What are the options?

You can now choose, on a per offering basis, to have AML performed when investments are created or when funds for an investment are received,

Option 1: AML when investments are received

When will AML happen?

Using this setting, AML will be performed when investments are created. For investors coming in through our Invest Now product, this happens when the investor finishes the investment flow by signing the subscription agreement. For investors coming through the API, this happens when the investment object is created.

Pros?

Funds availability. In order for investments to be disbursable, both the funds must have cleared, and AML must have cleared. By performing AML when the investment is created, that means the AML process kicks off as soon as possible and your funds will be disbursable as soon as possible. In this scenario, Prime Trust is able to run AML in parallel with the investor sending their funds.

Cons?

Cost. If an investor never funds their investment, Prime Trust will have already performed AML and you will incur AML charges for that investment. This happens since AML is kicked off before it’s clear whether or not an investment will be funded.

Option 2: AML when funds are received

When will AML happen?

Using this setting, AML will be performed when any funds are received for an investment. Note: “any funds” means that AML may be performed before the full investment amount is received for an investment or for funds that ultimately fail. However, AML will not be performed on investments where no funds are ever received, for example, wires that never get sent or credit cards that get declined. We do this to make the process easier for truing up investments, issuing partial refunds, and adjusting investment amounts!

Pros?

Cost. Using this option, if an investor never sends any funds for an investment, you won’t be charged any AML fees.

Cons?

Funds availability. In order for investments to be disbursable, both the funds must be cleared, and AML must have cleared. By performing AML when the investor sends funds, it’s more likely that AML will hold up the funds being available.

Which do I pick?

The short answer: it depends! If you value the speed at which funds become available, performing AML when investments are created may be the best option for you. If you value, keeping your costs as low as possible and you’re okay with some possible delays on the funds, then performing AML when funds are received may be the best option.

You may always want to consider the mix of expected funding methods. Wires and credit cards clear the next day while ACH and checks clear in 10 days. If you expect most of the funds to come via wire or credit card, performing AML when funds are received would slow down the availability of the funds. If you expect most of the funds to come via ACH or check, AML will likely be handled by the time the funds are cleared anyway even if it’s only started when the funds are received.

When is this available?

Since this is a new feature, it’s only available on new investments and it won’t apply retroactively to any old investments, but, it’s available right now!

How do I change the setting?

Offerings will default to the current behavior – AML being performed when investments are created. You can change this behavior over either the UIs or the APIs.

UIs: In the offering information section of the offering wizard, use the radio buttons to select when to perform AML.

APIs: Over the API, set

delay_aml_until_funds_received=true

on the offering object.