When it comes to its leading position as an international financial centre, Luxembourg has never been one to rest on its laurels. And as the demands of the regulators, general and limited partners evolve, so does the entire funds ecosystem.
Past industry practices are now firmly in the past, and the hyper focus we see on compliance and regulation in investing around the globe is the new normal. Thanks to technology, funds establishment and ongoing compliance processes are becoming more automated, and we’re seeing the subsequent efficiency across the 80+ countries in which TMF Group operates. For example, new integrated IT infrastructure that aligns with customer platforms has increased the speed of transaction management to allow for reduced time spent, lower fees and increased capacity. However, compliance process goes deeper than simple documentation and ID checks and how fast you can do them.
When supporting an investment in an emerging market for example, there needs to be a true understanding of that local ecosystem. The application of new compliance methodologies and the involvement of knowledgeable local partners equal swifter actions and comprehensive reputation profiles. There is faster certainty about the path forward, which ultimately feeds into improved investment reputation for clients and ourselves as service providers.
Those in the market that haven’t yet evolved their capabilities may soon find themselves left behind.
Simon Bodjanski, Senior relationship director (TMF Group)
Meeting the highest demand
The funds industry is, in part, moving away from the traditional alternative management administration of usual asset classes. Managers in the new technology space are setting up their funds to invest in start-up, which have a completely different mentality to a real estate asset. The new way of doing things must cater for growth in, for example, closed-end funds. Within these, we see the rise of shadow banking, peer-to-peer lending that doesn’t require a bank but an investment platform instead. It’s pleasing to see that the Luxembourg market is capable of managing these higher-level investments and more complex structures, thanks to its constantly improving technology – both in-house and licensed software – and strong financial industry foundations. Those in the market that haven’t yet evolved their capabilities may soon find themselves left behind.
Compliance complexity meeting opportunity
Typically in business, it starts with the idea – your client wants to expand to an emerging, high-risk market such as Africa to capitalise on a high investment return opportunity. But the problem is compliance. Your task is to strike that perfect balance between the need to be compliant with the ability to do business and thrive.
Investors are looking for a jurisdiction that takes regulation seriously.
Luxembourg’s very structured ecosystem of third-party providers give investors what’s best described as a “strike force”. And this team is essential for them to be able to keep a steady pace.
Investors are looking for a jurisdiction that takes regulation seriously. One that allows for opportunity but also holds itself accountable at every stage of the funds set-up and administration process. Luxembourg’s highly tuned regulatory framework and comprehensive network of risk mitigation players are on hand to give investors peace of mind, and help them make their moves quickly.