Private Equity AIFMD Compliance Checklist
This checklist is tailored for private equity managers operating as Alternative Investment Fund Managers (AIFMs) in the United Kingdom. It is designed to help managers comply with the UK’s implementation of the Alternative Investment Fund Managers Directive (AIFMD) as retained post-Brexit under the UK AIFMD regime. The checklist addresses core compliance obligations, governance frameworks, and operational considerations including actionable steps to help Managers mitigate regulatory risks. References to “AIF” denote Alternative Investment Funds managed by the AIFM.
Establish a robust governance framework to meet FCA expectations for organisational effectiveness and senior management accountability.
Rationale: FCA expects clear documentation of decision-making processes, with minutes reflecting substantive discussions on regulatory compliance.
Rationale: FCA Dear CEO letters emphasise robust conflicts management, particularly for private equity AIFMs with complex deal structures.
Implement effective risk management systems and internal controls to safeguard AIFs and meet FCA standards.
Rationale: Stress testing and scenario analysis should assess portfolio risks, particularly for illiquid assets common in private equity.
Rationale: FCA expects documented liquidity stress testing, even for closed-ended funds, to address unexpected drawdowns or market disruptions.
Ensure robust valuation processes for AIF assets, compliant with AIFMD and FCA expectations.
Rationale: The FCA’s March 2025 multi-firm review of private market valuation practices highlighted the importance of detailed methodologies and independence.
Rationale: Although many firms have valuation committees, many lack accurate record-keeping, impacting oversight.
Rationale: FCA found that while firms identified fee/remuneration conflicts, other conflicts were only partly documented (marketing, borrowing, transfers, redemptions, volatility).
Maintain adequate capital and financial resources to support AIFM operations and mitigate risks.
Full-scope AIFMs: At least €125,000 plus 0.02% of AUM exceeding €250m (capped at €10m); Small authorised AIFMs: Typically €50,000
Rationale: FCA expects PII policies to be tailored to the AIFM’s risk profile, with adequate coverage for private equity-specific risks (e.g., deal disputes).
Ensure delegated functions comply with AIFMD requirements and FCA oversight expectations.
Rationale: FCA has increased focus on delegation to non-UK entities, requiring robust oversight to prevent “letterbox” arrangements.
Rationale: AIFMs delegating valuation or risk management should retain ultimate responsibility and document oversight processes.
Provide clear, accurate, and timely disclosures to investors, aligning with AIFMD transparency obligations.
To consider: Ensure disclosures are written in plain English to comply with FCA’s consumer duty/COBS rule to avoid investor misunderstanding.
Rationale: AIFMs should integrate ESG factors into investment due diligence and disclose how these impact portfolio performance.
Ensure marketing activities comply with AIFMD and FCA rules on financial promotions.
Rationale: Post-Brexit, FCA has clarified NPPR processes, but delays in approvals are common so firms must plan notifications in advance.
Rationale: FCA expects AIFMs to oversee distributor conduct to prevent mis-selling or misrepresentation.
Complete all reporting obligations accurately and on time.
Full-scope AIFMs: Quarterly (within one month of quarter-end); Sub-threshold AIFMs: Annually
To consider: AIFMS may consider automated reporting to streamline Annex IV submissions and reduce errors.
To consider: Align ESG reporting with investor disclosures to maintain consistency.
Build a strong compliance culture
Rationale: All training and compliance reviews should be properly documented to evidence a robust compliance culture.
Book a conversation and we'll help you apply it to your firm's specific situation.