The United States Treasury Department’s Financial Crimes Enforcement Network (FinCEN) is once again pushing for regulations that would require investment advisers registered with the Securities and Exchange Commission (SEC) to be subject to anti-money laundering (AML) requirements. In 2003, FinCEN proposed such a rule under the Bank Secrecy Act. Many concerns were raised about that proposed rule, and FinCEN withdrew the proposal in 2008 and suggested it intended to propose a revised rule at a later date. Now, seven years later, FinCEN has proposed a new rule.
The rule proposed by FinCEN on August 25, 2015, would do three things: (i) include investment advisers within the general definition of “financial institution” in the regulations implementing the Bank Secrecy Act (BSA) and add a definition of investment adviser; (ii) require investment advisers to establish AML programs; and (iii) require investment advisers to report suspicious activity.
As proposed, the rule would only cover investment advisers who are registered or required to be registered with the SEC. However, as the proposal points out, future rulemaking may expand coverage to advisers regulated by a state or those exempt from registration. FinCEN would delegate its authority to examine investment advisers for AML compliance to the SEC. The SEC has served in this role with respect to FinCEN regulations governing broker-dealers and investment companies.
The proposed rule defines registered investment advisers as “financial institutions” and, as a result, they would be subject to the application of general BSA reporting and recordkeeping requirements including, but not limited to, Currency Transaction Report filing requirements and the recordkeeping, transmittal of records, and retention requirements for the transmittal of funds under the Recordkeeping and Travel Rules and other related recordkeeping requirements. While the current proposal would not include a customer identification program requirement or recently proposed customer due diligence requirements, see 79 FR 45151 (Aug. 4, 2014), FinCEN expects that both of these issues and others will be addressed in subsequent rulemakings, including a joint rulemaking with the SEC that will address customer identification program requirements.
The comment period will be open for 60 days, and comments may be submitted identified by Regulatory Identification Number (RIN) 1506-AB10 as follows:
- Federal E-rulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments. Include 1506-AB10 in the submission. Refer to Docket Number FINCEN-2014-0003.
- Mail: FinCEN, P.O. Box 39, Vienna, VA 22183. Include 1506-AB10 in the body of the text.