Registration of companies in the EU, financial licenses. Legal services in the EU

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15.02.2026

Sanctions screening how to avoid false positives

Since 2016 I have been heading COREDO and am responsible for ensuring that entrepreneurs from Europe, Asia and the CIS launch and scale businesses in international jurisdictions quickly, transparently and with properly configured compliance. During this time the COREDO team has carried out hundreds of projects: from company registrations in the EU, the Czech Republic, Slovakia, Cyprus and Estonia to licensing in the United Kingdom, Singapore and Dubai. I see the main task as bringing together legal architecture, licensing and the AML/sanctions framework into a single operational model that withstands regulator scrutiny and does not stifle operational efficiency.

Today I will offer you a practical guide to building sanctions screening and anti-sanctions compliance that genuinely reduces false positives, saves budget and maintains control over risks. At the same time I will cover the strategy for registration and licensing, because sanctions screening is not a separate module but a critically important part of your business architecture.

Registration abroad: sanctions and AML

Illustration for the section «Registration abroad: sanctions and AML» in the article «Sanctions screening – how to avoid false positives»

When we design a group structure in the EU, the United Kingdom, Singapore or Dubai, I immediately build AML and sanctions requirements into the founding documents and processes. The right choice of jurisdiction for a specific business model reduces the burden on sanctions monitoring thanks to quality registers, predictable regulators and clear KYC/KYB practice. Our experience at COREDO has shown: if at the incorporation stage you take into account access to corporate registries, rules on beneficial owners (UBO) and local expectations for a risk-based approach (risk-based approach, RBA), the costs of subsequent sanctions screening and KYC fall dramatically.

In the Czech Republic and Slovakia we often use local registries for initial client validation (KYB), and in Estonia the developed digital infrastructure for integrations. In the United Kingdom the UK Office of Financial Sanctions Implementation (OFSI) and its guidance on sanctions control play a significant role, while in Singapore the focus is on process accuracy and the regulator’s expected maturity of compliance. In Dubai it is convenient to assemble international holding structures if you plan from the outset how to synchronize sanctions screening in payment processes and real-time vs batch checking for different customer segments.

Crypto and Payments Licensing

Illustration for the section 'Crypto and payments licensing' in the article 'Sanctions screening – how to avoid false positives'

In licensing financial services I always link regulatory expectations with concrete technical solutions. Payment organizations, forex providers and crypto services are required not only to carry out KYC/KYB and PEP and sanctions monitoring, but also to demonstrate the manageability of the process: sanctions screening must be reproducible, explainable and independent of the individual analyst. COREDO’s practice confirms: successfully obtaining a license is accelerated by a clear demonstration of sanctions control systems, configured matching thresholds, procedures for human verification of alerts and a transparent audit trail.

When preparing for licenses for payment companies in the EU and the UK we include watchlist management, whitelist and exclusion policies, as well as screening modes: batch processing vs real-time screening. For crypto organizations we add adverse media screening and graph analysis to reduce false positives when checking addresses and links. In Singapore and Dubai on-premise solutions and security requirements are important, especially when you store sensitive personal data and beneficiary information.

Sanctions screening as a system

Illustration for the section «Sanctions screening as a system» in the article «Sanctions screening – how to avoid false positive matches»

I see sanctions screening as a four-layer pipeline: data, matching algorithms, threshold/scoring policy and operational workflow. If each layer has data quality controls, an audit trail and demonstrable decision-making, you both reduce false positive matches and keep the risk of false negatives manageable.

Data quality and watchlist management

The foundation is up-to-date, clean sanctions lists: OFAC, EU, UN and United Kingdom. I insist on watchlist consolidation and deduplication of lists, a clear list refresh cadence and data quality controls: completeness, accuracy, freshness. When the COREDO team implements sanctions list filtering, we remove duplicates, canonicalize names (normalisation), align Unicode normalization (NFC/NFD) and standardize transliteration rules (ISO 9, BGN/PCGN). This reduces false sanctions hits long before fuzzy matching algorithms kick in.

For corporate clients I recommend building a golden record in an MDM system and applying entity resolution/record linkage to merge disparate records. Integrating company registries and beneficial ownership data (beneficial ownership, UBO identification) improves KYC/KYB accuracy and reduces uncertainty in sanctions monitoring. Such data quality management and data profiling is the first lever to reduce false positives.

Precise name matching without overreach

Algorithms determine which signals you receive. I usually start with fuzzy matching using Levenshtein distance, the Jaro–Winkler algorithm, n-grams and tokenization. For phonetic robustness we use Soundex and Metaphone, and for multiscript names — multiscript matching (Cyrillic Latin Arabic Chinese) with handling of diacritics and apostrophes. Tuning the name matching model for Asian and European languages is critical: Chinese and Arabic names, as well as Latinization of Slavic surnames, cause a spike in alerts without proper normalization.

In COREDO projects we combine deterministic matching for obvious cases and probabilistic matching for borderline situations. When Entity Resolution is required for corporate clients, we add a graph component: links between legal entities, directors and addresses help distinguish true matches from false ones. Visualizing connections for sanctions risk review speeds up analyst work and provides explainable AI for decision-making.

Threshold policy and FP/FN calibration

Reducing false positives is not just “raising the match threshold.” I use score management and threshold policy, threshold calibration and A/B testing of thresholds and matching models. Metrics — false positive rate (FPR), precision and recall, F1-score and ROC AUC — show the trade-off between FP and FN and help select a point that matches the risk appetite and regulator expectations.

Regulators usually support a risk-based approach and do not expect zero FP. It is important to document the methodology, trade-offs and justification for chosen thresholds, and to perform a compliance audit of sanctions control. Our solution, developed at COREDO, includes regular cost-benefit analysis: we calculate cost per alert, analyst throughput, MTTR and operational efficiency and compare this to the assessed risk of a false negative (FN). This approach demonstrates ROI and the acceptability of changes in the eyes of regulators.

Processing flows: real-time or batch

Each business process dictates its mode. For incoming payments, real-time sanctions screening with API integration of the screening engine into processes is appropriate. For periodic customer base reviews: batch processing (batch checks) with scheduling and SLA. I build human-in-the-loop workflows and SLAs at every stage: initial automated check, alert triage and prioritization, human verification of alerts and case management for alert investigations.

