Regulatory reporting by asset management companies: the AMF calls for greater diligence

Portfolio asset management companies are subject to reporting obligations to the AMF, pursuant to the national regulations in particular. As part of this process, they are required to submit an annual disclosure sheet to the regulator, together with an annual internal audit report, and answer the questionnaire on their anti-money laundering and anti-terrorist financing measures. In addition, in January 2021 the AMF rolled out the ROSA extranet, where asset management companies are responsible for keeping their information and documents up-to-date and complete.

The AMF’s SPOT inspection campaign focused on a panel of five asset management companies of varying sizes, structures and activities. Specifically, the AMF examined the following aspects of the data production, verification, and transmission process for the aforementioned regulatory reports:

• organisation and governance;
• the associated procedural body;
• operational implementation;
• the ongoing and periodic internal inspection activities.

For all the companies in the panel, the Chief compliance and internal control officer is involved either in the preparation or in the review of the first versions of the reports produced, before they are validated by a senior manager and then sent to the AMF. The existing formal operating procedures describe the successive stages in this process. These stages are also subject to a robust audit trail.

However, tests conducted by the AMF revealed several data quality anomalies, including discrepancies in managed assets, customer information, internal control recommendations, and personnel within the companies audited.

Four of the five companies on the panel rated the risk of error in regulatory reporting to the AMF as "high". However, none of them has carried out any ongoing inspection activities on the process analysed since January 2020. Three of these companies did perform periodic audits of this process, but they did not identify the anomalies discovered during the tests carried out by the AMF.

Several examples of best practices are highlighted in this summary to reinforce the system analysed.  However, despite the varying levels of materiality of the anomalies found, the AMF stresses that they are numerous. Such a high level of error is incompatible with the critical importance of the data submitted to the Authority as part of its supervisory role. The AMF calls for a significant and prompt strengthening of the existing internal control framework regarding the operational production of these reports.
 

About the AMF
The AMF is an independent public authority responsible for ensuring that savings invested in financial products are protected and that investors are provided with adequate information. The AMF also supervises the orderly operations of markets.Visit our website https://www.amf-france.org/en