1 Legal & Regulatory 1.1 UCITS Update There have been a number of developments over the quarter: Central Bank Q&A and revised guidance on share classes On 15 May 2017 the Central Bank of Ireland ("Central Bank") published the UCITS question and answers ("Q&As") 17th Edition. A new question ID1076 on how a UCITS management company or a self-managed investment company should submit details of its designated email address to the Central Bank is included. ESMA's Opinion on Share Classes of UCITS (January 2017) sets out four high-level principles a UCITS should follow when setting up share classes in a UCITS or sub-fund in the case of an umbrella UCITS: (a) Common investment objective. ESMA is of the opinion that derivatives-based hedging arrangements at share class level, other than currency risk hedging, are not compatible with this principle. (b) Non-contagion. (c) Pre-determination. (d) Transparency. In order to fully apply the principles, the Central Bank has amended its guidance "UCITS and AIF Share Classes". In addition, on 28 June 2017 the Central Bank published some additional Q&As in its UCITS Q&A 18th Edition (new questions ID 1077 and ID 1078). The first one confirms that no amendments are required to be made to share classes approved by the Central Bank on or prior to 30 January 2017 (however, they should be closed for investment by new investors on or before 30 July 2017 and for additional investment by existing investors on or before 30 July 2018). The second question relates to UCITS with one or more share classes, approved by the Central Bank on or prior to 30 January 2017 where it uses derivatives in order to engage in currency hedging at the level of the share class and the circumstances in which amendments to these share classes must be made. 4 The Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Undertakings for Collective Investment in Transferable Securities) Regulations 2015 may be amended in the future to reflect the ESMA Opinion. ESMA Q&A On 6 April 2017 ESMA updated its Q&As on application of the UCITS Directive 2009/65/EC. It includes one new Q&A (section IV: notification of UCITS and UCITS management companies; exchange of information between competent authorities) on cross-border activities by UCITS management companies. It clarifies that a UCITS management company can notify crossborder activities without having to identify a specific UCITS. On 24 May 2017 ESMA published a further updated Q&A which includes a new Q&A on the application to UCITS of the exemption for intragroup transactions under Article 4(2) of EMIR if subject to the clearing obligation of Article 4(1) of EMIR (see "EMIR Update" at 1.7 below). 1.2 AIFMD Update There have been a number of developments in relation to the Directive 2011/61/EU ("AIFMD") over this quarter: Central Bank Q&A On 15 May 2017 the Central Bank published the AIFMD Q&A 25th Edition. A new question ID 1123 on how an authorised alternative investment fund manager ("AIFM") or an internally managed alternative investment fund ("AIF") should submit details of its designated email address to the Central Bank is included. ESMA Q&A On 6 April 2017 ESMA updated its Q&A on application of AIFMD. It includes one new Q&A (section II: notifications of alternative investment funds (AIFs)) which relates to the crossborder marketing of EU AIFs by EU AIFMs under Article 32 of AIFMD. It clarifies that the AIF marketing passport may only be used for marketing to professional investors as defined in AIFMD. On 24 May 2017 ESMA published further updated Q&As. They include three new Q&As on: • How AIFMs should report to national competent authorities ("NCAs") on the breakdown between retail and professional investors; • Notification by AIFMs on the AIFs domiciled in another EU Member State it intends to manage though the AIF management passport; and • Use by an AIF of the exemption for intragroup transactions under Article 4(2) of Regulation (EU) 648/2012 (EMIR), if subject to the clearing obligation of Article 4(1) of EMIR (see "EMIR Update" at 1.7 below). 5 1.3 Companies (Accounting) Act 2017 – New Filing Requirements This Act gives further effect to the Accounting Directive 2013/34/EU and came into force on 9 June 2017 (with the exception of one section). A key change is that many Irish unlimited companies will be required to publicly file their financial statements in the CRO as it broadens the definition of "designated unlimited company" in the Companies Act 2014 ("CA 2014"). Consequently, non-filing unlimited company structures which are currently exempt from filing their financial statements with the CRO will be obliged to file their financial statements with their annual returns thereby making them publicly accessible. It also amends the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011 