Integrating sanctions screening into payment flows, ERP/CRM systems and AML/CFT platforms requires an audit trail, data lineage and provenance so every decision is demonstrable. At COREDO we implement explainable AI and transparency of decisions: the analyst sees the reasons for the match, the contribution of each token or rule, and the manager sees aggregated metrics and team workload. This reduces operational risk and raises compliance maturity.

False positives: rules, ML, graphs

I start with basic settings: reducing false positives by tuning match thresholds, whitelists and exceptions with clear exception management and documentation of whitelists. Then I add filters by country, birth dates, entity types and context, as well as watchlist management with targeted filtering of entities known as “false matches”.

Next we refine matching rules using ML. Supervised learning to reduce FP is trained on labeled cases (training data labeling), while unsupervised clustering highlights hidden patterns of false alerts. Graph analysis to reduce false positives and network analysis help remove noise from namesakes and identically named companies. In several COREDO projects we introduced greylisting for contentious cases with additional context and “deferred” review, reducing SLA load without loss of quality.

Names, scripts and registries in Europe and Asia

Multilingualism is the main “alert generator.” In Asia we pay special attention to transliteration and name spelling variants, use transliteration tables (ISO 9, BGN/PCGN), configure Unicode normalization and rules for handling diacritics. For Arabic names we apply tokenization, n-grams and canonicalization and normalisation, and for Chinese names — romanization schemes and alternative forms.

In Europe the focus shifts to registry integration and record linkage. Entity Resolution for corporate clients and deduplication in master data remove “echoes” of records. For trade finance and commodity trading we add screening of counterparties, vessels and ports, and for correspondent banking and cross-border screening, praa focus on jurisdiction‑aware filtering. At the same time, we always take into account the legal aspects of storing and transmitting personal data, the requirements for on‑premise solutions and legal hold when cooperating with law enforcement agencies.

SaaS or on‑prem: scale and security

At the architecture stage I assess how ready the business is for SaaS sanctions‑screening providers or whether it needs an on‑premise installation. Key factors: security, latency requirements, multi‑jurisdictional operations and local data laws. For high loads we use Bloom filter to speed up searches in large lists and design CI/CD practices for ML models of sanctions screening to release changes safely and predictably.

We build scaling of sanctions screening to support company growth in Europe and Asia through micro‑services, API gateways and centralized watchlist management. Synchronization of sanctions lists and update frequency become policy‑manageable, and SLA‑oriented tuning keeps MTTR and cost per alert within target bounds. The COREDO team helps run a cost-benefit analysis of the implementation and calculate ROI: how much reducing FP saves, how analyst throughput grows and where the risk balance remains acceptable.

Demonstrating compliance to regulators

Sanctions screening without an audit trail does not pass review. I require a continuous audit trail and provable actions, explainability tools for matching models and a clear separation of roles: analysts, compliance managers, the CTO and data owners. Within the FATF recommendations and regulators’ expectations we organize regular audits of sanctions‑screening effectiveness, A/B testing of models, threshold updates and analyst training.

For transparency we introduce data lineage, provenance and evidence packages for each decision. Case management and workflow automation create reproducibility, and human‑in‑the‑loop processes and SLAs provide risk manageability. When a client receives a request from a regulator or counterparty, the prepared package with precision/recall metrics, F1‑score, ROC AUC and a description of the risk-based approach provides a convincing response without emergency rework.

COREDO case studies: reducing false positives and screening

Illustration for the section «COREDO case studies: reducing false positives and screening» in the article «Sanctions screening – how to avoid false positive triggers»

In Estonia we worked with a payments company that faced a flood of false sanctions hits. The COREDO team profiled the data, normalized names and transliteration, introduced watchlist consolidation and retuned fuzzy scoring. We implemented whitelists under strict exception governance and trained a supervised model on labeled alerts. The result, real-world cases reducing the number of alerts by 70% while maintaining recall on critical risks. The regulator accepted our documentation on trade‑offs and methodology with no additional requirements.

In Cyprus a forex provider was preparing for licensing and needed to build PEP and sanctions monitoring taking into account multiscript customer names from Asia. The solution developed at COREDO included multiscript matching, Jaro–Winkler and n‑grams, as well as link visualization for checking sanctions risks by UBO. We added adverse media screening and rules for alert triage with SLA metrics. The license was obtained, and the operations team meets target KPIs: cost per alert decreased quarterly, MTTR within 2–4 hours for priority alerts.

In Dubai an international holding structure was building anti‑sanctions compliance at the group level with branches in the UK and Singapore. Our experience at COREDO showed that a unified threshold policy and harmonized watchlist management provide consistency, while regional overlays account for local data laws. We set up a batch review of the database every 24 hours and real‑time screening on payments, introduced A/B testing of thresholds and regularly reported on ROC AUC and F1‑score to the risk committee. The system passed external audit and scaled without an increase in FP.

How to implement sanctions screening

Illustration for the section «How to implement sanctions screening» in the article «Sanctions screening – how to avoid false positive triggers»

Assess compliance maturity. Apply a compliance maturity model and identify gaps in data, algorithms, thresholds, and workflow.
Organize data. Configure watchlist consolidation, deduplication, unicode normalization, transliteration, and a golden record in MDM.
Design algorithms. Combine deterministic matching, fuzzy matching (Levenshtein, Jaro–Winkler), phonetics, and a multiscript approach.
Define a threshold policy. Conduct threshold calibration, A/B testing, establish a risk-based approach, and document FP/FN trade-offs.
Build the workflow. Include human-in-the-loop, case management, alert triage, SLA, and audit trail. Integrate ERP/CRM and payment processes via API.
Enable ML and graph. Implement supervised learning to reduce FP, unsupervised clustering for anomalies, and graph analysis of relationships.
Reinforce controls and training. Organize regular effectiveness audits, analyst training, labeling of training data, and CI/CD for rules and models.

Answers to questions: economics and ROI

How to estimate the ROI of implementing a new sanctions screening system? Consider cost per alert, analyst throughput, MTTR, FPR and reduction in investigation time. Add the cost of FN risk, fines and lost revenue due to payment delays. ROI: the difference between total savings and investments in licensing, integration and maintenance.

