A new study by CSC reveals that 87% of limited partners (LPs) have rejected or reconsidered capital commitments due to compliance concerns, making AML/KYC processes a decisive investment filter.
In parallel, 63% of general partners (GPs) report having lost investors or reinvestments because of documentation issues, process failures, or onboarding delays.
The survey—conducted among 200 GPs and 200 LPs across North America, Europe, the United Kingdom, and Asia-Pacific—shows that LPs are raising the bar even before regulations require it. 88% prefer managers with formal AML/KYC programs, and 97% believe compliance will be a central element of due diligence within the next three years.
Inconsistencies across jurisdictions, lack of independent oversight, and manual processes remain the greatest operational risks. As a result, GPs are accelerating the adoption of outsourced solutions: 91% already outsource part or all of the process, and most report cost savings of 10% to 30%. Additionally, 59% plan to increase technology investment over the next year.
“AML has gone from an administrative task to a key driver of fundraising success,” said Chalene Francis, Executive Director of Fund Services in North America.
With global regulatory changes underway and only 47% of managers feeling prepared, the urgency to standardize and modernize AML/KYC processes is only expected to grow.
