The Treasury Department's Financial Crimes Enforcement Network, or FinCEN, officially announced Monday the postponed effective date for the anti-money laundering rule for investment advisors — until Jan. 1, 2028.
Treasury said on July 21 that it had postponed the effective date as it takes a "broad review" of the rule.
The extension is meant to afford it “an opportunity to reduce any unnecessary or duplicative regulatory burden and ensure the IA AML Rule strikes an appropriate balance between cost and benefit," FinCEN explained.
"This signals that additional amendments may follow before the rule takes effect," Proskauer attorneys said Tuesday in a note. "Because the AML rule is already a final rule, any future changes would need to be proposed as separate amendments, each subject to its own notice-and-comment process. Depending on the nature of those changes, FinCEN could even determine that further extensions of the effective date would be necessary."
Comments must be received by Oct. 22.
Sen. Elizabeth Warren, D-Mass., and Rep. Maxine Waters, D-Calif., pressed Treasury Secretary Scott Bessent on Sept. 18 to answer questions on Treasury's decision to postpone the compliance date and "potentially weaken the substance of the final rule."
Advisors, the Proskauer attorneys state, "have gained additional time before any AML obligations under this rule formally take effect, although the contours and applicability of those obligations remain in flux."
While FinCEN’s proposal "to formalize the January 2028 extension provides immediate regulatory relief, substantive changes are still on the table," the Proskauer attorney said.
Carl Fornaris, partner with Winston & Strawn and chair of the firm’s Financial Innovation and Regulation Practice, added in an email Thursday that most RIAs "implement some type of a voluntary ‘best practice’ AML program already, and they should continue doing so."
FinCEN's reprieve on mandatory AML compliance "for at least another two years does not mean that AML compliance should be ignored," Fornaris said. Firms should "continue to make AML compliance an important compliance item so that your critical third party relationships — broker-dealers, banks and larger fund investors — know that there are no AML ‘blind spots’ in your business model."
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