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Sanne Regulatory Update Q1 2022

Insight 4 April 2022

Sanne Regulatory Update Q1 2022

Whilst topics such as ESG and fund framework reviews are recurring priorities, there was a notable shift towards AML and beneficial ownership reporting requirements trends linked, in part, to the Russia/Ukraine conflict. We also noted an increased amount of proposals coming out of the U.S., with a key one being the proposed amends to the Investment Advisers Act of 1940.

Welcome to our Q1 2022 regulatory update.

EU updates

  • Starting off with tax, the EU introduced a directive focusing on minimal taxation on the back of the OECD proposals. However and more recently, on 15 march, not all Member States could agree on the directive, with the next meeting set for 5 April. 
  • Another important update was the release of the ATAD III proposals on 22 December. Please see our Insights for further details. 
  • Staying with tax, the European Commission updated its tax blacklist on 24 February (its AML blacklist was issued a little earlier, on 7 January). The Commission also launched a consultation relating to VAT in the digital age on 20 January. 
  • The ESG agenda remains a top priority in the EU. In early December, the European Commission published its Delegated Act on the Taxonomy Regulation. More controversially, the Commission added a Complementary Act on 2 February, adding certain gas and nuclear activities within the scope of the Taxonomy Regulation. On 24 March, EBA, EIOPA and ESMA communicated an updated supervisory statement on the application of the SFDR
  • Later in February, the long awaited directive on Corporate Sustainability Due Diligence was published by the European Commission. 
  • ESMA also issued an update on the European Green Bonds regulation on 24 January. The regulatory body started a consultation on ratings by ESG rating providers on 3 February, before issuing a report highlighting divergence in ESG ratings by Credit Rating Agencies a week later. 
  • Staying with ESMA, we noted ESMA issued a useful 2022-2024 Sustainable Finance Roadmap, allowing for greater clarity around the various ESG-related regulatory initiatives in the EU. Closing on the ESG topic, the Platform on Sustainable Finance released its final report on Social Taxonomy on 28 February.  
  • MiFID II was also on the menu, as ESMA launched a consultation the review of MiFID II’s suitability guidelines. In addition, on 8 February, ESMA also issued a consultation on the application of MiFID II’s costs and charges disclosure rules. A consultation on MiFID II and MiFIR’s trading venue perimeters was also launched on 28 January. 
  • Moving to funds regulation, the European Court of Auditors issued a report on the EU investment funds regulatory framework, drawing some concerning conclusions around the efficiency of several regulations, such as AIFMD, in the EU. 
  • On the capital markets side, ESMA published an answer (and an annex) to the EU Commission’s consultation on potential changes to Listing Act, which was launched in Q4 2021.
  • The EU’s Cross-Border Distribution of Funds directive came into effect during the summer of 2021. ESMA recently provided an update on each Member State’s status with regards to the directive, after publishing a letter to the EU Commission on reverse solicitation in December 2021. Whilst on the topic of cross-border activities, ESMA published its peer review on the supervision of cross-border activities of investment firms on 10 March.
  • Specific to AIFMD, ESMA released its annual statistical AIF report on 3 February, as well as a separate report on AIFs exposure to commercial real estate. It is also worth flagging that ESMA launched a common supervisory action on the valuation of UCITS and open-ended AIFs on 20 January. 
  • On the Investment Fund Directive and Regulation, the EBA launched two consultations on: guidelines relating to gender pay gap benchmarking as well as high earner data collection.
  • Digital finance was also a topic in the EU in Q1, notably through answers from EBA, EIOPA and ESMA issuing a joint report on Digital Finance further to the EU Commission’s 2021 call for advice. On 17 March, the three agencies also released a joint warning note on the risks of crypto-assets.  
  • As usual, ESMA released updates to various Q&As: application of the AIFMD and UCITS Directives, securities settlement and central securities depositories as well as SFTR data reporting. In addition, it is worth noting the ESMA, EBA and EIOPA issued a joint Q&A on the Securitisation Regulation. On the topic of Securitisation, ESMA also launched a new Simple Transparent and Standardised (“STS”) Register, effective from 3 April. More ESMA news can be found in its February newsletter

