Anti Money Laundering Risk in Private Credit: Governance Gaps in a Rapidly Expanding Market

March 2026Money Laundering General

Abstract

Anti–money laundering (AML) risk is structurally amplified in cross-border third-party relationships, particularly within the rapidly expanding private credit sector. Industry estimates place the global private credit market at approximately $3 trillion in assets under management as of early 2025, up from roughly $2 trillion in 2020, and project growth to about $5 trillion by 2029, reflecting continued investor demand and displacement of traditional bank lending. As private credit funds scale globally through complex intermediary networks, the rapid growth, structural opacity, cross-border complexity, and reliance on counterparty diligence conducted by intermediaries, create multilayered transactional and ownership frameworks that heighten money laundering vulnerability and strain traditional AML controls. Despite regulatory expectations under the Bank Secrecy Act (BSA), Financial Action Task Force (FATF) recommendations, and Department of Justice guidance, many institutions continue to treat counterparty and third-party due diligence as a static onboarding exercise rather than a dynamic governance function. Prevailing risk-based models often underestimate jurisdictional asymmetry, beneficial ownership opacity, and systemic interconnectedness within private credit markets. The abstract proposes a tiered AML oversight framework integrating jurisdictional, transactional, and relationship-based risk scoring with continuous monitoring, escalation protocols, and governance accountability. Reframing counterparty and third-party AML risk as an adaptive, enterprise-level control is essential to mitigating legal, financial, and systemic exposure in an increasingly opaque global credit environment.

Subscribe to reador

For in-house counsel advising start-ups, intellectual property is often the principal source of value. Software, technical know-how, inventions, brands, data, content and confidential processes may be more important than physical...Read more

Madelein Kleyn

CEO, Mad K IP Consulting (Pty) Ltd, South Africa

Is It You, or Is It the System?

Why contracts are failing business – and what in-house counsel should do about it There is a moment, familiar to most in-house counsel, when a deal that seemed well-structured begins to...Read more

Tim Cummnins

Founder & President, WorldCC, UK

When the Referee Rewrites the Rulebook: Why FIFA's Governance Dilemma Matters to Every General Counsel

Governance Is Tested When Rules Become Inconvenient Every institution eventually encounters a defining moment. It is rarely triggered by a financial crisis, regulatory investigation or reputational scandal. Rather, it arises when...Read more

Anti Money Laundering Risk in Private Credit: Governance Gaps in a Rapidly Expanding Market

Abstract

Related Papers