Why Asset Managers Struggle With KYC and Entity Data

Introduction – The KYC Burden in Asset Management

Know Your Customer has become one of the most demanding compliance requirements in asset management. Since the 2008 financial crisis, regulators have rolled out stricter rules through FATCA, CRS, and new anti-money laundering directives. What used to be a one-time check is now a continuous cycle of monitoring and verification.

The scale of the task makes it harder. Asset managers operate across borders, deal with clients who have layered ownership structures, and face constant demands for transparency. A 2023 Thomson Reuters survey showed that large financial institutions spend more than $150 million annually on KYC compliance. For mid-sized firms, the burden is even greater, with costs consuming resources that could have supported growth.

KYC also has no finish line. Client structures evolve, beneficial owners shift, and regulations change faster than firms can adjust. Yet many organizations still depend on spreadsheets, disconnected systems, and manual reviews. These outdated tools leave compliance gaps that regulators view as unacceptable.

This article explains why asset managers struggle with KYC and entity data, the structural issues driving inefficiencies, and how stronger data practices can reduce risk while improving operations.

The Root Causes of KYC and Entity Data Challenges

Several structural issues make KYC compliance harder for asset managers. These problems reinforce each other and create a cycle of inefficiency. The following root causes explain why asset managers face growing KYC complexity. They also show why traditional tools cannot handle the demands of modern compliance environments.

Fragmented Data Across Jurisdictions

Asset managers rarely work within a single regulatory environment. Most operate across multiple jurisdictions, each with unique disclosure rules, reporting formats, and timelines. As a result, entity data becomes fragmented and inconsistent. Teams often juggle regional databases, local registries, and client-submitted documents that never fully align.

This lack of a centralized entity management framework slows KYC. Instead of analyzing risks, compliance officers spend hours reconciling records and validating ownership data. In many cases, even basic information like addresses or filing dates differs from one system to another. Consequently, firms lose both accuracy and speed, which weakens their ability to satisfy regulators on time.

Reliance on Manual Processes

Even though many firms today survive data doomsday as they face rising compliance demands, most of them still depend on spreadsheets, emails, and static PDFs to handle KYC. These tools appear convenient at first, but they create fragile workflows. Small mistakes, such as a missed entry in one spreadsheet, can cascade into inconsistencies across dozens of client files.

Moreover, manual reviews consume significant time. Teams spend weeks collecting documents, updating forms, and validating data that could be automated. As a result, compliance staff remain focused on clerical tasks instead of higher-value analysis. Over time, this reliance on manual processes inflates costs, delays onboarding, and increases exposure to errors that regulators are quick to penalize.

Complex Ownership Structures

High-net-worth clients and institutional investors rarely operate through a single entity. No wonder they use layered companies, partnerships, and trusts spread across jurisdictions. Understanding and untangling these networks to identify the ultimate beneficial owner (UBO) is rarely straightforward. Compliance teams often need to cross-check corporate registries, shareholder agreements, and legal filings to confirm accuracy.

This complexity slows down client onboarding and complicates ongoing monitoring. Even when information is available, it may be incomplete, outdated, or inconsistent across systems. Without a clear line of sight, firms risk overlooking hidden connections that regulators expect them to detect. The challenge is not just the volume of data but also the opacity created by structures designed to shield ownership.

Evolving Regulatory Requirements

Asset managers often struggle to keep pace owing to the ever-changing regulatory frameworks. What satisfies regulators in one region may fall short in another. For example, a disclosure that meets European standards might not align with requirements in Asia or North America. This lack of consistency creates constant tension in global compliance programs.

Frequent updates also add to the burden. It is an absolute must for the teams to revise policies, adjust reporting formats, and retrain staff while still managing day-to-day workloads. Because without structured systems such as an entity management platform, firms risk falling behind. Regulators, however, view delays as negligence, which can trigger audits, fines, or even restrictions on operations.

The shifting nature of these requirements highlights why reliance on legacy tools no longer works. Asset managers in 2025 require integrated approaches that adjoin entity management and KYC functions to meet evolving standards with confidence.

How These Challenges Impact Asset Managers

Weak KYC and fragmented entity data don’t just slow compliance teams. They ripple across asset management operations, shaping how firms grow, control costs, and earn client trust. The impacts are visible in every part of the business.

