Our Financial Services and Investment Funds Teams examine the delay by the Financial Crimes Enforcement Network (FinCEN) of the effective date for the Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) program requirements by two years.
- The postponement aims to ease compliance costs, reduce uncertainty, and allow for further review of the rule
- The rule would have included investment advisers in the list of “financial institutions” under the Bank Secrecy Act and required them to implement comprehensive AML/CFT programs
- FinCEN will provide interim exemptive relief while reviewing the rule’s substance
The Financial Crimes Enforcement Network (FinCEN) has postponed the effective date of its final rule establishing the Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) Program and Suspicious Activity Report Filing Requirements for Registered Investment Advisers and Exempt Reporting Advisers Rule. The effective date, previously set for January 1, 2026, is now anticipated to be January 1, 2028.
The so-called “IA AML Rule” would have brought certain investment advisers within the definition of “financial institution” under the Bank Secrecy Act (BSA) and imposed comprehensive AML/CFT program obligations. FinCEN cited several reasons for the deferral, including:
- Easing potential compliance costs for the industry.
- Reducing regulatory uncertainty.
- Allowing FinCEN to undertake a broader review of the rule’s substance and scope.
- Ensuring the rule is “effectively tailored to the diverse business models and risk profiles” within the investment adviser sector.
FinCEN also indicated its intent to collaborate with the Securities and Exchange Commission (SEC) to revisit the previously proposed rule on customer identification program (CIP) requirements for investment advisers.
What This Means for Advisers
While this postponement provides a two-year reprieve from the compliance obligations of the IA AML Rule, it’s important to understand what these obligations would have entailed. Had the rule become effective in 2026, advisers would generally have been required to:
- Develop and implement a written, risk-based AML/CFT program.
- Designate an AML compliance officer.
- Conduct ongoing training for relevant personnel.
- Perform independent testing of their AML programs.
- File suspicious activity reports with FinCEN about suspicious transactions.
- If the associated CIP rule were finalized, implement customer identification and verification procedures for their clients.
FinCEN intends to revisit the rule’s substance through a future rulemaking process and will provide interim exemptive relief to formally delay the effective date. Firms should continue to monitor FinCEN and SEC announcements for further developments on these AML/CFT and CIP requirements.
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