Fund administrators, as key players in the investment lifecycle, must implement effective AML/KYC frameworks that not only meet legal obligations but also protect the integrity of the financial system. Central to any AML/KYC strategy must lie a strong commitment to client and business protection through procedural, risk-based practices that align with the latest global regulatory standards.
Risk-Based Approach
A risk-based approach is foundational to effective AML/KYC. This principle ensures that the level of scrutiny applied to a client is proportionate to the risk they pose. Higher-risk clients warrant enhanced due diligence, while lower-risk clients may be subject to simplified procedures. This approach allows for efficient resource allocation and more targeted risk mitigation measures.
Comprehensive Customer Information
Collecting detailed and accurate customer information is critical. This includes identity verification, beneficial ownership details, source of funds, and the nature of the client’s business, among others. Comprehensive data enables accurate risk profiling and supports ongoing due diligence.
Reliable Data Sources
The use of independent, reputable data sources enhances the reliability of customer screening. These sources include government registries, international sanctions lists, and adverse media databases. Leveraging such data helps identify potential red flags early in the client lifecycle.
Technology Integration
Technology plays a vital role in modern AML/KYC programs. Automated screening tools, digital onboarding platforms, and machine learning algorithms can streamline compliance processes, reduce human error, and improve detection of suspicious activity. Nowadays, it is impossible to keep up an adequate level of screening without the use of technology.
Ongoing Monitoring and Reviews
AML/KYC is not a one-time event. Continuous monitoring of client transactions and periodic reviews of customer profiles are essential to detect changes in behaviour or risk status. This dynamic approach ensures that risk assessments remain current and relevant.
Regulatory Compliance
Staying aligned with evolving regulatory requirements is non-negotiable. Fund administrators must monitor updates from global and local regulatory bodies and adjust their policies and procedures accordingly. This includes adhering to guidelines from the Financial Action Task Force (FATF), EU AML directives, and jurisdiction-specific rules.
Training and Awareness
Regular training ensures that staff remain informed about emerging risks, regulatory changes, and internal procedures. A well-informed team is better equipped to identify and respond to potential compliance issues.
Data Protection
Given the sensitive nature of AML/KYC data, stringent data protection measures are essential. This includes secure data storage, encryption, access controls, and compliance with data privacy regulations such as the GDPR. Protecting client data is both a legal obligation and a trust imperative.
How We Can Help
As a dedicated fund administrator, we apply these best practices to deliver secure, compliant, and efficient services to our clients:
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: Our platforms, tailored to asset class, including Goji, Allvue, Advent Geneva, and PFS Paxus, feature automated screening, digital onboarding, and secure data management to enhance compliance and efficiency.
By embedding these principles into our operations, we not only meet regulatory expectations but go above and beyond to ensure the protection of our clients and uphold the integrity of our industry.
For more information on our regulatory services, please reach out to Jesmar Ciappara, Senior Manager - Regulatory, Malta, Dan Smith, President, US Fund Services, Atlanta, or Dave van Duynhoven, Head of Funds, Cayman.