Which KPIs to use to measure the effectiveness of false positive reduction? FPR, precision, recall, F1-score and the share of alerts closed as FP, plus operational KPIs: MTTR, backlog, share of auto-clear. Don’t forget data quality: completeness, accuracy, freshness.

How permissible is it to raise the match threshold from a regulator’s perspective? Within an RBA it is permissible if you document calibration, compromise metrics (precision/recall) and FN control. OFSI and FATF expect demonstrability and auditability, not a dogmatic “zero tolerance for FP”.

Which methodologies minimize operational risks when reducing FP? A/B testing of thresholds, multistage triage, greylisting, human-in-the-loop for borderline cases and explainable AI to justify decisions.

How to scale sanctions screening for growth in Europe and Asia? Centralize watchlist management, use API gateways, Bloom filter for lookups, separate real-time and batch, and apply on-premise in jurisdictions with strict data requirements.

What data and registries are needed for accurate matching of corporate clients? Company registries for the EU/UK/Asia, UBO information, addresses, directors, historical names. Implement record linkage, deduplication and a golden record.

How to choose between SaaS and on-premise? Look at regulatory constraints on data, latency requirements and security. SaaS gets you started faster, on-prem gives control and customization. We often design a hybrid.

How to organize human-in-the-loop and transparent audit? Introduce SLAs, roles and playbooks, case management with a full audit trail, data lineage and explainability reports for each decision.

How to train analysts and automate triage? Standardize training data annotation, deploy supervised models for auto-prioritization, set MTTR targets and hold periodic retrospectives on decision quality.

Which metrics show the trade-off between FP and FN? Use precision/recall, F1-score and ROC AUC, and also track FN risk estimates by customer/transaction types.

Risk management: FN under control

Reducing FP must not be done at the cost of an explosive rise in false negatives. I set threshold policies with a “safety” level of review for high‑risk segments and recommend regular retrospectives on closed cases. Exception management goes through the compliance committee, and any whitelisting and greylisting are documented and reviewed at predefined intervals. This regime keeps FN under control and shows the regulator a mature, risk‑oriented system.

We also use alerting channels and integration with AML/CFT systems so that sanctions alerts do not “get stuck” and move into investigation following a clear workflow. If required, we engage cooperation with law enforcement and implement legal hold, preserving the evidential base and transparency of actions.

COREDO: diagnostics and project support

I build the project in three steps. First, diagnostics and audit: maturity assessment, data profiling, rules inventory, measurement of FPR/precision/recall, evaluation of infrastructure and security. Then architecture and implementation: data and watchlists, algorithms and threshold policy, integrations, case management, explainability, analyst training and CI/CD deployment. And finally – support and development: regular calibration, A/B tests, expansion of jurisdictions, team training and preparation for inspections.

The COREDO team stays focused on the end result: reducing false positives, decision transparency and audit readiness. We handle company registration and licensing in the EU, the Czech Republic, Slovakia, Cyprus and Estonia, support scaling in the UK, Singapore and Dubai, and combine legal, operational and technological competencies into a single workflow.

Conclusions

Sanctions screening and anti-sanctions compliance have stopped being a “checkbox” for regulators. It is a managed system with clear data, transparent algorithms, calibrated thresholds and a disciplined workflow that protects the business and accelerates it. When sanctions control is embedded in a company’s architecture, from registration and licensing to AML-processes and payment integrations – you gain predictability, optimal KPIs and confidence in international scaling.

At COREDO I am responsible for ensuring that every decision is understandable, verifiable and economically justified. If you are planning to expand to Europe or Asia, preparing for a licence or want to put your AML and sanctions in order, let’s discuss a roadmap. I will propose concrete steps, provide metrics, assemble a team for your model and bring the project to operational resilience – so that the sanctions control system works in your favor every day.

15.02.2026

Investment licenses in the AIFC in Kazakhstan

I often start a conversation with entrepreneurs with a simple question: *what is your goal in choosing a new jurisdiction for an investment business*? The answer almost always comes down to a combination of three factors: regulatory predictability, access to capital, and operational efficiency. In recent years Astana International Financial Centre (AIFC) has become one of the few hubs where the balance of these factors works to the benefit of both international and regional players. During this time the COREDO team has carried out dozens of projects for legal entity registration, obtaining investment licenses, building an AML function, and launching funds within the AIFC.

In this article I organize COREDO’s practice: how the registration of a legal entity in the AIFC is carried out, which licenses are available, what the capital and substance requirements look like, what is important to know about the AIFC’s AML and KYC requirements, and how to strategically assess the ROI of operating through the AIFC. The text is aimed at entrepreneurs and finance directors who value concreteness and clear steps without unnecessary theory. My goal – that you leave the article with a clear plan and an understanding of whether an AIFC license suits your business model.

AIFC legal framework: the role of AFSA

Illustration for the section 'AIFC legal framework: the role of AFSA' in the article 'Investment licenses in Kazakhstan AIFC'
The AIFC uses a separate “AIFC legal framework” based on common law principles, with its own court, the AIFC Court, and an independent regulator, the Astana Financial Services Authority (AFSA). This provides predictability and dispute-resolution principles close to the English tradition, which is important for high-stakes and cross-border transactions. In my practice, this often reduces legal frictions between investors and managers, especially when structures from the EU and the United Kingdom are involved.

AFSA regulates activities by means of a Rulebook – a detailed code of rules similar in logic to European and Middle Eastern standards. In spirit, the requirements are close to MiFID II: investor protection, management of conflicts of interest, risk disclosure and adequate capital requirements and management systems. At the same time, the AIFC allows reasonable proportionality: early-stage projects and niche strategies have flexibility provided there is an evidential basis of robust risk management.

COREDO’s practice confirms that when preparing for licensing in the AIFC a “European” approach helps: product regulations, clear client categorization, documented suitability/appropriateness and transparent fees. At the same time AFSA expects all of this to be implemented into the actual operational environment – a single paper policy is not enough.

Which licenses are in the AIFC?

Illustration for the section «Which licenses are in the AIFC» in the article «Investment licenses in Kazakhstan AIFC»
Investment licenses in Kazakhstan through the AIFC cover a wide range of activities, and correctly mapping a business model to the permitted types of activity saves months at the approval stage. Within the AIFC, available in particular are AIFC broker license (broker/dealer), the AIFC asset manager license (portfolio manager/asset manager), the investment adviser license, as well as the AIFC depository and custodian license. For fund activity, collective investment schemes (CIS) are provided, including closed structures for private equity and an investment fund license in the AIFC.

