Anti-Money Laundering (AML) Rule Looms For Advisers

Anti-Money Laundering (AML) Rule Looms For Advisers

While most regulatory focus over the past year has been on the Department of Labor’s fiduciary rule, back in mid-2015 the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) proposed that anti-money-laundering (AML) provisions be extended to cover independent RIAs, which would include a requirement for RIAs to establish policies and procedures to identify “suspicious activity” and designate a compliance officer to oversee the program… along with conducting employee training, and even obtaining an independent audit to affirm the process is being executed appropriately. And while much of President’s Trump focus so far has been on rolling back regulations, the administration’s regulatory freeze memo had an exception for areas implicating national security or financial matters, which would leave the way clear for FinCEN to proceed with a new rule (given that money laundering can otherwise potentially be used to finance terrorism). At this point, the public comment period on the AML proposals has already closed, and FinCEN is ostensibly working on a proposed rule that might be issued in the year or two (there is no concrete timeline yet). As a result, it remains to be seen how the AML procedures might actually apply to RIAs, and whether there may be exceptions for smaller RIAs and/or those relying primarily on third-party custodians. Nonetheless, given that broker-dealers and banks have long been subject to AML regulations, it seems increasingly likely that something will ultimately apply to RIAs as well, and become part of what the SEC reviews when examiners visit an RIA firm in the future.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s