Client Alert
FinCEN Delays Compliance Date for AML/CFT Rule: Will Reopen Along with CIP Rule
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The U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) announced on July 21 that it was delaying the compliance date of the final rule establishing Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) Program and Suspicious Activity Report Filing Requirements for Registered Investment Advisers and Exempt Reporting Advisers (Final Rule) from January 1, 2026, to January 1, 2028. [1]
FinCEN intends to undertake a broad review of the Final Rule and ensure it is “effectively tailored to the diverse business models and risk profiles of the investment adviser sector.”2 FinCEN, along with the U.S. Securities and Exchange Commission (SEC), also intends to revisit their joint proposal establishing customer identification program (CIP) requirements for investment advisers. [3]
The Final Rule, which applies to registered investment advisers (RIAs) and exempt reporting advisers (ERAs), designates certain RIAs and ERAs as “financial institutions,” prescribes minimum standards for anti-money laundering (AML) and countering the financing of terrorism (CFT) programs, requires the filing of certain suspicious activity reports (SARs), and requires compliance with recordkeeping requirements as well as other obligations applicable to financial institutions subject to the Bank Secrecy Act of 1970 (BSA). [4]
Key Takeaways
- A reassessment of the Final Rule is a welcome development as it was subject to criticism for being overly broad and unduly burdensome. It should be noted that several prior proposals to impose AML/CFT rules on investment advisers were not acted upon.[5]
- Similarly, many comments on the CIP rule proposal highlighted the cost and burden of the proposal and questioned whether the proposal was duplicative, particularly for advisers whose custodians already are subject to CIP rules. SEC Commissioner Mark Uyeda did not support the CIP rule proposal. [6]
- Nonetheless, the comment process for and rollout of any amended AML/CFT and final CIP rules should provide the industry with the opportunity to foster a more harmonized and coordinated approach that better balances costs and burdens with anticipated benefits.
Summer associate Atticus Keane contributed to this alert.
[1] Treasury Announces Postponement and Reopening of Investment Adviser Rule, U.S. Department of the Treasury (July 21, 2025).
[2] Id.
[3] Customer Identification Programs for Registered Investment Advisers and Exempt Reporting Advisers, 89 Fed. Reg. 44751 (May 21, 2024).
[4] Financial Crimes Enforcement Network: Anti-Money Laundering/Countering the Financing of Terrorism Program and Suspicious Activity Report Filing Requirements for Registered Investment Advisers and Exempt Reporting Advisers, 89 Fed. Reg. 72156 (September 4, 2024); see also Stradley Ronon’s client alert, FinCEN Finalizes AML/CFT Rule: 6 Takeaways for Investment Advisers Facing New Regulatory Scrutiny (September 6, 2024).
[5] In particular, FinCEN first proposed that unregistered investment companies, including private funds, establish AML/CFT programs in 2002. (See Financial Crimes Enforcement Network: Anti-Money Laundering Programs for Unregistered Investment Companies, 67 Fed. Reg. 60617 (September 26, 2002).) That proposal was never implemented. FinCEN proposed that certain investment advisers be subject to AML/CFT requirements in 2003. (See Financial Crimes Enforcement Network: Anti-Money Laundering Programs for Investment Advisers, 68 Fed. Reg. 23646 (May 5, 2003).) FinCEN announced in 2007 that it would take a “fresh look” at how the AML/CFT regulatory framework was being implemented across industries and withdrew the 2003 proposal, noting that advisers “must conduct financial transactions for their clients through other financial institutions that are subject to BSA requirements.” (See Financial Crimes Enforcement Network: Withdrawal of the Notice of Proposed Rulemaking; Anti-Money Laundering Programs for Investment Advisers, 73 Fed. Reg. 65568 at n.3 (November 4, 2008).) In 2015, FinCEN again proposed that AML/CFT programs be established by certain investment advisers. (See Financial Crimes Enforcement Network: Anti-Money Laundering Program and Suspicious Activity Report Filing Requirements for Registered Investment Advisers, 80 Fed. Reg. 52680 (September 1, 2015).) That rule was eventually withdrawn with FinCEN’s 2024 proposal that led to the Final Rule.
[6] Commissioner Mark T. Uyeda, Statement on Customer Identification Programs for Registered Investment Advisers and Exempt Reporting Advisers (May 13, 2024).
