Mon Dec 02 19:50:00 UTC 2024: **FOR IMMEDIATE RELEASE**

**FinCEN Expands Anti-Money Laundering Regulations to Include Certain Investment Advisors**

**Washington, D.C. –** The Financial Crimes Enforcement Network (FinCEN) has issued a final rule expanding the definition of “financial institution” under the Bank Secrecy Act (BSA) to include certain registered investment advisors (RIAs) and exempt reporting advisors (ERAs). This significant regulatory change, effective January 1, 2026, requires these “Covered Advisers” to implement comprehensive anti-money laundering (AML) and counter-terrorist financing (CFT) programs.

The rule, published September 4, 2024, addresses concerns highlighted in a February 2024 Treasury Department risk assessment, which identified the investment advisor industry’s vulnerability to exploitation by criminals for money laundering and other illicit activities. While previous attempts to extend AML/CFT requirements to investment advisors were withdrawn due to industry pushback, FinCEN cites the increased risk as justification for this final rule.

The rule applies to most RIAs registered with the Securities and Exchange Commission (SEC), and ERAs, with specific exclusions for mid-sized advisors, those not reporting assets under management, state-registered advisors, foreign private advisors, and family offices. For Covered Advisers outside the U.S., the rule applies only to activities within the U.S. or involving U.S. persons. The SEC will oversee compliance with these new regulations.

Covered Advisers must develop a written, risk-based AML/CFT program approved by their governing body. This program must include customer due diligence, suspicious activity monitoring, and employee training. While some aspects of the program can be delegated to third-party service providers, the Covered Advisor retains ultimate responsibility and liability.

The rule also mandates the filing of Suspicious Activity Reports (SARs) for transactions of $5,000 or more and Currency Transaction Reports (CTRs) for currency transactions exceeding $10,000. Additionally, Covered Advisers must comply with information-sharing provisions under the USA PATRIOT Act.

This rule will impose significant new compliance burdens on Covered Advisers, requiring them to review and potentially overhaul their existing AML/CFT programs to ensure full compliance by the January 1, 2026 deadline.

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