Under the AIFMD and UCITS V directives, responsibility for any loss arising from third party service providers such as companies that perform transfer agency functions, falls upon the depositary bank. Transfer agency includes functions such as the processing of transactions and recording the ownership of units in mutual funds by individuals and institutional investors and may include the issue and cancellation of certificates and the distribution of income.
Depositary banks do not have a direct contractual relationship with transfer agents and so compliance can be complicated. To address this, Thomas Murray Data Services, in conjunction with over 20 depositary banks, has developed a Transfer Agent Monitoring service to assist groups in discharging their monitoring requirements for service providers that perform transfer agency for funds invested in by their underlying clients.
Thomas Murray Data Services aims to provide an industry standard assessment of transfer agents through the use of an electronic questionnaire that provides the depositary bank with key information on the service provider which supports the bank’s ongoing monitoring. The programme has delivered year on year increases in the number of assessments for the participating groups.
The product examines five risks: financial, operational, data protection, segregation of duties and conflicts of interest.