FinCEN Issued Final Anti-Money Laundering/Countering the Financing of Terrorism Rule

On August 28, 2024, the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued a final rule, the Anti-Money Laundering/Countering the Financing of Terrorism Program and Suspicious Activities Report (“SARs”) Filing Requirements for Registered Investments Advisers and Exempt Reporting Advisers, designed to combat money laundering, terrorist financing and other illicit financial activities. The rule was finalized after FinCEN issued its Notice of Proposed Rulemaking in February 2024.  

Implementing a Robust AML/CFT Compliance Program  

The Final Rule added investment advisers, specifically registered investment advisers (RIAs) required to register with the SEC and exempt investment advisers (ERAs), to the definition of financial institutions under the Bank Secrecy Act of 1970 (BSA).  

As a result, RIAs and ERAs who fall within the definition of the investment advisers are required to:

1. Implement a risk-based and reasonably designed AML/CFT compliance program; 
2. File SARs with FinCEN pursuant to the BSA;  
3. Provide independent testing of AML/CFT compliance program; 
4. Maintain certain records;  
5. Implement risk-based procedures for conducting ongoing customer due diligence. 

Outsourcing AML/CFT Compliance  

The final rule allows RIAs and ERAs to outsource the facilitation of the AML/CFT compliance program to a third party. However, each RIA and ERA remains responsible for the AML/CFT program’s compliance with the final rule.  

Preparing for the New Rule  

The compliance date is January 1, 2026, and FinCEN has delegated its examination authority to the SEC. 

The new FinCEN rule represents a significant regulatory development for investment advisors. By understanding the key requirement and taking proactive steps to implement a robust AML/CFT compliance program, RIAs and ERAs can make sure they comply with the law and mitigate risks associated with money lauding and terrorist financing.  

EisnerAmper has worked with Investment Advisers to define best practices to develop and maintain an AML/CFT compliance program. Follow the link to learn more.