Asset managers are under growing pressure to ensure compliance with Anti-Money Laundering (AML) and Know Your Client (KYC) regulations. These processes are essential not only for thwarting financial crimes but also for meeting mandatory regulatory standards. Yet, the global outreach of fund distribution presents a hurdle: AML/KYC compliance often becomes disjointed, inconsistent, and inefficient.
A significant issue with AML/KYC compliance is the repetitive work required across different jurisdictions. Investors often find themselves submitting the same documents on multiple occasions to satisfy various regional regulatory standards, leading to frustration and inefficiencies. The absence of a cohesive data strategy only makes matters worse, creating slowdowns in onboarding new clients and driving up operational expenses.
Transfer agencies are pivotal in ensuring AML and KYC compliance. Acting as the connecting link between asset managers and investors, these agencies are tasked with verifying investor documents, conducting due diligence, and scanning for money laundering threats. When the transfer agency system is well-integrated, it helps streamline AML/KYC processes and cuts down on redundancy and inefficiency. Asset managers that partner with a single global provider can reap benefits such as standardized procedures, better data management, and a reduction in compliance risks.
Outsourcing these processes to a global provider armed with advanced technology and a solid data strategy can be a game-changer for asset managers aiming to simplify compliance while trimming costs and lowering operational risks. By tapping into outsourcing, asset managers can enjoy centralized data management, risk reduction, scalability, and enhanced experiences for investors.
A particularly effective outsourcing model is the lift-out strategy. This involves a third-party provider taking charge of an asset manager’s internal compliance team and operations. Such a strategy can significantly reduce employment costs, improve service quality through specialization, and allow asset managers to benefit from the provider’s cutting-edge technology and regulatory expertise. Lift-outs also help alleviate the constraints of outdated technology and ensure that compliance processes stay current.
As the web of regulatory requirements becomes more tangled, asset managers need to adopt more efficient strategies for AML/KYC compliance. Outsourcing to a global provider offers a practical remedy to challenges like the ongoing need for investor recertification, ensuring compliance, reducing operational strain, and boosting investor confidence. By leveraging integrated data management, automation, and industry best practices, asset managers can concentrate on their core investment tasks while upholding strong compliance standards.
For further insight into how outsourcing can optimize AML and KYC processes, check out our “Thinking Local, Winning Global” whitepaper.
