INVESTMENT ADVISERS

• Annual Compliance Reviews
• General Updates to Fund Documets
• Final Private Fund Adviser Rules
• New Marketing Rule
• Form ADV – Annual Amendment Due by March 30, 2024; Delivery of Updated ADVs to Clients
• Exempt Reporting Advisers – Monitoring of “Regulatory Assets Under Management”
• Form ADV Part 3 “Relationship Summary”
• MA Registered-Advisers - Table of Fees
• Form PF
• Registered Advisers to Funds - Delivery of Audited Financial Statements
• Exempt Reporting Advisers - Delivery of Audited Financial Statements

PRIVACY COMPLIANCE

• Privacy Policy
• California Consumer Privacy Act (“CCPA”)
• Cayman Islands Data Protection Act (“DPA”)
• European General Data Protection Regulation (“GDPR”)

FILING OBLIGATIONS WITH RESPECT TO HOLDINGS AND TRADING IN PUBLICLY LISTED SECURITIES

• Section 13(f) Filings
• Form NP-X – New Say-on-Pay Disclosures for Institutional Investment Managers
• Section 13(g) Filings
• Form 13H Filings
• “New Issues Rules” – Annual Eligibility Verification

COMMODITY TRADING ADVISORS AND COMMODITY POOL OPERATORS

• Form PQR
• CPOs to 4.7 Pools - Delivery of Annual Audited Financials and Quarterly Account Statements
• Proposed Amendments to CFTC Rule 4.7
• Annual Certification - 4.13(a)(3) and 4.14(a)(8)
• Form PR
• NFA Bylaw 1101 Compliance
• Additional NFA/CFTC Requirements

FINANCIAL AND TAX RELATED REPORTING

• FATCA and CRS
• Foreign Bank Account Report (“FBAR”)
• Country-by-Country Reporting (“CbCR”)

GENERAL REMINDERS

• Corporate Transparency Act
• Rule 506 - “Covered Person” (or “Bad Actor”) Questionnaires
• Annual Amendment to Form D 
• Employee Confidentiality Provisions
• Cybersecurity
• Pay-to-Play
• Form SLT
• Environmental, Social and Governance (“ESG”) Proposed Rule
• Bureau of Economic Analysis (“BEA”) Reporting
• Annual Delaware Tax
• Annual State Filings

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INVESTMENT ADVISERS

Annual Compliance Reviews

All investment advisers registered with the Securities and Exchange Commission (“SEC”) or at the state level are required to review their compliance policies and procedures at least annually (and best practice is for any investment adviser, whether SEC or state registered or not registered, to engage in such a review). Many advisers with a December 31 fiscal year end traditionally conduct this review in March of each year. The new private fund adviser rules (see the section entitled “Final Private Fund Adviser Rules” below) require all SEC registered investment advisers, whether or not managing any private funds, to document the annual review of their compliance policies and procedures, and this requirement is currently in effect.

General Updates to Fund Documents

All investment advisers, whether or not registered, are reminded that reviews of all fund documents should be undertaken on a periodic basis. Registered investment advisers may undertake this review as part of their annual compliance review. To the extent that such a review has not been undertaken during the last two years, it is recommended that such a review be undertaken at this time.

Final Private Fund Adviser Rules

On August 23, 2023, the SEC adopted a final rule presenting sweeping changes to the U.S. private funds industry.

The final rule requires investment advisers that are registered with the SEC and managing one or more private funds to: (i) provide investors in private funds with quarterly statements detailing information about the fund’s performance, fees and expenses; (ii) obtain an annual audit, by a PCAOB registered and inspected audit firm, for each private fund it advises; and (iii) distribute to investors, in connection with any adviser-led secondary transaction, a fairness opinion or a valuation opinion, and a written summary of certain material business relationships between the adviser and the opinion provider.

In addition to imposing substantial additional reporting and recordkeeping requirements on investment advisers that are registered with the SEC, the final rule also imposes a number of requirements on advisers to private funds that are not registered with the SEC, including exempt reporting advisers and state registered advisers. These include a series of prohibitions on certain actions unless investor disclosure and consent is obtained or, in certain cases, prohibits certain actions altogether. For more information on the private fund adviser rules, including the implementation dates, please refer to our  please refer to our August 24, 2023 Foley Adviser.

New Marketing Rule

On December 22, 2020, the SEC announced that it was adopting amendments under the Investment Advisers Act of 1940 to implement a revised Rule 206(4)-1 (the “Marketing Rule”) governing investment adviser advertisements, marketing and client solicitation. All registered investment advisers must now be operating in compliance with the Marketing Rule.

