Alternative fund managers are concerned about the growing threat they face from money laundering risks and their organisation’s focus on anti-money laundering (AML) management is set to increase over the next 24 months, according to new research from Ocorian, a provider of regulation and compliance services for funds, corporates, capital markets and private clients.
The international study, carried out among senior leaders and senior compliance and risk executives at alternative fund manager firms, including hedge and private equity funds, which collectively manage around $132.25bn AUM, found that almost three quarters (73%) have seen the level of AML risks increase over the past two years. Of these, 16% have witnessed a dramatic increase. Around 20% say the risks have stayed the same and only 7% say they have decreased.
Despite almost all (99%) saying senior management and the board already taking AML management seriously, almost three quarters (70%) admit that their organisation has been subject to AML fines or sanctions in the last two years. Some 4% meanwhile admit they have received an information request or visit from the regulator in the last two years.
In response to these growing risks and the current level of fines they are already facing, almost nine in ten (87%) say that their organisation’s focus on AML management will increase over the next 24 months. Of these, almost a quarter (24%) say it will increase dramatically. Only 12% say it will stay the same.
More positively, Ocorian’s study found that the majority (93%) of respondents feel their staff receive adequate training to mitigate AML, although there are still 6% who don’t feel the training is adequate.
Alternative fund managers are looking at other ways in which they can improve their AML defences in a cost-effective way and around 94% have considered using an AML software solution to streamline their internal processes to increase efficiencies.
Joe French, Managing Director and Head of Financial Crime at Ocorian, said: “Almost three quarters of alternative fund managers interviewed for our survey have already been subject to AML fines or sanctions and despite the general consensus that firms are taking anti-money laundering seriously, the level of AML risks is only expected to increase.”
