87% of Institutional Investors Have Declined or Reconsidered Fund Commitments Due to AML/KYC Concerns

Nearly nine-in-10 (87%) limited partners (LPs) have declined or reconsidered a fund allocation due to anti-money laundering and Know Your Customer (AML/KYC) concerns, underscoring just how significant compliance has become as a gatekeeping item for fundraising.

According to a new study by CSC, the leading provider of global business administration and compliance solutions, general partners (GPs) are already feeling the strain. Almost two-thirds (63%) report losing investors or reinvestments due to AML/KYC shortcomings, most commonly from documentation gaps (61%) and onboarding delays (24%).

CSC surveyed 200 GPs and 200 LPs across North America, Europe, the U.K., and Asia Pacific to capture views on the evolving compliance landscape.¹ The findings are detailed in CSC’s report, “Beyond Compliance: How AML/KYC is Redefining Investor Confidence.”

The study found that LPs are setting the pace when it comes to AML/KYC. 88% said they’re more likely to invest in a manager with a formal AML/KYC program, even before regulations mandate it.

Top operational due diligence risks cited by LPs include inconsistent practices across jurisdictions (82%), lack of independent oversight (48%), and reliance on manual or paper-based compliance (41%). Nearly all LPs (97%) expect AML/KYC to become a critical, central element of due diligence within three years.

“AML has evolved from a back-office compliance task to a front-line determinant of fundraising success,” says Chalene Francis, senior executive director and head of Fund Services, North America at CSC. “LPs have options, and they’re backing managers who treat compliance as non-negotiable. Managers must prepare early and work closely with service providers to avoid the friction points that slow onboarding. If you wait until fundraising is already underway to get AML-ready, you risk losing both investors and reinvestments.”

With significant AML and KYC regulatory changes underway globally, many GPs acknowledge they’re not fully prepared. Globally, fewer than half (47%) of managers feel ready for new AML/KYC rules and developments taking effect from 2026 onward, for instance, including the launch of the EU’s Anti-Money Laundering Authority that will assume direct supervisory powers over high-risk financial entities.

To close the gap, fund managers are leaning on outsourcing and technology. More than nine in 10 (91%) already outsource some or all AML/KYC functions, with nearly three-quarters reporting cost savings of between 10-30%. Over the next year, 83% of GPs plan to expand outsourcing while 59% expect to increase technology investments.

“Outsourcing and technology have become essential for keeping AML/KYC standards consistent across jurisdictions,” adds Laettitia Vika, head of Investor Services, Europe at CSC. “With weekly sanction list updates, inconsistent local documentation practices, and varying cultural expectations, firms need teams that can balance automation with human judgment. Partnering with the right service provider not only helps reduce onboarding friction, but also brings the expertise, efficiency, and consistency that strengthen investor confidence.”

To receive a copy of CSC’s report, “Beyond Compliance: How AML/KYC is Redefining Investor Confidence,” contact us at [email protected].

About CSC

CSC is the leading provider of business administration and compliance solutions, offering industry-leading expertise and unmatched global reach to alternative fund managers and capital markets participants. Leveraging deep institutional experience and a tailored approach, CSC delivers a comprehensive suite of fund administration, trust, agency, and compliance services to support a wide range of private and public market transactions, complex fund strategies, and scalable operations.

As the trusted partner of choice for more than 70% of the PEI 300 and 90% of the Fortune 500^®, CSC helps clients navigate operational and transactional complexities across more than 140 jurisdictions and various asset classes. With extensive worldwide capabilities, our expert teams provide solutions tailored to each client’s needs. Privately held and professionally managed since 1899, we combine global reach, local expertise, and innovative solutions to help our clients succeed.

We are the business behind business^®. Learn more at cscglobal.com.

¹CSC, in partnership with Pure Profile, surveyed 200 GP and 200 LP senior fund professionals operating in Europe, the U.K., North America, and Asia Pacific to capture their views on the evolving compliance landscape. Respondents were equally split between North America, Asia Pacific, and Europe.

View source version on businesswire.com: https://www.businesswire.com/news/home/20251117227240/en/

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