Q1 regulatory updates

Regulatory change continues at pace across the EU, with a growing push for centralisation at the supranational level. At the same time, AIFMD 2.0 is shifting from policy to implementation, bringing new data and documentation demands for managers, and the CBI has signalled a focus on data-led supervision. Finally, we’ve seen the FCA actively reach out for feedback from firms to improve its reporting process.

Here’s our roundup of the biggest regulatory updates for the first quarter of 2026.

Centralisation across Europe

A notable theme emerging across the EU regulatory landscape is the gradual shift towards more centralised supervision. While the EU has traditionally set the rules and left implementation to national authorities, recent initiatives suggest a move toward direct oversight at the supranational level. This is a step change in the traditional balance between European coordination and member‑state autonomy.

One visible example is the new Anti-Money Laundering Authority (AMLA), which is now up and running after many months of talk, although the new regulatory body is still defining the scope of its remit. This includes plans to introduce direct regulation for a group of approximately 40 financial institutions, though the criteria for selecting these firms – such as by size, risk level or industry representativeness – isn’t yet clear. Meanwhile, ESMA is also increasingly expressing interest in direct regulation. Its market infrastructure package, delivered in December, also points towards a secondary direct supervisory layer for some market participants.

Focusing on the ESMA package, we – like many in the industry – welcome the measures designed to improve competitiveness, including steps to remove barriers to cross‑border registrations. At the same time, competitiveness across the EU has long been supported by state-level implementation: Europe’s regulatory model has historically set a high bar, while subtle national variations have helped retain competition between domiciles and encourage innovation. In our own industry, for example, Ireland and Luxembourg are widely acknowledged global hubs for fund administration – deep expertise that has been cultivated by their implementations of EU-level rules.

As the supervisory framework evolves, it will also create a new dynamic between ESMA (with its focus on market integrity) and national central banks (closely attuned to local nuances and consumer outcomes). Both will hold more direct powers, but from different vantage points, with the latter being far closer to the average person on the street they seek to protect. We are keen to see how these roles are balanced amid the EU’s growing interest in supranational supervision, as well as the deep national specialisations that support Europe’s diverse financial ecosystem.

Preparing for AIFMD 2.0

AIFMD 2.0 is moving from policy to implementation, with substantive work around Annex IV. ESMA will introduce a harmonised EU reporting template with expanded data requirements, new identifiers and standardised submission deadlines. Reporting will become more frequent and significantly more data‑intensive, particularly in areas such as delegation oversight, HR metrics and marketing footprints. Once the new Regulatory and Implementing Technical Standards are published, Carne will extend our existing AIFMD reporting service to support firms with the new regime.

AIFMD 2.0 also introduces several smaller requirements that require many firms to update their documentation. First, AIFMs must have at least two liquidity management tools. Many managers will have these already, but some updating of prospectuses will likely be required. Second, loan‑originating AIFs will need to align their documentation with the new loan origination rules. For most managers, these changes are not expected to alter operating models significantly, but they will require updates to disclosures.

Finally, a mere one-word change may ultimately prove consequential: the shift from "describe" to "list" in the rules governing fee and expense disclosures. This could require far more granular numerical breakdowns of fees and expenses than are currently provided. We are actively seeking legal guidance on this point and will update clients as the position clarifies.

CBI’s supervisory priorities for 2026

The Central Bank of Ireland (CBI) has published its supervisory outlook for 2026, signalling a more intrusive, data-led approach to supervision and remediation. Here are our key takeaways.

Governance and delegation are core concerns, particularly where Irish boards show limited oversight of delegated activities. The CBI highlighted expectations around board effectiveness, the role of compliance functions and the robustness of depositary challenge.

On operational and cyber resilience, the regulatory wants to see DORA fully embedded, including stronger oversight of third-party concentration risk, threat-led penetration testing and financial crime controls such as suspicious transaction reporting.

The CBI is also intensifying scrutiny of private asset valuation, with plans for a thematic review of valuation governance and depositary oversight – areas it views as increasingly sensitive as private market products expand.

For liquidity and leverage, the regulator will concentrate on funds with liquidity transformation or leverage exposure, including bond, property and LDI‑style strategies. Stress testing and the effective use of liquidity management tools are central expectations.

Finally, data and AI continue to draw attention. Persistent data‑quality issues will be challenged, and firms are expected to govern AI deployment as a material risk complete with clear explainability and accountability.

None of these priorities will come as a surprise to firms, as they reflect themes the CBI has been signalling for some time. Nevertheless, now may be a good moment for risk and compliance teams to refresh their approaches in the above areas. As always, we’re here to answer any questions and support firms as they navigate these expectations.

FCA asking firms for feedback

Finally, we were exceptionally pleased to be invited to take part in a recent FCA initiative, where the regulator asked firms exactly how it could improve its processes around fund level reporting to better support the market.

The discussion focused on practical ways to streamline reporting interactions with the FCA and ensure the regulator’s expectations are both clear and practical. It was notable to see the FCA asking firms directly what it could be doing better – an approach that is rare in the market and reflects its broader commitment to bolstering UK competitiveness on the global stage.