The Marketing Rule only applies to “advertisements” made by investment advisers registered (or required to be registered) with the SEC and defines “advertisement” in two prongs: (i) any direct or indirect communication an investment adviser makes to more than one person offering the adviser’s investment advisory services with regard to securities; and (ii) any endorsement or testimonial for which an investment adviser provides compensation, directly or indirectly. For more information on the Marketing Rule, please refer to our October 3, 2022 Foley Adviser.

In December 2022, the Massachusetts Securities Division of the Office of the Secretary of the Commonwealth issued guidance for advisers registered in Massachusetts, which reiterated that advertisements in Massachusetts are subject to the requirements of the Marketing Rule, as well as additional restrictions. For more information on the Massachusetts guidance, please refer to our January 5, 2023 Foley Adviser. Investment advisers registered in other states should consult their counsel regarding the guidance and regulations in such states.

Form ADV – Annual Amendment Due by March 30, 2024; Delivery of Updated ADVs to Clients

Form ADV for registered advisers (Parts 1A, 1B (state registered advisers only) and 2A) and Exempt Reporting Advisers (relevant portions of Part 1A) with a December 31 fiscal year end must be updated by March 30, 2024 through the Investment Adviser Registration Depository ("IARD") website (www.iard.com). Note that for advisers with a December 31 fiscal year end, the Form ADV is due one day earlier this year as 2024 is a leap year.  Please be sure to select “annual amendment” when updating Form ADV so the filing will qualify as an annual amendment to Form ADV. Failure to update Form ADV could lead to registration or status as an Exempt Reporting Adviser being revoked. Advisers should also check to ensure their IARD account is adequately funded well in advance of the filing deadline to avoid any delays in submission of their Form ADV.

In addition to the requirements mentioned above, registered investment advisers are required to deliver updated brochures (Part 2A) and brochure supplements (Part 2B) to all clients within 120 days after the end of the adviser’s fiscal year.

Exempt Reporting Advisers – Monitoring of “Regulatory Assets Under Management”

Exempt Reporting Advisers are reminded to review their “regulatory assets under management” on a regular basis, to ensure that any increase does not trigger additional requirements, such as full registration with the SEC or, for State Exempt Reporting Advisers, the need to also become an SEC Exempt Reporting Adviser.

Regulatory assets under management should be calculated in accordance with Item 5.F of Form ADV and the accompanying instructions.

Form ADV Part 3 “Relationship Summary”

In accordance with SEC rules issued in 2019, registered investment advisers with clients that are “retail investors” are required to provide Part 3 of Form ADV (Form CRS or a “Relationship Summary”) to new and prospective clients and customers who are retail investors. For these purposes, the term “retail investor” is defined as “a natural person, or the legal representative of such natural person, who seeks to receive or receives services primarily for personal, family or household purposes.” Note that an investment adviser to pooled investment vehicles containing investors who are “retail investors” are not required to deliver Form CRS to those pooled investment vehicle clients. However, managers advising clients other than pooled investment vehicles, such as separately managed accounts, should consider whether a Form CRS must be filed and delivered.

Initial Form CRS filings are due upon registering with the SEC. Advisers should evaluate the need for amendments whenever any information in the adviser’s Relationship Summary becomes materially inaccurate, at which point the adviser must amend its Part 3 of Form ADV within 30 days by filing an additional other-than-annual amendment or by including the Relationship Summary as part of an annual updating amendment.

MA Registered-Advisers - Table of Fees

The Massachusetts Securities Division requires all Massachusetts registered investment advisers to provide a one-page stand-alone Table of Fees for Services to clients and prospective clients. The fee table must be updated and delivered consistent with the existing requirements for Form ADV.

Form PF

SEC registered investment advisers that manage private funds and have at least $150 million in “regulatory assets under management” attributable to “private fund assets” (as defined in Form PF) are required to file Form PF through the IARD website (www.iard.com). Note, this may include assets of a separate account running a parallel strategy to a private fund managed by the adviser.

Large Hedge Fund Advisers (defined as advisers with over $1.5 billion in “hedge fund assets” under management) must file Form PF quarterly within 60 calendar days after the end of each quarter or by February 29, 2024 for the quarter ended December 31, 2023. Most other advisers must file annually within 120 days of the end of their fiscal year or by April 29, 2024 for advisers with a December 31 fiscal year end. Advisers are cautioned to carefully review the definitions and the instructions for Form PF when determining the amount of private funds assets and hedge fund assets.

