ICI Backs Proposed Delay in the Implementation of Investment Adviser AML Rule
The Investment Company Institute ("ICI") supported a recent FinCEN proposal to delay implementation of AML/CFT and Suspicious Activity Reporting ("SAR") requirements for investment advisers and exempt reporting advisers. ICI also made recommendations to improve the Rule’s alignment with existing compliance frameworks.
The 2024 Final Rule would extend Bank Secrecy Act ("BSA") obligations — such as AML program requirements and SARs filings — to Registered Investment Advisers ("RIAs") and Exempt Reporting Advisers ("ERAs"). Under this designation, RIAs and ERAs are treated as "financial institutions" for purposes of the BSA, aligning them with other covered entities such as banks, broker-dealers, and mutual funds. (See previous coverage.)
In a comment letter, the ICI said the delay until January 1, 2028, was needed due to continued uncertainty and operational challenges, particularly the unfinalized Customer Identification Program proposal, which is closely linked to the Rule. The ICI explained that advisers require more time to implement compliance programs effectively and have already paused efforts in reliance on FinCEN’s prior exemptive relief. The ICI urged FinCEN to ensure that any final rule remains consistent with that relief and to use the extension to clarify key provisions and promote coordinated, risk-based compliance across the advisory industry.
The ICI also urged FinCEN to clarify and streamline the Rule by:
- Eliminating Duplicative Burdens. The ICI recommended that FinCEN remove overlapping AML/CFT requirements among advisers and other financial institutions serving the same customer.
- Facilitating Risk-based Approaches. The ICI encouraged FinCEN to promote flexible, risk-based compliance frameworks tailored to advisers’ specific business models and risk profiles.
- Allowing Avoidance of Redundant Activities. The ICI asked FinCEN to permit advisers to forgo duplicative AML/CFT tasks without requiring formal contractual delegation agreements.
- Clarifying Obligations When Information is Limited. The ICI requested clearer guidance on expectations for advisers who have limited access to customer or investor data.
- Defining Non-U.S. Adviser Requirements. The ICI urged FinCEN to provide more detailed direction for non-U.S. advisers to promote consistent global application of AML/CFT standards.