and the CA 2014 to provide that both UCITS and AIF investment companies will be obliged to file financial statements and directors' reports with the CRO. These filed documents are then publicly accessible records. The new filing requirements apply to financial years commencing on or after 1 January 2017. Note that ICAVs are not in scope and therefore do not have to file their accounts with the CRO. For more information see our client update, Irish Investment Funds - New Requirements to Make Accounts Publicly Available 1.4 Money Market Funds Regulation The Money Market Funds Regulation (EU) 2017/1131 ("MMFR") lays down rules for MMFs, in particular, the composition of their portfolios and the valuation of their assets, to ensure the stability of their structure and to guarantee that they invest in well diversified assets of a good credit quality. It also introduces common standards to increase the liquidity of MMFs, to ensure that they can face sudden redemption requests. The MMFR was published in the Official Journal of the EU ("OJ") on 30 June 2017 and comes into force on 20 July 2017. Most provisions apply from 21 July 2018 (with the exception of Article 11(4), Article 15(7), Article 22 and Article 37(4) which shall apply from 20 July 2017). Existing MMFs can avail of a further six month transition period to submit an application to the competent authority demonstrating compliance with the MMFR. The MMFR builds on the existing regulatory regime operating under the UCITS Directive, AIFMD and the 2010 ESMA "Guidelines on a common definition of European money market funds". Funds in scope will have to comply with obligations under the UCITS Directive/AIFMD (as applicable) and an additional layer of specific MMF rules under the MMFR. Once the MMFR applies, this will be factored into the authorisation process/existing regulatory regime for new UCITS/AIF MMFs, rather than introducing an additional layer of authorisation. On 24 May 2017 ESMA issued a consultation containing proposals on draft technical advice, draft implementing technical standards and guidelines under the MMFR. The key proposals relate to asset liquidity and credit quality, the establishment of a reporting template and stress test scenarios. The consultation closes on 7 August 2017. For more information see our client update, MMFR: Introducing a New EU Framework for Money Market Funds 6 1.5 Exchange Traded Funds Discussion Paper The Central Bank published a Discussion Paper on Exchange Traded Funds ("ETFs") on 15 May 2017. It considers the distinctive design features of ETFs and how they operate to deliver a product that has become highly valued by investors. It considers how those features operate in good times and bad and seeks input on investor expectations. The purpose of the paper is to garner information from stakeholders and other interested parties on any aspect of ETFs (whether covered in the paper itself or not). The closing date for responses is 11 August 2017. 1.6 Brexit - ESMA Supervisory Approach to Relocations from the UK On 31 May 2017 ESMA published an opinion on general principles to support supervisory convergence in the context of Brexit. It is addressed to the 27 NCAs (including the Central Bank) that will remain in the EU once the UK has left (referred to as the EU27) as well as the NCAs of Norway, Lichtenstein and Iceland. The opinion focuses on the activities of AIFMs, UCITS management companies and MiFID firms seeking to relocate from the UK to the EU27. It also addresses outsourcing or delegation activities by relocating firms with the objective of ensuring they do not become letterbox entities nor create obstacles to effective and efficient supervision and enforcement by the NCAs and sets out nine high level principles regarding authorisation and supervision. Three further Brexit focused opinions were subsequently issued by ESMA on 13 July 2017. These "sector-specific" Brexit opinions cover the areas of: • Investment Management – encompassing the activities of UCITS management companies, self-managed investment funds and authorised AIFMs; • Investment Firms – based on the MiFID framework applicable to these firms; and • Secondary Markets – covering all types of trading venues, i.e. regulated markets, multilateral trading facilities and, under MiFID, organised trading facilities. For more information see our client updates, ESMA Issues Brexit Focused Opinion and the subsequent ESMA Brexit Opinions – Investment Management 1.7 EMIR Update The European Market Infrastructure Regulation (Regulation on over the counter ("OTC") derivative transactions, central counterparties ("CCPs") and trade repositories (Regulation 648/2012)) ("EMIR") is relevant to all Irish funds trading in financial derivative instruments ("FDI") whether on an exchange or otherwise. UCITS