September 12, 2024
Who may be interested: Investment Advisers
Quick Take: The Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued a final rule subjecting certain registered investment advisers (RIAs) and exempt reporting advisers (ERAs) to anti-money laundering and countering the financing of terrorism (AML/CFT) requirements that largely track the requirements applicable to other covered financial institutions.
_____________________________________________________________________________________________________________________________The final rule updates the definition of a covered financial institution” in FinCEN’s AML regulations to include all RIAs and ERAs, except for RIAs that are:
Investment advisers covered by the final rule will be required to implement a risk-based and reasonably designed AML/CFT program (AML Program) that includes written policies, procedures, and internal controls and requires the appointment of an AML Compliance Officer. In addition, covered advisers will be required to conduct regular risk assessments and independent testing of their AML Program. Additional requirements also include:
The final rule excludes mutual funds from the requirements of a covered adviser’s AML Program requirements. Further, the final rule does not require an investment adviser to implement a customer identification program (CIP), nor does it require advisers to collect beneficial ownership information from their legal entity customers. However, the CIP requirement is being addressed through joint FinCEN/SEC rulemaking and is expected to be adopted in the near future.
Covered Advisers will be required to comply with the final rule beginning on January 1, 2026.
FinCEN’s adopting release can be found here. For a more detailed discussion of the final rule, see S&K’s Client Alert here.
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The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm or its clients, or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
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