CapZone Analytics Releases 1.0 of its Compliance Platform

• Following commercial availability announced on January 18, CapZone Analytics has delivered the first round of CapZone Reports to Qualified Opportunity Funds, establishing a strong tax compliance and risk management foundation for Funds and investors consistent with 26 U.S. Code § 1400Z-2. As Opportunity Zone (OZ) Funds and investors prepare for increasing regulatory scrutiny, the CapZone Reports are critical.
• The core of CapZone Analytics’ platform is the OZ Rules Engine, which codifies IRS regulations for investors, Funds, and portfolio companies. The OZ Rules Engine identifies compliance issues that may require the attention of Fund managers. Development is proceeding briskly beyond Release 1.0 to support the hundreds of rules embedded within IRS OZ regulations.
• CapZone Analytics has engineered the OZ Risk Register to prioritize and mitigate critical compliance issues. This tool flags compliance and risk issues that are the most likely to occur, and that have potential for substantial financial impact on Qualified Opportunity Funds (QOFs). For these critical items, the OZ Risk Register tracks and manages mitigation steps to help ensure timely resolution. This powerful technology enables Fund Managers and compliance professionals to prioritize top issues and communicate important activities and required resources.
• Central to the data ingestion for new clients, CapZone Analytics has deployed a secure compliance data room where compliance documentation is stored and cross-referenced to Fund structures, business operations, and OZ regulations. The ability to instantaneously locate and arm legal and tax professionals with information and data related to OZ issues speeds up workflows and reduces valuable time and resources needed to manage an OZ program.

CapZone Analytics, the leading national provider of compliance and risk management technology solutions for the $180 billion Opportunity Zone (OZ) market, has announced Release 1.0 of its Compliance Platform. The release marks a major stride in CapZone Analytics’ quest to help Qualified Opportunity Funds (QOFs) and their investors navigate the complex IRS and SEC compliance requirements of the OZ program.

“Our clients have asked us to keep our foot on the gas pedal, and that’s exactly what we’ve done,” said Jonathan Ewert, CEO of CapZone Analytics. “Smart QOFs are preparing for a rapidly evolving regulatory environment, where timely analysis and accurate reporting are just as important as they are in every other financial sector.”

Ewert continued, “Before rigorous transparency and impact reporting standards were in place, QOFs invested $180 billion, largely from Family Offices. With new legislation proposed recently, and a technology solution to manage the vast data and sophisticated analytics associated with the Opportunity Zone law, large corporations and capital allocators will have the confidence to make new investments in large scale infrastructure and businesses that create job growth and income growth in all 50 states and 16 U.S. territories.”

The cornerstone of the new automated reporting capability is the CapZone Report, which establishes and maintains direct linkages between OZ regulations, a QOFs portfolio company operations, and the data and documentation required to establish and maintain compliance for the full investment period. CapZone Analytics has mapped nearly 200 discrete rules for partnership investment structures alone, with each rule requiring between three and seven data points that combine to establish a compliance profile for the Fund and its investments. The platform automates the delivery of an at-a-glance view across all entities within a Fund using the most recent operational data.

“The moment we delivered the first CapZone Reports, our clients requested help identifying and prioritizing the compliance issues that surfaced,” recalled Landon Johnson, Chief Marketing Officer of CapZone Analytics.

Johnson added, “Most issues were driven by portfolio company operations and beyond the control of the Qualified Funds and their investors, who are accountable for accurate reporting to the SEC and the IRS. In response, we developed the OZ Risk Register, a tool designed for Fund Managers to prioritize compliance issues and communicate effectively to stakeholders inside and outside their organizations.”

The OZ Risk Register systematically assesses the likelihood that a risk will occur, and estimates the financial impact if it does occur, guiding Fund Managers to allocate resources wisely. “We want to help Fund Managers work better and smarter—this is a big step in that direction,” Johnson concluded.

“Technology is the only way a Fund Manager can handle this volume of financial and operational data, refreshing monthly, with any degree of accuracy and confidence,” said Mark Herschberg, Acting Chief Technology Officer of CapZone Analytics. “Release 1.0 is an important launchpad for the expansion of our platform. We have significantly scaled the number and complexity of reports for fund managers, which will help them stay ahead of the evolving regulatory landscape. Now, we can now turn our attention to enhanced analytics and automated data ingestion for client Funds and QOZBs,” Herschberg added.

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