Fund Compliance & Anti-Money Laundering (AML) Manual

Essential Governance for Hedge Funds and Private Investment Vehicles

Every licensed investment fund—whether established in the Bahamas, Cayman Islands, British Virgin Islands (BVI), or the United States—is subject to a growing array of regulatory and anti-financial crime obligations. One of the most critical requirements is the implementation and ongoing maintenance of a Fund Compliance & Anti-Money Laundering (AML) Manual.

At SCG Fund Services, we assist fund managers, compliance officers, and administrators with the preparation, review, and implementation of tailored fund compliance manuals that meet current local and international standards.

What Is a Fund Compliance & AML Manual?

A Fund Compliance & AML Manual is a comprehensive internal document that outlines the fund’s policies, procedures, and controls for complying with:

• Anti-Money Laundering (AML) regulations
• Counter-Terrorism Financing (CTF) laws
• Know Your Customer (KYC) obligations
• International sanctions regimes
• Regulatory filing and reporting requirements
• Internal compliance and risk oversight

The manual is designed to guide all internal personnel and third-party service providers in their role of ensuring that the fund operates in a compliant, ethical, and secure manner.

Why Is a Compliance Manual Required?

Regulators in major fund jurisdictions—including the Cayman Islands Monetary Authority (CIMA), Bahamas Securities Commission, BVI Financial Services Commission (FSC), U.S. SEC, and others—mandate that registered or licensed investment funds maintain an active and up-to-date compliance and AML framework.

Failure to adopt and implement such a framework can result in:

• Regulatory sanctions
• Fines and penalties
• Suspension or revocation of the fund’s license
• Reputational damage
• Denial of banking or custodian relationships

A written Compliance & AML Manual is not only a regulatory requirement—it’s also a best practice for investor assurance and operational transparency.

Key Components of a Fund Compliance & AML Manual

A professionally developed fund compliance manual should be customized to the fund’s structure, strategy, jurisdiction, and investor base. Typical sections include:

1. Regulatory Overview

• Overview of applicable laws and regulatory bodies
• Registration or licensing status of the fund
• Designated compliance officer and MLR

2. KYC & Customer Due Diligence (CDD)

• Identification and verification procedures for investors
• Risk-based approach to due diligence
• Source of funds and wealth verification
• Ongoing due diligence and periodic reviews

3. Anti-Money Laundering (AML) & Counter-Terrorism Financing (CTF)

• Policies to detect, prevent, and report suspicious activities
• Sanctions screening procedures (OFAC, EU, UN)
• Transaction monitoring and escalation protocols
• Internal reporting and suspicious activity reports (SARs)

4. Recordkeeping & Documentation

• Required retention periods for investor files and communications
• Format and security of records
• Access controls and audit trail maintenance

5. Training & Awareness

• Annual AML training requirements for all relevant staff
• Documentation of training completion
• Updates on changes in AML laws or emerging risks

6. Internal Controls & Oversight

• Role of the Money Laundering Reporting Officer (MLRO)
• Compliance committee structure (if applicable)
• Internal audits and compliance reviews
• Escalation policies and procedures

7. Filing & Reporting Obligations

• Regulatory filing timelines (e.g., annual certifications, suspicious transaction reports)
• Procedures for responding to regulator inquiries or inspections

8. Risk-Based Approach

• How the fund identifies and assesses AML risk
• Categorization of investor types and counterparties
• Controls for higher-risk clients or jurisdictions

Who Needs a Fund Compliance & AML Manual?

The following entities are typically required to maintain a Fund Compliance Manual:

• Licensed Hedge Funds and Private Funds
• Investment Funds regulated by CIMA, SCB, or BVI FSC
• Segregated Portfolio Companies (SPCs)
• Professional Fund Managers and Administrators
• Funds with independent directors or third-party service providers
• Offshore Funds with U.S. or EU investors

How SCG Fund Services Can Help

We provide bespoke Fund Compliance & AML Manuals that are:

• Aligned with current regulatory requirements
• Tailored to your fund strategy and investor base
• Reviewed and updated as laws evolve
• Delivered with implementation support and optional compliance officer training

We also assist in regulatory readiness for fund registration, license applications, and ongoing compliance filings.

📩 Contact us today to discuss how we can support your fund’s compliance framework and help prepare a robust AML Manual tailored to your jurisdiction and investor needs.