The European fund industry has warned that proposed anti-money laundering (AML) due diligence requirements risk disrupting investment fund distribution models and undermining the global competitiveness of the UCITS framework.
In a response to a consultation by the newly established Anti-Money Laundering Authority (AMLA), the European Fund and Asset Management Association (EFAMA) said draft regulatory technical standards (RTS) on customer due diligence obligations could create unnecessary compliance burdens for asset managers and distributors.
AMLA, which was established last year as part of the EU’s broader AML reform package, is developing a harmonised framework for AML supervision across the bloc.
EFAMA acknowledged that AMLA has recognised the need for a differentiated approach for asset management firms compared with other financial institutions, but argued that the current draft rules still fail to reflect the specific characteristics of the sector.
The association warned that the proposals could negatively affect both EU and international investors’ access to EU investment funds and threaten the UCITS framework’s position as a global investment fund standard.
According to EFAMA, fund distribution is largely conducted through intermediaries and other entities already subject to AML obligations, making additional due diligence requirements on underlying investors “redundant and counterproductive”.
The industry body also argued that asset management activities inherently present lower money laundering and terrorist financing risks than other areas of financial services because of existing safeguards and operational structures.
EFAMA cautioned that without “genuine relief from unnecessary compliance burdens”, some EU and global fund distribution models could become commercially unviable because of duplicative AML requirements and demands for increased visibility into intermediaries’ client bases.
Zuzanna Bogusz, EFAMA’s senior regulatory policy advisor, said: “The new AML Authority has an opportunity to establish harmonised due diligence rules that will, at long last, fully recognise the unique attributes of asset management. The risks of not doing so extend beyond AML obligations, potentially negatively impacting UCITS distribution across the globe.”
The intervention comes as the European asset management industry faces increasing scrutiny over operational resilience, investor protection and financial crime prevention, while policymakers simultaneously seek to strengthen the EU’s competitiveness as a global investment hub.
The RTS under consultation form part of AMLA’s broader mandate to create a single EU rulebook for anti-money laundering supervision and compliance.
