Fund administration is an easily overlooked topic. It’s not glamorous or exciting, but it is critical to the success of the fund. A General Partner (GP) can expose themselves to regulatory scrutiny or litigation, or at least create a poor reputation with their client base or the industry if there isn’t a thorough administration process.
As a regulated trust company, Alta must meet a higher level of compliance and professional oversight than other fund administrators, maintain required bonding and insurance coverages, and employees are all FBI background checked and thoroughly trained. This not only ensures regulatory adherence, but also instills confidence in investors and prospective investors by maintaining transparency and accuracy in financial reporting.
The regulatory requirements that Alta Trust must meet are listed below:
Financial Safety & Stability
Alta Trust is subject to regulatory oversight, which governs its financial stability, risk management, and capital adequacy. This includes:
- Pledged capital
- Minimum capital reserves
- Liquidity ratios
- Adequate levels of insurance
- Required Bonding
Investor Due Diligence & Anti-Money Laundering (AML)
Alta is required to implement robust investor due diligence procedures and AML compliance measures to prevent money laundering, terrorist financing, and other illicit activities. This includes:
- Verifying the identity of investors
- Conducting risk assessments
- Monitoring transaction
- Reporting suspicious activities to the appropriate authorities.
As a regulated entity, Alta’s AML/KYC checks can be used by other financial institutions. This is not the case with an unregulated administrator.
Fiduciary Duties
Trust companies have fiduciary duties to act in the best interests of their clients and avoid conflicts of interest. Regulatory requirements mandate:
- Disclosures of conflicts
- Procedures for managing conflicts
- Adherence to fiduciary standards of care in managing trust assets and relationships.
Governance & Oversight
Trust companies are expected to have robust governance structures, internal controls, and risk management systems in place to ensure effective oversight and compliance with regulatory requirements. This includes:
- Employee background checks for all directors, officers, and any employee with access to money and/or sensitive information (“access persons”)
- Required Separation of Duties
- Required Bonding
- Risk management frameworks
- Cybersecurity policies and procedures
- Business Continuation plan
- Succession plan
- Capital plan
Reporting & Disclosure Requirements
Trust companies are typically required to submit regular reports, filings, and disclosures to regulatory authorities, clients, and other stakeholders. This includes:
- Financial statements
- Regulatory filings
- Client statements
Regulatory Compliance Monitoring & Enforcement
Regulatory authorities conduct periodic examinations, inspections, and audits of trust companies to assess compliance with regulatory requirements. Non-compliance can result in enforcement actions, fines, penalties, or revocation of licenses or registrations.
- Bank Secrecy Audits
- Operational Audits
- Financial Audits
- Periodic On-Site Examinations
In the past, only the larger banking or trust institutions could offer this heightened attention to detail, diligence, and service. And it would come at a premium rate. At Alta Trust you will get the service level and peace of mind that a large, regulated firm provides, but at similar pricing to unregulated administrators. This added level of service will be a key selling point for attracting investors and standing out from the competition.
Reach New Heights with Alta
Our commitment to your fund’s success is what sets us apart from other fund administrators. Alta Trust’s turn-key alternative investment offering provides fund sponsors with a premier team, decades of experience in managing and administering funds, and the highest level of compliance and professional oversight at a fraction of traditional costs.
Download the Ultimate Guide to Building Your Alternative Investment Offering or schedule a consultation to discuss how Alta can ensure your fund is low risk and high reward.
