AIFMD Passport extension to non EU jusrisdictions

On 30 July 2015, ESMA published an Advice and an Opinion (4) on the extension of the AIFMD passport to non-EU jurisdictions.

ESMA assessed 6 non-EU jurisdictions (Guernsey, Hong Kong, Jersey, Singapore, Switzerland and the USA) that were selected on the basis of a number of factors including, but not limited to, the amount of activity already being carried out by entities from these countries under the national private placement regimes and EU national authorities’ knowledge and experience of dealing with their counterparts.

In its Advice, ESMA concludes that no obstacles exist to the extension of the passport to Guernsey and Jersey, while Switzerland still needs to enact new legislation in order to become eligible for the extension of the passport.

In relation to Hong Kong, Singapore and the USA, ESMA concludes that no definitive view has been reached on these three jurisdictions due to concerns related to competition, regulatory issues and lack of sufficient evidence to assess the relevant criteria properly.

It is now up to the European Commission, the European Parliament and the Council (together the "EU Institutions"), to extend the passport to Jersey and Guernsey through a delegated act.

In this context, more recently, at a meeting of the Economic and Monetary Affairs Committee of the European Parliament, ESMA recalled (5) that they only assessed these jurisdictions from a regulatory standpoint and did not touch on other issues, such as fiscal matters or anti-money laundering rules, (these might be considered by the EU Institutions when deciding on the passport extension). They also suggested the EU Institutions should wait until ESMA has delivered positive advice on a larger number of non-EU countries before triggering the relevant legislative procedures, taking into account factors like the potential impact on the market that a decision to extend the passport might have.

As regards the next steps, ESMA identified three actions: first, they will continue their assessment of Hong Kong, Singapore and the US with a view to reaching a definitive conclusion on whether to extend the passport to those countries, secondly, they will start to assess a second group of non-EU countries comprising Australia, Canada, Japan, the Cayman Islands, the Isle of Man and Bermuda, and thirdly, they will focus on putting in place an extensive framework foreseen by the co-legislators in the event that the passport is indeed extended to one or more non-EU countries.