Key Benefits:
In view of the growing globalisation of international financial markets and the increase in cross-border transactions and activities of alternative investment fund managers, the Swiss Federal Financial Market Supervision Authority (FINMA, Switzerland) and the Autorité des marchés financiers (AMF, France) have concluded this Memorandum of Understanding concerning mutual assistance in the monitoring and control of alternative investment fund managers, their delegates and depositaries who are signatories The authorities express, through this Memorandum of Understanding, their willingness to cooperate with a view to respecting their respective regulatory mandates, including in the areas of investor protection, the promotion of market integrity and financial integrity, and the preservation of systemic confidence and stability.
Article 1
Definitions
For the purposes of this Memorandum of Understanding:
(a) "authority", a signatory to this Memorandum of Understanding or any signatory to succeed it;
(b) "required authority", the authority to which a request is addressed under this Memorandum of Understanding; and
(c) "applicant authority", the authority submitting a request under this Memorandum of Understanding;
(d) "competent authority of the EU", any authority designated within a Member State of the EU, in accordance with Article 44 of the AIFM directive, for the supervision of managers, delegates, depositaries and, where applicable, of the funds covered (1);
(e) "IAFM Directive", Directive 2011/61/EU of the European Parliament and the Council, of 8 June 2011, on alternative investment fund managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No. 1060/2009 and (EU) No. 1095/2010;
(f) “CPC”, Swiss Federal Act of 23 June 2006 on collective capital investments;
(g) "LFINMA", Swiss Federal Act of 22 June 2007 on the Swiss Federal Financial Market Supervision Authority (FINMA);
(h) "Manager", a corporation whose usual activity is the management of one or more funds covered in accordance with the AIFM directive or in accordance with the CCPSA;
(i) "covered funds", collective investment organizations, including their investment compartments, which: (i) raise capital from a number of investors to invest them, in accordance with a defined investment policy, in the interest of these investors and (ii) are not UCITS;
(j) "OPCVM", a group investment agency in securities registered in accordance with Article 5 of Directive 2009/65/EC;
(k) "delegate", an entity to which a manager shall delegate the portfolio management or risk management services of one or more funds under his or her direction, in accordance with section 20 of the AIFM directive or in accordance with sections 31 and 36 of the CCPSA;
(l) "depository", an entity designated to perform the functions of depositary of a covered fund, in accordance with Article 21 of the AIFM directive or in accordance with sections 72 and 74 of the CCPSA;
(m) "transborder-based operation", the following situations: when (a) managers established in the EU manage funds covered by third countries, (b) managers established in the EU sell funds covered by third countries on the market of a EU Member State, (c) managers established in a third country market share covered funds of the EU and/or third countries on the market of a Member State To the extent that there is a relationship with the activity of managers and the funds covered, the Memorandum of Understanding also covers delegates and depositaries, as defined in paragraphs (i) and (j) of this Article;
(n) “covered entity”, a manager, if any, a covered fund and, to the extent that there is a relationship with the manager and the covered fund, the delegates and depositaries referred to in (i) and (j) of this article, including persons employed by the said entities;
(o) "transborder on-site visit", any regulatory visit of an authority to the premises of a covered entity established in the jurisdiction of the other authority for the purpose of continuous monitoring;
(p) "government entity", the Ministry of Finance, the Central Bank and any other national prudential authority within the jurisdiction of the competent authority;
q) "local authority", the authority in the jurisdiction of which acts a covered entity;
r) "emergency situation", the occurrence of an event that could seriously adversely affect the financial or operational situation of a covered entity, IAF investors or markets, regardless of a decision of the European Council within the meaning of Article 18 of the AEMF Regulation (Regulations [EU] No. 1095/2010).
Article 2
General provisions
(1) This Memorandum of Understanding is a declaration of intent to consult, cooperate and exchange information on the monitoring and control of the entities covered on a cross-border basis in the jurisdictions of the signatories, in accordance with the laws and obligations applicable to the authorities. The authorities expect that cooperation will be carried out mainly through permanent, informal and oral consultations, complemented by in-depth ad hoc cooperation. The purpose of this Memorandum of Understanding is to encourage this informal and oral communication and to facilitate the written exchange of information that has not been made public, if any.
(2) This Memorandum of Understanding does not create legally binding obligations, confers no rights and does not replace national legislation. It does not confer any right or capacity that may be invoked, directly or indirectly, to obtain, delete or exclude information or oppose the execution of a request for assistance under that protocol.
