REGULATORY FRAMEWORK

Mouflon Real Estate Fund is licensed by the Cyprus Securities and Exchange Commission (CySEC), which is an independent public organization for the supervision and regulation of the investment services market and fund industry in the Republic of Cyprus.

Our Fund falls under the Alternative Investment Fund (AIF) Law of 2014, which is the legislation that was put in place in order to implement the European AIF directive within Cyprus. The law is fully harmonized with EU legislation, as Cyprus has been an EU member state since 2004, and thus CySEC's financial regulations and operations comply with the European MiFID financial harmonization law. Upon Cyprus’ joining of the European Union, CySEC simultaneously became a part of the European MiFID regulation, giving firms registered in Cyprus access to all European markets through harmonised regulation for investment services across the 31 member states of the European Economic Area.

In June 2014, the European Parliament and the Council adopted Directive 2014/65/EC (MiFID II) and Regulation 600/2014 (MiFIR), which seeks to make financial markets more efficient, resilient and transparent, as well as to improve investor protection. Both MiFID II and MiFIR entered into force on 3 July 2014. The deadline for implementation is January 2018, which will ensure implementation across the European Union, including Cyprus.

The AIF directive provides investors with added security and transparency, minimizing their risks, and has become the vehicle of choice for a wide range of investment funds in the large EU fund markets, such as Luxembourg and Ireland, the BVIs, as well as Cyprus.

Mouflon Fund operates under an Umbrella Structure, which gives it the flexibility to create fully independent and ring-fenced Investment Compartments, all of which fall under the same management structure. This structure not only cost effective, to the benefit of the investors, but also allows for the implementation of customized strategies, with different assets, gearing, and risk-return profiles. Each investment compartment undergoes its own licensing process, and is ultimately authorized by the CySEC, ensuring compliance with the legislation as well as offering an additional layer of security to investors.

The AIF law and underlying framework offers fund managers the ability to structure transparent and reliable vehicles for investors to enter the real estate market, while minimizing both the operational and regulatory risks. In addition, the particular structure provides both tax and legal advantages, as well as increased liquidity and an exit potential when compared with direct investments, in addition to diversification of assets and an efficient management structure, leading to an overall optimization of the investment profile.

Our Fund adheres to strict Anti-Money Laundering policies, and is required to establish, implement and maintain adequate policies and procedures designed to detect any risk of failure by the Fund to comply with its obligations under the AIF Law, the Prevention and Suppression of Money Laundering Activities Law of 2007 (Law 188(I)/2007) as well as the Directive DI144-2007-08 of 2012 for the Prevention of Money Laundering and Terrorist Financing, as well as the associated risks. We have a dedicated Anti -Money Laundering Compliance Officer, whose responsibility revolves around ensuring our Fund’s compliance with the relevant legislation, and regular information gathering and reporting.

Our Fund also maintains Internal Audit, Risk Management and Compliance functions, as per the requirements of its legal framework. These functions help to ensure that our Fund adheres to established internal control mechanisms at all levels within its structure as well as strict adherence to relevant legislation and directives to from the regulator, as well as applying adequate risk management systems throughout all of the Fund structure including its individual Compartments.

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