Introducing AML Compliance Officer at Passthrough

Today, Passthrough is announcing an offering to cover all of the new anti-money laundering (AML) rules that apply to most private fund managers starting in 2026.

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This August, the Securities & Exchange Commission (SEC) & Financial Crimes Enforcement Network (FinCEN) published a final rule that says SEC-registered Exempt Reporting Advisors (ERAs) and Registered Investment Advisors (RIAs) will be regulated as financial institutions like banks and broker-dealers are today.

‍The change means ERAs and RIAs will be subject to anti-money laundering rules effective January 1, 2026. A large majority of firms I’ve spoken to aren’t aware of those rules, let alone prepared for them.

The SEC, FinCEN, and Department of Justice have signaled since 2019 that PE, VC, and other private capital firms were going to face scrutiny on fraud detection and money laundering. See this leaked FBI report for an example. Until now, the main reason firms had AML programs was because their bank mandated it. The banks continue to face significant fines ($4.2 billion in 2022 and $6.3 billion last year) so imposing rules on their customers was one attempt to minimize it. 

Passthrough has helped fund managers meet their AML needs since 2023. Nearly 200 fund managers use our Know-Your-Customer (KYC)/AML offering to collect the appropriate information about each investor and make sure those investors weren’t sanctioned, politically exposed, or otherwise unfit for the firm. But with the new rule, that’s no longer enough.

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Here’s what’s changing– by 2026, ERAs and RIAs must have these seven steps in place to clear SEC and FinCEN audits:

^{1. An AML Compliance Officer}

^{2. Internal controls to onboard and monitor investor and counterparty risk}

^{3. Annual anti-financial crime training for everyone at the firm}

^{4. Annual assessment of the effectiveness of the program}

^{5. Customer due diligence program similar to our KYC/AML offering, but retroactively across every investor in an active fund tied to your registration}

^{6. Program to file unusual and suspicious activity}

^{7. Program to monitor the source of wealth and source of funds from your investors}

For more about these requirements, check out this explainer and a recent webinar where we covered it in depth.

This isn’t something firms can fix over a weekend. You could spend hundreds of hours (which may be billable) hiring or training in-house experts, drafting policies, building a system of controls, registering with FinCEN, undergoing training, and collecting KYC information from your LPs. Trying to respond to the requirements in late 2025 will put most managers in a position to fail SEC and FinCEN audits that are expected to begin in early 2026. To avoid being subject to fines and cease-and-desist orders, you need to start thinking about implementation timelines now.

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So what is Passthrough doing to help firms meet these changes?

‍We already built a software-enabled services team to handle your KYC/AML at scale. Plus, the 50K+ investors we already have on the platform can just reapply the information they’ve given us. Now we’re launching a full package that solves everything the SEC and FinCEN require so that you don’t need to juggle providers or be concerned you’re missing something.

Passthrough will:

^{1. Be your AML Compliance Officer responsible for oversight of day-to-day AML operations}

^{2. Prepare policies and procedures that are systematically enforced by our KYC/AML}

^{3. Provide annual training and testing online}

^{4. Run and coordinate your audit}

^{5. Create the best experience possible for your LPs to fulfill KYC/AML requests and manage your risk}

^{6. File suspicious activity reports and coordinate with law enforcement on any investigations}

^{7. Monitor source of wealth and funds to make sure there’s no illicit activity}

And because we’re providing this with software, we can operate a system of controls across your firm and investors cost-effectively and time-efficiently.

Pricing is simple: we’ll charge you an annual fee to cover everything above, plus a per-investor fee for KYC/AML. Your costs will be predictable and can likely be expensed to your fund (check your LPA to be sure).

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An AML program is no longer optional.

‍If you don’t have this solved, you’ll be subject to enforcement actions up to and including cease and desist orders, fines, and increased and repeat exams from the SEC and FinCEN. But this will also be part of your institutional investor’s due diligence packages. Not having a confident “yes” to their questions relating to fraud, terrorism financing, and anti-money laundering will be disqualifying no matter how much they’d like to invest with you.

Passthrough’s goal is to automate fund workflows by making investor information reusable. First, with sub docs and KYC/AML, now with ongoing AML compliance. Schedule a call to see how Passthrough can simplify your AML journey.