On August 28, 2024, the Financial Crimes Enforcement Network (FinCEN) issued a final rule to modernize and strengthen safeguards in the investment adviser sector from illicit finance activities, including but not limited to money laundering and terrorist financing. This rule includes certain covered “investment advisers” under the definition of “financial institution”, expanding the reach of the Bank Secrecy Act (BSA). It mandates that these investment advisers establish standards for AML/CFT compliance programs and that they report suspicious activities to FinCEN. The final rule goes into effect on January 1, 2026.
The rule addresses risks highlighted in a February 2024 Treasury risk assessment, which noted exploitation of the investment adviser industry by criminals and some foreign states. The rule aims to mitigate these risks and supports the Biden-Harris Administration’s 2021 U.S. Strategy on Countering Corruption.
FinCEN considered public comments and consultations with the SEC and other agencies, making adjustments to the rule’s scope and requirements based on feedback.
Click here to read the full Fact Sheet released by FinCEN.
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