AML Obligations May Be Coming for Investment Advisors
February 29, 2024
The Case
Yesterday, the Financial Crimes Enforcement Network (FinCEN) published a proposal in the Federal Register to enact a federal standard for anti-money laundering (AML) and combating financing of terrorism (CFT) programs on U.S. Securities and Exchange Commission (SEC)-registered investment advisors (RIAs) as well as exempt reporting advisors (ERAs).
Why Does This Matter?
The proposed rule, from which comments are due by April 15, would apply to RIAs registered with the SEC and exempt reporting advisors, including non-U.S. advisors meeting these threshold qualifications. If adopted as proposed, the rule would impose significant new compliance responsibilities on asset managers, including the following.
Implement a written, risk-based AML/CFT program to prevent money laundering, terrorist financing, or other illicit finance activities in compliance with the BSA Act.
Perform independent testing over periodic intervals or when there are significant changes to the Covered IA’s risk profile, systems, compliance staff, or processes.
Designate a responsible person or persons to implement and monitor the operations and internal controls of the program.
Conduct ongoing monitoring to identify and report suspicious transactions.
Report on a SAR any suspicious transaction conducted or attempted by, at, or through the Covered IA that involves at least $5,000 in funds or other assets.
Comply with certain information-sharing procedures under the USA Patriot Act.
Comply with special measures under section 311 of the USA PATRIOT Act.
InnReg's Experience
Since its inception in 2013, InnReg has developed deep expertise in compliance services related to AML/CFT regulations impacting registered investment advisors and managing compliance programs for a wide range of fintechs.
Learn More About This Topic
For additional insights, read InnReg’s free RIA SEC Compliance Checklist to help you build best practices to meet evolving regulatory requirements.
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