On 19 January 2016, the European Securities and Markets Authority (ESMA) published the European Commission’s response to its advice of 30 July 2015, on the application of the AIFMD passport to non-EU AIFMs and AIFs.

In its letter, the Commission agreed with ESMA’s approach to take a country-by country approach to the granting of the passport to these funds and managers. The Commission noted that the application of the test in Article 67 of the AIFM Directive may result in differing outcomes, depending on the third country’s regulatory and supervisory frameworks, which leads to ESMA providing its advice in stages. The Commission further advised that it would make a decision on the granting of the third-country passport when a sufficient number of countries have been assessed.

The Commission has therefore requested ESMA:

• To complete firstly an assessment of the USA, Hong Kong and Singapore by 30 June 2016, followed by Japan, Canada, Isle of Man, Cayman Islands, Bermuda and Australia (also by 30 June 2016).
• To provide a detailed assessment of the enforcement capacity of the third country supervisory authorities and their track record of effective enforcement.
• To provide a preliminary assessment of the expected inflows of funds by type and size into the EU from relevant third countries.

The Commission also agreed with ESMA’s suggestion that it provide a further opinion on the functioning of the EU passport and national private-placement regimes, once the AIFM Directive has been fully transposed in the EU.

Contributed by Patricia Taylor