On May 3, 2023, the SEC adopted a final rule amending Form PF to require (i) quarterly event reporting for all private equity fund advisers upon the occurrence of one or more trigger events, (ii) current reporting for Large Hedge Fund Advisers as soon as practicable, but no later than 72 hours from the occurrence of one or more trigger events, and (iii) expanded reporting for Large Private Equity Fund Advisers (defined as advisers with over $2 billion in “private equity fund assets” under management).

Advisers that have not yet started preparing their Form PF filings are encouraged to start this process promptly.

Registered Advisers to Funds - Delivery of Audited Financial Statements

Registered investment advisers to private funds relying on the “audited financials exception” to the account statement delivery and independent verification requirements of the Custody Rule must deliver audited financial statements for such funds to investors within 120 days after the end of the fund’s fiscal year (so, by April 29, 2024 for funds with a December 31 fiscal year end). Please note that funds that are 4.7 pools for CFTC purposes have a 90-day deadline under CFTC rules (see the section entitled “CPOs to 4.7 Pools - Delivery of annual audited financials and quarterly account statements” below). The financial statements must be audited by an independent public accountant that is registered with, and subject to regular inspection by, the Public Company Accounting Oversight Board. Advisers to funds of funds must deliver such statements within 180 days after the end of the fund’s fiscal year.

Exempt Reporting Advisers - Delivery of Audited Financial Statements

Exempt reporting advisers in Massachusetts that manage private funds relying on the exclusion from the definition of “investment company” set forth in Section 3(c)(1) of the Investment Company Act of 1940, as amended, and that are not “venture capital funds” (as defined by the Massachusetts Securities Division), must for each such fund deliver its annual audited financial statements to each beneficial owner of such fund.

Exempt reporting advisers qualified in other states should consult their counsel to determine any annual requirements in such states.
 

PRIVACY COMPLIANCE

Privacy Policy

Generally, all investment advisers must circulate a summary of their privacy policy to advisory clients who are natural persons each year. However, an exception to the annual privacy notice distribution requirement is available if the following two criteria are met by the investment adviser:

1. The investment adviser does not share nonpublic personal information with nonaffiliated third parties (other than as permitted under certain enumerated exceptions); and
2. The investment adviser’s policies and practices regarding disclosure of nonpublic personal information have not changed since the last distribution of its policies and practices to its advisory clients.

For more information, see our January 6, 2016 Foley Adviser or please contact us.

In addition, various states and other jurisdictions have passed and continue to pass privacy related regulations. By way of example:

1. California Consumer Privacy Act (“CCPA”)
   The CCPA went into effect on January 1, 2020 and created “consumer” rights relating to the access to, deletion of, and sharing of personal information collected by businesses. The CCPA defines “consumer” as any “natural person who is a California resident.” Investment advisers may be subject to the CCPA if they have gross annual revenues in excess of $25 million and collect personal information from California residents. For more information, please see our December 16, 2019 Foley Adviser.
2. Cayman Islands Data Protection Act (“DPA”)
   The DPA went into effect on September 30, 2019 and was designed to protect individuals’ data and give them greater control over its use. Advisers need to review any Cayman fund’s data privacy policies and procedures, update fund documents, and review contracts with service providers. For more detailed information on the DPA, please refer to our September 3, 2019 Foley Adviser.
3. European General Data Protection Regulation (“GDPR”)
   The GDPR went into effect in May 2018. Advisers that manage funds with European investors or are marketing in Europe should consult with legal counsel. Compliance with the GDPR requires advisers to review their policies and procedures; update their fund documents and third-party contracts; and, potentially, appoint an EU representative. For more information on the GDPR, please refer to our April 11, 2018 Foley Adviser.

Depending on the location of an adviser and/or its investors, advisers should be aware that specific privacy requirements may apply and should consult their counsel for specific guidance.
 

FILING OBLIGATIONS WITH RESPECT TO HOLDINGS AND TRADING IN PUBLICLY LISTED SECURITIES 

Section 13(f) Filings

Investment advisers that are required to make quarterly Form 13F filings with the SEC must make such filings using EDGAR within 45 days after the end of each calendar quarter. The first of such filings for calendar year 2024 must be made by February 14, 2024. These filings are required if, in the previous calendar year, the adviser exercised investment discretion over at least $100 million in securities traded on U.S. securities exchanges (including NASDAQ). Failure to file Form 13F in a timely manner could lead to an enforcement proceeding by the SEC.

