AML Vulnerabilities in Hedge Funds

Hedge funds have rarely been on the frontline of the fight against money laundering, but scrutiny of the sector is on the rise as they feature a number of characteristics which have the potential to expose them to increased money laundering risk.

The customer base is often composed of wealthy individuals, including politically exposed persons (PEPs); shell companies and trusts are often used for investment purposes; and many hedge funds make use of complicated investment structures which may include multiple accounts in different jurisdictions, including tax havens.

Against this backdrop, hedge funds can expect ongoing scrutiny of its AML and CFT compliance. The cost of failure can be significant, in addition to punitive fines, subsequent reputational damage is particularly serious in a sector that relies on trust and confidence, while regulation in many jurisdictions makes hedge fund executives personally liable which can result in fines and even prison sentences.

To ensure your business doesn’t fall foul of any new national and international legislation and regulatory requirements, we have taken an in-depth look into the issue to help you to identify weaknesses in your existing compliance framework.

In this brand-new industry report, we examine:

• Where hedge funds may be vulnerable to AML risk
• The current regulatory environment in the UK, EU, and US
• The requirements for customer due diligence (CDD) and enhanced due diligence (EDD)
• Screening for sanctions, ultimate beneficial owners (UBOs), and politically exposed persons (PEPs)
• How to ensure compliance with AML regulations

Download this valuable compliance analysis today.