(c) regularly reconciles the depositary’s own records with sub-custodian it appoints per Art. 21(11);
(d) takes due care over custody financial instruments to ensure a high standard of investor protection;
(e) assesses and monitors all risks throughout the custody chain and inform the AIFM of material ones;
(f) minimises the risk of loss of or diminution to financial instruments through fraud or negligence;
(g) verifies the AIF’s ownership right over the assets.
DR89(2). A depositary who delegates custody functions under Art. 21(11) of AIFMD is still subject to DR89(1)(b)[1] to (e) and must ensure that the third party complies with Art. DR89(1)(b) to (g) and the segregation obligations in Art. DR99.
DR89(3). A depositary’s safe-keeping duties in Art. DR89(1) and DR89(2) apply on a look-through basis to underlying assets held by financial or legal structures controlled directly or indirectly by the AIF or its AIFM.