Form NP-X – New Say-on-Pay Disclosures for Institutional Investment Managers

Institutional managers that are required to make Form 13F filings are now required to file Form N-PX in order to report how they voted proxies relating to executive compensation (or “say-on-pay”) matters. Previously, Form N-PX was only required for certain registered investment companies.

The initial reports for institutional managers on Form N-PX cover the period from July 1, 2023 to June 30, 2024. The initial filing will be due by August 31, 2024.

Section 13(g) Filings

Any person or entity who acquires direct or indirect beneficial ownership of more than 5% of a class of equity securities registered under Section 12 of the Securities Exchange Act of 1934 must report that acquisition on a Schedule 13D, unless eligible to report such acquisition on a Schedule 13G. The SEC permits “qualified institutional investors” (such as registered advisers) and “passive investors” (which may include non-registered advisers or funds managed by registered or non-registered advisers) that have 5% or greater beneficial ownership (a broadly-defined concept that goes beyond just who owns the shares) of a class of registered equity securities to report this ownership on Schedule 13G, instead of the more demanding Schedule 13D. For “qualified institutional investors,” an initial Schedule 13G must be filed using EDGAR, within 45 days after the end of the calendar year, if, as of the close of business on December 31, its beneficial ownership exceeds 5% (i.e., by February 14, 2024 with respect to positions from calendar year 2023). In addition, a registered adviser that files Schedule 13G as a qualified institutional investor must notify any person (such as a client) on whose behalf it holds 5% beneficial ownership of any transaction that such person may be required to report (for example, the acquisition of that 5%). For “passive investors,” the initial Schedule 13G filing must be submitted within 10 days of the event that triggers the filing requirement.

With respect to both “qualified institutional investors” and “passive investors,” an annual amendment is required to be filed within 45 days after the end of each calendar year to report any change in holdings for that year (i.e., by February 14, 2024). The annual amendment should report holdings as of December 31. A copy of such filing should also be sent to the issuer. 

Please note that both qualified institutional investors and passive investors must make additional filings upon certain changes in ownership or changes in investment purpose.

Form 13H Filings

Form 13H filings are required to be made by “large traders,” defined under Rule 13h-1(a)(1) as persons or entities that directly or indirectly exercise investment discretion over one or more accounts and affect transactions in an aggregate amount equal to or greater than the “identifying activity level.” The “identifying activity level” is defined as aggregate transactions in “NMS securities” that equal or exceed two million shares, or $20 million during any calendar day, or 20 million shares or $200 million during any calendar month. The term “NMS securities” refers generally to exchange-listed securities, including both equities and options. 

Large traders must submit an initial Form 13H within 10 days of reaching the identifying activity level. An amended filing must be submitted promptly following the end of the calendar quarter in which any of the information contained in a previously filed Form 13H becomes inaccurate for any reason. Otherwise, large traders must make annual filings no later than 45 days after the calendar year end (i.e., by February 14, 2024). 

On December 16, 2020, the SEC issued a Risk Alert containing observations from the Office of Compliance Inspections and Examinations (“OCIE”) in their examination of registered investment advisers for compliance with Rule 13h-1 relating to large traders. Observations included numerous instances of investment advisers that were either not aware of the Rule or not familiar with its requirements. As a result of these observations, OCIE encouraged investment advisers to review their compliance policies and determine whether they qualify as a large trader. 

“New Issues Rules” – Annual Eligibility Verification

The New Issues Rules require FINRA members and their associated persons (“Members”) to obtain an affirmative written statement from an account holder or its authorized representative that the applicable account is eligible to purchase new issues in compliance with the New Issues Rules, within 12 months prior to a sale of a new issue to the account holder. Members are required to verify this status on an annual basis. The initial verification of an account holder’s status under the New Issues Rules must be a positive affirmation of the account holder’s non-restricted status. However, the New Issues Rules also allow Members to follow a “negative consent” process for annual verification of an account holder’s status by sending a notice asking the account holder if there has been any change in its status. Unless an account holder affirmatively reports a change in status, the Member is permitted to rely on its existing information regarding such account holder. In many cases, Members rely on representations from investment advisers, which must, in turn, determine the eligibility status of separate account clients and investors in hedge funds. Investment advisers investing in new issues should undertake this verification as to new issues eligibility with their clients and investors annually.