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Over the past two years we have observed strong demand for the AIFC private equity license and the AIFC venture fund license. Such structures are convenient for cross-border capital raising, and for working with investors familiar with common law. A separate vector is the AIFC license for digital asset operations: under it custody solutions, crypto exchanges and tokenization services develop while complying with requirements for storage technologies and cybersecurity.

For non-residents, the AIFC provides an investment license, and this is a real tool for accessing regional markets while minimizing legal conflicts. Our experience at COREDO has shown that a well-designed combination of an SPV in the AIFC and an operational core in another jurisdiction helps to flexibly allocate functions while maintaining compliance with AFSA regulatory standards.

Capital, substance and fit and proper

Illustration for the section 'Capital, substance and fit and proper' in the article 'Investment licenses in Kazakhstan AIFC'
Capital requirements for an AIFC license depend on the type of activity and the risk profile. By the typical ranges we encounter in projects, broker-dealer licenses sit at the top of the scale, while advisory and non-custodial management are lower. Capital adequacy for asset managers includes a fixed base amount and add-ons for operational risk and assets under management. I always recommend planning a “buffer” above the minimum level to smooth seasonal fluctuations and growth-related costs.

Economic presence (substance) at the AIFC: more than a nameplate on the door. AFSA expects a real team: at least one executive director resident in the AIFC, a competent head of compliance/AML, and, where appropriate, risk management and internal audit functions. In COREDO projects we include a responsibility matrix and job descriptions at the submission stage to pass the fit and proper checks for AIFC directors and senior management without delays.

Fit and proper test for directors and senior managers at the AIFC covers experience, qualifications, reputation and compliance history. Background checks include certificates of no criminal record, verification of education, previous roles and references. I honestly warn clients: it’s better to identify and work through “grey areas” in advance than to explain them to AFSA at a late stage.

AML and KYC in the AIFC: technologies and control

Illustration for the section «AML and KYC in the AIFC: technologies and control» in the article «Investment licenses in Kazakhstan AIFC»
AML and KYC requirements of the AIFC are based on the recommendations of FATF and integrate a risk-based approach. In practice this means an individual AML risk assessment for investment firms, client segmentation by geography and profile, as well as documentation of sources of funds. The solution developed at COREDO typically includes a risk matrix, playbooks for onboarding and instructions on procedures for detecting suspicious transactions (STR).

Modern KYC/eKYC technologies for the AIFC simplify remote onboarding, but AFSA pays attention to the quality of PEP and sanctions screening and to periodic review. We implement a transaction monitoring and AML screening system taking into account the business model profile, including scenario settings, trigger thresholds and an escalation procedure. A separate register of beneficial owners and beneficial owner verification in the AIFC are developed to resolve questions about ownership structures before submission.

A compliance policy for an investment firm in the AIFC should describe procedures for managing conflicts of interest, product acceptability, as well as whistleblowing channels. At AFSA audits, not only documents are valued but also implementation artifacts: monitoring logs, committee reports, and AML training for staff. COREDO’s practice confirms that a mature AML framework speeds up both Licensing and subsequent reviews.

Timelines and steps for registering a legal entity in the AIFC

Illustration for the section «Timelines and steps for registering a legal entity in the AIFC» in the article «Investment licenses in Kazakhstan AIFC»
The registration of a legal entity in the AIFC starts with choosing a form: from ordinary companies to special SPVs. Registration is carried out through the electronic portal, and the basic timeframe with a properly prepared package takes from several working days to a couple of weeks. We agree names, types of activity and constitutional provisions in advance so as not to return to the amendment stage.

SPV structures and trusts in the AIFC are convenient for asset transactions, securitization or incorporating a holding level. For funds, fund registration procedures in the AIFC apply, including submitting fund rules, disclosing valuation policy and selecting a depositary/custodian. Economic presence is established through an office, local directors and key functions, which is reflected in subsequent tax and regulatory aspects.

In COREDO projects we prepare a corporate governance package: board provisions, audit and risk committees, a senior manager regime with role demarcation. This reduces AFSA queries and facilitates the integration of external and internal audit under IFRS.

Licensing of investment activities, timelines and costs

Obtaining an investment license in the AIFC begins with an accurate description of the business model and the selection of the appropriate “regulated activities”. This determines the set of policies, capital requirements and staff profile. At the pre-application stage the COREDO team conducts a gap analysis against the AIFC Rulebook, develops a roadmap and agrees key parameters with AFSA to avoid incorrect classification.

The timelines and cost of obtaining an AIFC license depend on the complexity of the model and the applicant’s readiness. In our experience, the advisory and regulatory phase takes 8 to 16 weeks for ‘clean’ models, while more complex combinations involving custody and dealing require 4–6 months. The cost consists of AFSA fees, legal and compliance preparation, technological solutions and hiring of key persons, as well as future ongoing compliance costs.

Preparation for an AFSA inspection (AIFC regulator) includes interviews with directors, demonstration of operational systems, testing of compliance controls and a walkthrough of the client journey. I always recommend conducting a pre-inspection simulation – in a risk-free mode we identify ‘bottlenecks’ and fix them before contacting the regulator.

CIS and SPV Fund Structures: Disclosure

For investment funds in the AIFC, open and closed collective investment schemes (CIS) are available; private placements and public offers in the AIFC are subject to different regimes. Preparing a prospectus and disclosure in the AIFC requires a description of the strategy, risks, fees and valuation procedures, as well as prospectus requirements for key metrics. Our clients value structuring SPVs and trust solutions for individual transactions when it is necessary to flexibly separate classes of assets or investors.

Depositary and custodian requirements place particular emphasis on independence, accounting systems and asset storage technologies. Agreements with depositaries and service providers must clearly record SLAs, liability and escalation procedures. We conduct Due Diligence on providers in advance so AFSA sees a considered selection of counterparties, not a formal one.

For closed funds pursuing private equity and venture strategies the regulatory framework remains pragmatic if governance and risk management correspond to the scale of the portfolio. Investment committees, clear management of conflicts of interest and external audit are not just a checklist but a prerequisite for LPs’ trust.

