Regulatory & Compliance

The Foreign Account Tax Compliance Act (FATCA), which was passed as part of the HIRE Act in the United States, generally requires that a Foreign Financial Institution (“FFI”) report on the foreign assets held by their US account holders or be subject to withholding payments.  An investment fund is classified as a FFI as it takes deposits from customers (investors).

While FATCA is a United States initiative, Common Reporting Standard (CRS) emerged for the automatic exchange of financial account information between tax administrations to use in fighting tax evasion and to promote voluntary compliance with tax laws. Canada and close to a hundred other jurisdictions are committed to its implementation.

Given the complexities regarding inter-governmental filing requirements, Pinnacle can help you determine your responsibilities and filing obligations.

• Registration of funds as FFIs with the US Internal Revenue Service (“IRS”).
• Performing detailed due diligence reviews to determine “US accounts”.
• Contacting existing investors where there is insufficient data to determine US status.
• Ongoing monitoring of investors for US Indicia.
• Obtaining and maintaining certification forms (W-8, W-9, Self-Certification) for investors.
• Annual filing with Fund’s respective regulatory jurisdiction to ensure compliance.

Pinnacle provides full AML services for all jurisdictions. We have developed a comprehensive AML procedures framework which, when followed, ensures that funds are in compliance with the relevant regulations.  The AML framework is reviewed and tested annually through an independent compliance audit.  Our AML framework consists of two components: Customer Due Diligence and Investor Assessments.

CUSTOMER DUE DILIGENCE  

Pinnacle obtains ‘customer information’ for all investors, in accordance with applicable regulations.  Such information is dependent on the type of investor, but in all circumstances will entail the following:

• Identifying the beneficial owner and in the case of entities, identifying any beneficial owner, above the applicable threshold, of the entity’s capital structure.
• Ensuring all documents received as certified in accordance with the applicable standards.
• Liaising directly with investors for receiving original documents in prescribed format.

INVESTOR ASSESSMENTS

All investors may need to be assessed for risk and documented accordingly.  The current standard is setting a level of High, Medium or Low, which replaces the “standard / non-standard” approach.

Politically Exposed Persons (PEPs) will be identified and assessed as high risk, with enhanced due diligence procedures performed.

Specific AML services:

• A risk-based approach to AML issues.
• Proactive follow up with investors on an individual basis.
• Ongoing compliance reporting.
• Dedicated and experienced AML experts and MLRO dealing with investor compliance.
• AML and KYC documentation tracking.
• Technology restrictions to block certain investor transactions when compliance levels have not been met.
• Document management and review services.
• Workflow management including maker / checker rules.
• Identifying source of funds and matching to investor details.
• World Check screening and ongoing monitoring.

Depending on the regulatory requirements of your fund and jurisdiction, Pinnacle’s compliance specialists can ensure you are on side and in compliance will all applicable laws and covenants.

• Form PF.
• Euro Alternative Investment Fund Managers Directive services (“AIFMD”).
• Money Laundering Reporting Officer services.
• Portfolio limit and concentration restrictions.
• Risk management reporting.
• Portfolio exposure and counterparty reporting.