Welcome to Legal Shorts, a short briefing on some of the week’s developments in the financial services industry. If you would like to discuss any of the points we raise below, please contact me or one of our other lawyers. Claire Cummings 020 7585 1406 claire.cummings@cummingslaw.com www.cummingslaw.com

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Welcome to Legal Shorts, a short briefing on some of the week’s developments in the financial services
industry.
If you would like to discuss any of the points we raise below, please contact me or one of our other lawyers.
Claire Cummings
020 7585 1406
claire.cummings@cummingslaw.com
www.cummingslaw.com
Criminal Finances Bill introduced
The Criminal Finances Bill was introduced to the House of Commons on 13 October 2016. It
contains four parts: (i) Part one concerns the proceeds of crime, and makes amendments to
existing legislation to investigations, money laundering, civil recovery and enforcement powers;
(ii) Part two concerns terrorist property; (iii) Part three creates a new corporate offence of failure
to prevent the facilitation of tax evasion; and (iv) Part four makes general amendments. The Bill
follows the launch of the government’s Action Plan for anti-money laundering and counter-
terrorist finance, which it published in April 2016, and its consultation on reform of the anti-
money laundering and counter-terrorist financing regime, the responses to which were also
published this week.
MLD4
The EU Council has published the opinion from the ECB on the proposed Directive amending the
Fourth Money Laundering (MLD4). The ECB was asked to provide an opinion by the Council
and the European Parliament in August and September 2016 respectively. In the opinion, the ECB
sets out its observations on the following areas covered by the proposed Directive: (i) the
regulation of virtual currency exchange platforms and custodian wallet providers; and (ii) central
registers of bank and payment accounts. The European Commission published the proposed
Directive in July 2016, which is known as the Fifth Money Laundering Directive or MLD5.
EMIR - Delegated Regulation on reporting to trade repositories
As part of the implementation of EMIR, the European Commission has adopted a Delegated
Regulation amending Delegated Regulation 148/2013 supplementing EMIR dealing with

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regulatory technical standards (RTS) on the minimum details of the data to be reported to trade
repositories. Under EMIR, counterparties and central counterparties are required to report the
details of any OTC derivative contract they have concluded and of any modification or termination
of the contract to a trade repository. The revised RTS is intended to clarify data fields, their
description or both; adapt existing fields to the reporting logic prescribed in existing Q&As or
reflect specific ways of populating them and introduce new fields and values to reflect market
practice or other necessary regulatory requirements. Also available is an Annex setting out the
counterparty data and common data details to be reporting to trade repositories. The Council of
the EU and the European Parliament will now to consider the Delegated Regulation and if no
objections are raised it will enter into force 20 days after its publication in the Official Journal.
Joint G20 and FATF meeting on corruption
FATF and the G20 Anti-Corruption Working Group (ACWG) held a joint experts meeting on
corruption this week, focussing on transparency and beneficial ownership. The issues under
discussion included: (i) the misuse of legal persons and arrangements, which focused attention on
the need to improve implementation of controls against the misuse of corporate structures; (ii) an
update on the beneficial ownership work currently being undertaken by different bodies at the
international level; (iii) the practical challenges for implementation of international standards on
beneficial ownership in practice, for AML/CFT and anti-corruption purposes and ways to
overcome them; and (iv) the specific actions that the G20 and FATF members can take to
implement beneficial ownership commitments, including how the G20 members can lead by
example.
Open Europe report on Brexit
Open Europe, a non-partisan and independent policy think tank, has published a report ‘How the
UK’s financial services sector can continue thriving after Brexit’, which analyses the operation of
the existing passporting regime. It considers the potential impact of the loss of passporting post-
Brexit and the availability of alternative arrangements in the wholesale and investment banking,
asset management and insurance sectors, such as bespoke agreements, equivalence and local
arrangements. The conclusion reached by Open Europe is that the loss of passporting is most
likely to affect the banking sector and that equivalence may only be a partial solution, as it is not
currently available for all relevant EU legislation. Open Europe also suggests that the UK
government should undertake reforms to ensure that the UK remains attractive for financial
services, which could include abolishing, or reducing the impact of, the bank levy and the
corporation tax surcharge for banks.
FCA market study on investment market
The FCA has published its final report on its market study on the UK investment and corporate
banking market, which affirms the conclusions of its April interim report. The interim report
concluded that while larger customers with a wide variety of banking services needs were well
served, there was evidence that banks had reduced engagement with smaller, newer and/ or riskier
clients in response to market conditions and regulatory change. The FCA has proposed a
consultation, published alongside the final report, on prohibiting future service restrictions, which

3. tie clients to banks for future banking services, and the development of guidelines for improving
the operation of league tables. The FCA also committed to monitoring developments in relation to
IPO allocations and corporate finance advice. Comments on the restrictive clause consultation are
invited by 16 December 2016.
Consumer credit information sheets
The FCA has updated a number of consumer credit information sheets, including those dealing
with arrears (No 001), default (No 002), high-cost short-term loans (No 003), high-cost short-
terms loans, peer-to-peer lenders (No 004) and arrears, peer-to-peer lending (No 005). Firms are
expected to use the current version until 18 January 2017.
Guest Short
This week, Karine Seguin of Trident Fund Services writes about the RAIF - the new option for
alternative investment funds in Luxembourg
“Luxembourg’s Reserved Alternative Investment Fund was introduced by the “RAIF law” in July
this year and is already exciting strong interest from the global private equity, hedge fund and real
estate fund management community. The RAIF combines many of the characteristics of the SIF
and SICAR regimes in terms of structuring and investment flexibility, while offering a quicker
time to market as there is no requirement for Luxembourg supervisory authority (CSSF) approval
or supervision.
A RAIF can only be managed by an authorized external AIFM, domiciled in Luxembourg or
another EU member state (or outside the EU subject to third-country management passport rules),
meaning that supervision is provided indirectly from the supervisory authority of the AIFM, and
that double supervision of both the AIF and the AIFM is avoided. A RAIF is therefore also able to
make use of the AIFM European passport for marketing to EU professional investors, as well as
offering the AIFMD regime’s investor protections.
The RAIF can accommodate any type of investment strategy and asset class and can be closed-
ended or open-ended. It can also be structured as an umbrella vehicle with ring-fenced
compartments. A RAIF needs to appoint a Luxembourg depositary in accordance with AIFMD
requirements, as well as a Luxembourg independent auditor and central administrator. RAIFs that
respect the SIF’s 30% risk diversification rule are subject to the same tax regime: an annual
subscription tax of only 0.01% of net assets.
For more information about establishing a RAIF, or other Luxembourg structures contact:
Karine Seguin, Head of Business Development – Europe, Trident Fund Services:
+44 20 7935 1503 kseguin@tridenttrust.com
Richard van ‘t Hof, Director, Trident Fund Services, Luxembourg:
+352 26302852 rvanthof@tridenttrust.com”