AIFMD under review
With AIFMD under review the panellists considered how this could impact Jersey’s funds industry and its ability to interact with European investors.
One of the important proposals under the AIFMD II review concerns the third-country provisions. Given that Jersey is a third country vis-à-vis the EU, the issue is of particular focus.
“What they’re proposing is that where there’s a non-EU AIFM or a non-EU AIF, it can’t be established in a non-cooperative jurisdiction for tax purposes, which will now be defined by the EU list instead of the former FATF list,” noted Hernandez. “Also, that third country is not identified as a high-risk country according to the latest European laws on money laundering.”
Given that these qualifications are part of the proposals, Hernandez added: “Where does Jersey fit into all of that? In light of those proposals, helpfully Jersey does not trigger any of those things. It’s a cooperative jurisdiction as far as the EU is concerned, Jersey remains on their white list, and it’s not a high-risk jurisdiction. Therefore, it’s excellent news for Jersey.
“Not every international finance centre can claim to be all of those, so how does that affect third countries moving forward? Jersey is in an excellent place because it’s ticking all of the right boxes.”
Refson added that, on the point about Jersey’s access to Europe being via the national private placement regime (NPPR), KPMG feedback to the AIFMD II report showed overwhelming support for the private placement regime to remain in place. Over 200 managers are using Jersey as a base to market into Europe via the national private placement regime.
Patton told the roundtable there are 374 alternative investment funds in Jersey, which equated to a 9% increase in the past six months, across private equity, private debt, venture capital, real estate and infrastructure. He also said there are 201 Jersey-registered AIFMs marketing into the EU currently, which has only grown 2% in the past six months, but 58% since December 2016.
“Hernandez set out in detail why Jersey is well placed to continue marketing into Europe. Is there political will in Europe to materially change NPPR, which continues to be popular with fund managers and investors? Following a review of Jersey’s AIFMD regulations a number of years ago, Esma [the European Securities and Markets Authority] provided a green light to Jersey to obtain a passport to market freely into Europe, when third-country passports become available. Jersey will therefore remain a key location for funds with EU and non-EU investors regardless of any changes to the NPPR.”