(3) This Memorandum of Understanding is not intended to limit an authority to take exclusively the measures described in this document as part of the performance of its oversight or control functions. In particular, this Memorandum of Understanding does not affect any right of any authority to communicate with, or to obtain information or documents from, any person or entity covered under its judicial jurisdiction and established in the territory of the other authority.
4) This comprehensive memorandum of understanding, but does not change the terms and conditions of the ICAO multilateral agreement on the consultation, cooperation and exchange of information, of which the authorities are signatories, and which also covers the exchange of information in the context of repressive investigations, or any existing cooperation agreement on securities between the signatories.
5) As part of this Memorandum of Understanding, the authorities will mutually offer the most complete cooperation possible with respect to the monitoring and control legislation of the entities covered. After consultation, cooperation may be refused:
(a) if it requires an authority to take measures against national legislation;
(b) where a request for assistance is not made in accordance with the terms of the Memorandum of Understanding; or
(c) due to the national public interest.
6) No bank secrecy, no blocking law or domestic regulations could prevent an authority from providing assistance to another authority.
7) The authorities will regularly review the operation and effectiveness of the modalities of cooperation between the authorities in order, inter alia, to extend or modify the scope or operation of this Memorandum of Understanding, if they deem it necessary.
8) In order to facilitate cooperation under this protocol, the authorities shall designate by this protocol persons to be contacted as set out in Annex A.
Article 3
Scope of cooperation
(1) The authorities recognize the importance of close communication with respect to the entities covered and provide for consultations at the staff level, if necessary, with respect to: (i) general monitoring issues, including with respect to regulatory, control or any other program developments; (ii) matters relating to operations, activities and settlement of the entities covered and (iii) any other area of interest for mutual oversight.
(2) Cooperation will be particularly useful, but not limited, to the following circumstances in which regulatory issues may be raised:
(a) the initial request of an entity covered for the purpose of an authorization, registration or exemption from registration in another jurisdiction;
(b) the ongoing monitoring of a covered entity; or
(c) regulatory approval procedures or supervisory actions undertaken in respect of an entity covered by an authority that may affect the entity's operations in the other jurisdiction;
(d) repressive actions against a covered entity.
(3) Notification. Each authority shall inform the other authority as soon as possible of the following:
(a) any significant known event likely to have a negative impact on a covered entity; and
(b) any repressive or regulatory action or sanction, including the revocation, suspension or modification of the relevant licences or registrations, relating to or relating to a covered entity, which may have, in the opinion of the authority, a significant impact on the entity covered.
4) Exchange of information. In addition to informal consultations, each authority shall provide assistance to the other authority, upon written request, in the collection of information that would not otherwise be available to the requesting authority and, if necessary, in the interpretation of this information in order to allow the requesting authority to assess their compliance with its own laws and regulations. The information covered by this paragraph includes, but is not limited to:
(a) information allowing the requesting authority to verify that the entities covered under this MOU comply with the relevant obligations and requirements of the requesting authority's national law;
(b) useful information to monitor the potential consequences of the activities of individual managers, or collectively managers, on the stability of financial institutions of systemic importance, and on the proper functioning of the markets on which managers are active, and to respond to these consequences;
(c) information on the financial and operational situation of a covered entity, including, for example, reports of equity, liquidity or other prudential measures, and internal control procedures;
(d) the relevant information and regulatory statements that a covered entity is required to submit to an authority, including, for example, intermediate or annual financial statements and early warnings;
(e) regulatory reports, prepared by an authority, including, for example: review reports, conclusions or information from such reports on the entities covered.
Article 4
Cross-border visits on site
(1) The authorities must review and reach agreement on the conditions for cross-border visits on site, taking fully into account the sovereignty of each of the authorities involved, the legal framework and legal obligations, including when determining the respective roles and responsibilities of the authorities. The authorities will act in accordance with the following procedure before conducting a cross-border visit on site:
a) the authorities will consult to reach an agreement on the schedule and scope of application for any cross-border on-site visits. The decision to accompany officials on mission by local officials during the visit belongs to the local authority;
(b) when defining the scope of any proposed visit, the authority wishing to ensure the conduct of the visit shall give due and full consideration to the monitoring activities of the other authority and any information made available to it, or likely to be, by that authority;
(c) the authorities will assist each other in the examination, interpretation and analysis of the content of public and non-public documents and in obtaining information from the directors and senior officials of the entities covered or any other competent person.
