In order to future proof and ensure continuity of distribution arrangements in a hard BREXIT scenario -post March 2019-, some UK based initiators have already decided to establish proprietary AIFMs in Luxembourg, or, driven by economies of scale, are actively negotiating with third party AIFMs to provide these services for existing and new raise funds, as under a delegation model, even post BREXIT, the fund initiator should still be able to provide portfolio management from the U.K. or elsewhere.

 

On 23 August 2018, the CSSF published its new CSSF Circular 18/698 on the “authorization and organization of Luxembourgish investment management companies; Specific provisions on the fight against money laundering and terrorist financing applicable to investment fund managers and entities carrying out the function of registrar agent” (the “Circular”).

 

The Circular confirms existing practices already applied by the CSSF as well as some new requirements in relation to AML/KYC, governance, central administration, internal controls and key functions such as delegated activities, marketing, internal administration procedures and valuation.

 

The combination of a potential hard BREXIT scenario and the implementation of the Circular might be seen as challenging for fund initiators but is certainly a great opportunity for Luxembourg to demonstrate its infrastructure, experience and to provide efficient solutions to address managers concerns.