Private Investment Fund Guidance Note (May 2025)

Summary

This guidance note from the Guernsey Financial Services Commission (GFSC) explains how Designated Administrators and other Guernsey licensed service providers should conduct due diligence on promoters and investment managers of Private Investment Funds (PIFs) registered under the Private Investment Fund Rules 2025. It also clarifies who is responsible for investor customer due diligence and sets out relief from certain conduct of business, capital adequacy and audit requirements for entities that act solely as PIF managers.

New Promoter Due Diligence

• Fitness and propriety declaration: The Designated Administrator must certify to the Commission that it has performed sufficient due diligence to be satisfied the promoter and/or investment manager are fit and proper, covering integrity, solvency and competence, and must document its findings.
• Good standing test: Good standing means the promoter/investment manager and its directors, controllers and senior managers have not, in the past 5 years, been subject to material ongoing disciplinary action by a regulator or professional body, or convicted of fraud, dishonesty or related financial offences.
• Newly formed promoters/managers: Applications on behalf of newly formed promoters or investment managers are permitted, but the licensed service provider must consider and document the track record, experience and previous employment history of controllers, directors and management.
• Consultation on doubtful issues: Where applicants or licensees are aware of issues concerning a promoter/investment manager (or associated parties) but are uncertain of materiality or impact, they should consult the Commission at the time they become aware of the issue, rather than waiting until formal application.
• Ongoing monitoring: Due diligence on promoters and investment managers must be updated on a regular basis, with findings and conclusions documented, and the Commission may take action against licensees for defective or misleading declarations, including exclusion from the fast track regime.

Investor Due Diligence and PIF Managers

• Nominated CDD firm: Each PIF must nominate a firm licensed under the Protection of Investors (Bailiwick of Guernsey) Law, 2020 and contracted to or connected with the PIF, to be responsible for meeting investor customer due diligence requirements under Schedule 3 to the Proceeds of Crime Law and the Handbook.
• Relief for PIF-only managers: Where a POI Law licensee acts solely as manager to one or more PIFs and undertakes no other Controlled Investment Business, the Commission will typically dis-apply the Licensees (Conduct of Business) Rules and Guidance 2021 and the Licensees (Capital Adequacy) Rules and Guidance 2021, and exempt it from the Section 43(1) POI Law requirement to appoint an auditor and submit audited accounts.
• Other obligations remain: Licensees benefiting from this relief and their directors and administrators must still remain mindful of any obligations owed to other parties, such as requirements in constitutive documents or other applicable legislation.

Key obligations

• Designated Administrators must certify to the Commission that they have performed sufficient due diligence to be satisfied that a PIF promoter and/or investment manager are fit and proper, documenting findings on integrity, solvency and competence.
• Licensed service providers must document their consideration of the track record, experience and employment history of controllers, directors and management of newly formed promoters/investment managers.
• Applicants or licensees who become aware of unresolved issues regarding a promoter, investment manager or associated parties must consult the Commission at the time they become aware, before or during the application process.
• Licensees must update their due diligence on promoters and investment managers on a regular basis and document findings and conclusions.
• A PIF must nominate a POI Law licensed firm, contracted to or connected with the PIF, to be responsible for investor customer due diligence under Schedule 3 to the Proceeds of Crime Law and the Handbook.

Applies to

Private Investment Funds (PIFs), Designated Administrators, Guernsey licensed service providers, investment managers, promoters, POI Law licensees acting as PIF managers