 

COMMODITY TRADING ADVISORS AND COMMODITY POOL OPERATORS

Form PQR

Registered Commodity Pool Operators (“CPOs”) must file NFA Form PQR through the EasyFile system on the National Futures Association (“NFA”) website (www.nfa.futures.org) within 60 days after the end of each quarter. Each Form PQR filed after its due date will be subject to a late filing fee of $200 for each business day that it is late. Under Bylaw 1303, failure to pay the late filing fee within 30 days of the due date will be deemed by NFA as a request by the CPO to withdraw from NFA membership.

CPOs to 4.7 Pools - Delivery of Annual Audited Financials and Quarterly Account Statements

CPOs managing 4.7 pools must deliver to pool participants and file with the NFA certified (per the certification guidelines in Rule 4.7) annual reports that include audited financial statements within 90 days after the end of the fiscal year or by March 30, 2024 for advisers with a December 31 fiscal year end. CPOs of fund of funds can request an extension of up to 180 days after the end of the fiscal year to deliver and file these reports. CPOs managing 4.7 pools must also deliver certified (per the certification guidelines in Rule 4.7) quarterly account statements to the pool’s participants.

Proposed Amendments to CFTC Rule 4.7

On October 2, 2023, the CFTC proposed amendments to Regulation 4.7 that would (i) increase the portfolio requirement thresholds for “qualified eligible persons”; (ii) implement new minimum disclosure requirements for CPOs and commodity trading advisors (“CTAs”) relying on Regulation 4.7; and (iii) codify routinely issued exemptive letters that allow CPOs of 4.7 pools that are funds of funds to distribute monthly statements within 45 days of month-end. The proposed amendments were published in the Federal Register on October 12, 2023, and the comment period closed on December 11, 2023. 

Annual Certification - 4.13(a)(3) and 4.14(a)(8)

Fund managers relying on the exemption from registration as a commodity pool operator with the CFTC set forth in Rule 4.13(a)(3), the so-called “de minimis exemption,” and fund managers relying on the exemption from registration as a commodity trading adviser with the CFTC set forth in Rule 4.14(a)(8), must reaffirm their claim of exemption or exclusion from registration each year. The annual affirmation may be made through the NFA’s Exemption System (http://www.nfa.futures.org/NFA-electronic-filings/exemptions.HTML) and must be made within 60 days of the end of the calendar year or by February 29, 2024 for calendar year 2023. Failure to submit an affirmation by this deadline will result in a withdrawal of the exemption or exclusion from registration. 

Form PR

All registered CTAs must file NFA Form PR through the EasyFile system on the NFA website within 45 days after the end of each of the quarters ending March, June and September. They must also file a year-end report within 45 days after the calendar year end. Each Form PR filed after its due date will be subject to a late filing fee of $200 for each business day that it is late. Under Bylaw 1303, failure to pay the late filing fee within 30 days of the due date will be deemed by NFA as a request by the CTA to withdraw from NFA membership.

NFA Bylaw 1101 Compliance

All registered CPOs and CTAs must have procedures in place to comply with NFA Bylaw 1101. NFA Bylaw 1101 prohibits NFA members from conducting customer business with a non-NFA Member that is required to be registered with the CFTC. To be in compliance, the procedures should include (1) the steps firm personnel will take to determine if an entity is required to be registered with the CFTC and to be an NFA Member and (2) a requirement that firm personnel review BASIC to verify that the entity is registered with the CFTC and an NFA Member (if registration and membership are required) or has an exemption from registration on file with the NFA. The procedures should also require firm personnel to document the review and maintain the documentation.

Additionally, the NFA requires Members to take reasonable steps each year to confirm that previously exempt CPOs/CTAs with which a Member transacts customer business continue to be exempt, by confirming that such parties have affirmed their exemptions on the NFA website within 60 days after the end of the calendar year. If the Member learns that a person does not intend to file a notice affirming an exemption, or the person does not file a notice affirming the exemption within 60 days of the end of the calendar year, then the Member must promptly obtain a written representation as to why the person is not required to register or file a notice exemption and evaluate whether the representation appears adequate based upon the information that the Member knows about the person. If the Member ultimately determines that the person’s written representation is inadequate and the person is required to be registered, then the Member must put a plan in place to cease transacting customer business with the person, or risk violating NFA Bylaw 1101.

