The Alternative Investment Fund Managers Directive (AIFMD) was published in the Official Journal of the European Union on 1 July 2011 and each EU Member State had until 22 July 2013 to implement the Directive into their national laws.
By 22 July 2014, all existing EU AIFMs meeting certain thresholds were to request an authorization in their respective home competent authorities and demonstrate full compliance with the Directive.
In Luxembourg, the Directive was transposed into national law on 12 July 2013. Since, the CSSF has published and updates on a regular basis a Frequently Asked Questions (FAQ), providing their views on the implementation of the Directive: The CSSF also publishes the list of Luxembourg and authorized and registered AIFMs on their website.

The scope of the AIFMD covers portfolio management and risk management (the core activities of an AIFM) as well as other functions including but not limited to depositary, valuation, administration, reporting to investors and regulators, and marketing of alternative investment funds (AIFs). Its focus is on regulating the Alternative Investment Fund Manager (AIFM) rather than the AIF.

The AIF as provided by the AIFMD refers to collective investment undertakings, which raise capital from a number of investors with a view to investing it in accordance with a defined investment strategy for the benefit of those investors, and which do no not qualify as UCITS. Hedge funds, real estate and infrastructure funds, private equity funds etc. are therefore targeted by the AIFMD, regardless of their current legal regime or form. In Luxembourg, Part II UCIs, SIFs, SICARs and non-regulated investment vehicles qualify or may qualify as AIFs.

In addition to the Directive, the European Securities and Markets Authority (ESMA) was given the mandate by the EU to propose Level 2 legislation and to issue regulatory and implementation technical standards as well as guidelines. The AIFMD Level 2 Regulations were published by the European Commission on 19 December 2012.

Your AIFMD challenges

The AIFMD heavily affects the non-UCITS sector.

The directive significantly impacts the current organisational structure and business practice of the non-UCITS sector. The challenges to be addressed by the AIFMs covered by the directive are the following:


Scope of the Directive is very broad. The AIFMD aims to regulate Alternative Investment Funds Managers (AIFMs) of Alternative Investment funds (AIFs). AIFs being basically defined as all non-UCITS funds, thereby covering hedge and private equity funds but also real estate structures and 'plain vanilla' long only non UCITS funds. The Directive provides some exemption for smaller AIFMs as well as limited grand fathering clauses. A few uncertainties remain. In particular, joint ventures or family office vehicles are not expected to be considered AIFs. The difficulty lies in the lack of definition of these structures.

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Rules regarding the liability of the depositary are far reaching. Conditions of safe-keeping of assets, the due diligence and supervision duties over sub-custodians, if any, and the monitoring of the fund’s operations will dramatically increase with these new regulations.

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Operating conditions

The AIFM will have to comply with specific substance, conflict of interest, risk management and liquidity management requirements.

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Risk management

A clear risk management process needs to be implemented whereby all risks associated with the AIF will need to be measured and monitored (e.g. market risk, counterparty risk and operational risk). A strong liquidity management process will need to be put in place.

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This function will need to be robust and have a high degree of operational independence.

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The AIFM will have to adopt specific remuneration policies aligned to the recent EU Capital Requirements Directive for the financial services industry.

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Reporting and disclosure

The AIFM will have to comply with several reporting and disclosure requirements towards the regulators and the authorities.

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Third country regime

A dual regime (EU vs Non EU) will operate for a period of time. A EU AIFM will need to be fully compliant as from 2013 at which point access to the EU passport will be granted. On the other hand, non-EU AIFMs, as from 2013, will only need to comply with transparency provisions of the Directive. Access to the EU passport will not be granted and marketing to EU investors will continue via national private placement regimes (NPPRs). Such NPPRs may evolve following the transposition of the Directive into national law. Non-EU AIFM should closely monitor such evolution. As from 2015, AIFs managed by non-EU AIFM may be granted access to the EU passport, at which point in time the non-EU AIFM will not only need to fully comply with the Directive (as a EU AIFM) but will also be subject to additional specific 'third country' provisions (e.g. cooperation and tax agreements, designation of an EU competent authority and member state of reference and legal representative). Non EU AIFM, for which marketing to professional investors in the EU, is relevant need to consider and assess the impact of this dual regime and take appropriate actions accordingly; one potential solution would consist of establishing a EU AIFM.

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In addition to other conditions, there are certain requirements which may have major impacts for specific industries, like the asset stripping rules and requirements in case of investments in non-listed companies and issuers which will primarily affect the private equity industry.

How we can help

How we can help

Understanding a new regulation and more importantly its impact can be challenging, especially when there's a lack of detail and guidance. The Directive contains many technical requirements, some of which may require significant modifications to your current structures and organisation.

Our multi-disciplinary and multi-industry team of professionals in business strategy, operation and structuring, regulatory compliance, tax, remuneration and assurance services are ready to assist you, identify and assess the many impacts of the Directive on your organisation and develop an integrated response to the AIFMD.

Our team works closely with the PwC European AIFMD working group to ensure knowledge and best practices are shared on a Pan-European basis.

Our experts can help you in:

  • AIFM application
  • Adding value with AIFMD Compliance
  • Risk management support
  • Compliance function support
  • Internal audit support
  • Reporting to the CSSF
  • Distribution services
  • Remuneration
  • Valuation
  • Raising awareness and building knowledge within your organisation


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Marie-Elisa Roussel-Alenda

Partner, AIFMD Leader

Tel: +352 49 48 48 2050

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