The FCA’s New AML Questionnaire for Asset Managers

1. Private Markets & Complex Structures Focus

There is a visible increased interest in the complexity of private market structures e.g.:

• Exposure to illiquid assets, alternatives, and private deals

• Use of SPVs, LPs, trusts, feeder funds and other multi-layered entities

• Non-UK structures and jurisdictions associated with opacity

• Distribution chains involving offshore intermediaries

• How firms verify ownership in multi-layered structures

2. Automated, Consistent Risk-Tiering

The FCA’s engagement has focused on manual-risk rating:

• Whether firms rely on automated, rule-based Client Risk Assessment (CRA) models

• Whether scoring is consistent across teams

• Whether qualitative or manual scoring introduces discretion

• How the methodology connects to monitoring, EDD, product approval and escalation

3. Portfolio-Level AML Risks

Historically, AML obligations for asset managers centred primarily on investor onboarding. Now, supervisors are increasingly examining portfolios:

• Whether firms monitor risks inside the portfolio

• Whether firms can identify suspicious patterns in investment flows

• How firms manage onboarding for entities that they invest into

4. Scrutiny on Outsourced Onboarding

Several firms have reported supervisory emphasis on outsourced KYC (e.g. to fund admins, transfer agents) namely:

• Whether onboarding performed by third parties is properly overseen

• Whether information from distributors, introducers or intermediaries is timely and complete

• Whether the regulated firm can evidence that it owns the risk

• Whether the firm itself assesses the quality of documents and controls.

5. Real-Time Screening & Monitoring

Market feedback shows more questions around how effective your screening is e.g.:

• Frequency and automation of sanctions/PEP/media screening

• The use of alerts, thresholds and false-positive filters

• Trend analysis, MI dashboards and escalation workflows

• Whether firms rely on batch screening vs real-time tools

Themes in Risk-Assessment Findings Across the Industry

The FCA has shared general feedback this year on how firms approach Business Wide Risk Assessments (BWRA) and CRAs. The observations are broad and apply across all financial services, but asset managers have particularly relevant exposure. What can we learn from the feedback:

• Carry out an internal audit / Review of your AML processes against the FCA’s asks - don’t forget to document it.

• Carry our Sample Tests of your / your outsourced providers’ onboarding files.

• Invest in Automated risk-scoring and screening systems that can augment your processes.

• Check your Business Wide Risk Assessment - is it up-to-date?

• Check your Data - how easy is it to get from your fund admin/service provider? Can you run quick reports to assess risk levels?

• Don’t be the poster child of an AML fine!