1.  A hedge fund manager should be confident that it understands the applicable laws and regulations in the markets in which it deals and has effective systems and controls in place to enable it to identify, assess, monitor and manage the risk that it is used to further financial crimes.
[See also Section B2 (11)]

1. This may apply to areas such as:

• anti-money laundering procedures (although typically the fund's administrator will be responsible for compliance);
• procedures to prevent market abuse offences (see also Standard 23 (Prevention of market abuse)); and
• strict internal controls to prevent misappropriation of client money (e.g., co-signing policies), where client money is held by the manager.

2.  A hedge fund manager should ensure that it understands local conduct of business rules and regulations which apply in the jurisdictions in which it operates (including any rules governing the passporting of regulatory authorisations from one jurisdiction to another). A hedge fund manager should also ensure that it understands laws and regulations relevant to the securities in which it trades (e.g., shareholding disclosure requirements and foreign ownership rules).
[See also Section B2 (11)]

2.  No applicable guidance.