Taxes in the AIFC: incentives, transfer pricing

tax incentives and AIFC stimuli often become a decisive factor. The AIFC provides regimes that reduce the tax burden on certain types of income, as well as simplification mechanisms where there is economic presence. At the same time it is important to align tax residency and certificates in order to use Kazakhstan’s double tax avoidance agreements and correctly process payments to investors.

Transfer pricing and documentation require attention if you have a cross-border chain of services or IP. The COREDO team develops a transfer pricing policy and a supporting file with functional analysis so that regulatory and tax audits go through without surprises. Reporting under IFRS and external auditors close the loop of trust and transparency.

Taxation of investment companies’ income in the AIFC should be considered together with the profit allocation model at the fund, management company and investor levels. Smart structuring of flows reduces friction costs and simplifies subsequent exit decisions.

Digital assets: tokenization and custody

Regulation of digital assets and tokenization in the AIFC is evolving through specialized AFSA regimes and the regulatory sandbox. Licensing of crypto exchanges and custody is built around storage technologies, cybersecurity and resilience to operational disruptions. In COREDO projects we pay particular attention to custody technologies for digital assets, segregation of client funds and access recovery processes.

Smart contracts and the legal status of tokens are analyzed in every case: tokenized fund shares, debt instruments or utility models fall under different parts of the Rulebook. I recommend starting with the legal qualification of the token and only after that choosing the technology stack. The AIFC license for digital asset operations opens doors to new sources of liquidity, but requires mature risk management.

KYC/eKYC and PEP/sanctions screening in “crypto” models are especially important: monitoring scenarios and triggers for STR should take into account volatility and address behavior. COREDO’s practice confirms that “compliance-by-design” reduces the cost of holding a license as you scale.

Clearing, custody and partner banks

Capital market infrastructure and clearing at the AIFC are developing in tandem with regional operators and international providers. Partner banks and custodians in Kazakhstan provide access to settlement and safekeeping of assets, and the clearing and settlement infrastructure at the AIFC is integrated with global standards. During the due diligence stage we assess connection architecture, contingency scenarios and software interfaces.

Agreements with depositories and service providers set out procedures for corporate actions, corporate voting and dispute resolution. Requirements differ for retail and institutional segments, and this must be taken into account when developing compliance policies. As a result, the regulator builds confidence in the operational quality of your platform.

For broker-dealer licenses, issues of secondary market liquidity and market-making are important. We select models in which the risk profile aligns with capital and insurance measures, and a disclosure policy addresses questions from clients and AFSA.

Scaling cross-border capital

Cross-border capital raising through the AIFC relies on clear fund marketing rules and AIFC advertising regulations. Passporting and cross-border services restrictions require separate strategies for the EU, the UK, Singapore, and the Middle East. I recommend building marketing funnels that take local private placement regimes into account and using flexible side-letter structures for institutions.

ROI assessment when operating through the AIFC should include NPV, IRR and payback period approaches, as well as profitability metrics for investment platforms: investor CAC, commission LTV, LP churn and compliance operational KPIs. Scaling an investment business through the AIFC becomes predictable when your KPIs are tied to regulatory metrics, onboarding time, share of alerts, and incident closure speed.

Marketing without transparency regarding complaints and suitability leads to regulatory and reputational risk at the AIFC. Therefore I insist on balancing growth with quality control, supported by regular reporting to the board and committees.

Risk Management and Compliance System

Management of operational and regulatory risks in the AIFC is built around three lines of defense: business, risk/compliance and internal audit. Investor protection and compliance measures become part of the culture rather than a separate department. In COREDO solutions we configure conflicts of interest management, outsourcing compliance and third-party risk management, covering the key capital supply chains: investors and unit-holders in the AIFC.

Due diligence of investors and limited partners, counterparty checks and forensic due diligence, sanction risks and international restrictions, as well as reputational screening and KYP (Know Your Partner) are part of the standard package. For cybersecurity and data protection we build measures with GDPR compatibility in mind, including DLP, IAM, encryption and incident response plans. The senior manager regime and management accountability formalize personal accountability and improve the quality of decisions.

External and internal audit for funds provides an independent view of finances and processes. IFRS reporting and regular compliance reports for AFSA reduce the information gap and enable complex topics to be discussed in the language of facts.

COREDO cases — what worked

Recently the COREDO team supported the licensing of an investment company focused on managing portfolios of debt instruments. The client applied for non-custodial management with advisory rights. We strengthened governance, prepared a capital adequacy model and implemented a transaction monitoring system. AFSA approved the license within the stated window, and subsequent review confirmed the quality of AML controls.

In another project we launched a broker platform with restricted dealing for institutional clients. Requirements for minimum statutory capital and operational resilience turned out to be higher than planned. We rebuilt the financial model, engaged a partner custodian and strengthened IT controls. The AIFC broker license was issued after an additional interview, and the business started operations on the schedule set out in the plan.

A separate case — a license for a venture fund in the AIFC with a multi-strategy focused on early rounds. We drafted the fund documents, established procedures for valuing illiquid assets, and agreed the private placement memorandum and marketing materials. The solution developed by COREDO enabled the fund to quickly close the first closings from institutional LPs and to build succession planning processes at the management company level.

Finally, for a digital asset custody provider we designed the licensing, storage technology architecture and recovery scenarios. Special attention was paid to PEP and sanctions screening, segregation of funds and contingency procedures. The AIFC license for digital asset operations was approved after demonstrating technological and operational test cases.

Cost of license maintenance

The cost of license maintenance and ongoing compliance costs include annual fees, an IFRS audit, policy updates, staff training, as well as IT and cybersecurity support. For companies with active growth, budget for expanding the compliance team, upgrading monitoring systems, and independent model reviews. Our experience at COREDO has shown that planning OPEX as a function of AUM and the number of clients reduces the risk of underfunding the control system.

Outsourcing some functions is possible and reasonable if you retain accountability. AFSA is receptive to outsourcing provided there are clear SLAs, regulator access to data, and independent oversight. It is important to conduct vendor risk assessments regularly and incorporate the results into management reporting.

In the long term, savings are achieved through KYC automation, integration with data providers, and product line standardization. This reduces risk variability and simplifies regulatory communication.

