NASAA Supports FinCEN Proposal to Impose BSA Obligations on SEC-Registered Advisers

The North American Securities Administrators Association ("NASAA") supported a FinCEN proposal that would include "investment adviser" in the definition of "financial institution" under the Bank Secrecy Act ("BSA"). The proposed expansion of the definition would subject advisers to AML/CFT program and recordkeeping requirements. (See related coverage.)

In a comment letter on the proposal, NASAA emphasized that the BSA and related AML regulations promulgated by FinCEN "serve an important public policy objective of preventing the U.S. financial services industry from being used for illicit purposes." NASAA noted that its members engaged with Treasury Department staff on this issue prior to the proposal’s issuance, in which NASAA acknowledged FinCEN’s findings that such illicit activities are occurring and pose a significant risk to the U.S. financial system.

NASAA further acknowledged FinCEN’s assessment that it is unnecessary to extend the regime to state-registered investment advisers due to lack of evidence that state-registered investment advisers are being used as conduits for money laundering. NASAA said it expects that, should FinCEN ever find that state-registered investment advisers are being utilized by money launderers, FinCEN would contact NASAA so that its member state securities regulators can work together with FinCEN to address the issue.