FinCEN Targets Investment Advisors with Full Anti-Money Laundering Requirements

The U.S. Treasury Department has proposed an initiative to strengthen anti-money laundering controls. They involve mandating investment advisers to adhere to the same compliance rules as banks.

If approved by Congress, the new measures would require investment advisers to report any suspicious activity by their clients or the accounts they manage to the Financial Crimes Enforcement Network (FinCEN).

According to Andrea Gacki, Director of FinCEN, the main reason behind the proposal is to strengthen controls on money laundering and terrorist financing vehicles by US financial authorities (practices known as AML/FCT).

"Investment advisers are important gatekeepers to the American economy, overseeing the investment of tens of trillions of dollars. The current patchwork of AML/CFT requirements create regulatory gaps that criminals and foreign adversaries exploit to launder money, hide illicit wealth, and compromise American innovation," said FinCEN Gacki in a call with reporters. "This proposed rule would level the regulatory playing field, protect U.S. economic and national security, and safeguard American businesses."

With this proposal, the Treasury Department seeks, for the first time in the history of the fight against financial crime, to include rules controlling the activities of investment advisers.

Investment advisers can be independent firms, segments of financial service providers, or asset managers for individuals or organizations, both in the U.S. and abroad.

According to American Banker, FinCEN has never subjected investment advisors to the full anti-money laundering requirements of the U.S. Bank Secrecy Act. The publication stated that under the proposal, registered investment advisors accredited by the Securities and Exchange Commission, as well as investment advisers reporting to the SEC as exempt reporting advisers, would both be subject to the proposed rule.