Overview

AML Foundations refer to the core principles and compliance requirements that investment funds must implement to prevent money laundering and terrorist financing. These basics stem from global standards like the EU AML Directives, the Bank Secrecy Act (BSA) and Financial Action Task Force (FATF) guidelines, tailored for funds handling investor capital.

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Key Components

Investment funds establish AML programs including customer identification (CIP), beneficial ownership verification, and ongoing transaction monitoring. They appoint an AML officer, conduct risk assessments, and file suspicious activity reports (SARs) for unusual patterns like large unexplained transfers.

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•  Customer Due Diligence (CDD): Verify investor identities, sources of funds, and ultimate beneficial owners to block illicit entry.

• Transaction Monitoring: Flag layering tactics, such as rapid fund movements across accounts or borders.

•  Reporting Obligations: Submit Currency Transaction Reports (CTRs) for large cash dealings and SARs for suspected crimes

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Fund-Specific Risks

Funds face heightened risks from private equity, hedge strategies, or alternative investments that may involve complex structures prone to abuse, like shell entities. Enhanced due diligence applies to high-risk investors, such as politically exposed persons (PEPs).

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