Visas and personnel: how to build a team

Visas and employment of foreign personnel in the AIFC are simplified through the center’s special regimes. We plan in advance the relocation schedule for directors and the key compliance officer, taking into account document timelines and the readiness of the IT infrastructure. This reduces the risk of delays at the launch stage.

corporate governance: requirements for the board and committees imply independent directors, charters for the audit and risk committees and clear authorities. In COREDO projects we pay special attention to describing the senior manager regime and management responsibilities, including business continuity plans and delegation. This forms a mature “line of defense” and helps during inspections.

Migration of fund management to the AIFC is possible with a well-considered transfer of functions, taking into account regulatory arbitrage and legal risks when changing jurisdiction. We arrange a phased transition while maintaining client service and controls.

Exit strategies and liquidity

Exit strategies for funds registered in the AIFC depend on the asset class and investment horizon. Exit options are available: IPO in Kazakhstan, trade sale and secondary buyout, as well as listing instruments on regional exchanges. I recommend planning secondary market liquidity metrics and market making already at the fund structure stage.

Prospectus requirements and risk disclosure when preparing for a listing require consistent messaging, financial transparency and management discipline. External audit and independent asset valuation increase confidence and accelerate the marketing window. The COREDO team supports clients through to final closing, overseeing legal and compliance aspects.

Regulatory arbitrage is useful when you compare the requirements of different centers and build a hybrid structure. The key is not to lose substance and the ability to manage risks, and to properly document the reasons for the choice.

Is the AIFC suitable for your model?

To make a considered decision, I suggest going through a checklist. Assess which license categories are needed right now and in 12–24 months, and how they are affected by the requirements for obtaining a license in AIFC. Align capital, substance and fit and proper requirements with available resources and your staffing plan.

Analyze client jurisdictions to account for cross-border service restrictions and local marketing requirements. Assess ROI: apply NPV and IRR to three scaling scenarios and take into account the payback period for licensing and IT. Do not leave regulatory risks and reputational risk in the AIFC in the shadows: set an acceptance threshold and a response plan.

If the AIFC meets the key criteria, it’s worth proceeding. If some parameters are ‘yellow’, adjust the design: a combination of an SPV and a management company, phased licensing, a pilot with a regulatory sandbox and subsequent upscaling.

Why COREDO is a reliable AIFC partner

Over years of working in Europe, Asia and the CIS I have learned that success in the AIFC is built on careful process calibration and attention to detail. The COREDO team is used to being accountable for results: from registering a legal entity in the AIFC and licensing investment activities in the AIFC to deploying AML/KYC and preparing for an AFSA inspection. We do not promise miraculous timelines, but we design realistic roadmaps and ensure transparency at every stage.

If you are considering an AIFC investment license, an AIFC asset manager license, an AIFC broker license, an AIFC depository license, or fund structures, I am ready to discuss your business model and offer a practical solution. COREDO’s experience shows that a properly structured setup in the AIFC simplifies cross-border capital raising, strengthens investor confidence, and creates a foundation for strategic exit decisions. That is the kind of foundation needed for calm, steady scaling of an investment business.

14.02.2026

RAIF in Luxembourg fund launch

The COREDO team has implemented dozens of structures in Luxembourg, the Czech Republic, Cyprus, Estonia, the United Kingdom, Singapore and Dubai. When entrepreneurs and chief financial officers from Europe, Asia and the CIS come to me with the task of quickly and cleanly launching a fund for professional investors, we often choose the Reserved Alternative Investment Fund: RAIF Luxembourg. It is a tool that combines private-market flexibility, AIFMD compliance, tax efficiency and predictable RAIF fund launch timelines.

Below I share a practical guide: from choosing a RAIF fund structure and an AIFM for the RAIF to AML/KYC requirements, valuation policies, tax planning and RAIF marketing in the EU. I use the language of business, real COREDO cases and the solutions that give our clients speed, risk control and investor confidence.

Why a RAIF in Luxembourg is advantageous

Illustration for the section «Why RAIF in Luxembourg is advantageous» in the article «RAIF in Luxembourg – launching a fund»
Luxembourg provides a stable legal environment and predictable law and regulation for RAIF. The RAIF was established by Luxembourg’s 2016 RAIF Law; at the same time the fund does not require direct supervision by the CSSF: the CSSF’s role and oversight are exercised through a licensed management company — an AIFM for the RAIF — which significantly speeds up RAIF registration in Luxembourg and the first closing. This structure allows use of the AIFMD passport for cross-border distribution of the RAIF and marketing the RAIF in the EU to professional investors.

From a tax perspective, tax planning for a Luxembourg RAIF is transparent. In the typical regime the fund benefits from Luxembourg funds’ exemption from corporate taxes and pays the nominal taxe d’abonnement (usually 0.01% per annum of NAV), while the transmission of income to investors occurs without withholding tax in Luxembourg, which reduces withholding tax issues at the fund level. The “risk capital” option makes a RAIF comparable to a SICAR in terms of regime, which is convenient for pure private equity.

In our practice COREDO uses the launch of a Reserved Alternative Investment Fund for private equity deals in Central and Eastern Europe, direct real estate funds (core/core-plus, value-add) and hedge strategies involving derivatives. The flexibility of the investment mandate and the rapid time-to-market save months and directly support raising AUM.

Regulatory framework: what you need to know

Illustration for the section «Regulatory framework: what you need to know» in the article «RAIF in Luxembourg – launching a fund»
RAIF is managed by an external AIFM authorized in the EU; this is the AIFMD compliance “anchor” for the RAIF. The manager assumes risk management and portfolio management, liquidity control, conflicts of interest policy and the RAIF’s ESG and SFDR compliance. The professional investor requirement precludes retail distribution: the RAIF is intended for well-informed and professional investors under MiFID; RAIF minimum investment thresholds typically start at EUR 125,000, and, upon competence certification, at the AIFM’s discretion.

I often explain the RAIF vs SIF vs SICAR difference fairly briefly. RAIF: without CSSF authorization, faster, with an AIFM and an AIFMD passport, tax regime like a SIF (or the “risk capital” option). SIF/SICAR: direct CSSF supervision and a longer pre-sale phase, although some LPs prefer the “regulated” label. When investors value speed to market and flexibility, RAIF proves optimal.

Capitalization — clear and achievable: RAIF capital requirements: reach a minimum of EUR 1,250,000 within 12 months from launch. Implementation deadlines and monitoring are set out in the fund documentation and are overseen by the administrator and the AIFM.