Article 5
Implementation of requests for assistance
(1) Where possible, a written request for information, pursuant to section 3, paragraph 4, must be addressed to the contact person identified in Appendix A. In general, such a request must specify the following:
(a) the information requested by the requesting authority, including the specific questions to be asked, as well as an indication of the potentially sensitive nature of the application;
(b) a brief description of the facts underlying the request and the objective of monitoring justifying the request for information, including the applicable regulations and the relevant provisions of the surveillance activity; and
(c) the desired response time and, if necessary, the degree of urgency.
(2) In emergency situations, the authorities will endeavour to inform each other about this emergency situation and to communicate the information required in such circumstances, taking into account all relevant factors, including the progress made in addressing the emergency situation. In case of emergency situations, requests for information may be made in all forms, including by oral means, provided that such communication is confirmed in writing as soon as possible following this notification.
Article 6
Implementation cooperation
To the extent permitted by the national legislation, the required authority is required to assist the requesting authority when it is necessary to enforce the AIFM Directive, its enforcement measures or national legislation of a EU Member State or the CCPA and its enforcement measures or the LFINMA breached by a covered entity established in its territory. In particular, such assistance must be lent by the authority required to the requesting authority at least in the following situations:
(a) where the requesting authority has requested a covered entity established in the jurisdiction of the required authority to cease any practice contrary to the provisions adopted in the implementation of the AIFM Directive and its enforcement measures or the CCPA and its enforcement measures or the AML Act. In this situation and at the request of the requesting authority, the requested authority must provide information that may permit the requesting authority to verify compliance with the request by the covered entity;
(b) where the requesting authority has applied for the freezing or sequestration of the assets of a covered fund established in the jurisdiction of the required authority. In this situation the required authority shall either order the freezing or sequestration of the assets of the covered fund established in its jurisdiction, or, to the extent possible, inform and assist the requesting authority with respect to the judicial proceedings leading to that result;
(c) where the requesting authority has sought a temporary ban on professional activity relating to a covered entity established in the jurisdiction of the required authority. In this situation and at the request of the requesting authority, the requested authority must provide information that may permit the requesting authority to verify whether the temporary prohibition is being complied with by the consignee of the measure;
(d) where the requesting authority has adopted any type of measure to ensure that the entities covered in the jurisdiction of the required authority continue to comply with the requirements of the AIFM Directive and its enforcement measures or the CCPA and its enforcement measures or the AML Act. In this situation and at the request of the requesting authority, the requested authority must provide information that may permit the requesting authority to verify whether the recipient complies with the measure adopted by the requesting authority;
(e) where, in the interest of investors or the public, the requesting authority has requested the suspension of the issuance, redemption or repayment of shares or shares of funds established in the jurisdiction of the required authority. In this situation and at the request of the requesting authority, the requested authority must provide information that may allow the requesting authority to verify that the covered fund complies with the application for suspension;
Article 7
Authorized uses of information
(1) The requesting authority may only use non-public information obtained under this Memorandum of Understanding for the purpose of monitoring the entities covered and compliance with the legislation or regulations applicable in the jurisdiction of the requesting authority, including the assessment and identification of the systemic risks of the financial markets or the risk of unorganization of the markets.
(2) This Memorandum of Understanding is intended to complement, but does not change the general terms and conditions, existing arrangements between the authorities with respect to cooperation in securities matters, including the OICV Multilateral Agreement. The authorities recognize that, if the information is not collected under this Memorandum of Understanding for enforcement purposes, the authorities may, at a later stage, use this information for enforcement purposes. In such cases, the subsequent use of information must be governed in accordance with the general terms and conditions of the ICAO multilateral agreement or another memorandum of understanding providing an equivalent degree of enforcement cooperation.
Article 8
Confidentiality and further information exchange
(1) With the exception of disclosures in accordance with the MOU, including the authorized uses of information referred to in Article 7, each authority shall ensure the confidentiality, to the extent permitted by law, of information exchanged under this MOU, of requests made under this MOU, of the content of such requests and of any other matter raised under this MOU. The terms of this Memorandum of Understanding are not confidential.
(2) To the extent permitted by law, the requesting authority shall inform the required authority of any legally binding request from a third party to obtain non-public information provided under this Memorandum of Understanding. Prior to accessing this application, the requesting authority shall ensure that all legal exemptions and privacy protection rules applicable to this information, if any.
(3) In certain circumstances and as required by law, the requesting authority may be required to exchange information collected under this Memorandum of Understanding with other government entities of its jurisdiction. In this case, and as long as the legislation authorizes it:
(a) the requesting authority shall inform the required authority;
(b) before transmitting the information, the requested authority will receive adequate safeguards regarding the use and confidential treatment of information by the government entity, including, where appropriate, guarantees that information will not be shared with other parties without the prior consent of the required authority.
