Laundry Day

There has been much debate as to where investment advisors fit into the anti-money laundering procedures. It’s still unclear how the procedures will affect advisors who serve consumers directly, and don’t have relationships with mutual fund companies or broker/dealers. Dwayne Thompson, director of government affairs for the Financial Planning Association, says the FPA is now in talks with Treasury to shed some light on the issue. “We’re talking to the Treasury Department to share information on how advisors do business, and Treasury wants to learn about the advisory industry,” he says.

Debra Brown, president of Self Audit, Inc., in Beverly Farms, Massachusetts, says that while advisors are not now required to have formal plans, it is important for advisors to a mutual fund company and those with broker/dealer relationships to have some type of procedure in place. “Any investment advisor to a mutual fund company could be required [to have a money laundering plan] due to the fact that the mutual fund is required to have a program,” Brown says. “The mutual fund is a virtual company and has to delegate that responsibility to some entity, so it could be the investment advisor or the administrator.”

Self Audit recently created model anti-money laundering procedures for mutual fund companies that delegate the responsibility of having an anti-money laundering program to the investment advisor. Advisors can download the model procedures for free by logging on to www.selfauditor.com.

Information about Self Audit’s Investment Adviser AML Program Kit, which costs $500, is also available on the Web site. The kit contains an employee training program with Power Point slides, due diligence information on “covered service providers,” and other relevant information, Brown says. “Our package allows every investment advisor to buy this pre-made employee training program and due diligence questionnaire that would go out to any firm that puts assets in their funds–hedge funds, mutual funds–and to the extent that they have selling agreements with other firms, this due diligence questionnaire would help them have some program in place.”

So far, more than 200 firms have downloaded the free procedures. And “we had sales within two hours of [the AML kit] going online” in early April, Brown says.