
Introduction: the growing importance of KYD compliance
Regulatory scrutiny in the asset management industry is intensifying, especially the French Monetary Authority ("AMF"). Compliance with Anti-Money Laundering (AML) and Know Your Customer (KYC) rules is no longer limited to verifying investors—it now extends to distributors as well.
This is where Know Your Distributor (KYD) comes into play. KYD is a due diligence requirement that ensures asset managers verify and monitor the financial intermediaries who distribute their investment products.
Distributors—such as independent financial advisors, wealth managers, private banks, or third-party marketers—play a critical role in the investment fund ecosystem. However, they can also introduce risks related to money laundering, fraud, and regulatory non-compliance.
To mitigate these risks, regulators require asset managers to collect, verify, and periodically refresh distributor data. However, KYD is often manual, time-consuming, and complex, especially when dealing with multiple distributors across different jurisdictions.
In this article, we’ll break down:
- What KYD is and why it’s important
- The key stakeholders involved in KYD
- How often KYD needs to be refreshed
- The biggest KYD challenges asset managers face
- How Ondorse automates KYD to reduce compliance burdens
What is Know Your Distributor (KYD) and why does it matter?
KYD is an AML due diligence process requiring asset managers to:
- Identify & verify their distributors’ credentials and regulatory status
- Assess AML risk levels based on the distributor’s jurisdiction, business model, and ownership structure
- Monitor distributors periodically and refresh due diligence data based on risk levels
The three key stakeholders in the KYD process
Understanding KYD requires looking at the three main stakeholders in the asset management distribution chain:
- The Asset Manager – The investment firm offering funds to clients and responsible for ensuring compliance with AML regulations.
- The Distributor – The financial intermediary (such as an independent financial advisor, private bank, or broker) that sells investment products to investors.
- The Customer – The end investor purchasing investment products through the distributor.
Here’s a visual representation of the parties:
+------------------------+
| Asset Manager |
| (Fund Provider) |
+------------------------+
|
| KYD Due Diligence
v
+------------------------+
| Distributor |
| (Wealth Manager, IFA, |
| Private Bank, Broker) |
+------------------------+
|
| KYC Due Diligence on Investors
v
+------------------------+
| Customer (Investor) |
| (End Client) |
+------------------------+
Regulatory responsibility breakdown:
- Asset managers conduct KYD on distributors.
- Distributors conduct KYC on end customers.
- Regulators audit both to ensure compliance.
Without proper KYD checks, asset managers risk partnering with unlicensed or non-compliant distributors, exposing them to fines, reputational damage, and potential legal consequences.
KYD is a continuous process: how often should it be refreshed?
KYD is not a one-time verification—it must be refreshed periodically based on the AML risk level assigned to each distributor:

Failure to refresh KYD within the required timeline can lead to regulatory non-compliance, legal penalties, and business disruptions.
However, manually tracking refresh deadlines and collecting updated data from multiple distributors is a significant burden. That’s where automation comes in.
The biggest challenges asset managers face with KYD
Many asset managers struggle with KYD because traditional processes are:
- Manual and paper-based – Relying on spreadsheets, PDFs, and email chains leads to inefficiencies and errors.
- Time-consuming – Chasing distributors for documents and validating them delays onboarding.
- Lacking a centralized system – No single source of truth makes it difficult to track verification status.
- Difficult to scale – As firms onboard more distributors, KYD complexity increases.
A modern, automated KYD solution is essential to overcoming these obstacles.
How Ondorse automates KYD compliance
At Ondorse, we streamline KYD by digitizing and automating the two most time-consuming parts of the process:
1. AI-assisted data collection
Ondorse eliminates manual document chasing by providing a centralized platform that:
- Automatically suggests information on the business of the distributor
- Automatically suggests information on the business of the distributor
- Have data automatically validated for completeness and compliance (more details available here!)
- Automatically suggests publicly available documents such as certificate of incorporation, by-laws or UBO declarations
Asset managers get a real-time dashboard to track missing information and compliance status.
2. AI-powered verification & smart monitoring
Once the data is collected, Ondorse’s AI-driven system:
- Verifies distributor credentials against regulatory databases (e.g., FINRA, FCA, AMF)
- Automates AML risk scoring and determines when KYD refreshes are due
- Triggers automated reminders for high-, medium-, and low-risk distributors to submit updated data
By integrating with regulatory data sources and internal compliance workflows, Ondorse significantly reduces compliance costs while ensuring full regulatory adherence.
The future of KYD: Compliance without the complexity
KYD is a critical regulatory requirement that cannot be ignored. As AML regulations tighten, asset managers must find a way to:
- Ensure compliance without overburdening their teams
- Reduce the risk of partnering with non-compliant distributors
- Scale KYD operations efficiently as their distribution network grows
With automation, AI-powered verification, and real-time monitoring, Ondorse helps asset managers stay ahead of compliance requirements while reducing operational costs.
Want to see how Ondorse can simplify KYD for your firm?
You can reach out to our team who will show you how Ondorse can help you by clicking here.
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