New Treasury Rules Impose AML/CFT Requirements on Investment Advisers
From the desk of Jim Eccleston at Eccleston Law
The U.S. Treasury Department has finalized anti-money-laundering (AML) regulations targeting investment advisers registered with the U.S. Securities and Exchange Commission (SEC). According to the DI Wire, The Financial Crimes Enforcement Network (FinCEN) introduced two final rules aimed at curbing money laundering: one for investment advisers and exempt reporting advisers, and another for residential real estate advisers.
These new rules classify Registered Investment Advisers (RIAs) and exempt reporting advisers as “financial institutions” under the Bank Secrecy Act, making them subject to AML and countering the financing of terrorism (CFT) program requirements. This move comes after a Treasury risk assessment revealed that the investment adviser industry has repeatedly been exploited as an entry point for illicit funds tied to foreign corruption, fraud, tax evasion, and other criminal activities.
Historically, AML/CFT obligations have been imposed on banks, broker-dealers, and mutual funds. SEC Chair Gary Gensler supported the proposal earlier this year, emphasizing that the rule is designed to prevent terrorists and criminals from accessing U.S. financial markets through false identities established with investment advisers.
The final rule, while similar to the original proposal, narrows its scope by excluding certain categories of advisers, such as “mid-sized,” “multi-state,” and “pension consultants”, as well as RIAs that do not report assets under management to the SEC. The rule does not apply to state-registered advisers. Those affected must establish a "risk-based and reasonably designed" AML/CFT program, file suspicious activity reports with FinCEN, and maintain specific records related to fund transmittals.
According to DI Wire, firms must comply with the new rule by January 1, 2026. However, RIAs advising mutual funds, which are already covered under the Bank Secrecy Act, will not need to implement additional AML/CFT requirements for those funds.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
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