AML and KYC Obligations (Finally) Imposed on Private Fund Managers

Introduction

The Financial Action Task Force (FATF) has finally imposed Anti-Money Laundering (AML) and Know Your Customer (KYC) obligations on private fund managers.

This is a significant development in the fight against financial crime, as private fund managers have historically been exempt from these requirements.

The new regulations will require private fund managers to implement a number of measures to prevent money laundering and terrorist financing, including:

• Conducting customer due diligence
• Maintaining records of transactions
• Reporting suspicious activity
• Training employees on AML/KYC requirements

The Benefits of AML/KYC Compliance

There are a number of benefits to AML/KYC compliance for private fund managers, including:

• Reduced risk of financial crime
• Improved reputation
• Increased investor confidence
• Access to new markets

How to Implement AML/KYC Compliance

Private fund managers can implement AML/KYC compliance by following these steps:

1. Develop an AML/KYC policy

The policy should outline the firm's AML/KYC procedures and responsibilities.

2. Conduct customer due diligence

Private fund managers must conduct customer due diligence on all new and existing customers.

This involves collecting and verifying information about the customer's identity, source of funds, and investment objectives.

3. Maintain records of transactions

Private fund managers must maintain records of all transactions for at least five years.

These records should include the date and amount of the transaction, the parties involved, and the purpose of the transaction.

4. Report suspicious activity

Private fund managers must report any suspicious activity to the relevant authorities.

Suspicious activity includes any transaction that is inconsistent with the customer's known profile or that is indicative of money laundering or terrorist financing.

5. Train employees on AML/KYC requirements

Private fund managers must train employees on AML/KYC requirements.

This training should cover the firm's AML/KYC policy, procedures, and responsibilities.

Conclusion

The imposition of AML/KYC obligations on private fund managers is a significant development in the fight against financial crime.

Private fund managers can benefit from AML/KYC compliance by reducing their risk of financial crime, improving their reputation, and increasing investor confidence.

Private fund managers can implement AML/KYC compliance by following the steps outlined in this article.