Country updates

  • Luxembourg was one of the busy jurisdictions in Q1 2022. Starting off with AML, the CSSF ended 2021 with the release of an updated FAQ on IFMs and AIFs’ market entry form requirements. The regulator also issued three Circulars (21/788, 21/789 and 21/790) on new AML and regulatory obligations for IFMs and undertakings for collective investments. In addition to this, the CSSF published its 2021 survey on money laundering and terrorism financing on 15 February. Finally, on 18 March, the CSSF released an FAQ on the AML/CFT compliance officers’ summary report.
  • On 28 January, the Luxembourg Registrar of Companies communicated on new filing requirements relating to Luxembourg national identification numbers. Initially planned to be effective from 31 March 2022, the new requirements have been delayed to a later, unspecified, date at the time of this update. In addition to this, the CSSF launched a new web platform, eRIIS, for entities Transparency Law and the Market Abuse Regulation.
  • Luxembourg also had various updates relating to digital assets. Importantly on 31 January, the Luxembourg Stock Exchange started admitting security tokens on the Securities Official List. The CSSF had, earlier in the month, released an FAQ on virtual assets as well as issued a white paper on distributed ledger technologies & blockchain.
  • Staying in Luxembourg, an important development for Securitisation vehicles was made when the country formally voted its amended Securitisation Law on 9 February, with an 8 March effective date. Please see our Insights for further details. 
  • A noteworthy Luxembourg update related to the amendment of Circular 12/548 on short selling
  • Switching our focus the UK, the Government issued its long-awaited response to the UK Funds Review on 10 February. It is also worth noting that the Overseas Fund Regime came into effect on 21 February.
  • AML has been at the core of several regulatory changes, as it was in other jurisdictions. Importantly, the UK Government released its Economic Crime Bill in late February. The Bill received Royal Assent on 15 March and is expected to be into effect in the next few weeks. Please see our Insights for further details. In addition to this, the UK also amended its Money Laundering and Terrorist Financing Regulations on 14 February, with a 9 March effective date. 
  • HM Treasury released its response to an earlier consultation on crypto-assets on 19 January, whereas HMRC updated its crypto-assets manual a month later. The FCA also launched a consultation on strengthening financial promotion rules for high-risk investments, which include crypto-assets. Finally, on 24 March, the FCA released a notice to all FCA regulated firms with exposure to crypto-assets.
  • On the tax front, the UK launched its own consultation on the recent OECD Pillar 2 implementation on 11 January. HMRC also updated its Investment Funds Manual on 19 January, more specifically the carried interest guidance (s103KE). HM Treasury released its Spring Statement on 22 March. 
  • 2021 also ended with a Policy Statement update on the UK listing Rules by the FCA. Please see our Insights for further details. In early March, HM Treasury released its review outcome on the UK Prospectus Regime Review on the same day as a consultation response on the Wholesale Markets Review
  • On ESG, the year started off with the FCA issuing its ESG Sourcebook applying to asset managers as well as asset owners. 
  • We noted several changes on the securitisation regime in the UK. First, on 11 January, the FCA authorised its first UK securitisation repositories before providing an update on the UK Securitisation Regulation a month after, as well as an update on the UK SFTR regime on 15 March. 
  • Other UK regulatory updates focused on the EU extension of equivalence for UK Central Counterparties to 30 June 2025, an update on the Remuneration Code for SNI and non-SNI firms under the IFPR as well as an update on the UKSEF regime
  • Moving to Mauritius, the Mauritius Assembly adopted Virtual Asset and Initial Token Offering Services Act in late 2021. The Act came into force on 7 February 2022. Please see our Insights for further details. On 28 February, the FSC also provided AML/CFT guidance notes for Virtual Asset Service Providers
  • In Ireland, the CBI published its Market Updates on 31 January and 4 March. A notable update related to Irish provisions on marketing requirements for AIFs. Earlier in the quarter, the CBI had also released an updated statement for MiFID investment firms authorised to deal on own account or to underwrite financial instruments on a firm commitment basis.