Delays in Client Onboarding

Onboarding is often the first impression. When ownership verification drags because records are scattered, clients wait longer than expected to open accounts or complete investments. Compliance teams spend weeks reconciling details that should be available instantly. Competitors who move faster capture these opportunities, leaving slower firms at a disadvantage before relationships even begin.

Escalating Compliance Costs

Manual reviews and repeated document requests consume significant resources. Studies suggest that mid-sized firms spend close to 10 percent of their operating budgets on KYC compliance alone. That is money that could fuel product innovation, technology upgrades, or client service. Instead, it gets tied up in administrative work that adds little long-term value.

Greater Regulatory Exposure

Errors in filings rarely go unnoticed. Regulators may impose fines, order audits, or apply restrictions that limit business activity. Beyond the penalties, the reputational cost is steep. Once a firm is seen as weak on compliance, rebuilding credibility with clients and partners becomes a long, uphill process.

Pressure on Client Relationships

Clients will definitely expect efficiency and clarity. So when firms ask for the same documents multiple times or fail to explain delays, it is obviously going to be a frustrating experience. However, investors may interpret these gaps as signs of operational weakness. Over time, this erodes trust and nudges clients toward rivals who manage compliance with more speed and precision.

The Role of Entity Management in Solving KYC Complexity

KYC challenges often stem from fragmented data, complex ownership structures, and manual processes. Spreadsheets and isolated systems force teams to spend hours reconciling records and verifying documents. Without a structured approach, compliance gaps grow and deadlines slip. A robust entity management platform centralizes data, automates workflows, and connects compliance functions.

Centralized Entity Data

Centralized records provide a clear view of all client entities. Ownership changes or new entities propagate automatically across systems. This reduces errors and regulatory gaps. Onboarding becomes faster, and operational clarity improves.

Automated KYC Workflows

Automation handles repetitive tasks like document collection, verification, and approvals. Teams focus on exceptions instead of routine checks. Deadlines are consistently met, and audit trails remain accurate and accessible. Integration with AML and KYC tools ensures continuous monitoring. Data moves seamlessly between systems, reducing duplication and mistakes. Reporting for regulators and internal teams becomes straightforward, which strengthens governance and decision-making.

Analytics and Reporting

Analytics takes raw data and turns it into actionable insights. Dashboards highlight anomalies, reveal bottlenecks, and quantify exposure. Teams can anticipate compliance challenges instead of reacting after issues arise.

Entity Resolution Capabilities

Modern platforms also perform entity resolution. Duplicate or conflicting records are reconciled, keeping client data accurate and audit-ready. By combining centralized management, automated workflows, integration, analytics, and entity resolution, asset managers gain a structured framework. This framework reduces KYC complexity while maintaining operational agility.

Conclusion – Rethinking KYC Through Better Entity Data

KYC continues to challenge asset managers because fragmented records, manual workflows, and disconnected tools create inefficiency and risk. Delayed onboarding, higher compliance costs, and regulatory exposure are the visible symptoms of this broken model.

A stronger foundation lies in combining entity management with KYC integration. Centralized data, automation, and entity resolution create accurate client records and reliable audit trails. Integration with monitoring tools ensures continuous oversight, while analytics provides early warnings instead of after-the-fact fixes. Together, these capabilities turn KYC from a burdensome task into a manageable, scalable process.

Firms exploring solutions should look at modern platforms that unify compliance and operations. Tools like TruNtity, SG Analytics’ platform-led managed services solution, bridge data management and regulatory requirements without adding complexity. TruNtity gives asset managers a path to stronger governance and sustainable growth by addressing the gaps left by outdated systems.

The future of compliance will not depend on more manual effort. It will depend on smarter systems that bring clarity, consistency, and control to KYC and entity data.

About TruNtity: An Entity Management System by SG Analytics

TruNtity, SG Analytics’ AI-powered entity management software, provides a secure, API-first architecture that streamlines compliance assurance. From real-time corporate action tracking to enhancing document intelligence via generative AI integration, TruNtity equips banks, financial institutions, and compliance officers to ensure resilience. Whether you want audit-ready workflows for KYC/AML procedures or comprehensive legal entity identification powered by built-in referential integrity, SG Analytics’ TruNtity platform will meet all those requirements and more.