and AIFs are financial counterparties for EMIR purposes, subject to the full scope of EMIR obligations. There have been a number of developments over the quarter: 7 On 3 April 2017 ESMA published an updated version of its Q&A on the implementation of EMIR following publication of the revised technical standards on reporting under Article 9 of EMIR. They include an updated question regarding the obligation to report outstanding trades following the entry into force of EMIR (backloading). The revised regulatory technical standards ("RTS") and implementing technical standards ("ITS") on EMIR reporting were published in the OJ on 21 January 2017 and apply from 1 November 2017 (including guidance where parties fail to agree a unique trade identifier in advance of reporting). ESMA has also published a table of the updated validation rules for the reports submitted under the revised technical standards. On 10 April 2017 ESMA published an opinion on portfolio margining requirements under Article 27 of Regulation (EU) 153/2013. Under Article 27 a CCP may allow offsets or reductions in the required margin across the financial instruments that it clears if the price risk of one financial instrument or a set of financial instruments is significantly and reliably correlated, or based on equivalent statistical parameter of dependence, with the price risk of other financial instruments. ESMA's opinion clarifies when two contracts can or cannot be considered as the same instrument for the purpose of portfolio margining. It contains clarification for all asset classes. It also states that CCPs have to limit the reduction in margin requirement when portfolio margining different instruments. On 19 May 2017 a delegated regulation relating to the EMIR clearing obligation to prolong, by two years, the phase-in period for financial counterparties with a limited volume of OTC derivatives activity came into force. This postpones commencement of OTC clearing to 21 June 2019 and will benefit UCITS and AIFs with notional volumes of non-cleared OTC derivatives below €8 billion (subject to certain balance sheet tests). On 24 May 2017 ESMA published updated UCITS and AIFMD Q&As which includes a new Q&A on the application to UCITS and AIFs of the exemption for intragroup transactions under Article 4(2) of EMIR if subject to the clearing obligation of Article 4(1) of EMIR. On 10 June 2017 a Commission implementing regulation on the extension of the transitional periods related to own funds requirements for exposures to CCPs in the CRR and EMIR came into force. On 29 June 2017 the European Commission adopted a regulation amending Delegated Regulation EU/151/2013 with regard to RTS specifying the data to be published and made available by trade repositories and operational standards for aggregating, comparing and accessing data under EMIR. The next step will be for the Council of the EU and the European Parliament to consider it. On 30 June 2017 Commission Delegated Regulation amending EMIR as regards the list of exempted entities entered into force. This exempts central banks and public bodies that manage the public debt in Australia, Canada, Hong Kong, Mexico, Singapore and Switzerland from the clearing and reporting requirements in EMIR. 8 EMIR II On 4 May 2017 the European Commission published a proposed Regulation amending EMIR in order to simplify some rules and for disproportionate costs and burdens on certain derivative counterparties to be eliminated based on the results of a public consultation. These amendments are intended to "simplify the rules and make them more proportionate" for smaller market participants. Complementing these EMIR II proposals on 13 June 2017 the European Commission published a proposed Regulation amending the ESMA Regulation 1095/2010/EU and EMIR as regards the procedures for the authorisation of CCPs and requirements for the recognition of third-country CCPs. 1.8 Beneficial Ownership Register Delayed The European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2016 which transpose parts of the Fourth Anti-Money Laundering Directive 2015/849/EU ("MLD4") require companies and other legal entities incorporated in Ireland to hold adequate, accurate and current information on their “beneficial owners” on an internal register since 15 November 2016. MLD4 also requires EU Member States to establish a central register of beneficial ownership by 26 June 2017. On 31 May 2017 the Companies Registration Office ("CRO") announced that further proposals to amend MLD4 by the Fifth Anti-Money Laundering Directive have resulted in the original MLD4 transposition date of 26 June 2017 being no longer achievable. Therefore the CRO's central register is now due to be launched in Q4 2017 (and is expected not to be publically accessible). There will be an extended timeframe of at least three months for companies to make their beneficial ownership filings which will commence after the launch of the register. 