AIFMD II in Guernsey – an opportunity hiding in plain sight?

Much of the commentary surrounding AIFMD II has focused on its potential to increase complexity, constrain flexibility and reshape existing fund management models - often with an implicit assumption that non-EU jurisdictions, including Guernsey, may feel the adverse effects most acutely.

That may well be the orthodox view. But it is not the only one.

Taking a deliberately more optimistic perspective, AIFMD II may in fact reinforce Guernsey's position as a jurisdiction of choice for international fund managers seeking regulatory credibility, structural clarity and operational certainty in an increasingly prescriptive European landscape.

Heightened EU regulation and the case for stepping outside

AIFMD II brings EU AIFMs further into the regulatory spotlight, with enhanced requirements around loan origination, leverage, liquidity risk management, delegation and supervisory reporting. For some managers, particularly those with global strategies and limited EU investor exposure, this raises a fundamental question: does remaining within the full scope of the AIFMD regime still deliver a proportionate return on regulatory effort?

For those answering “perhaps not”, the attraction of sitting wholly outside AIFMD - rather than navigating its expanding perimeter - is likely to grow.  A Guernsey AIF with a Guernsey AIFM, marketed into the EU via well-established national private placement regimes, offers a clear and familiar alternative. NPPR is not new, experimental or untested; it is a framework managers already understand and continue to use successfully. In fact, ESMA's most recent report [FN: Marketing requirements and marketing communications under the Regulation on cross-border distribution of funds, dated 6 January 2026] shows that the use of pan-EU passports may be limited in any event.  ESMA's statistics show inbound cross-marketing notifications remain heavily concentrated in just a few Member States (Germany, Italy and France reporting more than 10,000 notifications each), questioning the value of a full AIFMD passport against the backdrop of the significant costs and time incurred in obtaining one.

Seen through this lens, AIFMD II does not close doors for Guernsey - it sharpens the distinction between EU-centric structures and international models designed for flexibility without sacrificing substance.

Regulatory credibility without regulatory overload

One reason this rose-tinted view is defensible is that Guernsey already embodies many of the regulatory outcomes AIFMD II is seeking to achieve.

Guernsey has long operated robust AML/CFT regimes aligned with FATF standards, coupled with meaningful economic substance requirements and highly engaged regulators with deep experience in private capital, credit and alternative strategies. As EU regulators place increasing emphasis on governance, substance and supervisory oversight, Guernsey's regulatory maturity becomes an asset rather than an obstacle.

For managers and investors alike, this offers reassurance that operating outside AIFMD does not equate to lighter-touch regulation, but rather to proportionate, well-understood and internationally respected oversight.

Private credit: Where the optimism feels most justified

Private credit provides a particularly compelling illustration of why an optimistic view of AIFMD II may be justified. The introduction of an EU-wide loan origination regime, including leverage limits, concentration thresholds and risk retention requirements, may constrain certain strategies or introduce friction into existing models.  

By contrast, Guernsey already hosts a sophisticated private credit ecosystem, supported by flexible fund regimes, experienced boards and service providers, and regulators comfortable with complex credit, leverage and asset-level risk. For non-EU focused credit managers, a Guernsey AIF and AIFM structure can offer a stable and credible platform without the additional constraints imposed by AIFMD II.

In that sense, heightened EU regulation may not dampen activity - it may simply redirect it.

A conscious choice

Choosing a rose-tinted view of AIFMD II does not mean ignoring its challenges or underestimating its impact. Rather, it reflects a recognition that regulatory change rarely has uniform consequences - and that for jurisdictions with strong regulatory foundations, change can create opportunity as well as risk.

For Guernsey, AIFMD II may ultimately reinforce what the island already offer: substance without excess, credibility without complexity, and a compelling alternative for managers navigating an increasingly crowded European rulebook.