4) With the exception of the provisions set out in paragraph 2, the requesting authority must obtain the prior consent of the required authority before disclosing non-public information received under this Memorandum of Understanding to any non-signatory party to this Protocol. If the requested authority does not give its consent, the authorities shall examine the reasons for this refusal to approve such use and the circumstances, if any, in which the requested use by the requesting authority may be permitted.
5) The authorities shall ensure that the sharing or disclosure of non-public information, including but not limited to, deliberation and consultation documents, under this Memorandum of Understanding, do not constitute a abandonment of privilege or a waiver of the confidentiality of such information.
Article 9
Specific rules on the subsequent communication of information in the EU domestic market
(1) Article 8, paragraph 4, does not apply to all cases in which the competent authorities of the EU are required to communicate information to other competent authorities of the EU, in accordance with Article 1 (d), the CERS and the AMF, under the AIFM Directive. In particular, section 8, paragraph 4, does not apply in the following circumstances:
a. pursuant to Article 25, paragraph 2, of the AIFM Directive, a competent EU authority may have to transmit information received from FINMA to other relevant EU authorities where a manager under his or her responsibility or a covered fund managed by that manager may potentially constitute an important source of risk of counterparty for a credit institution or other systemic establishments in other EU Member States;
b. pursuant to Article 50, paragraph 4, of the AIFM Directive, the competent authority of the reference Member State of a manager established in a third country (2) shall transmit the information relating to that manager obtained from FINMA to the competent authority of the host Member States, as defined in Article 4, paragraph 1, point (r), of the AIFM Directive;
c. pursuant to Article 53 of the AIFM Directive, a competent EU authority shall communicate to the other competent EU authorities, the CERS or the AMF, the information useful for monitoring and to respond to the potential consequences of the activities of individual managers, or collective managers, regarding the stability of financial institutions of systemic importance, and the proper functioning of the markets on which these managers are active.
(2) In the cases referred to in paragraph 1, the following conditions apply:
a. in accordance with Article 47, paragraph 3, of the AIFM Directive, all information exchanged by the competent authorities of the EU, the CERS and AMF are considered confidential, except where FINMA specifies, at the time it discloses them, that such information may be disclosed, or where such disclosure is necessary in the course of judicial proceedings;
b. the competent authorities of the EU, AETA and CERS are required to use this information only for the purposes set out in the AIFM directive and in accordance with the regulations establishing AETF and CERS;
c. the competent EU authority shall inform FINMA of the identity of the competent EU authorities with which the information is exchanged in accordance with this Article.
d. The competent authority of the EU must obtain the prior consent of FINMA before disclosing it to authorities or entities other than those referred to in paragraph 1.
Article 10
Denunciation of the Memorandum of Understanding; "successors" authorities
(1) If a signatory wishes to terminate the Memorandum of Understanding, it must notify the counterpart in writing. EMFA coordinates the action of EU authorities in this regard. Cooperation, under this Memorandum of Understanding, shall continue until 30 days after the written notification of an authority to others. Notwithstanding the transmission of such notification, cooperation continues with respect to all requests for assistance made under the MOU prior to the effective date of notification, until the requesting authority resolves the problem for which assistance has been requested. In the event of denunciation of this Memorandum of Understanding, the information obtained under the Memorandum of Understanding will continue to be processed in accordance with the provisions of Article 7.
(2) Where the powers of a signatory to this Memorandum of Understanding are transferred or assigned to another/other authorities, the provisions of this Memorandum of Understanding shall apply to the authority/authorities that succeed it and exercise such powers without the need to amend this Memorandum of Understanding again or the successor authority becomes a signatory to the Memorandum of Understanding. The foregoing does not affect the right of the successor authority or that of its counterpart to denounce the Memorandum of Understanding, in accordance with the above-mentioned provisions, if it so wishes.
Article 11
Entry into force
This Memorandum of Understanding comes into force on July 22, 2013.
ANNEX A
CONTACTS
| Financial Markets Authority (FAM) | International affairs Financial Markets Authority 17, Place de la Bourse, 75082 Paris Cedex 2 France |
| Federal Financial Market Surveillance Authority (FINMA) | International affairs Federal Financial Market Surveillance Authority Einsteinstrasse 2 CH-3003 Bern Switzerland |
Signed on June 18, 2013.
Signatures
Financial Markets Authority (France)
Swiss Financial Market Supervisory Authority (FINMA)
