Ultra-EU Fund Management Directive Cross-Border Permit: Essential Facts US Investment Managers Should Understand
As of July 2025, the AIFMD marketing passport remains exclusive to European Alternative Investment Fund Managers (AIFMs) managing European funds. Third-country AIFMs, such as those based in the United States or Cayman Islands, are currently unable to access this passport for funds domiciled outside the EU [1][2].
The AIFMD Marketing Passport: A Privilege for EU AIFMs
The AIFMD marketing passport allows European AIFMs to market their Alternative Investment Funds (AIFs) across all EU and EEA countries. This passport is not accessible to third-country AIFMs [1]. In the absence of a direct passport, these non-EU managers often establish parallel EU-authorized AIFM structures and funds to access the passport [1].
The Role of National Private Placement Regimes
Some EU member states require prior authorization or rely on National Private Placement Regimes (NPPRs) for marketing third-country funds. However, these are country-specific and do not constitute a unified passport system [2].
The Future of the AIFMD Marketing Passport for Third-Country AIFMs
Recent regulatory updates do not indicate an immediate implementation of a marketing passport for third-country AIFMs. The European Commission focuses on incremental updates rather than fundamental changes to access rights for these managers [3].
The Member State of Reference (MSR) Selection Process
A third-country AIFM must choose a Member State of Reference (MSR) based on the EU and EEA domiciles where it intends to manage or market its European and third-country AIFs. The selection process involves an application to the competent authorities of all potential MSRs, and a joint decision is made by these authorities and ESMA within one month from the application [1][2].
The Impact of Equivalence Decisions
If an equivalence decision is not obtained, the phasing out of private placement regimes by some European domiciles could pose further uncertainty for existing strategies to access European investors [1].
Compliance Challenges for Third-Country AIFMs
In an ideal scenario where the US is deemed equivalent, US fund managers might face difficulties in complying fully with the provisions of AIFMD, particularly with regards to the depositary proposition. If compliance with certain AIFMD provisions is impossible due to conflicting local laws, the third-country AIFM may be allowed non-compliance if the local rule serves the same or similar purpose and the foreign AIFM must mandatorily comply with such rule [1].
Coexistence of the Third-Country Passport and National Private Placement Regimes
Once delegated acts are issued, there will be a transitional period where both the third-country passport and the national private placement regime will coexist [1].
In summary:
| Status | Ability to Use AIFMD Marketing Passport | |-----------------------------|-------------------------------------------------| | EU-authorized AIFMs | Yes, for marketing EU-domiciled AIFs | | Third-country AIFMs | No, must use NPPRs or create EU fund + AIFM | | Third-country funds (non-EU) | No direct passport use; local NPPR or authorization needed |
This reflects the current regulatory environment and practical considerations reported in 2025 [1][2][3].
[1] Source: European Securities and Markets Authority (ESMA) [2] Source: European Commission [3] Source: European Fund and Asset Management Association (EFAMA)
- To expand their business ventures, third-country Alternative Investment Fund Managers (AIFMs) may invest in European funds by establishing EU-authorized AIFM structures and funds, thereby gaining access to the AIFMD marketing passport.
- Despite regulatory updates, the implementation of a marketing passport for third-country AIFMs, not currently accessible, is not anticipated to occur immediately, as the European Commission focuses on incremental updates rather than fundamental changes to access rights for these managers.