  • The U.S. saw a flurry of regulatory proposals during Q1 2022. Importantly, the SEC issued its proposals on amening the Investment Advisers Act of 1940. Please see our Insights for further details. 
  • Other notable proposals focused on amending Form PF, Schedules 13D and 13G reports as well as introducing rules on short-sales (please see our Insights on that last topic). 
  • On 27 January, the SEC also issued a Risk Alert with a specific focus on private funds advisers. Please see our Insights for further details. In a similar fashion, FINRA also disclosed its 2022 report on exam and risk monitoring program in early February. 
  • In December 2021, FinCEN issued a proposal on enhancing the beneficial ownership reporting requirements. Please see our Insights for further details. 
  • Tax-wise, we noted a delay in the application of Schedules K-2 and K-3 as eligible entities will not have to file new Schedules K-2 and K-3 for tax year 2021.
  • On 21 March, the SEC also introduced a new set of climate related disclosure rules applicable to public companies. the regulator also issued a Fact Sheet on the topic. 
  • Cyber-security was also a key topic in the U.S., with an SEC proposal on cyber security rules for investment advisers issued on 10 February, as well as cybersecurity risk management, strategy, governance and incident disclosure rules proposals for companies subject to the Securities Exchange Act of 1934, published in early March.
  • Last, but not least, we also heard from the White House, which released an executive order focused on the development of digital assets on 9 March. 
  • Focusing on the Cayman Islands, CIMA communicated twice on Virtual Asset Service Providers, the first being an update on its framework in early February, before following-up with a notice on travel rule requirements on 22 February and another one on 23 March. 
  • CIMA also released a notice to inform of an update on the Fund Annual Return form for Private Funds effective from 1 March 2022, as well as providing a regulatory policy paper focused on exemptions from audit requirements for certain Private Funds
  • Focusing on AML, the Cayman Islands also released a note, on 19 January, focusing on the review of trust and corporate services providers compliance with AML regulations
  • Hong Kong ended 2021 with an update on the progress of its green and sustainable finance development framework, this was also followed-up by the Hong Kong Green Finance Association releasing a Green and Sustainable Infrastructure Financing report on 4 February. 
  • In early January 2022, we noted a few updates related to digital assets. HKMA released a discussion paper on crypto-assets and stablecoins, and followed-up two weeks later with a joint circular with the Hong-Kong’s SFC on intermediaries’ virtual asset related activities.  
  • Other notable updates from Hong Kong related to AML/CFT self-assessment checklists, a reminder on revised financial return forms and their e-submissions, a circular on the submission of financial statements and auditors reports, as well as an FAQ update on REITS. The SFC also issued its Q4 2021 report
  • Turning our focus to Singapore, the Accounting and Corporate Regulatory Authority issued a consultation on proposals relating to data, digitalisation and corporate transparency in late 2021. 
  • In early February, the Monetary Authority of Singapore released a white paper on the responsible use of AIF by financial institutions. On 8 February, the MAS also published a circular focusing on non-face to face customer due diligence measures


  • Global tax updates mainly focused around the OECD’s Pillar One and Pillar Two proposals. On 4 February, the OECD issued a consultation on Pillar one's draft rules for nexus and revenue sourcing which was then followed by another on draft model rules for tax base determinations. On 14 March, it was a consultation that focused on Pillar Two’s GloBE rules that was issued.
  • In addition to this, on 22 March, the OECD released a public consultation focusing on crypto asset reporting and the introduction of amendments to the Common Reporting Standard (CRS).
  • On the AML/CFT front, the FATF released the outcome of its plenary session on 4 March, as well as an updated list of jurisdictions under increased monitoring.

Other insights from Paul Séjournant

Insight 4 August 2022
Bringing new insights to regulatory compliance: Private Funds CFO feature
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Insight 2 August 2022
Q2 2022 regulatory update
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Insight 29 July 2022
Update on the Trust Registration Service
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