FinCEN recently issued a Notice of Proposed Rulemaking (NPRM) to keep criminals and foreign adversaries from exploiting the US financial system and assets through investment advisors.
Key points to note include
Under the proposed rule, registered investment advisors (RIAs) and exempt reporting advisers (ERAs) would be included in the definition of ‘financial institution’ under the Banking Secrecy Act (BSA).
These firms would be required to apply AML and CFT requirements pursuant to the Bank Secrecy Act including:
- Implementation of a risk-based AML / CFT programme;
- Filing of certain reports such as Suspicious Activity Reports with FinCEN
- Keeping records such as those relating to the transmittal of funds; and
- Fulfilling other obligations applicable to financial institutions subject to the BSA.
• The proposed rule would apply information-sharing provisions between and among FinCEN, law enforcement government agencies, and certain financial institutions, along with special measures that have been applied under Section 311 of the USA PATRIOT Act.
• FinCEN proposes to delegate examination authority for this rule to the SEC given their expertise in the regulation of investment advisers and experience in examining other financial institutions with respect to AML/CFT responsibilities.
• The comment period for the NPRM is open until 15 April 2024.
• Covered investment advisors would be required to comply with the rule on or before 12 months from the final rule’s effective date.
How we can help?
As the trusted hub of the private markets, IDR is on hand to help fund managers and investment advisers get ahead of incoming AML / CFT requirements with our internationally compliant KYC solution and ongoing MLRO Support .
For more information contact Louis Dodd or visit our website.