KYC / AML
KYC/AML are regulatory processes that verify investor identity and prevent money laundering, protecting funds and ensuring compliance.
What Is KYC / AML?
KYC (Know Your Customer) and AML (Anti-Money Laundering) are regulatory processes designed to prevent financial crimes such as money laundering, terrorist financing, and fraud. KYC focuses on verifying the identity of investors and understanding their financial activities, while AML encompasses the broader framework of policies, controls, and monitoring to detect and prevent illicit transactions. Together, these processes are essential for maintaining the integrity of the financial system and ensuring compliance with global and local regulations.
How Does KYC / AML Work?
The KYC process involves collecting and verifying personal and business information from investors, such as name, date of birth, address, and identification documents. This may include enhanced due diligence for higher-risk clients, screening against international sanctions lists, and identifying beneficial owners. AML procedures go further by implementing transaction monitoring systems, ongoing customer reviews, and reporting suspicious activities to authorities. These steps are not just one-time checks, they are continuous processes that help financial institutions and funds detect and address potential risks over time.
Why Are KYC / AML Important for Funds and Investors?
KYC/AML processes are critical because they:
Protect funds and investors from being involved in or exposed to financial crime
Ensure compliance with legal and regulatory requirements, reducing the risk of fines or sanctions
Build trust with allocators, fund managers, and regulators by demonstrating a commitment to transparency and ethical conduct
Support operational due diligence and risk management, especially in complex fund structures
Example: KYC / AML in Practice
When onboarding a new allocator, a fund manager collects identification documents, verifies the source of funds, and screens the investor against global sanctions and watchlists. The fund’s custodian oversees these checks, ensures compliance, and monitors ongoing transactions for suspicious activity. If anything unusual is detected, the fund follows internal AML procedures to investigate and, if necessary, report to regulatory authorities.
When Should You Use KYC / AML?
KYC/AML procedures are essential:
During the onboarding of new investors, allocators, or managers
When conducting operational due diligence or compliance reviews
For ongoing monitoring of transactions and client relationships
Whenever required by law, regulation, or internal risk management policies
Schedule an introductory call