Financial crime compliance in private funds is under pressure from two directions: regulation and investor scrutiny.
For UK fund managers, obligations under the Money Laundering Regulations 2017 (MLR 2017) are well established, requiring a clear framework for identifying, verifying and monitoring the individuals and entities they do business with. But in practice, it is not just about compliance anymore.
Fund investors are asking more questions. Operational due diligence now routinely covers AML and CDD processes. And reputational expectations, from Limited Partners (LPs), regulators and counterparties, are shifting. The message is clear: controls must work in practice, not just on paper.
Where AML and CDD fit in and how they differ
Anti-Money Laundering (AML) refers to the UK’s regulatory framework for detecting, preventing and reporting financial crime. Under the MLR 2017, UK AIFMs and fund service providers must carry out Customer Due Diligence (CDD) on investors, conduct ongoing monitoring, and file suspicious activity reports when appropriate.
CDD, which includes verifying identity and beneficial ownership, assessing risk levels, and ongoing screening, is one of the core controls under that framework.
In recent years, many fund managers have gone further: applying the same CDD-style assessments to deal counterparties, co-investors, JV partners and vendors. This isn’t always a regulatory requirement, but it reflects a broader risk management trend, especially in private capital where transaction complexity is high.
Two pressure points for fund managers
At Langham Hall, we consistently see two friction points for managers:
- Investor onboarding: particularly when structures involve trusts, nominees or multi-layered corporates. Meeting compliance standards without slowing capital calls requires deep familiarity with the documentation and regulatory thresholds across jurisdictions.
- Counterparty checks: increasingly expected by deal teams and investment committees. These checks must be fast, thorough and auditable, even when they fall outside formal AML scope.
In both cases, the underlying expectation is the same: can the manager demonstrate control?
What good looks like
Whether applied to investors or counterparties, a robust CDD process includes:
- Clear identification and verification of Ultimate Beneficial Owners (UBOs) or Senior Managing Officers (SMOs)
- Documented customer risk assessments
- Politically Exposed Person (PEP) and sanctions screening, with ongoing monitoring
- Adverse media checks
- Source of funds and wealth verification
- Periodic and event-driven reviews
- Escalation and governance procedures that are risk-based and consistently applied
Langham Hall’s role
Langham Hall supports fund managers across both investor AML and counterparty CDD, with services delivered entirely in-house by our specialist Financial Crime team.
Delegated investor AML
We act as a regulated delegate, providing CDD from onboarding through to periodic reviews and 24-hour rolling screening. Our process meets MLR 2017 requirements and aligns with FCA expectations under SYSC and SMCR.
Counterparty and deal-level CDD
We apply the same rigour to counterparties, helping funds assess deal and engagement risk, particularly in complex procurement or co-investment scenarios. While not always mandated, this growing practice strengthens reputational risk management and supports investor expectations.
In both cases, we work closely with our administration and depositary teams to ensure integrated controls and clear accountability.
Why it matters
AML and CDD are no longer viewed as technical compliance tasks. Increasingly, they are part of how fund managers demonstrate trustworthiness: to regulators, to investors and to counterparties.
The firms that approach this proactively are not only meeting their obligations. They are reducing friction, protecting reputation and gaining a commercial edge.
