On July 21, the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) announced a two-year postponement of the Anti-Money Laundering (AML)/Countering the Financing of Terrorism (CFT) Program and Suspicious Activity Report filing requirements for registered investment advisers (IAs) and exempt reporting advisers.
The rule, originally scheduled to take effect on January 1, 2026, will now become effective on January 1, 2028.
We previously reported on the final rule issued on August 28, 2024, here.
The IA AML rule was developed to address illicit finance risks and vulnerabilities in the IA sector, particularly those posed by criminals and foreign adversaries seeking to exploit the US financial system. However, FinCEN has acknowledged the need to ensure that AML requirements are appropriately tailored to the diverse business models and risk profiles of IAs. The postponement is intended to:
- Balance regulatory costs and benefits.
- Allow for further tailoring of the rule to accommodate the varied structures and risk profiles of IAs.
- Reduce potential compliance costs and regulatory uncertainty for industry participants.
Regulatory Developments and Next Steps
During the extended period, FinCEN will revisit the substance and scope of the IA AML rule through a new rulemaking process. In addition, FinCEN, in coordination with the US Securities and Exchange Commission (SEC), intends to reconsider the joint proposed rule regarding customer identification program requirements for IAs. The agency will provide regulatory certainty to the sector by issuing appropriate exemptive relief to formally delay the effective date.
Despite the delay in domestic rulemaking, FinCEN and other US authorities continue to prioritize AML and sanctions enforcement, particularly with respect to foreign threats and sanctions violations. Recent enforcement actions have emphasized the importance of AML and sanctions compliance programs, especially for IAs with cross-border activities or high-risk counterparties. IAs should remain vigilant regarding their AML and sanctions compliance obligations, and consider maintaining or enhancing voluntary AML programs in line with industry best practices and evolving enforcement priorities.
Key Takeaways
- The effective date for the IA AML rule is postponed from January 1, 2026, to January 1, 2028.
- FinCEN will review and potentially revise the rule to better address the unique characteristics and risk profiles of IAs.
- The agency will coordinate with the SEC on related customer identification program requirements.
- IAs should continue to monitor regulatory developments and consider maintaining or enhancing voluntary AML and sanctions compliance programs, particularly in light of ongoing enforcement activity and the evolving regulatory landscape.