On July 21, 2025, the U.S. Department of the Treasury’s (“Treasury”) Financial Crimes Enforcement Network (FinCEN) announced it will delay the effective date of the final rule establishing anti-money laundering/countering the financing of terrorism (AML/CFT) program and suspicious activity report (SAR) filing requirements for certain investment advisers (the “IA Rule”) until January 1, 2028. The new effective date is also subject to Treasury’s announced plan to revisit the scope of the IA Rule. The IA Rule had an original effective date of January 1, 2026.
The IA Rule amends the definition of “financial institution” under the Bank Secrecy Act (BSA) to include certain registered investment advisers (RIAs) and exempt reporting advisers (ERAs) and imposes standards for AML/CFT programs and SAR requirements on them (for more information about the IA Rule, please see our September 2024 Client Alert). Risks affecting the investment adviser industry were documented by Treasury in a February 2024 Investment Adviser Risk Assessment, which emphasized that private funds are “an attractive entry point for illicit proceeds” and noted the risks posed by the patchwork inclusion of investment advisers in the AML/CFT regulatory regime. The IA Rule aims to mitigate these risks and deliver on a key finding of the 2021 U.S. Strategy on Countering Corruption, which found that lack of regulatory oversight facilitates illicit activity through investment advisers. FinCEN noted in its announcement, however, that the IA Rule must be effectively tailored to the diverse business models and risk profiles of the investment adviser industry, and that extending the effective date of the IA Rule will reduce regulatory uncertainty while FinCEN undertakes its broader review of the IA Rule.
FinCEN also stated in the July 21, 2025 announcement its intent to provide the investment adviser industry with regulatory certainty by issuing formal exemptive relief delaying the effective date of the IA Rule. Additionally, FinCEN will revisit the substance of the IA Rule through a rulemaking process and, together with the U.S. Securities and Exchange Commission (SEC), intends to revisit the joint proposed rule establishing customer identification program (CIP) rule requirements for investment advisers (the joint proposed CIP rule is covered in our Client Alert published on July 8, 2024).
Recommended Action
As the regulatory landscape continues to evolve, RIAs and ERAs covered by the IA Rule must remain vigilant and monitor Treasury’s plans for the IA Rule. Investment advisers that have already adopted changes to their compliance programs in anticipation of the IA Rule should continue to adhere to those amended policies and procedures. Any decision to roll back compliance program changes in light of Treasury’s recent announcement should be grounded in a risk-based approach tailored to the specific RIA or ERA business being conducted.
Our BSA/AML and Investment Management teams are closely tracking these developments and will monitor for further updates from FinCEN, including future rulemakings. Please contact us if you have any questions concerning this alert.
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