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Client Alert: FinCEN Proposes AML Requirements for Registered Investment Advisers

August 26, 2015

On August 25, 2015, the Financial Crimes Enforcement Network ("FinCEN") issued proposed rules that would require registered investment advisers to develop and implement a written anti-money laundering ("AML") program reasonably designed to prevent the adviser from being used for money laundering and the financing of terrorist activities and to achieve and monitor compliance with applicable provisions of the Bank Secrecy Act ("BSA").  Under the proposals, the AML program would be required to be approved in writing by the adviser's board of directors or other persons having similar functions.  The program would be required to:

  • Establish and implement policies, procedures, and internal controls reasonably designed to prevent the investment adviser from being used for money laundering or the financing of terrorist activities and to achieve and monitor compliance with the applicable provisions of the BSA and the implementing regulations thereunder;
  • Provide for independent testing for compliance to be conducted by the investment adviser's personnel or by a qualified outside party;
  • Designate a person or persons responsible for implementing and monitoring the operations and internal controls of the program; and
  • Provide for ongoing training for appropriate persons.

Under the proposals, registered advisers would be included in the general definition of "financial institution" under the BSA and be required to file currency transaction reports and suspicious activity reports with FinCEN, and keep certain records relating to their AML programs.  FinCEN proposes to delegate to the SEC its authority to examine advisers for compliance with the AML requirements.

Although the current proposal would not require advisers to implement a customer identification program ("CIP"), FinCEN plans to address CIP requirements for advisers in a subsequent rulemaking jointly with the SEC.

The proposals contemplate a six-month phase-in period for compliance. Comments on the proposals must be submitted to FinCEN within 60 days after the proposals are published in the Federal Register. Click here for the FinCEN proposing release.


If you have any questions regarding the matters covered in this memo, please contact any of the partners and counsel listed below or your primary attorney in Seward & Kissel's Investment Management Group.


John J. Cleary


(212) 574-1255


Maureen R. Hurley


(212) 574-1384


Paul M. Miller


(202) 661-7155


Joseph M. Morrissey


(212) 574-1245


David R. Mulle


(212) 574-1452


Steven B. Nadel


(212) 574-1231


Anthony C.J. Nuland


(202) 661-7140


Patricia A. Poglinco


(212) 574-1247


Christopher C. Riccardi


(212) 574-1535


Jack Rigney


(212) 574-1254


John E. Tavss


(212) 574-1261


Robert B. Van Grover


(212) 574-1205


Robert L. Chender
(212) 574-1415


Kathleen K. Clarke


(202) 661-7190


Sharon M. Davison


(212) 574-1315


Bibb L. Strench


(202) 661-7141


About Seward & Kissel LLP

Seward & Kissel LLP, founded in 1890, is a leading U.S. law firm with an international reputation for excellence. We have offices in New York City and Washington, D.C.

Our practice primarily focuses on corporate, litigation and restructuring/bankruptcy work for clients seeking legal expertise in the financial services, corporate finance and capital markets areas.  The Firm is particularly well known for its representation of major commercial banks, investment banking firms, 
investment advisers and related investment funds (including mutual funds and hedge funds), master servicers, servicers, investors, distressed trade brokers, liquidity providers, hedge fund administrators,  broker-dealers, institutional investors and transportation companies (particularly in the shipping area). 



This memo  may be considered attorney marketing and/or advertising. Prior results do not guarantee a similar outcome.  The information contained in this memo is for informational purposes only and is not intended and should not be considered to be legal advice on any subject matter.  As such, recipients of this memo, whether clients or otherwise, should not act or refrain from acting on the basis of any information included in this memo without seeking appropriate legal or other professional advice.  This information is presented without any warranty or representation as to its accuracy or completeness, or whether it reflects the most current legal developments.