1.9 Central Bank Investment Firms Regulations 2017 - Questions and Answers On the 28 June 2017 the Central Bank published the second edition of the Central Bank Investment Firms Q&A on the Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Investment Firms) Regulations 2017 (which consolidate all of the requirements which the Central Bank imposes on certain investment firms). This incorporates amendments to existing questions ID 1005 (performance and quality standards), ID 1006 (key performance indicators) and ID 1010 (notifying existing clients impacted by proposed outsourcing arrangements) and new questions ID 1022 - ID 1025. The new questions confirm: (a) that the definition of administration services includes support services relating to (i) the performance of valuation services; (ii) fund accounting services; and (iii) acting as a transfer agent or a registration agent for an investment fund. 9 (b) the requirement to carry out a stress test to assess the cost of continuing to provide administration services under alternative arrangements if a disaster recovery scenario impacts either the fund or an outsourcing service provider. (c) that the Central Bank must approve in advance of outsourcing a service to a new location and/or a new outsourcing service provider due to a business continuity event. (d) that the review of the check and release of each investment fund NAV can be completed and signed by a senior staff member of the fund administrator. 1.10 MiFID II/MiFIR Update The Markets in Financial Instruments Directive (2014/65/EU) ("MiFID II") and the Markets in Financial Instruments Regulation (Regulation 600/2014) ("MiFIR") repeal the Markets in Financial Instruments Directive (2004/39/EC) ("MiFID"). They apply from 3 January 2018. On 3 April 2017 ESMA updated its Q&As on data reporting under MiFIR and updated MiFID II Q&As on market structures, commodity derivatives and transparency on 5 April and 31 May 2017. On 6 April 2017 ESMA published its final report on guidelines on the calibration, publication and reporting of trading halts under MiFID II which contained the final guidelines. On 27 June 2017 it published the official EU language versions of these guidelines which apply from 3 January 2018. NCAs must now notify ESMA whether they comply or intend to comply with them. In May 2017 ESMA published opinions on whether commodity derivatives traded on a thirdcountry venue should be considered as traded OTC for the purposes of the position limits regime; on determining third-country trading venues for the purpose of MiFID II post-trade transparency requirements; and on the meaning of traded on a trading venue for OTC derivatives under MiFID II. On 2 June 2017 ESMA published its final report on guidelines on product governance requirements under MiFID II. The guidelines aim to promote greater convergence in the implementation and application of the MiFID II requirements on product governance and address the target market assessment. They will apply from 3 January 2018. For more information see our client update, MIFID II: ESMA Clears a Path for a Simple Form Identified Target Market for UCITS On 4 April and 6 June 2017 ESMA updated its Q&As on investor protection topics under MiFID II and MiFIR. On 12 June 2017 the European Commission adopted a Delegated Regulation supplementing MiFIR as regards the exemption of certain third countries' central banks in their performance of monetary, foreign exchange and financial stability policies from pre- and post-trade transparency requirements. The next step is for the Council of the EU and the European Parliament to considerate it. If neither of them objects, it will enter into force 20 days after it is published in the OJ. 10 The following Commission regulations were published recently in the OJ and apply from 3 January 2018: (a) ITS on standard forms, templates and procedures for co-operation arrangements in respect of a trading venue whose operations are of substantial importance in a host member state, under MiFID II. (b) ITS on standard forms, templates and procedures for cooperation in supervisory activities, for onsite verifications and investigations and exchange of information between competent authorities under MiFID II. (c) ITS on standard forms, templates and procedures for the consultation of other competent authorities prior to granting an authorisation under MiFID II. (d) ITS on the format and the timing of position reports by investment firms and market operators of trading venues under the MiFID II. (e) RTS specifying information to be notified by investment firms, market operators and credit institutions. (f) ITS on standard forms, templates and procedures for authorisation of data reporting services providers under MiFID II. On 19 June 2017 ESMA published a consultation paper regarding its draft technical standards specifying the trading obligation for derivatives under MiFIR. It sets out its revised approach for determining which derivatives should be subject to the trading obligation, based on feedback to its September 2016 discussion paper on this topic. On 30 June 2017 ESMA issued an opinion helping market participants to assess whether their activities in commodity derivatives can be considered as ancillary to their main business. 