FCA Review of Asset Managers and Private Markets: AML Findings (2026)

In July 2026 the Financial Conduct Authority published the results of a review of anti-money laundering controls at asset management and alternative investment firms. The message from the regulator was blunt: private markets carry higher inherent money laundering risk, and a significant share of firms had not put basic controls in place. This guide summarises what law firm and consultancy commentary reports about the review, what the weak points were and what fund managers, their administrators and the accountants who advise them should do. The detail below comes from secondary summaries rather than the FCA's own publication, so check the original before quoting a figure.

What the FCA looked at

According to Greenberg Traurig's summary, which gives a publication date of 22 July 2026, the FCA gathered financial crime control data from 242 asset management and alternatives firms. A Debevoise commentary describes the sample as 242 of around 2,500 regulated firms in the sector, with interviews of senior staff from a cross-section of firms, and says the review focused on anti-money laundering and on alternative investment firms such as private equity and hedge funds. RSM adds that the work drew on a sector-wide questionnaire, firms' financial crime returns and interviews. The review builds on the FCA's February 2025 portfolio letter to the sector, which named financial crime as a supervisory priority, and the Greenberg Traurig note says the FCA will use the questionnaire data to target future supervision.

Why private markets are higher risk

Commentators agree on the headline: private markets firms face higher inherent risk because of complex ownership structures, politically exposed persons and overseas customers requiring international fund transfers. Greenberg Traurig reports figures from the questionnaire:

• About one-fifth of private markets firms said that more than 30% of their customers used complex ownership structures, while 85% of other firms reported none.
• 32% of private markets firms reported politically exposed persons among their customers, compared with 9% of other firms.
• Half of the surveyed firms said more than 60% of their customers were domiciled overseas.

Those numbers explain why the sector's weak spots matter. A fund with offshore investors and layered holding vehicles is exactly the sort of customer base where verifying beneficial owners and understanding source of wealth takes real work. Our guide to private banking and wealth management KYC covers the source of wealth techniques in more depth.

Where firms fell short

Debevoise reports that a significant proportion of firms had not implemented at least one standard element of an AML framework. It lists business-wide risk assessments, customer risk assessments, verification of ultimate beneficial owners, oversight of outsourced customer due diligence, source of wealth verification for high-risk customers and transaction monitoring. Greenberg Traurig gives further percentages:

• Business-wide risk assessment. Just over one-fifth of firms had not completed one or had only partly completed it, and 18% of private markets firms did not specifically address private markets risks. RSM also reports that over 20% of firms had no complete assessment.
• Customer due diligence. 18% of firms had no formal customer risk assessment methodology, and some did not risk-rate customers or verify beneficial owners in multi-layered or offshore structures.
• Outsourcing. About 40% of firms outsourced part of their financial crime compliance, and only 36% of those had full oversight of the third party's AML onboarding.
• Monitoring. 29% of firms had no formal transaction monitoring process and 7% had no systematic monitoring of customers after onboarding.
• Screening. 7% of firms did not carry out repeat screening.
• Governance. Just over a third discussed AML regularly at governance forums, half had made no remediation or systems investment in the previous 24 months and 18% had no formal quality assurance process.
• Money laundering reporting officers. Some may not have been trained on their specific legal obligations, and they need sufficient time and resources.

Debevoise also reports that even where firms thought they had controls, these were often poorly implemented, and that the FCA wants formal, documented processes that fit the business and are reviewed regularly. Our guide to the firm-wide AML risk assessment shows how to build the document most firms were missing.

The administrator question

Many fund managers use administrators or other third parties for investor onboarding. Greenberg Traurig's takeaway is that the location of the administrator does not remove the UK firm's responsibility, and it recommends written administrator agreements that allocate UK compliance responsibilities, give access to due diligence files and allow risk-based spot checks. That matches the general principle explained in our guide to reliance on third parties for customer due diligence: you can delegate the task but not the responsibility.

What the commentary says firms should do

• Confirm which investors, beneficial owners and entities need review under the Money Laundering Regulations 2017 and the industry guidance.
• Apply UK-standard checks to assets acquired from overseas counterparties, not just local standards.
• Keep due diligence current through risk-based review cycles and trigger events, and repeat politically exposed person, sanctions and adverse media screening.
• Update the business-wide risk assessment to cover complex ownership, higher-risk investors and international flows.
• Adopt a documented customer risk rating methodology and verify beneficial owners in complex structures.
• Run periodic quality assurance reviews, give role-specific training and record the firm's review of the findings, including gaps and remediation decisions.

Debevoise advises senior managers to expect more supervisory attention and possible enforcement. For boards, RSM recommends clear oversight of financial crime risk, evidence-based challenge of management information and a structured process for testing whether controls work.

Why this matters for accountants

If you audit a fund, act for a management company or prepare investor reporting, you are close to the area the FCA is probing. Ask the client whether it has completed its business-wide risk assessment, whether customer risk ratings are documented and whether the administrator's work is overseen. If you are a fund administrator yourself, expect your clients to ask for evidence. And remember the wider context: HM Treasury and the FCA are also reshaping who supervises accountants, as the government's plan for the FCA to become the single AML supervisor shows.

Frequently asked questions

Did the FCA publish enforcement action?

The reports we reviewed describe a data-gathering review rather than enforcement, though commentators expect more supervisory attention.

Does this apply to all asset managers?

The review covered 242 firms and focused on private markets and alternatives, but the FCA's expectations on risk assessments and customer due diligence apply across regulated firms.

Are the percentages official?

They are reported by law firms and consultancies. Check the FCA publication before quoting them.

Where can I get training on AML and financial crime?

See Learnsignal's CPD courses for finance professionals.