ESMA and the AFM Focus on the Compliance and Internal Control Functions of Fund Managers

In March 2025, ESMA, in collaboration with national regulators, launched a fact-finding assessment among fund managers regarding their compliance and internal control functions. The aim of this study is to promote a more uniform and consistent supervisory approach across the EU regarding the implementation of these requirements by fund managers.

As part of this initiative, selected UCITS and AIFMD managers must complete a detailed questionnaire and submit supporting documentation to the regulator.

A potential next step is for ESMA and national regulators to further clarify their expectations on the implementation and functioning of the compliance and internal control functions. Given the critical role of these functions, a high standard is expected.

In this news update, we discuss the scope of the assessment, the potential next steps, and how Projective Group can support fund managers.

Scope of the Assessment

The assessment is part of a ‘Common Supervisory Action,’ an ESMA-initiated investigation conducted uniformly across multiple EU countries.

In the Netherlands, the AFM sent a comprehensive questionnaire to a large number of fund managers in early March 2025, including both UCITS and AIFMD managers. These fund managers must complete the questionnaire and provide detailed information about their compliance and internal control functions by no later than May 15, 2025.

The questionnaire is structured around eight themes, including ‘Compliance – Policies’ and ‘Compliance – Responsibilities.’ Each theme contains detailed questions on topics such as responsibilities, conditions, reporting and escalation lines, monitoring plans, and mitigating measures.

The focus is less on whether a fund manager meets certain requirements and obligations and more on how these are implementen in practice. For example, managers must explain how employees are kept informed about relevant changes in laws and regulations.

Additionally, they must provide documentation, such as compliance monitoring plans from different years, and clarify which monitoring activities have yet to be completed and when they are scheduled to take place.

Next Steps

The compliance and internal audit functions are vital to fund managers' internal control frameworks. While the regulations governing these functions are relatively clear, and most fund managers are likely to comply adequately, the structure of the ‘Common Supervisory Action’ questionnaire—along with the depth and detail of its questions—signals that regulators have high expectations.

Given this, we anticipate that ESMA and national regulators will further clarify their expectations for these functions. This could include new ESMA guidelines that fund managers must follow, as well as regulators incorporating these expectations into supervisory reviews and licensing procedures.

Need Support?

Fund managers who have received the AFM’s request must complete the questionnaire and submit the required information by May 15, 2025. We recognize that this study may raise questions, and we are here to assist you in completing the questionnaire and, if needed, drafting or supplementing documentation.

In addition, we provide support in establishing, structuring, and enhancing compliance and internal control functions. We work with both large and smaller firms, ensuring a proportional approach to regulatory requirements, particularly for smaller firms.

For small and medium-sized fund managers who cannot fully implement the compliance function independently, we offer support as an external compliance officer or compliance advisor. Our tailored approach ensures that the compliance function is executed effectively and efficiently.

Why Projective Group?

Our compliance specialists work daily with the AIFM and UCITS regulations and have in-depth knowledge of how fund managers should apply the resulting requirements.

Through our Ruler tool, we offer a comprehensive overview of the complex regulations applicable to fund managers. With extensive experience in improvement projects and our strong relationships with the AFM, we understand how the regulator interprets the AIFM and UCITS guidelines.

Additionally, we act as an external compliance officer for approximately eighty financial institutions, allowing us to provide practical, effective, and efficient compliance solutions tailored to the regulatory requirements for fund managers.