The AFM has investigated 6 AIFMs on their compliance with the transaction monitoring obligation. The findings (in Dutch only) of the AFM are that AIFMs and AIFs should improve transaction monitoring. In the news message important guidance is given which AIFMs should take into consideration when applying transaction monitoring.
Although the number of reports to the FIU has increased in the recent years, the AFM sees room for further improvement. The AFM describes the most relevant findings in its news publication.
- Most of the AIFMs surveyed did not start setting up an (automated) transaction monitoring system until late 2018 or early 2019.
- It appears that the investigated companies do not sufficiently take into account the risk profile of the client in transaction monitoring.
- Many of the companies investigated do not draw up a profile of the expected individual transaction behavior. However, such a transaction profile is a good tool for monitoring transactions.
- Many of the AIFMs investigated do not use concrete detection rules (with associated threshold values) for identifying unusual transactions. And if such detection rules have been drawn up, they are often very briefly elaborated or do not sufficiently correspond to the type of transactions or clients.
- The timing and quality of the reports submitted with the FIU sometimes falls short. The AIFMs investigated do not always indicate why they consider a transaction to be unusual. Also, companies are required to report "promptly" when they identify a transaction as unusual.
In addition to the surveys discussed above, the AFM indicated in the new message that it conducted another survey in 2019, which shows that a number of AIFMs do not have an (automated) system to monitor client transactions.
The AFM indicates that the investigation into transaction monitoring gives rise to a follow-up survey into transaction monitoring and the reporting obligation to the FIU.
A key take away for AIFMs from the news message of the AFM is that AIFMs should draw up a risk profile and a transaction profile for their clients, and monitor transactions of clients in accordance therewith. Also, AIFMs should review their detection measures to ensure that they contain the appropriate parameters for detecting unusual transactions.