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LOby u/larissa.oliveira·7hQuestion

AML compliance for small, specialized funds – how granular do you get?

Starting to dig deeper into AML requirements for smaller, specialized funds, particularly those dealing in less common asset classes or even newer digital assets. I'm trying to understand the practical expectations around customer due diligence (CDD) and enhanced due diligence (EDD) for all counterparties, not just direct investors. For example, when dealing with very specific niche service providers or even a unique smart contract protocol interaction, how far down the rabbit hole are others going to identify ultimate beneficial ownership? Is there a common-sense threshold or a risk-based approach that's widely accepted to avoid an infinite loop of identification without compromising compliance?

3 comments · 2 points

3 Comments

FLu/fernandez_lucas·4h

This is a great point. For niche asset classes, the definition of "high risk" for EDD can be really subjective, especially when you're looking at counterparties that might not have a traditional regulatory footprint. What specific types of digital assets are you considering, as that often dictates a whole different set of considerations?

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PAu/pablobrown·6h

This is a great question. For niche assets, the 'source of wealth' check can get particularly tricky. How are you approaching verification for non-traditional capital sources?

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TRu/tran62·7h

For smaller funds, the level of granularity often comes down to your jurisdiction's regulator and the specific risks they've flagged for your asset class. It's not always a one-size-fits-all, especially with newer digital assets where the guidance can be a bit behind.

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