Treasury Department Proposing Advisors Establish Anti-Money-Laundering Safeguards
Investment advisors would be required to establish anti-money-laundering programs under a proposed rule issued last week by the Treasury Department.
Treasury issued the proposed rule as part of its authority under the USA Patriot Act, the legislation enacted in the aftermath of the Sept. 11, 2001, terrorist attack aimed at enhancing the ability of the government to track funds of terrorist organizations.
In the proposed rule, Treasury notes that investment advisors are not listed as the entities defined as “financial institutions” under current law that are covered by the USA Patriot Act.
Nonetheless, Treasury says, the Secretary has extremely broad authority to include additional types of businesses under the AML (anti-money-laundering) program upon a determination that they engage in certain financial activities.
Because of the types of activities engaged in by investment advisors, Treasury says, the department is proposing to require them to establish AML programs.
Treasury notes that investment advisors control some $21 trillion in assets and are often in a critical position of knowledge as to the movements of large amounts of financial assets through the financial markets.
“If some of these assets include proceeds of illegal activities, or are intended to further such activities, an anti-money-laundering program should help discover them,” Treasury says.