CBI proposes overhaul of AIF Rulebook

In September, the CBI published Consultation Paper 162 (CP162), proposing wide-ranging amendments to its Alternative Investment Fund (AIF) Rulebook. This is the most significant update since 2013 and is designed to implement the new AIFMD 2.0 regime while removing some of the domestic requirements that have made Ireland less competitive for private markets funds than Luxembourg and other EU domiciles.

At a high level, the proposals seek to revoke certain Irish-specific rules and replace them with the standardised requirements under AIFMD 2.0. The industry has broadly welcomed the changes, which were developed following close engagement with market participants. The consultation closed on 5 November 2025, and we don’t expect the final rules to diverge substantially from what’s proposed.

Loan origination

One of the most notable changes is the proposed removal of Ireland’s domestic loan origination regime for QIAIFs, which historically have been more restrictive than elsewhere in the EU. CP162 proposes to align fully with the AIFMD 2.0 loan origination framework, with no additional local requirements.

This alignment will create a level playing field across the EU, making Ireland more attractive to managers and supporting a wider variety of private credit strategies using flagship structures such as the ICAV and ILP. The proposals would also allow non-EU AIFMs to manage loan-originating QIAIFs, further broadening the jurisdiction’s appeal.

Subsidiary rules

Another key reform relates to Ireland’s rules for subsidiaries. The CBI recognises that the safeguards in AIFMD – such as acquisition of control, valuation, depositary oversight and leverage look-through – already provide robust protections. The additional Irish overlay is therefore no longer seen as necessary.

As a result, the CBI proposes to remove requirements such as:

– CBI approval prior to establishing a subsidiary

– The obligation for fund directors to form the majority of a subsidiary’s board

– The restriction preventing subsidiaries from entering into contracts unless the fund itself was also a party

Instead, the new regime will rely on prospectus disclosure and due diligence requirements, significantly reducing operational burdens and costs for managers.

Market implications

Luxembourg has long been the default jurisdiction for private asset funds in Europe. However, the early adoption of AIFMD 2.0 in Ireland is expected to expand market capacity and increase competition. Managers and investors will likely benefit from greater flexibility and choice when considering fund domiciles.

EU building Savings & Investment Union  

Another initiative gathering momentum is the European Commission’s push for a Savings and Investment Union (SIU). The objective is to mobilise the vast amounts of household savings sitting idle in bank accounts and channel them into productive investments across the EU.

It’s a similar conversation to what we’re seeing in many parts of the world, inspired by the US’s success in harnessing retail investments to support capital markets. The SIU aims to give retail savers more opportunities to grow their wealth while boosting market efficiency.

An area of focus is rule standardisation, such as simplifying complex tax rules across jurisdictions to make investment more attractive to retail investors. Changes such as these would effectively create a single EU financial system, aiming for it to be more efficient and resilient than the current disparate national systems.

Ongoing AML focus in Luxembourg

AML remains a hot topic in Luxembourg, with 40% of all CSSF’s onsite inspections in 2024 focused on AML and Countering the Financing of Terrorism (CFT), per the latest figures released in August.

The inspections targeted sectors with higher inherent exposure to money laundering and terrorist financing risks, including private banking, trade finance, transfer agency and virtual asset services. The CSSF identified several weaknesses, including:

– Delays in processing alerts generated by name screening tools and lack of second-level compliance checks

– Failures to consider certain risk factors when assigning client money laundering and terrorist financing risk levels, resulting in inappropriate due diligence

– Failures to meet obligations to report suspicions to the Financial Intelligence Unit or notify the Ministry of Finance of restrictive measures

– Deficiencies in transaction monitoring, even when certain businesses relationships had previously been the subject of suspicious transaction reports

These findings underline the CSSF’s continued scrutiny of AML/CFT frameworks. Firms operating in Luxembourg should ensure their policies, systems and controls remain robust, with particular attention to monitoring and escalation procedures.