1.11 PRIIPs KID Regulation The Regulation on key information documents ("KIDs") for packaged retail and insurancebased investment products (Regulation 1286/2014) ("PRIIPs") ("PRIIPs KID Regulation") will introduce a new pan-European pre-contractual product disclosure document for PRIIPS in EU Member States from 1 January 2018. Commission Delegated Regulation (EU) 2017/653 supplementing the Regulation by laying down RTS regarding the presentation, content, review and revision of KIDs and the conditions for fulfilling the requirement to provide KIDs came into force on 2 May 2017. It will apply from 1 January 2018 and Article 14(2) will apply until 31 December 2019. This is an amended version of the original Delegated Regulation which the European Parliament rejected in September 2016. On 11 May 2017 a corrigendum to that Delegated Regulation was published that amends some of the formulae in Annexes II and IV. 11 1.12 European Venture Capital Funds and Social Entrepreneurship Funds The European Venture Capital Funds Regulation 345/2013/EU ("EuVECA Regulation") sets out a marketing passport to allow fund managers to market qualifying venture capital funds to EU investors using the EuVECA designation. The European Social Entrepreneurship Funds Regulation 346/2013/EU ("EuSEF Regulation") sets out a marketing passport to allow fund managers to market qualifying social entrepreneurship funds to EU investors using the EuSEF designation. On 30 May 2017 the European Commission announced that it has reached agreement with the Council of the EU and the European Parliament on the proposed Regulation amending both Regulations. The press release states that the agreement reached: • Extends the range of managers eligible to market and manage EuVECA and EuSEF funds to larger fund managers (that is, those with assets under management of more than EUR500 million). • Expands the ability of EuVECA funds to invest in small mid-caps and small and mediumsized enterprises or SMEs listed on SME growth markets. • Decreases costs by explicitly prohibiting fees imposed by competent authorities of host member states where no supervisory activity is performed. • Simplifies the registration process and determines the minimum capital necessary to become a manager. On 27 June 2017 the text of the draft amending Regulation between the European Parliament and the Council was published. COREPER was invited to approve the text. Once both the Council and the Parliament have adopted it, the Regulation will start to apply three months after its entry into force. The European Parliament is to consider the proposed amending Regulation at its 11-14 September 2017 plenary session. 1.13 Benchmark Regulation The Regulation on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds 2016/1011/EU ("Benchmark Regulation") entered into force on 30 June 2016 and applies fully from 1 January 2018. To date, the European Commission has only designated EURIBOR and the euro overnight index average known as EIONA as a critical benchmark under the Regulation. On 2 June 2017 ESMA published its final report on draft RTS on co-operation arrangements with third countries under the Benchmarks Regulation. The Commission has three months to decide whether to endorse them. On the same day ESMA also published a methodological framework on the selection of supervised entities for mandatory contribution under Article 23(7) of the Regulation. On 22 June 2017 the European Commission invited feedback on the following draft delegated regulations supplementing the Benchmarks Regulation: 12 • Specifying technical elements of the definitions in paragraph 1 of Article 3 of the Benchmarks Regulation. • Specifying how the nominal amount of financial instruments other than derivatives, the notional amount of derivatives and the net asset value of investment funds are to be assessed. • Specifying how the criteria of Article 20(1)(c)(iii) are to be applied for assessing whether certain events would result in significant and adverse impacts on market integrity, financial stability, consumers, the real economy or the financing of households and businesses in one or more EU Member States. • On the establishment of the conditions to assess the impact resulting from the cessation of or change to existing benchmarks. 