RAIF structure and investment strategies

Illustration for the section «RAIF structure and investment strategies» in the article «RAIF in Luxembourg – fund launch»
The choice of legal form depends on strategy and tax objectives. Most often I recommend SCSp (an unincorporated limited partnership) with an LPA agreement and rights of Limited Partners, where the carried interest remuneration structure and the profit distribution waterfall model can be configured flexibly. For hedge strategies corporate forms with a board of directors and independent directors are convenient – RAIF governance and independent directors increase LPs’ confidence and improve audit.

RAIF for private equity: growth and buyout deals, possibility of a master-feeder RAIF structure for different classes of investors and currencies.
RAIF for a hedge fund: RAIF pricing and NAV, often monthly, side-pocketing of illiquid assets is allowed for stressed assets, redemption gates and suspension of redemptions for risk management.
RAIF for real estate: valuation methodologies for real estate and illiquid assets, an independent valuer and a clear valuation policy and frequency of NAV (quarterly/semi-annually).

In master fund feeder structuring benefits we use multi-currency classes, optimize currency risks and hedging for the RAIF through class-level swaps and forward strategies. Side letters and investor preferences are applied selectively: the economics must not undermine equality between classes and the waterfall.

Providers and contractual architecture

Illustration for the section «Providers and contractual architecture» in the article «RAIF in Luxembourg – fund launch»
The solution developed by COREDO to speed up the launch is a “block” of contracts and providers with ready-made SLAs. In such a scheme:

Registration of the AIFM management company: we take an external EU-authorised AIFM or register a new one (longer and more expensive). Delegation of RAIF management is structured through a management agreement and agreements with the investment consultant.
Depositary and custodian for the RAIF: RAIF depositary duties include cash flow monitoring, safekeeping and oversight. The depositary agreement is agreed together with the administrator.
RAIF fund administrator services: maintaining the register, NAV calculation, financial reporting, subscription/redemption of shares (RAIF subscription and redemption procedure), KYC/AML operational processes. registration agent RAIF performs transfer agent functions.
Independent auditor and NAV audit: annual audit of financial statements and valuation procedures.
Asset valuation — independent valuer: for real assets and complex private debt portfolios.
corporate governance: governance committee and investment committee with clear mandates; conflict of interest and disclosure policy – a mandatory element of AIFMD.

Fund documentation is built around the offering memorandum for the RAIF, the LPA (or articles of association), the term sheet for key parameters, subscription agreements, as well as distribution agreements for the EEA. COREDO’s practice confirms: clear documentation at the start saves months in subsequent rounds of LP fundraising.

Operational AML and KYC procedures

Illustration for the section «Operational AML and KYC procedures» in the article «RAIF in Luxembourg — fund launch»
AML KYC requirements for RAIF comply with AIFMD standards and Luxembourg rules. We set up AML risk assessment and control policies together with the AIFM and the administrator, including PEP screening and enhanced Due Diligence, sanctions monitoring and EU sanctions, as well as transactional monitoring of suspicious operations. Investor due diligence for RAIF covers KYC/KYB for institutional investors of the RAIF, source of funds analysis and the beneficial owner and UBO of the RAIF.

From the data exchange perspective the fund is classified under CRS, FATCA, RAIF. We organise FATCA registration and GIIN for investors where required, and configure the CRS European automatic exchange so that annual reporting cycles proceed predictably. Additionally, we ensure GDPR compliance for the fund in the EU, including IT security and protection of investor data, access segregation, operation logging and provider control under SLAs.

AML regulators and the recommendations of FATF set the “ceiling” of practices; my team adapts them to the risk profile of the strategy, the jurisdictions of target assets and the channels for attracting LPs. This approach is recorded in AML policies, and operational outsourcing and process customization reduce manual workload without losing control.

Taxes, substance and cross-border structuring.

The tax residency status of a RAIF fund depends on its form. In a “SIF-like” regime the fund is usually exempt from corporate tax and does not claim benefits under double tax treaties; to reduce taxes in portfolio jurisdictions we set up an SPV layer and substance requirements and economic substance (substance documents: office lease, employees, local directors). For private equity and real estate, transfer pricing and the RAIF affect loan and service agreements; we check compliance with the “arm’s length” principle and the TP documentation.

BEPS and its impact on fund structure together with ATAD and EU anti-abuse rules (interest limitation, GAAR, CFC at the investor level) are becoming standard for the project. For cross-border financing programs I introduce DAC6 reporting and cross-border schemes as a mandatory checklist item. Issues of income allocation and withholding tax are resolved through a treaty-eligible SPV where economically justified; capital repatriation and foreign exchange control are taken into account in cash modelling for LPs from different countries.

Marketing and distribution: compliance

Thanks to the AIFM, RAIF marketing in the EU uses the AIFMD passport for professional investors, and marketing registration in the EEA is carried out centrally. For a number of markets pre-marketing is used, and, for non-EU jurisdictions, private placement is done under local NPPR. We comply with the public advertising restriction and distribution rules: no retail communications, clear legends and geographic filters.

In COREDO projects the marketing strategy for family offices is built around qualification sessions and a data room focused on risk metrics and governance. To attract institutional capital and for LP due diligence we assemble a package: track-record, AIFMD policies, ESG and SFDR compliance of the RAIF (arts. 6/8/9), valuation policy, independent directors, committees, auditor reports. We tie fund scaling and AUM attraction to fund performance KPIs and ROI metrics: IRR/TVPI/DPI, time-to-close, share of invested capital, and specific ongoing charges.

Liquidity and risk management

RAIF risk and liquidity management: the AIFM function and a documented LRM policy. In closed PE/RE structures, liquidity terms and lock-up periods are specified, as well as the schedule of capital calls and distributions. In open strategies, redemption gates and suspension of redemptions are used as a rare-event tool, and the fund’s liquidity stress-testing is performed against market shock and outflow scenarios.

Currency risks and hedging for RAIF are implemented at the share-class or portfolio level: forwards, NDFs, swaps with counterparty limits. The valuation policy takes into account RAIF pricing and NAV, including FX, fair value and methods for illiquid assets; an independent auditor reviews the approach and the frequency of NAV calculation.

