On September 1 2015 the US Treasury’s Financial Crimes Enforcement Network (FinCEN) published a notice of proposed rulemaking prescribing anti-money laundering (AML) requirements for investment advisers that are registered or required to be registered with the Securities and Exchange Commission (SEC).(1) The requirements include establishing an AML programme and reporting suspicious activity. In addition, FinCEN proposes to include investment advisers within the general definition of ‘financial institution’ in rules implementing the Bank Secrecy Act, which would require them to file currency transaction reports and maintain records relating to the transmittal of funds, among other things. The authority to examine investment advisers for compliance with these AML requirements would be delegated to the SEC.
The proposed rule addresses concerns that money launderers and other illicit actors seeking to access the US financial system may attempt to gain entry through an investment adviser because they are subject to fewer AML controls than other financial institutions, such as broker-dealers and banks. The proposed rule would subject investment advisers to rules similar to those affecting other financial institutions under the Bank Secrecy Act and would make it more difficult for criminals to evade scrutiny by operating through investment advisers.