Verifica vs leaving KYC to your fund administrator
Delegating KYC to your administrator is common. Delegating the responsibility is not possible. What to weigh before you decide who runs the file.
The short answer
Handing KYC to your fund administrator is common and often sensible. It is not the same as handing over the responsibility. Under FinCEN's investment adviser AML rule, now effective January 1, 2028, an adviser may delegate parts of its AML program to a third party such as an administrator, but the adviser remains responsible for compliance and has to oversee the work.
The real question is whether you can see, evidence and defend what your administrator did. Verifica is for firms that want to run the file themselves, or want an independent record alongside the administrator's.
Side by side
| Verifica in-house | Leave it to the fund administrator | |
|---|---|---|
| Who runs the checks | Your team, with automation doing the collection and screening | The administrator's operations team |
| Who is responsible | You | Still you. Delegation does not transfer responsibility |
| Visibility | Every step timestamped in your own system | Whatever the administrator reports back to you, when they report it |
| Speed | File generated once the investor submits | Depends on the administrator's queue and email back-and-forth |
| Screening source | LSEG Risk Intelligence: sanctions, PEP, adverse media | Varies by administrator. Ask |
| Beyond fund investors | Co-investors, SPVs, deal counterparties, property transactions | Usually limited to investors in funds they administer |
| Changing administrators | KYC records stay with you | Records have to be migrated or re-collected |
| Cost | Software fee, quoted on a demo | Often bundled into administration fees, sometimes charged per investor |
When leaving it to the administrator is the better fit
- Your administrator has a strong AML program, gives you the reporting you need and has passed your due diligence.
- You have one or two funds, a stable LP base and no deal flow outside the funds they administer.
- You do not have anyone in-house to review screening hits, and you are comfortable overseeing the administrator instead.
When Verifica is the better fit
- Onboarding stalls in the administrator's queue and LP commitments are waiting on KYC before a close.
- You need to verify people the administrator does not cover: co-investors, SPV members, sellers, counterparties.
- You want to own the record, so that changing administrators does not mean re-collecting KYC from every investor.
- You need evidence for your own oversight: what was checked, against which lists, when, and who cleared a potential match.
The middle option
Some advisers keep the administrator for fund-level investor KYC and use Verifica for everything outside it, or as a second record they can show an examiner directly. If you take this route, write down in your AML program which system is authoritative for which population, so the two records never contradict each other.
Questions to ask your administrator
- Which screening database do you use, and do you screen for PEP and adverse media as well as sanctions?
- How do you identify and verify beneficial owners of entity investors, and down to what threshold?
- How often is the investor base re-screened, and how are we told about a new hit?
- Can we receive the complete KYC record for any investor within a day of an examiner asking?
- If we move administrators, what do we receive and in what format?
For the full build plan ahead of the rule, see The Investment Adviser AML Rule Moved to 2028.
Frequently asked questions
Can an investment adviser outsource KYC to its fund administrator?
It can delegate the work. It cannot delegate the responsibility. The adviser has to oversee the administrator and make sure regulators can get the records.
Does Verifica replace a fund administrator?
No. Verifica handles KYC and AML verification only. Fund accounting, investor reporting and capital calls stay with your administrator.
Is this legal advice?
No. Verifica is software that supports your compliance team. Talk to counsel about how your AML program should allocate responsibilities.
Next step
Run the KYC efficiency assessment to see what your current process costs in time, or contact the team to see a file run on a real investor.