Additional NFA/CFTC Requirements

On at least an annual basis, registered CPOs and CTAs must also:

• Complete an NFA Annual Questionnaire on the NFA website

• Complete the electronic Annual Registration Update

• Pay NFA dues on the anniversary date of the firm’s registration

• Complete NFA’s annual Self-Examination Questionnaire and affirmation

• Send the firm’s Privacy Policy to every participant in a pool

• Test the firm’s Disaster Recovery Plan and make any necessary adjustments

• Provide Ethics Training and Cybersecurity Training to firm employees

• Review the firm’s written information security program ("ISSP") using either in-house staff with appropriate knowledge or by engaging an independent third-party information security specialist

• Supervise the operations of and conduct an annual onsite inspection of every Branch Office

• Update the firm’s Questionnaire as the firm’s information changes, including for any pools that have liquidated

 

FINANCIAL AND TAX RELATED REPORTING

FATCA and CRS

In order to comply with FATCA, fund managers should ensure that the funds they manage have identified and documented their respective investors (e.g., collected and verified an IRS Form W-8 or W-9, as applicable, and any other required information from each investor) and that they have policies and procedures in place to collect the appropriate information and documentation from new investors (if new investors can be admitted). U.S. funds that made withholdable payments (e.g., U.S.-source interest and dividends) to non-U.S. persons during 2023 will be required to furnish certain information to such non-U.S. persons (on IRS Form 1042-S) and file information returns with the IRS (on IRS Form 1042) by March 15, 2024, even if withholding was not required, and such funds may also have withholding obligations with respect to withholdable payments made to certain non-U.S. investors during 2024. Non-U.S. funds may have registration and information reporting obligations (with respect to 2023) in their respective jurisdictions between April and July 2024 and may have registration (e.g., “GIIN”) obligations in the United States.

The OECD Common Reporting Standard (“CRS”) is substantially similar to FATCA, but it applies on a global scale, and must be complied with in addition to FATCA for funds in CRS jurisdictions (e.g., Cayman Islands and BVI, but not the United States). The due diligence and information reporting requirements under CRS are intended to expand upon the corresponding requirements under FATCA. For managers of funds in CRS jurisdictions, such funds are required to identify and document their respective investors (e.g., collect and verify CRS Self-Certification Forms) and adopt policies and procedures relating to CRS compliance. Non-U.S. funds subject to CRS may have registration and reporting obligations (with respect to 2023) in their respective jurisdictions between April and September 2024.

Managers of funds with FATCA and/or CRS compliance obligations should consult with counsel and/or accountants immediately to determine what actions are required.

Foreign Bank Account Report (“FBAR”)

Every U.S. person (including both individuals and entities) that had a financial interest in, or signature authority over, one or more non-U.S. financial accounts (e.g., bank accounts and mutual fund interests, but not equity interests in a hedge fund, private equity fund or other private investment fund) during 2023 must file an FBAR with the U.S. Treasury if the aggregate value of such accounts exceeded $10,000 at any time during 2023. For this purpose, a U.S. person will be deemed to hold a financial interest in the non-U.S. financial accounts held by an entity or trust if such U.S. person owns, directly or indirectly, more than 50% of the voting power or value of such entity or trust. If an FBAR for 2023 is required, it must be filed electronically with the U.S. Treasury on or before April 15, 2024. The U.S. Treasury, however, will grant filers failing to meet the FBAR due date an automatic extension to October 15, 2024; specific requests for this extension are not required and further extensions beyond October 15, 2024 may not be requested (and, in any event, will not be granted). Failure to comply may expose a U.S. person to a civil penalty of up to $10,000. Willful FBAR violations may expose a U.S. person to an increased civil penalty of up to the greater of $100,000 and 50% of the aggregate high value of the accounts for the year in question, as well as criminal penalties.

Country-by-Country Reporting (“CbCR”)

In addition to FATCA, CRS, and FBAR, fund managers may have additional reporting obligations under CbCR rules that have been implemented by numerous jurisdictions around the world. In general, “multinational enterprise groups” (i.e., chains of related entities that include two or more entities that are formed or that operate in different countries) may be required to register with local authorities and self-report certain information about the group’s structure and ownership if (1) group entities are required to consolidate for financial reporting purposes, and (2) the revenue of the consolidated entities for the prior reporting period exceeds U.S. $850 million. To the extent CbCR reporting is required for activities in 2023, the corresponding reports will be due at various dates throughout 2024, depending upon the jurisdiction. The revenue threshold may cause most multinational groups, including multinational investment fund structures, not to have a reporting obligation under CbCR, but fund managers should be aware of CbCR and should review their respective fund structures to determine if CbCR may apply.