During the recent Projective Group Insights: the Evolution of Asset Management event, Floor Coomans-Piscaer and Sanel Sunje shared their views on how fund managers can practically comply as effectively as possible with the requirements of the Money Laundering and Terrorist Financing (Prevention) Act (Wwft). Their message struck a chord: nearly every manager in the room recognises the complexity of the regulations, their practical application and the sometimes intangible open standards. At the same time, expectations around professionalism are rising faster than ever.
Many managers associate the term “client” mainly with their investors. In practice, the definition is considerably broader. When a fund invests in real estate, private equity or other businesses, the underlying parties also come into scope, including tenants, service providers and other relevant stakeholders. This wider scope is often misinterpreted in practice.
This is also evident in real estate funds. Tenants are usually not enthusiastic about sharing their identification data, yet they do fall within the legal definition of a client. Supervisors therefore expect managers to document carefully which efforts they have made to identify and verify these parties. Even when full identification ultimately proves unfeasible, documenting and recording the efforts made remains crucial.
The flexibility offered by the law is both an opportunity and a source of uncertainty. The risk-based approach allows managers to apply proportionality, but that same freedom often feels like an open-ended space that the supervisor may interpret differently.
It is therefore important to keep in mind that it is not only about finding the perfect solution, but also about the process. Which risks have you identified, which decisions have you taken, and why are these choices appropriate for your organisational profile? Without substantiation, a measure is merely an opinion. With substantiation, it becomes policy that is both reproducible and defensible.
Coherence is often a challenge. Many organisations implement a SIRA or Wwft risk assessment because it is required. The risk scenarios and corresponding control measures are not always reflected in the policies, procedures or client files. This is a missed opportunity to design the framework, based on the organisation’s business profile, in a way that genuinely aligns with its operations. In practice, this lack of coherence undermines both the effectiveness and efficiency of client due diligence.
During the seminar, several essential points of attention were emphasised:
Many fund managers outsource tasks such as identification, verification or document preparation. This is permitted under both the current rules and the forthcoming European AML Regulation. One element, however, remains exclusively with the manager: the actual acceptance of clients and the assessment of risks.
External parties may collect information, but the manager is responsible for decision-making. This also applies to transaction monitoring: signals may originate externally, but interpreting and deciding on them remains a managerial responsibility.
The forthcoming AML Regulation will bring significant changes. The rules will become clearer, but certainly not easier.
Uniform guidelines will be introduced. This will help reduce differences between European countries, but it also means that managers will need to redesign their policies accordingly.
The advice is to start in good time. New clients and new funds must be assessed under the new rules by 2027, while existing structures will be subject to a five-year transition period.
Whether dealing with reluctant tenants, complex foreign structures, unexpected transactions or unusual risk assessments, analysis and documentation are essential.
Those who can demonstrate how their decisions were made are in a strong position with the AFM or DNB. Those who cannot will be left empty-handed.
