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FinCEN Proposes Rule to Apply AML/CFT Requirements to Investment Advisers

"The current patchwork of AML/CFT requirements creates regulatory gaps that criminals and foreign adversaries exploit to launder money, hide illicit wealth, and compromise American innovation,...[t]his proposed rule would level the regulatory playing field, protect U.S. economic and national security, and safeguard American businesses."
FinCEN Director Andrea Gacki
"The current patchwork of AML/CFT requirements creates regulatory gaps that criminals and foreign adversaries exploit to launder money, hide illicit wealth, and compromise American innovation,...[t]his proposed rule would level the regulatory playing field, protect U.S. economic and national security, and safeguard American businesses."
FinCEN Director Andrea Gacki

FinCEN proposed to include "investment adviser" in the definition of "financial institution" under the Bank Secrecy Act ("BSA"). The proposed rule would require advisers to implement AML/CFT programs and maintain recordkeeping requirements.

The proposed regulations would amend BSA Rule 1010.100(t) ("General definitions") defining the term "investment adviser" to include SEC-registered investment advisers and investment advisers that report to the SEC as Exempt Reporting Advisers. The proposed rule would require registered advisers and exempt reporting advisers to implement an AML/CFT program, file Suspicious Activity Reports ("SARs") with FinCEN, keep records relating to the transmittal of funds (aka "Recordkeeping and Travel Rule") among other obligations. The proposed rule would also apply information-sharing provisions among FinCEN, law enforcement government agencies, and certain financial institutions, and would subject investment advisers to the "special measures" imposed by FinCEN pursuant to Section 311 of the USA Patriot Act.

Comments on the proposal are due 60 days after publication of the proposal in the Federal Register.

Primary Sources

  1. Federal Register: Financial Crimes Enforcement Network: Anti-Money Laundering/Countering the Financing of Terrorism Program and Suspicious Activity Report Filing Requirements for Registered Investment Advisers and Exempt Reporting Advisers
  2. FinCEN: Press Release: FinCEN Proposes Rule to Combat Illicit Finance and National Security Threats in Investment Adviser Sector
  3. FinCEN: Fact Sheet: Anti-Money Laundering Program and Suspicious Activity Report Filing Requirements for Registered Investment Advisers and Exempt Reporting Advisers Notice of Proposed Rulemaking (NPRM)

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Tags

Regulated Activities
AML Compliance Recordkeeping Regulatory Reporting
Regulated Entities
Adviser / CTA / CPO
Body of Law
AML Regulation
Jurisdiction
US - Federal
Organization
Treasury / FinCEN / OFAC / CFIUS
Sub-Author
FinCEN