2015, the Financial Reporting Council (FRC) has issued a Financial Reporting Exposure Draft 62 (FRED 62) proposing limited scope improvements to FRS 102 relating to fair value hierarchy disclosure requirement, which will have an impact on the financial statements of investment funds.

Europe's fund expenses at a crossroads

The benefits of mutualising the cost of distribution

The global investment fund industry is much larger today than it has ever been. Its European component more than doubled in size over the past ten years, with total assets under management surpassing the €10 trillion mark in the course of 2015.1 Against the background of the deepest global recession since World War II, a major political crisis, and an unprecedented number of regulatory initiatives, such a strong and sustained growth emphasizes the attractiveness of investment funds and the success of the UCITS brand.

Despite these impressive achievements, the industry will still have many challenges to overcome in order to secure and strengthen its growth. Our report originates from the observation that three trends will directly impact the future success of our investment fund model.

S110 reporting requirements for SPV's

In October 2015, the Central Bank finalised and issued increased reporting requirements for Irish Companies that are registered with the Irish Revenue Commissioners under section 110 of the Taxes Consolidation Act 1997 (‘SPVs’). The aim of which is to improve the oversight of the Structured Finance sector. The new reporting requires all SPVs, or agents nominated on behalf of SPVs, to report quarterly to the Central Bank. The first period of reporting begins in Q3 2015 and is due on 20th November 2015.

November UCITS Update

The Central Bank of Ireland issued a new set of regulations relating to Irish domiciled UCITS, their management companies and their depositaries titled “Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Undertakings for Collective Investment in Transferable Securities) Regulations 2015” on 5 October, 2015.

European Commission publishes lists of Excluded Accounts and Non-Reporting Financial Institutions

On October 31, 2015, the European Commission published a resolution which included lists of the Excluded Accounts and Non-Reporting Financial Institutions (“Non-Reporting FIs”) under the Common Reporting Standard (“CRS”).

Release of updated OECD CRS related FAQ’s

On 10 November 2015, the OECD issued an updated version of their CRS FAQ’s which included further guidance on the timing for obtaining and validating self-certifications on account opening.

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