The Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury, announced August 28 it had adopted a final rule (Final Rule) creating and expanding certain obligations related to anti-money laundering and countering the financing of terrorism (AML/CFT) for investment advisers.1 The Final Rule implements FinCEN’s February proposed rule2 (Proposal) to add certain registered investment advisers (RIAs) and exempt reporting advisers (ERAs) to the definition of “financial institution” under the Bank Secrecy Act (BSA), with some modifications from the Proposal. The compliance date of the Final Rule is January 1, 2026.
Key Takeaways
- The Final Rule applies to ERAs and RIAs, but not yet to state-registered advisers, nor to family offices or foreign private advisers.
- The Final Rule permits an investment adviser acting as a subadviser to exclude the primary adviser from its AML/CFT programs when the subadviser has a direct contractual relationship with the primary adviser (rather than the underlying customer of the other investment adviser).
- Advisers are permitted to exclude mutual funds3 and certain collective investment funds they advise from their AML/CFT programs, provided the funds are subject to an AML/CFT program, but FinCEN did not categorically exclude registered closed-end funds.
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