AML/KYC Compliance Now a Gatekeeper for Fundraising, New Study Reveals
Nearly nine in ten limited partners are now factoring anti-money laundering and Know Your Customer (AML/KYC) protocols into investment decisions, signaling a dramatic shift in the fundraising landscape.
A new study from CSC, a leading provider of global business administration and compliance solutions, underscores the growing importance of robust AML/KYC programs for general partners (GPs). The research indicates that compliance is no longer a back-office function, but a critical determinant of fundraising success. According to the findings, 87% of limited partners (LPs) have either declined or reconsidered fund allocations due to AML/KYC concerns.
“Fund managers who delay investing in AML/KYC risk notable disruption. Friction points that slow onboarding. If you wait until fundraising is already underway to get AML-ready,you risk losing both investors and reinvestments.”
The research highlights that LPs are proactively driving the demand for stronger AML/KYC practices. A significant 88% of LPs indicated they are more likely to invest in a manager with a formal AML/KYC program,even before such programs are mandated by regulation. This proactive stance reflects a growing awareness of the risks associated with non-compliance and a desire for greater investor protection.
Operational due diligence risks identified by LPs include inconsistent practices across different jurisdictions (82%), a lack of independent oversight (48%), and reliance on manual or paper-based compliance processes (41%).Looking ahead, nearly all LPs (97%) anticipate AML/KYC becoming a critical, central element of due diligence within the next three years.
many GPs acknowledge they are not fully prepared for the evolving regulatory landscape. Globally,fewer than half (47%) of managers feel ready for new AML/KYC rules and developments slated to take effect from 2026 onward,including the launch of the EU’s anti-Money Laundering Authority and its expanded supervisory powers over high-risk financial entities.
To address these challenges, fund managers are increasingly turning to outsourcing and technology. More than nine in ten (91%) already outsource some or all AML/KYC functions, with nearly three-quarters reporting cost savings between 10-30%. Over the next year, 83% of gps plan to expand their outsourcing efforts, while 59% expect to increase investments in AML/KYC technology.
“Outsourcing and technology have become essential for keeping AML/KYC standards consistent across jurisdictions,” added a company representative from CSC’s European Investor Services team. “with weekly sanction list updates, inconsistent local documentation practices, and varying cultural expectations, firms need teams that can balance automation with human judgment. Partnering with the right service provider not only helps reduce onboarding friction, but also brings the expertise, efficiency, and consistency that strengthen investor confidence.”
The full report, “Beyond Compliance: How AML/KYC is Redefining Investor Confidence,” is available by contacting CSC at [email protected].
About CSC
CSC is a leading provider of business administration and compliance solutions, serving choice fund managers and capital markets participants with industry-leading expertise and a global reach. The company delivers a complete suite of fund administration, trust, agency, and compliance services, supporting a wide range of private and public market transactions and complex fund strategies.
As a trusted partner to over 70% of the PEI 300 and 90% of the Fortune 500®, CSC helps clients navigate operational and transactional complexities across more than 140 jurisdictions and various asset classes. Privately held and professionally managed since 1899, CSC combines global reach, local expertise, and innovative solutions to drive client success.
CSC is “the business behind business®.” Learn more at cscglobal.com.
CSC, in partnership with Pure Profile, surveyed 200 GP and 200 LP senior fund professionals operating in Europe, the U.K., North America, and Asia Pacific to capture their views on the evolving compliance landscape. Respondents were equally split between North America, Asia Pacific, and Europe.
