The Treasury Department said Monday that it has postponed the effective date for the anti-money laundering rule for investment advisors until Jan. 1, 2028, as it takes a "broad review" of the rule.
Treasury's Financial Crimes Enforcement Network, or FinCEN, issued in February 2024 its long-awaited anti-money laundering rule for advisors.
On Monday, Treasury said that "in order to ensure efficient regulation that appropriately balances costs and benefits," FinCEN will postpone the effective date of the final rule establishing Anti-Money Laundering/Countering the Financing of Terrorism Program and Suspicious Activity Report Filing Requirements for Registered Investment Advisers and Exempt Reporting Advisers and revisit the scope of the IA AML Rule at a future date.
FinCEN anticipates delaying the effective date of the rule from Jan. 1, 2026, until Jan. 1, 2028.
The AML rule "seeks to address ongoing illicit finance risks, threats, and vulnerabilities posed by criminals and foreign adversaries that exploit the U.S. financial system and assets through investment advisers," FinCEN states.
FinCEN said that it "recognizes, however, that the rule must be effectively tailored to the diverse business models and risk profiles of the investment adviser sectors," and that extending the effective date of the rule "may help ease potential compliance costs for industry and reduce regulatory uncertainty while FinCEN undertakes a broader review" of the rule.
FinCEN said that it also "intends to provide the IA sector with regulatory certainty by issuing appropriate exemptive relief delaying the effective date."
During the delayed effective date, FinCEN states that it intends to revisit the substance of the rule "through a future rulemaking process and, together with the Securities and Exchange Commission," also intends to revisit the joint proposed rule establishing customer identification program requirements for advisors, Customer Identification Programs for Registered Investment Advisers and Exempt Reporting Advisers."
The Investment Adviser Association told FinCEN in January that the AML Rule "should not go into effect until the CIP Proposal is finalized and the compliance dates of both rules should coincide so that advisers will not have to establish new AML programs only to have to modify them once any CIP rule is adopted."
The CIP rule was jointly proposed last May and would require SEC-registered investment advisors to establish, document and maintain written customer identification programs.
Credit: Michael A. Scarcella/ALM
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