1.14 CSDR: Regulating Central Securities Depositories The Regulation on improving securities settlement and regulating CSDs (Regulation 909/2014/EU) ("CSDR") is in effect since September 2014. However, Article 3(1) will apply from 1 January 2023 to transferable securities issued after that date, and from 1 January 2025 to all transferable securities. Certain other implementing measures will apply from the date that they enter into force. ESMA published two sets of guidelines under the CSDR on 1 June 2017 on relevant currencies and substantial importance of a CSD for a host member state. These will be translated into the official languages of the EU and published on ESMA’s website. On 2 June 2017 ESMA published an updated version of its Q&As on CSDR to include new answers relating to: CSDs’ investment policy; access to CSDs; and conditions relating to provision of services in another Member State. On 8 June 2017 ESMA published translations, in all official EU languages, of the guidelines on CSD participants' default rules and procedures and the guidelines on access by a CSD to the transaction feeds of CCPs and trading venues under the CSDR. NCAs to which these guidelines apply must, within two months, notify ESMA whether they comply or intend to comply with them. 1.15 Capital Requirements Regulation The Capital Requirements Regulation 575/2013/EU ("CRR") applies to credit institutions and investment firms and contains provisions relating to, among other things, own funds and capital requirements, large exposures, securitisations, liquidity, leverage and supervisory reporting. On 1 June 2017 the Council of the EU published the final Presidency compromise proposal on a proposed Regulation amending the CRR as regards the transitional period for mitigating the impact on own funds of the introduction of International Financial Reporting Standard 9 and the large exposures treatment of certain public sector exposures denominated in nondomestic currencies of member states. On 8 June 2017 the European Parliament's 13 Committee on Economic and Monetary Affairs ("ECON") published its draft report on it which sets out amendments to this proposed CRR II Regulation that reflect the splitting out of the transitional provisions into a separate Regulation. The proposed Regulation is intended to enter into force on the 20th day following its publication in the OJ and to apply from 1 January 2018. The European Commission adopted a Delegated Regulation on 31 May 2017 supplementing the CRR with regard to RTS further specifying the additional objective criteria for the application of a preferential liquidity outflow or inflow rate for cross-border undrawn credit or liquidity facilities within a group or an institutional protection scheme. The next step is for the Council and the European Parliament to consider it. If neither of them object, it will enter into force 20 days after it is published in the OJ. On 23 June 2017 the Central Bank issued a consultation on the Implementation of Competent Authority Options and Discretions in the European Union (Capital Requirements) Regulations 2014 and Regulation (EU) No 575/2013 - CP110. It closes on 4 August 2017. 1.16 Investment Funds Statistics: Q1 2017 The main points to note in the Central Bank's June 2017 update for Q1 2017 are: (a) The net asset value ("NAV") of investment funds resident in Ireland increased by 7% cent (€115 billion) over Q1 2017, reaching €1,721 billion. The total value of assets held by investment funds increased by €157 billion to €2,096 billion. (b) Q1 2017 saw inflows of €64 billion, more than twice the amount of Q4 2016. Across fund types, bond funds were the primary driver accounting for 53% (€34 billion) of net inflows. (c) Exchange traded funds added €27 billion to their net asset value between endDecember 2016 and end-March 2017 and now account for 18% of the total net asset value of resident investment funds. For more information see our client update, Irish Funds Trends 1.17 Home and Host Responsibilities under AIFMD and UCITS On 7 April 2017, ESMA published the findings of its thematic study on notification frameworks and home-host responsibilities under AIFMD and the UCITS IV Directive. ESMA's findings include the following: (a) The extent to which the passporting frameworks are used varies extensively across EU Member States, and is mostly consistent with the size of national fund markets and the share the relevant member state has in the single European fund market. Compared to cross-border management, the cross-border marketing of UCITS plays a bigger role. (b) The statistics for the AIFM passporting frameworks mirror the above findings to some extent. 