The Financial Crimes Enforcement Network today proposed a new rule to require certain investment advisers to comply with Bank Secrecy Act regulations regarding anti-money laundering and countering the financing of terrorism. Under the proposal, covered advisers would need to implement risk-based AML/CFT programs, report suspicious activity to FinCEN and fulfill recordkeeping requirements. Also, to coincide with the release of the proposal, the Treasury Department published a new report on ALM/CFT risk in the investment advisory sector.
The sector is a key entry point into the U.S. financial system for criminals, terrorists and other bad actors, Under Secretary for Terrorism and Financial Intelligence Brian Nelson said in a video announcing the proposed rule. “Investment advisers have never been subject to comprehensive regulation to detect and prevent money laundering and terrorism financing,” he said. “We know that bad actors have been exploiting the sector to access the U.S. financial system for nefarious purposes.”
The proposed rule would add investment advisers to the list of businesses classified as “financial institutions” under the BSA, according to FinCEN. At the same time, the agency is proposing to delegate examination authority under the rule to the Securities and Exchange Commission, “given the SEC’s expertise in the regulation of investment advisers and experience in examining other financial institutions with respect to AML/CFT responsibilities.”
