The FCA’s latest consultation paper is not explicitly about anti-money laundering, but for UK fund managers, it may as well be.
According to Cascade, CP26/16, which opened for industry feedback on 21 May 2026 and closes on 9 July 2026, centres on the registration of authorised fund assets. Yet its practical implications stretch well beyond asset registration, reaching into depositary oversight, outsourcing controls, investor onboarding and the audit evidence firms need to support increasingly complex private-market strategies.
Cascade recently discussed FCA CP26/16 and AML KYC software for UK fund managers through a 2026 guide for FCA-regulated firms.
For depositaries, Authorised Fund Managers (AFMs) and authorised alternative investment funds, the consultation signals a regulatory environment that expects operational sophistication to match investment ambition. Firms that have not yet mapped their AML KYC infrastructure against the realities of private-market growth may find CP26/16 is the prompt they needed to do so.
Among the key proposals in CP26/16 are provisions allowing depositaries of authorised AIFs managed by full-scope AIFMs to delegate certain safekeeping functions for private-market assets to third parties. The FCA is also proposing to permit delegation of safekeeping functions for non-custodial assets, including real estate, to AFM affiliates, subject to additional protections.
The paper further seeks to clarify how CASS 6 custody rules apply to depositaries of authorised and unauthorised AIFs, and proposes replacing the temporary Modification by Consent linked to COLL 5.6.22R with a permanent rule change.
These are technical proposals, but the governance questions they raise are anything but routine. As fund structures grow more complex and delegation arrangements become more layered, the ability to demonstrate consistent, auditable controls becomes harder, and more important.
The wider regulatory backdrop compounds this pressure. In April 2026, the FCA published findings from its review of firms’ customer due diligence (CDD), enhanced due diligence (EDD) and ongoing monitoring controls, with scrutiny focused on policies and procedures, compliance monitoring and audit. Taken together with CP26/16, the message for FCA-regulated firms is clear: operational readiness is no longer a compliance box to tick. It is a strategic requirement.
For UK fund managers, the practical challenges are considerable. Expanding into private markets typically means more complex investor and counterparty structures, greater reliance on third parties and affiliates, more extensive documentation around ownership and title, and a heightened need for consistent, risk-based onboarding. Without the right infrastructure, these requirements quickly outpace manual processes.
AML KYC software built for regulated firms can help address this gap. Luxembourg-based provider Cascade offers a SaaS platform designed to centralise client data, support risk-based workflows and maintain audit-ready records across the onboarding-to-monitoring lifecycle. The platform supports daily name screening against sanctions, PEP and adverse media sources through data providers including LSEG, Dow Jones and Acuris Risk Intelligence. For firms managing high volumes of investor, beneficial owner and counterparty records, this kind of structured infrastructure reduces operational friction while improving compliance visibility.
Cascade also offers a series of add-on modules, each requiring the core SaaS platform, that extend its capabilities into specific compliance functions. The Automated Treatment of Name Screening Alerts module supports more efficient handling of repetitive screening workflows whilst keeping treatment logic traceable. The Digital Communication Bridge for Client Onboarding enables secure client messaging, document collection and communication audit trails within existing AML workflows. The BI Module for AML Reporting and Analytics provides dashboards, drill-down analytics and exportable reports to support management oversight of overdue reviews, high-risk files and unresolved alerts.
Firms reviewing their operating model in light of CP26/16 should consider a structured set of practical steps. These include mapping which fund structures and private-market assets could be affected by the proposals; reviewing the responsibilities of AFMs, depositaries, affiliates and third parties; confirming that CDD, EDD and ongoing monitoring are consistently evidenced; and testing whether onboarding communications are traceable and easy to audit. Decisions, approvals and exceptions should be clearly documented, and qualified legal or AML advice sought before making any policy or operating model changes.
CP26/16 is open for consultation until 9 July 2026. For FCA-regulated firms with exposure to private markets, the window before rules are finalised is a valuable opportunity to stress-test existing controls, and to determine whether their AML KYC infrastructure is truly fit for the complexity ahead.
Read the full Cascade post here.
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