Generally Accepted Principles And Practices (GAPP)

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Updated February 28, 2023
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Definition of Generally Accepted Principles And Practices (GAPP)

The generally accepted principles and practices (GAPP), which are also known as the Santiago principles, are standardized business procedures related to the operation of sovereign wealth funds (SWFs), which have agreed to pursue financial rather than political agendas and maintain a stable global financial system.

Understanding Generally Accepted Principles And Practices (GAPP)

The generally accepted principles and practices (GAPP), were agreed upon by the International Working Group of the Sovereign Wealth Funds (IWG)—23 countries with SWFs—in October 2008. In response to the concern of investors and regulators about the inadequate transparency, independence, and governance of the industry, the IWG resolved that SWFs demonstrate that their arrangements are properly set up and investments are made on an economic and financial basis—instead of pursuing political agendas.

GAPP is underpinned by the following guiding objectives for SWFs, defined as "special purpose investment funds or arrangements, owned by the general government":

  1. To help maintain a stable global financial system and free flow of capital and investment;
  2. To comply with all applicable regulatory and disclosure requirements in the countries in which they invest;
  3. To invest on the basis of economic and financial risk and return-related considerations; and
  4. To have in place a transparent and sound governance structure that provides for adequate operational controls, risk management, and accountability."

The 24 voluntary Santiago Principles simply provide a framework for these guiding principles in three key areas: legal, institutional, and investment and risk. The principles are maintained and promoted by the International Forum of Sovereign Wealth Funds (IFSWF), whose members voluntarily endorse the principles and seek to implement them in their governance and investment practices. As of 2021, the forum represented more than 30 sovereign wealth funds from all corners of the globe.

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  1. International Working Group of Sovereign Wealth Funds. "Sovereign Wealth Funds: Generally Accepted Principles and Practices," Pages 4 and 27. Accessed March 18, 2021.

  2. International Working Group of Sovereign Wealth Funds. "Sovereign Wealth Funds: Generally Accepted Principles and Practices," Pages 7-9. Accessed March 24, 2021.