14 (c) In general, notification frameworks and their administrative procedures are wellestablished and functioning at NCA level. NCAs also identified further issues around the day-to-day functioning of the passporting frameworks that were outside the study's scope. ESMA will try to resolve these issues and will also look at contributing to the work on barriers to cross-border distribution of funds carried out by the European Commission. 1.18 Investing Restrictions Breaches, Pricing Errors, Compensation and Reporting Guidance Irish Funds' Industry Guidance Papers 6 and 8 have been compiled into one paper - Guidance Paper 6 on investment restriction breaches, pricing errors, compensation and reporting. It does not change the industry principles or guidelines and compensation will continue to be predominately applicable to advertent breaches and errors in excess of 50bps. It does refer to the Central Bank’s requirements on the notification of pricing errors and breaches. The paper also introduces additional approval requirements in respect of the application of the "alternative compensation arrangements" for advertent investment restriction breaches. This reflects the practice of basing compensation calculations on the differential between the unauthorised investment and the performance of an authorised investment. In practice, the alternative compensation arrangements are used in a very small number of cases. The additional approvals do, however, reflect the Central Bank’s challenges with this methodology. 1.19 Anti-Money Laundering Update EU Member States were obliged to transpose the Fourth Money Laundering Directive EU/2015/849 ("MLD4") into national law by 26 June 2017 (the date it entered into force). The revised Wire Transfer Regulation EU/ 2015/847 ("WTR") applies from the same date. Only parts of the MLD4 have been transposed into Irish law; the rest of its provisions will be implemented through regulations due to issue in Q4 2017. On 7 April 2017 the Joint Committee of the European Supervisory Authorities ("ESAs") published the official EU language versions of its guidelines on risk-based supervision under MLD4. NCAs such as the Central Bank had to notify the ESAs whether they comply or intend to comply with the guidelines (or otherwise, giving reasons for non-compliance) by 7 June 2017. The European Commission is responsible for producing a "blacklist" of countries thought to be at risk of tax evasion, money laundering and terrorism financing. On 17 May 2017 the European Parliament rejected as inadequate the revised proposed delegated regulation amending the European Commission's list of high risk third countries under MLD4. (It deletes Guyana from the table of high risk third countries with strategic deficiencies and adds Ethiopia based on the most recent Financial Action Task Force information.) The European Commission will therefore have to prepare a further revised regulation. 15 On 29 May 2017 GoAML was launched by the Financial Intelligence Unit of the Garda Síochána (Irish Police). GoAML is a new software system which allows reporting entities to submit suspicious transactions under section 42 of the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 electronically. It was developed by the United Nations Office on Drugs and Crime. Although registration is not compulsory, there are benefits to doing so, including the message board feature which will display alerts regarding trends in the funds industry. On 31 May 2017 the CRO announced that further proposals to amend MLD4 by the Fifth AntiMoney Laundering Directive ("MLD5") have resulted in the original MLD4 transposition date of 26 June 2017 being no longer achievable for the beneficial ownership register (see "Beneficial Ownership Register Delayed" at 1.8 above). On 31 May 2017 the Joint Committee of the ESAs published a consultation paper on draft RTS under MLD4 on steps firms should take where third country's law prevents implementation of group wide AML and CTF policies and procedures. They will be reviewed in the light of responses received and the final draft will then be sent to the European Commission for endorsement. On 26 June 2017 the Joint Committee of the ESAs published its final MLD4 risk factor guidelines on AML/CTF which will apply by 26 June 2018. They give credit and financial institutions the tools to make informed, risk-based decisions on the effective management of individual business relationships and occasional transactions for AML/CTF purposes and how those firms can adjust the extent of their customer due diligence measures in a way that is commensurate to the level of risk they have identified. They also published draft RTS to help Member States determine when payment service providers and electronic money issuers should appoint a central contact point to support the fight against money laundering and terrorist financing. The European Parliament is due to consider MLD5 at its 23 to 26 October 2017 plenary session. 