AML software for fund managers and private equity

• Investors behind vehicles: commitments arrive through feeders, nominees, trusts and family offices, so the investor to know is often not the name on the subscription document.
• Source of wealth: large commitments call for an understanding of how the investor's wealth was built, not only where this transfer came from.
• Politically exposed investors: PEPs and their families and associates invest in funds, and need enhanced due diligence rather than refusal.
• Multiple closes: a fund that closes in stages has several moments when the world has changed since the last check.
• Portfolio acquisitions: buying a company means taking on its shareholders, directors and counterparties.
• Shared responsibility: managers, administrators and placement agents may each perform part of the checks, so the evidence has to be held in one place.

1. 1

   Onboard investors

   Customer due diligence on each investor, and for legal persons and arrangements, identification of beneficial owners and controllers.

2. 2

   Screen before acceptance

   Sanctions, PEP and adverse media screening of investors, their controllers and authorised signatories before a subscription is accepted.

3. 3

   Apply enhanced due diligence

   Source of wealth and source of funds checks, and senior approval, for PEPs and other higher-risk investors.

4. 4

   Screen targets and counterparties

   Sanctions and ownership checks on portfolio companies, co-investors and sellers before a deal completes.

5. 5

   Re-screen and record

   Re-screening investors when lists change and at each close or distribution, and keeping the evidence of every check.

The FATF Recommendations treat individual and collective portfolio management as financial activity, so customer due diligence (Recommendation 10) and PEP measures (Recommendation 12) apply to fund managers. Recommendation 17 allows reliance on third parties such as administrators for some due diligence, but the ultimate responsibility stays with the firm that relies on them.

In the UK, fund managers and other investment firms are within the Money Laundering Regulations 2017 and are supervised by the FCA. In the EU, investment firms and collective investment undertakings marketing their units are obliged entities under the EU anti-money laundering framework. Rules for investment advisers and private funds differ widely between jurisdictions, so a manager should confirm which regime applies to each fund and vehicle. Sanctions apply to every investor and every deal regardless.

• Ownership checks: a company lookup that reaches the owners behind an investing vehicle or a target, and screens them.
• PEP coverage that reaches family and associates: a sensitive commitment often arrives in a relative's or associate's name.
• Batch screening: the whole investor register screened at each close, without rebuilding the diligence.
• Ongoing monitoring: investors re-screened when lists change, with alerts only on changes.
• Explainable matches: each alert shows the list and record that matched, so investor relations is not held up by namesakes.
• One evidence trail: a record of what was checked and when that both manager and administrator can rely on.