FinCEN unveils final AML rules for investment advisers

investmentnews.com:

The Treasury Department has finalized new regulations extending anti-money-laundering measures to certain investment advisers, though it’s made concessions on some requirements after pushback from the industry.

The rules, unveiled Wednesday, require specific investment advisers to monitor and report suspicious client activities as part of a broader effort to close regulatory gaps identified by the Biden administration.

As reported by the Wall Street Journal, the new regulations come after years of deliberation and are part of a more broad-based push to mitigate the flow of illicit funds across various industries.

“These steps will make it harder for criminals to exploit our strong residential real estate and investment adviser sectors,” Treasury Secretary Janet Yellen stated Wednesday.

The Treasury’s Financial Crimes Enforcement Network initially proposed similar regulations for investment advisers in 2003 and again in 2015, but both efforts were met with strong opposition from industry stakeholders.

FinCEN floated the idea again earlier this year in February, and followed that up with a joint proposal with the SEC in May. While representatives for the investment adviser industry recognized it was much more relaxed compared to earlier iterations, they still railed against certain aspects of the latest proposal, causing FinCEN to soften its final version of the rules.

One critical adjustment in the final investment adviser rule is that certain advisers have been exempted from the AML requirements, including midsize and family advisers and pension consultants.

The final rule also deviates from FinCEN’s earlier proposal by no longer requiring individuals responsible for an investment adviser’s AML program to be located in