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.