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Buy-Side AML in 2026: 5 Predictions Asset Managers Can’t Ignore

By Neil D’Rosario, VP of Buyside Product

As the buy side looks toward 2026, the anti-money laundering (AML) conversation is shifting in a meaningful way. The question is no longer whether firms have controls in place, but whether they can clearly explain how those controls fit together across jurisdictions, products, and delegated relationships. 

For asset managers, this next phase of regulatory scrutiny will be less about volume and more about clarity.

1. 2026 Is a Readiness Year, Not a Pause 

The US Investment Adviser AML rule remains unresolved. FinCEN’s 2025 Notice of proposed rulemaking (NPRM) states an effective date of January 1, 2026, while proposing to move compliance obligations to January 1, 2028. 

In practice, regulators are unlikely to treat 2026 as a grace period. Instead, it will be viewed as a readiness year. Firms will be expected to show that they are actively building AML capability, governance frameworks, and operating models that can accelerate if timelines change. 

Asset managers that stall investment risk entering audits and being unable to demonstrate progress, credible plans, or internal alignment. 

2. Exams Focus on Defensibility, Not Just Controls 

Supervisory expectations are also evolving. In 2026, regulators will spend less time verifying the existence of controls and more time testing whether firms can defend the logic behind their AML operating model. 

Expect increased scrutiny of: 

  • How responsibilities are allocated across the organization 
  • How delegation to third parties is governed and overseen 
  • Why certain jurisdictions or products operate differently 

Informal local exceptions without a clear, documented rationale will be harder to justify. Global asset managers with fragmented or inherited AML structures will feel this pressure most acutely. 

3. Money Laundering Through Markets Gains Prominence 

Regulators are increasingly framing capital markets as a potential laundering channel, not just a venue for legitimate investment activity. Complex transactions, layering through securities and unusual settlement behavior are now firmly on the supervisory radar. 

For asset managers, this shifts AML focus beyond onboarding. In 2026, business-wide risk assessments will be expected to account for secondary-market behaviors such as rapid in-and-out positions, atypical redemption patterns and settlement anomalies. 

There will also be growing pressure to connect trade surveillance, transaction monitoring, and SAR logic, even where these functions sit in different teams or systems. 

4. Transaction Monitoring Forces Clear Scope Definition 

Transaction monitoring has always been challenging for the buy side. Asset managers rarely see the full flow of funds. Distributors, custodians, fund administrators, transfer agents, and platforms each hold partial views. 

In 2026, regulators are likely to push firms to clearly define and document their monitoring scope. This includes: 

  • Which flows are monitored, such as subscriptions, redemptions, distributions, custody cash, FX, or settlement 
  • What data the firm sees versus what delegates see 
  • Where monitoring responsibility ends 
  • How issues are escalated across parties 
  • The expectation is not universal visibility, but explicit ownership of gaps and clear governance around them. 

5. Perpetual KYC Meets Rising Identity Deception 

Two forces are converging. Supervisors increasingly expect KYC to be ongoing rather than periodic, with risk ratings that evolve based on behavior. At the same time, identity deception is becoming more sophisticated. 

Deepfake and synthetic identity techniques are no longer niche fraud concerns. FinCEN has warned of increased suspicious activity involving manipulated media and fraudulent identity documents used to bypass verification controls. 

As a result, more asset managers will implement step-up controls across onboarding and servicing. These may include liveness checks, device intelligence, re-verification after changes to bank details, and tighter callback procedures for investor instructions. 

KYC operations teams will need defined playbooks for AI-assisted impersonation, not just traditional document fraud. 

The Core Theme for 2026? Explainability. 

Across all of these trends, one theme stands out: regulators are prioritizing explainability. Asset managers will be judged not only on the controls they have in place, but on how clearly they can articulate their AML model, its boundaries, and how risks are managed across them. 

Digital asset exposure is also becoming a mainstream AML topic for asset managers. FATF’s 2025 targeted update highlights the growing use of stablecoins by illicit actors and notes that the majority of on-chain illicit activity now involves stablecoins. It also underscores how regulatory failures in a single jurisdiction can have global consequences. 

For the buy side, this means that “crypto diligence” is becoming a standard component of enhanced due diligence- covering source-of-funds and source-of-wealth narratives, wallet provenance where relevant, and exposure to VASPs. We are also seeing increased buy-side adoption of blockchain analytics in investigations, particularly where stablecoins appear in investor funding chains. 

By 2026, the ability to tell a coherent AML story may be just as important as the controls themselves. 

Explore Fenergo’s Regulatory Horizon Scanning hub-to track upcoming regulatory developments across APAC, assess their practical impact, and plan confidently before expectations turn into enforcement.-