On August 28, 2024, FinCEN issued two rules to help safeguard the residential real estate and investment adviser sectors from illicit finance as part of its ongoing efforts to combat illicit finance and protect U.S. national security. One of the final rules will will apply anti-money laundering/countering the financing of terrorism (AML/CFT) requirements to certain investment advisers that are registered with the U.S. Securities and Exchange Commission (SEC), as well as those that report to the SEC as exempt reporting advisers.
The final investment adviser rule will include certain investment advisers in the definition of “financial institution” under the BSA and prescribe minimum standards for anti-money laundering/countering the financing of terrorism (AML/CFT) programs to be established by covered investment advisers. The final rule adds “investment adviser” to the definition of “financial institution” and defines investment advisers as:
Investment advisers registered with or required to register with the SEC, also known as registered investment advisers (RIAs), and
Investment advisers that report information to the SEC as exempt reporting advisers (ERAs).
The final rule requires RIAs and ERAs to:
Implement a risk-based and reasonably designed AML/CFT program;
File certain reports, such as Suspicious Activity Reports (SARs), with FinCEN;
Keep certain records, such as those relating to the transmittal of funds (i.e., comply with the Recordkeeping and Travel Rules); and
Fulfill certain other obligations applicable to financial institutions subject to the BSA and FinCEN’s implementing regulations, such as special information sharing procedures.
The final is effective on January 1, 2026.
FinCEN’s press release can be found here.
A Fact Sheet on the final rule can be found here.
