The UK’s shift to T+1 settlement on 11 October 2027 is often framed as an operations problem. But according to RegTech firm Cascade, the compressed settlement cycle poses just as sharp a challenge for anti-money laundering teams at Alternative Investment Fund Managers.
T+1 means in-scope securities trades will settle one business day after the trade date rather than two. HM Treasury intends to legislate for the change under UK CSDR, and the FCA expects firms to have completed project plans, secured budget and be ready to test system changes by the end of 2026. The regulator has warned it may act to protect market integrity if firms are unprepared.
Cascade stresses that T+1 introduces no new AML rules. The Money Laundering Regulations 2017, the Proceeds of Crime Act 2002 and the Terrorism Act 2000 still anchor firms’ obligations. What changes is the tolerance for delay. Under T+2, teams had breathing room to chase missing KYC documents, untangle investor ownership or escalate screening hits. Under T+1, those bottlenecks collide far faster with settlement, subscriptions and redemptions.
The pressure varies by fund model. Private equity, venture capital and private credit managers face layered corporate structures, trusts and cross-border investors that demand deeper beneficial ownership analysis, an area the FCA has flagged as a financial crime priority in private markets.
Hedge funds sit closest to the direct impact, given frequent trading, prime brokerage and rapid cash flows. Real estate and infrastructure funds may move more slowly, but nominee and offshore structures keep AML complexity high. Firms relying on administrators and screening vendors should revisit service-level agreements and escalation timings before testing begins.
Cascade recommends AIFMs take a risk-based approach: mapping which funds and counterparties are exposed to T+1, bringing the MLRO into project governance, cleaning investor and UBO data, tightening onboarding timelines, automating where proportionate and strengthening audit trails so evidence can be retrieved quickly.
Cascade’s AML SaaS platform is positioned to help here, centralising investor data, KYC workflows, due diligence, name screening and risk scoring. For AIFMs, the firm argues, this reduces fragmented spreadsheet-based files, tracks missing and expiring documents, and supports audit-ready oversight for MLROs and boards, precisely the capabilities that a one-day settlement window will demand.
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