Compliance with legal obligations
In 2021, the AFM published a Sector Brief outlining the regulatory requirements applicable to light managers. The sector brief published on 30 June 2025 shows that compliance with these obligations is lacking in several areas. The AFM is therefore calling attention to the following topics:
- AIFMD reporting obligation
- Use of the retail investor definition
- Compliance with the Anti-Money Laundering and Sanctions Acts
- Key Information Document (KID)
- Offering to fewer than 150 persons
- Ongoing monitoring of AIFMD registration status
- Deregistration of funds
AIFMD reporting obligation
Light managers are required to submit the so-called Annex IV report to the AFM each year in January (or February in some cases). This report must include information on the main financial instruments in which the manager has invested, as well as the principal risk exposures and key concentrations of the funds they manage.
The AFM has found that not all light managers fulfil this reporting obligation. Those who failed to submit their report on time this year received a letter from the AFM in April notifying them of the breach. Light managers should be aware that failing to report — especially on a repeated basis — may result in regulatory enforcement, including fines.
Investor categories
When registering a fund, light managers must indicate whether the fund is offered to professional investors and/or to non-professional (retail) investors. This distinction is crucial, as additional regulatory requirements apply when funds are offered to retail investors. The AFM’s investigation revealed that many light managers lack a clear understanding of the difference between these two investor categories.
Professional investors are presumed to have the knowledge, experience and expertise to make their own investment decisions and to properly assess the associated risks. The criteria for professional investor classification are defined under Dutch financial law (Wft) and include entities such as banks, investment firms, pension funds, national governments and large undertakings.
All other investors — including, in most cases, individuals, small partnerships and small or medium-sized enterprises — generally do not qualify as professional investors and must therefore be treated as retail investors.
The AFM frequently observes that light managers assume investors contributing more than €100,000 to a fund qualify as professional investors. In most cases, this assumption is incorrect: individuals and personal investment vehicles typically do not meet the legal criteria and must be classified as retail investors.
Key Information Document (KID)
Light managers offering their funds to retail investors must make a Key Information Document (KID) available to prospective investors before they are admitted to the fund. A KID is a three-page document that must include information — in a prescribed format — about the fund provider, costs, and key risks.
The AFM found that many light managers offering funds to retail investors do not have a KID at all. Others do have one but have failed to publish it on their website as legally required. Additionally, many existing KIDs do not meet the prescribed standards.
Failing to have a KID, providing an incorrect KID, or failing to properly publish the KID constitutes a breach of the European PRIIPs Regulation. These violations may result in enforcement action by the AFM, including fines.
Offering to fewer than 150 persons
Light managers who offer funds to retail investors and rely on specific exemptions — such as offering to fewer than 150 persons — must ensure that the offer is targeted at a clearly defined and limited group of individuals.
The 150-person exemption applies not to the number of actual investors in a fund, but to the number of individuals to whom the offer is made. Therefore, it is not permitted to promote the fund via public websites or advertisements, as such communication would exceed the 150-person limit.
It is essential to understand that the 150-person exemption can only be used for private placements within a very restricted circle. The AFM also emphasises in its sector brief that circumvention schemes are not permitted.
AML and sanctions obligations
Like many other financial institutions, light managers are subject to the obligations of the Dutch Anti-Money Laundering and Anti-Terrorist Financing Act (Wwft) and the Sanctions Act (Sw). The AFM stresses that these obligations are extensive and detailed, and that merely having a written policy is wholly insufficient. Light managers must ensure that the rules are applied effectively in practice.
The AFM found that light managers often lack an up-to-date and well-supported risk assessment. Furthermore, many fall short in conducting comprehensive due diligence on investors and other business relationships.
The AFM actively monitors compliance with the Wwft and Sw, including through periodic data requests and inspections. These investigations frequently reveal serious shortcomings, and the AFM applies strict enforcement measures in such cases.
Outsourcing
Light managers remain fully responsible for all tasks outsourced to third parties.
The AFM notes that many light managers outsource tasks relating to AML and sanctions compliance. It emphasises that managers must have sufficient in-house expertise to comply with these obligations themselves and to critically assess the work of any third-party service providers.
Ongoing monitoring of AIFMD registration
Light managers must continuously assess whether they still meet the conditions for operating under the AIFMD registration regime. If they no longer meet the requirements — for instance, because assets under management exceed €100 million (or €500 million in certain cases) — the manager must notify the AFM immediately and apply for a full AIFMD licence within 30 days.
Light managers must also be able to provide the AFM with up-to-date information on an ongoing basis. This includes registering new funds, updating fund details, and notifying the AFM of any changes to contact or address information of directors or contact persons.
Deregistration of funds
If a light manager decides to terminate a fund, it must notify the AFM as soon as possible and provide the required information.
In some cases, light managers fail to meet this deregistration obligation. The AFM therefore expects inactive managers to deregister themselves (and/or their funds) promptly and in accordance with the applicable procedure.
In conclusion
This news update provides a brief summary of the contents of the AFM’s new sector brief for AIFM-light managers. All light managers are strongly advised to read the full document carefully and ensure they are in full compliance with the legal requirements and obligations outlined therein. The AFM is stepping up its supervisory efforts and is increasingly taking enforcement action. Especially where managers have been repeatedly warned about specific requirements, the AFM may take swift and firm action.
If you would like more information about the obligations applicable to light managers, or guidance on how to implement them in a pragmatic and effective manner, Projective Group – Risk & Compliance is here to support you. Please feel free to get in touch, or subscribe to our newsletter to stay updated on regulatory developments relevant to fund managers.
