House-Passed Defense Bill Includes AML Rule for Advisors
The bottom line is that anti-money laundering rules are "on the horizon for investment advisors," says the Investment Adviser Association.
The House voted 329-101 late Thursday in favor of H.R. 7900, the National Defense Authorization Act for Fiscal Year 2023, which includes a provision to require investment advisors to adopt anti-money-laundering policies.
The $939.3 billion FY 2023 NDAA includes the ENABLERS Act or the “Establishing New Authorities for Business Laundering and Enabling Risks to Security Act,” which amends the definition of “financial institutions” under the Bank Secrecy Act to include U.S.-based intermediaries, including investment advisors, according to the Investment Adviser Association in Washington.
“These provisions would require Treasury to adopt rules for the newly covered entities to report suspicious transactions, establish anti-money laundering (AML) and due diligence programs, and identify and verify account holders,” IAA said.
An AML rule for investment advisors has been on the long-term action list of Treasury’s Financial Crimes Enforcement Network, or FinCen, for some time.
Nicolas Morgan, partner at Paul Hastings, told ThinkAdvisor in a previous interview that a September 2015 proposed a rule change by FinCEN “has languished, perhaps in part because of doubts about whether FinCEN had the statutory authority for such a substantial modification of the definition of ‘financial institution’ under the Bank Secrecy Act.”
The Senate’s version of NDAA awaits floor action.
“Bottom line: AML rules are on the horizon for investment advisors,” according to IAA.
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