2 Tax 2.1 Tax Treaty Entitlement for Funds – OECD Multilateral Instrument On 7 June 2017 over 60 countries signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting ("MLI"). This is the first treaty of its kind that has the effect of amending a series of bilateral treaties (there are over 3,000 bilateral double tax treaties in existence). The effect of the MLI is that countries (including Ireland) will transpose certain provisions relating to the OECD's Base Erosion and Profit Shifting ("BEPS") project into their existing networks of bilateral tax treaties without the requirement to renegotiate each treaty individually. The earliest that any of these changes are likely to apply in Ireland is 1 January 2019. 16 The key provisions which will amend Ireland's double tax treaties relate to: (a) The adoption of a general anti-avoidance principal purpose test in relation to the prevention of treaty abuse; (b) The adoption of the best practice tie-breaker test for determining tax residence for dual resident entities; and (c) The adoption of certain mechanisms in respect of dispute resolution (including mandatory binding arbitration) in order to ensure disputes between treaty parties are resolved and double taxation does not arise. For more information see our client update, Over 60 Countries Sign up to Revolutionary OECD Multilateral Instrument 3 Listings 3.1 ISE: New MiFID II Obligation The Irish Stock Exchange ("ISE") will be subject to a new obligation under MiFID II and MiFIR which will come into effect on 3 January 2018 (see also "MiFID II/MiFIR Update" at 1.10 above). It will be required to collect additional issuer and financial instrument data and report this data to ESMA with effect from 17 July 2017. This data will be included in ESMA's new database of all financial instruments admitted to EU markets and will be used for various purposes, including ESMA's transparency calculation under MiFID II. In order to facilitate the collection of this data the ISE have revised its application forms and will now be requesting details of funds' FISN (financial instrument short name) and CFI (classification of financial instrument) codes. From 1 July 2017 the FISN and CFI codes will be assigned simultaneously with allocation of the international securities identification number ("ISIN") to new financial instruments. They will also be allocated to all currently active ISINs. 17 Ciara O'Leary Partner, Dublin firstname.lastname@example.org +353 1 619 2034 Deirdre McIlvenna Partner, Dublin deirdre.mcIlvenna@maplesandcalder.com +353 1 619 2064 Pádraig Brosnan Partner, Cayman email@example.com + 1 345 814 5441 Emma Conaty Head of Global Registration Services, Dublin firstname.lastname@example.org +353 1 619 2708 Andrew Quinn Partner, Head of Tax, Dublin email@example.com +353 1 619 2038 Ciaran Cotter Head of Debt Listing, Dublin firstname.lastname@example.org +353 1 619 2033 Gerry Brennan Director, Financial Services Regulatory email@example.com +353 1 619 2723 Contacts Peter Stapleton Partner, Dublin firstname.lastname@example.org +353 1 619 2024 Barry McGrath Partner, Dublin email@example.com +353 1 619 2029 Stephen Carty Partner, Dublin firstname.lastname@example.org +353 1 619 2023 Carol Widger Partner, Dublin email@example.com +353 1 619 2762 Adam Donoghue Partner, Dublin firstname.lastname@example.org +353 1 619 2718 Eimear O'Dwyer Partner, Dublin email@example.com +353 1 619 2065 John Gallagher Partner, Dublin firstname.lastname@example.org +353 1 619 2073 Ian Conlon Partner, Dublin email@example.com +353 1 619 2714 18 About Maples Maples and Calder is a leading international law firm advising financial, institutional and business clients around the world on the laws of the Cayman Islands, Ireland and the British Virgin Islands. The firm's affiliated organisation, MaplesFS, provides specialised fiduciary, accounting and administration services to corporate, finance and investment funds entities. The Maples group comprises more than 1,500 staff in 15 offices worldwide. Since establishing in Ireland in 2006, the Dublin office has grown to over 350 people and has advised on many high profile and complex transactions in Ireland. Maples and Calder is independently ranked first amongst law firms in Ireland in terms of total number of funds advised and number of new funds established (based on Monterey's most recent report, as at 30 June 2016). To find out more about the firm visit maplesandcalder.com and maplesfs.com © Maples and Calder 2017 This update is intended to provide only general information for the clients and professional contacts of Maples and Calder. It does not purport to be comprehensive or to render legal advice.