Retail investors are non-professional individuals who invest their own money in securities. Due to their increasing influence, they are becoming significant market participants, effectively transforming the financial landscape.  

According to data from PitchBook, the private market, which is worth $25 trillion (as of March 2025), is expected to more than double to $60 trillion by 2023. An important factor contributing to this expansion is the growing participation of high-net-worth individual retail investors in alternative investments. 

Retail investors usually invest in stocks, bonds, cryptocurrency and exchange-traded funds (ETFs). With the expansion of the investment community, more investors are looking for new investment opportunities in venture capital and private equity. In a recent survey, 70 per cent of high-net-worth individuals (HNWIs) noted that they would invest in alternatives if financial advisors suggested it. 

Retail investors: How do they impact the market

Retail investors now have the tools and confidence to engage in financial markets actively, thanks to factors like technology, online trading platforms and access to financial information. This gives them more control over their portfolios and enables them to make well-informed investment decisions.  

How influential are they? They (a) can contribute to increased market volatility, (b) add liquidity to the market, (c) influence stock prices and (d) offer diverse investment strategies, leading to a more dynamic and resilient market.  

Financial crimes in retail investment

Retail investment may be subject to various financial crimes, including money laundering and fraud. It is possible to launder money through retail investment accounts by purchasing and selling securities to conceal the source of illegal funds. For regulators and financial institutions, this is a major concern. In order to reduce risks and safeguard the integrity of financial markets, these financial crimes underscore the significance of regulatory measures and awareness among investors.   

Surge in retail investment drives AML/KYC/CTF demand

Although the investment environment has become increasingly open due to the growing number of individual investors, there are still challenges, particularly in regulatory compliance. Implementing robust Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures is necessary for fund managers to adapt to this changing environment. These processes are crucial for preventing financial crimes and ensuring fund managers maintain good standing with the authorities.  

Role of AML/KYC/CTF with retail and other investors

Effective implementation of Anti-Money Laundering (AML), Know Your Customer (KYC), and Counter-Terrorism Financing (CTF) measures is crucial in dealing with all types of investors, including retail investors.  

1. Preventing Financial Crimes: AML, KYC and CTF processes help prevent financial crimes like fraud, money laundering and terrorist financing. Financial institutions can detect and prevent fraudulent activity by verifying investors’ identities and monitoring their transactions.  

2. Ensuring Regulatory Compliance: For financial institutions to stay out of trouble with the law and keep their licences, they must comply with AML, KYC and CTF laws. These regulations require institutions to follow best practices for recognising and managing financial crime risks.  

3. Protecting Market Integrity: Implementing AML, KYC and CTF measures helps maintain the integrity of financial markets. These steps ensure that markets are fair and transparent, which is critical for investor trust.  

4. Risk Assessment and Management: As part of KYC procedures, investors’ risk levels are evaluated by looking at their profiles and transaction history. As a result, financial institutions can successfully manage risks and implement necessary due diligence measures. 

5. Building Trust and Reputation: Financial institutions can gain the trust of their stakeholders and clients by complying with AML, KYC and CTF rules. More investors opt to invest in an organisation with a solid reputation for ethics and compliance, which also increases the institution’s credibility.  

Bolder AML and KYC services

Partnering with a reputable AML and KYC services provider like Bolder can help you handle the complexities of compliance. Our team of experts can help businesses perform KYC checks efficiently, ensuring regulatory compliance and reducing the risk of financial crimes. We also continuously update and monitor AML/KYC processes to adapt to changing regulations and emerging threats. 

Working with us allows fund managers to efficiently navigate the challenges presented by the rise of retail investors while ensuring regulatory compliance.  

If you want to learn more about our KYC and AML services, contact us today. 

Bolder Group does not provide financial, tax or legal advice and the information contained herein is meant for general information purposes only. We strongly recommend that before acting on any of the information contained herein, readers should consult with their professional advisers. The Bolder Group accepts no liability for any errors or omissions in the information, or the consequences resulting from any action taken by a reader based on the information provided herein.

Bolder Group refers to the global network of independent subsidiaries of Bolder Group Holding BV. Bolder Group Holding BV provides no client services. Such services are provided solely by the independent companies within the Bolder Group which are each legally distinct and separate entities and have no authority (actual, apparent, implied or otherwise) to obligate or bind Bolder Group Holding BV in any manner whatsoever. The operations of the Bolder Group are conducted independently and have no affiliation with third party financial, tax or legal advisory firms or corporations.