‘Know Your Assets’ for Due Diligence Best Practice

By conducting KYA, managers can mitigate certain unseen risks for the fund such as owning a company or dealing with a counterparty known to engage in illicit activities.  Through KYA, managers can enhance their investment screening process thereby reducing risk for the fund and its investors.

External Expertise for Funds

For funds, it is important to discharge KYA obligations prior to making an investment and ensure that due diligence has been performed appropriately.  Frequently, managers and funds are seeking assistance with KYA with the desire to engage external capability and resources that can support the process to the highest standards.  In some cases, managers and funds are seeking assistance to comply with regulatory requirements (e.g. CSSF Regulation 12-02 Article 34 (2) in Luxembourg or the Anti-Money Laundering Regulations in the Cayman Islands) while in other instances, managers and funds are seeking to leverage additional expertise and technology to supplement their existing internal processes.

The Maples Group has significant experience and expertise in performing due diligence on various entities including helping funds to comply with various anti-money laundering regulations.  Through our Know Your Customer (“KYC”) and due diligence / compliance Centre of Excellence established in our offices in Montreal, Canada, our team has performed KYC and due diligence / compliance checks on more than 50,000 unique investors.  Going beyond KYC, the Maples Group has extended its services to perform KYA.

This includes assisting in the performance of certain due diligence on the portfolio investments in a private fund as well as any parties related to those investments to ‘agreed-upon standards’ by reviewing the corporate documents and performing KYC on an Ultimate Beneficial Owner (“UBO”).  Due diligence is also performed on the controlling parties, with enhanced due diligence on any individuals and / or entities with high-risk triggers.  In addition, a one-time scrub is performed against international sanctions and watch lists.

With decades of experience and accumulated knowledge in KYC and due diligence / compliance, the Maples Group can leverage a large team – with over 70 resources at our Centre of Excellence dedicated to this specialisation – to ensure managers and funds get the greatest support.  We employ industry leading screening software, connected to over 100 lists, including adverse media, terrorism and proliferation financing, PEPs and PEP association verification.  Utilising sound due diligence methodology, the service is also customisable to meet an investment manager’s specific requirements.

Unmatched Technology Solutions

The Know Your Assets service for managers is an extension of the Maples Group’s global compliance services and built around our award-winning, proprietary technology solution – Alpha, which facilitates due diligence on a broad range of entity types, from individuals to corporations, partnerships, LLCs, trusts and foundations.  The dynamic workflow is tailored to adapt between different entities and individuals and data requirements change depending upon the risk classification, with additional checks required for high-risk entities.

The system was specifically developed in-house by our technology team, to overcome the familiar limitations of generic KYC solutions.  This was achieved through design input from our key stakeholders, with our regulatory experts from our global law firm and the Maples professionals who act as AML officers to funds on a daily basis, to ensure it meets best practice.

The Maples Group – Know Your Assets

For both investment managers and investors, a KYA solution which can identify certain red flags on portfolio investments as part of an overall risk management framework can provide comfort that operating procedures are helping to safeguard investor assets and complying with requisite regulatory requirements.  If you have any questions about due diligence for funds on assets and the benefits of the Maples Group’s ‘Know Your Assets’ compliance service, please reach out to one of the authors or connect with your usual group contact.

For legal and regulatory disclosures, please visit maples.com/legal-notices.