FinCEN Announces It Will Provide Two-Year Extension of the AML Rule Compliance Date for Registered Investment Advisers and Exempt Reporting Advisers While It Revisits Rule’s Scope

Registered Investment Advisers (RIAs) and Exempt Reporting Advisers (ERAs) were less than six months away from the requirement to implement an anti-money laundering and countering the financing of terrorism (AML/CFT) program and report suspicious activity to the Financial Crimes Enforcement Network (FinCEN). Then, FinCEN hit the brakes.

Background

On July 21, 2025, FinCEN, U.S. Department of Treasury, announced that it will be postponing the effective date of its AML/CFT rule for RIAs and ERAs, moving the compliance date from January 1, 2026 to January 1, 2028. FinCEN stated the extension will be conducted through the rulemaking process and that it would be issuing exemptive relief to effectuate the extension. Importantly, FinCEN announced that the extension will allow FinCEN to conduct a broader review of the rule and reevaluate the rule’s scope to “ensure efficient regulation that appropriately balances costs and benefits.”

FinCEN emphasized in its announcement that the rule “must be effectively tailored to the diverse business models and risk profiles of the investment adviser sector” and FinCEN “recognizes that extending the effective date of the rule may help ease potential compliance costs for industry and reduce regulatory uncertainty while FinCEN undertakes a broader review” of the rule.

In addition to revisiting the scope of the rule through a future rulemaking process, FinCEN also announced its intent to revisit the 2024 jointly proposed rule with the U.S. Securities and Exchange Commission (SEC) addressing customer identification program (CIP) requirements for RIAs and ERAs.¹

Analysis

FinCEN has attempted to impose AML requirements on investment advisers for over 20 years,² encountering significant roadblocks until the current rule was adopted in 2024.

With the Administration change³and, among other things, the rollback of the Corporate Transparency Act rules in March of this year,⁴ many practitioners in this area expected that there would be a reevaluation of this rule. We will be monitoring FinCEN rulemaking activity regarding the RIA/ERA AML rule, as well as the prior joint CIP proposal with the SEC, and provide further updates as they arise.

¹See also Request for Comments on FinCEN and SEC rule on CIP - King & Spalding.

²See, e.g., FinCEN, Anti-Money Laundering Programs for Investment Advisers, Proposed Rule, 68 Fed. Reg. 23646 (May 5, 2003).

³The new Administration issued an executive order on deregulation in January 2025. See White House, Unleashing Prosperity Through Deregulation (Jan. 31, 2025).

⁴SeeNo Fines, Penalties, or Enforcement with BOI Reporting Deadline; Forthcoming Rule Will Narrow the Scope of CTA Requirements to Foreign Reporting Companies Only - King & Spalding