WILMINGTON, DE — Anti-money laundering and Know Your Customer compliance has become a defining factor in global fundraising, with a new CSC study showing investors are increasingly walking away from managers who fall short of rising standards.
According to the report, 87% of limited partners have declined or reconsidered a fund allocation due to AML/KYC concerns, illustrating how central compliance has become to operational due diligence. The pressure is already being felt by managers: 63% of general partners say they have lost investors or reinvestments because of AML/KYC shortcomings, most often due to documentation gaps or delays during onboarding.
The findings are based on a survey of 200 GPs and 200 LPs across North America, Europe, the U.K., and Asia Pacific for CSC’s new publication, Beyond Compliance: How AML/KYC is Redefining Investor Confidence.
LPs are taking a proactive stance. Eighty-eight percent said they are more likely to invest with managers that have formal AML/KYC programs in place — even where regulations do not yet require them. Nearly all respondents, 97%, expect AML/KYC to become a central pillar of due diligence within three years.
Chalene Francis, senior executive director and head of fund services for North America at CSC, said compliance has shifted from a background function to a key determinant of fundraising success. She emphasized that managers who wait until capital raising begins to address AML gaps risk losing both new investors and existing relationships.
The study highlights several operational risks flagged by LPs, including inconsistent practices across jurisdictions, lack of independent oversight, and heavy reliance on manual compliance. With major regulatory changes coming in 2026 — including the EU’s new Anti-Money Laundering Authority — fewer than half of managers globally say they are prepared.
To keep pace, firms are increasingly turning to outsourcing and technology. Ninety-one percent already outsource some or all AML/KYC functions, and nearly three-quarters report cost savings of 10–30% as a result. Over the next year, most managers plan to expand outsourcing and ramp up tech investments.
Laettitia Vika, head of investor services for Europe at CSC, said the complexity of global sanctions updates and local documentation rules makes specialized support essential. She noted that combining automation with expert oversight helps reduce onboarding delays while improving consistency — a key driver of investor confidence.
The study’s conclusions point to a broader shift: AML/KYC is no longer a regulatory checkbox. It is becoming a frontline competitiveness issue for fund managers, influencing capital flow, investor trust, and long-term fundraising performance.
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