The Treasury Department's Financial Crimes Enforcement Network, or FinCEN, issued Tuesday its long-awaited anti-money laundering rule for investment advisors.
In a Notice of Proposed Rulemaking, FinCEN states that its proposed rule complements Treasury's other recent actions "to combat the illicit finance risks from anonymous companies and all-cash real estate transactions," and that it will add "further transparency to the U.S. financial system and help assist law enforcement in identifying illicit proceeds entering the U.S. economy."
The rule will "keep criminals and foreign adversaries from exploiting the U.S. financial system and assets through investment advisers," Treasury said.
The proposed rule would add investment advisors to the list of businesses classified as "financial institutions" under the Bank Secrecy Act.
Advisors registered with the Securities and Exchange Commission, as well as those that report to the SEC as exempt reporting advisers, would be required to implement anti-money laundering and combating the financing of terrorism (AML/CFT) programs, according to FinCEN.
FinCEN states that it's proposing to delegate examination authority for the rule to the SEC given the SEC's expertise in regulating investment advisors "and experience in examining other financial institutions with respect to AML/CFT responsibilities."
Advisors would also be required to file suspicious activity reports, fulfill certain recordkeeping requirements, and fulfill other obligations applicable to financial institutions subject to the BSA and FinCEN's implementing regulations.
The proposed rule would also apply information-sharing provisions between and among FinCEN, law enforcement government agencies, and certain financial institutions, along with special measures that have been applied under Section 311 of the USA PATRIOT Act.