Documentation and procedures

Preparing the offering memorandum for the RAIF sets the rules of the game: description of the strategy, limits, valuation, risks, subscription and redemption procedures of the RAIF, fees, ESG, SFDR disclosures. The management agreement clarifies delegation and AIFM oversight; the depositary agreement and the agreements with the administrator and the registrar/transfer agent establish the control points. Side letters and investor preferences are permitted within the bounds of fairness between classes and without breaching the prospectus.

I insist on a clear conflicts of interest policy and a disclosure policy, including related-party transaction regimes and a governance committee with independent directors. This is partly within the scope of AIFMD, but genuine LP trust is built through transparent practice, not just by rules.

Timelines and costs — guidance

Our experience at COREDO shows that the launch timeline for a RAIF fund with a finalised strategy and an AIFM in place is 8–12 weeks to soft-close. This includes structuring, opening accounts with the depositary, negotiating agreements, registering in the registers and publishing the offering memo. If registration of the AIFM management company from scratch is required, the timeline is extended by 4–6 months.

The cost of launching a RAIF in Luxembourg depends on the mix of providers and the complexity of the structure. In a typical project the setup and first-year budget comprises legal support for the RAIF, fees for the AIFM, the depositary and administrator, an independent auditor, a registration agent, a valuer (if required), D&O insurance and marketing expenses. As a reference, formation and first-year ongoing charges for COREDO clients typically fall within the average range for institutional RAIFs, and the unit burden quickly decreases as AUM grows. I determine specific pricing after receiving a term sheet on the strategy and operating model.

Timeline and project launch checklist

To ensure process transparency and save time, I use a step-by-step checklist:

Strategy, RAIF fund structure, choice of form (SCSp/corporate), tax regime.
Economic term sheet: classes, fees, carried interest, waterfall and exit waterfall.
Providers: AIFM, depositary and custodian, administrator, auditor, registration agent, independent valuer.
Fund documentation: offering memorandum, LPA/articles of association, management agreement, depositary agreement, distribution/placement agreements, subscription agreement.
Policies: valuation policy and NAV frequency, risk and liquidity management, AML/KYC, sanctions, GDPR and IT security, ESG and SFDR.
Marketing and cross-border distribution of the RAIF: registration in the EEA, private placement outside the EU, restriction on public advertising.
Substance: office, local directors, meeting calendar, recruitment compliance for the management team.
Reporting and audit: annual audit, audit approval and annual general meeting, CSSF notification via the AIFM.
Finance: transaction costs and ongoing charges, currency policy, hedging, banking and brokerage agreements.

COREDO case studies: solutions in practice

Recently the COREDO team launched a RAIF for private equity with a focus on buyouts in the EU industrial sector. We selected an SCSp, set out carried interest with a European waterfall, and implemented a master-feeder for multi-currency fundraising. For liquidity management we provided capital calls by deal stages, and for tax purposes – an SPV in contractual jurisdictions with substance and TP documentation. The investors’ committee received independent members, and the AIFM adopted a risk policy and SFDR disclosures under Article 8.

Another project, a RAIF for real estate with a value-add strategy. We appointed an independent valuer, quarterly NAV, a side-pocket for rare workout assets and redemption gates in case of market shocks. A depositary with experience in real assets took custody and recordkeeping, an administrator, and robust KYC/KYB for institutional investors. As a result the fund reached first closing in 10 weeks, and subsequent marketing in the EEA was carried out through the AIFMD passport.

For a hedge strategy with liquid instruments, the solution developed at COREDO included daily pricing of key assets by a price provider, monthly NAV and strict counterparty limits. We built in liquidity stress-testing, FX hedging of classes and a suspension policy for extraordinary conditions. LPs received a transparent reporting pack and a clear fee model.

Secondary sales and investor exit

Exit strategies of RAIF investors depend on the structure. In closed-ended funds this is a waterfall distribution after exit from the portfolio; in open-ended funds: redemptions according to the rules and frequency described in the prospectus. If necessary, a secondary-market sale of a stake is permitted: transfer of an LP’s interest with the consent of the GP and AIFM and updating the registers with the administrator. We add these mechanics in advance to the LPA and subscription agreements so as not to restrict the transferability of interests.

Where difficulties most often arise

The question “RAIF depositary obligations” when investing in illiquid or non-standard assets requires early selection of a custodian prepared for such classes. We begin negotiations at the term sheet stage, agree on the valuation policy and the description of ownership rights.

Another point — ESG and SFDR compliance for RAIF: an agreed level of ambition is needed (article 6/8/9) and real operational capability to collect data from SPVs and portfolio companies.

In cross-border structures I pay attention to BEPS/ATAD, substance and DAC6. Proper substance documents (office lease, local directors, meeting minutes) and recruitment compliance for the AIFM management team address issues of the “paper” structure and strengthen the position during institutional LP due diligence.

Benefits of RAIF for the investor

Benefits of RAIF for investors consist of three components. First, Luxembourg’s legal regime, the stability of the legal environment in Luxembourg, and AIFMD compliance through an AIFM with clear roles for the depositary, auditor and administrator. Second, flexibility of the remuneration structure (carried interest and waterfall), governance and independent directors, committees and clear LP rights (LPA, side letters within the framework of fairness). Third, tax efficiency at the fund and SPV level, well-considered currency hedging and predictable Ongoing charges.

Institutional LPs also value automatic information exchange CRS FATCA RAIF, robust AML processes, sanctions monitoring, PEP screening and enhanced due diligence. KPI and ROI metrics, regular reporting and NAV audits matter to them — we build all of this into the operating model from day one.

Why I recommend RAIF and COREDO

RAIF is an instrument that combines speed to market, the AIFMD distribution passport, a flexible structure for private equity, hedge funds and real estate, and a transparent compliance regime. In COREDO projects this is expressed in a controlled timeline, a clear budget, predictable regulatory steps and investor trust even before the first closing.

When an entrepreneur or CFO comes to me with the task of “setting up” a fund for professional LPs and scaling AUM, I offer a roadmap: from choosing the form and tax regime to selecting providers, fund documentation, ESG and SFDR, AML and GDPR. COREDO’s practice confirms: it is precisely the sequence and attention to detail — from the valuation policy to distribution rules and substance — that turn a strategy into a working RAIF that withstands institutional investors’ due diligence and delivers a predictable result.

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