Left to Right: David Sewell, Timothy Clark, Ivet Bell, David Nicolardi, and Nathaniel Balk (photos courtesy of authors)
On August 28, 2024, the Financial Crimes Enforcement Network (FinCEN) adopted a final rule that extends anti-money laundering (AML) and countering the financing of terrorism (CFT) compliance obligations to certain types of investment advisers (the Final Rule), and delegates to the U.S. Securities and Exchange Commission (SEC) the authority to examine investment advisers’ compliance with these obligations.[1] The Final Rule ends a long-running debate over whether to subject investment advisers to AML/CFT obligations after multiple prior proposals to do so had stalled.
The Final Rule imports standards and requirements that will be familiar to investment advisers affiliated with financial institutions already subject to AML/CFT obligations, but may be new to smaller and independent investment advisers. For these entities, the compliance uplift required could be substantial.