FinCEN Proposes to Establish AML/CFT Requirements for Investment Advisers | Practical Law

FinCEN Proposes to Establish AML/CFT Requirements for Investment Advisers | Practical Law

FinCEN issued a notice of proposed rulemaking for a proposed rule that would establish anti-money laundering and countering the financing of terrorism (AML/CFT) requirements for certain investment advisers.

FinCEN Proposes to Establish AML/CFT Requirements for Investment Advisers

Practical Law Legal Update w-042-3335 (Approx. 3 pages)

FinCEN Proposes to Establish AML/CFT Requirements for Investment Advisers

by Practical Law Corporate & Securities
Published on 14 Feb 2024USA (National/Federal)
FinCEN issued a notice of proposed rulemaking for a proposed rule that would establish anti-money laundering and countering the financing of terrorism (AML/CFT) requirements for certain investment advisers.
On February 13, 2024, the US Treasury Department's Financial Crimes Enforcement Network (FinCEN) issued a notice of proposed rulemaking for a proposed rule that would establish anti-money laundering and countering the financing of terrorism (AML/CFT) requirements for certain investment advisers.
Under the proposed rule, SEC-registered investment advisers and exempt reporting advisers would be classified as "financial institutions" under the Bank Secrecy Act (BSA). Exempt reporting advisers are private fund advisers with less than $150 million in private fund assets and venture capital advisers (see Practice Note, Registration of Investment Advisers: Overview: Exempt Reporting Advisers). Covered investment advisers would be required to, among other things:
The proposed rule would also apply information-sharing provisions between FinCEN, law enforcement agencies, and certain financial institutions to investment advisers, and investment advisers would become subject to "special measures" imposed by FinCEN under the USA PATRIOT Act. FinCEN's proposed rule does not include requirements for the collection of beneficial ownership information for legal entity customers or a customer identification program (CIP) (see Practice Note, US Anti-Money Laundering and Trade Sanctions Rules for Financial Institutions: Customer Identification Program). Those requirements will instead be addressed in future rulemaking.
While FinCEN would have overall authority for enforcement of compliance, examination authority for investment adviser compliance with the proposed rules would be delegated to the SEC.
Comments will be accepted on the proposed rules until April 15, 2024.
For more information on current regulatory obligations of investment advisers, see Practice Notes, Investment Adviser Regulation: Overview and Registration of Investment Advisers: Overview.