On September 4, 2024, the Financial Crimes Enforcement Network (“FinCEN”) added a rule that would treat certain investment advisers as “financial institutions” under the Bank Secrecy Act (“BSA”) and require those advisers to comply with the Anti-Money Laundering/Countering the Financing of Terrorism (“AML/CFT”) Program as well as the BSA. The rule is known as the “IA AML Rule” and would require SEC registered investment advisers and exempt reporting advisors to comply with reporting and record keeping obligations that are typically associated with banks and credit unions. The original effective date of the IA AML Rule was January 1, 2026.
On September 22, 2025, FinCEN published a proposed rulemaking that would delay the effective date of the IA AML Rule by two years, to January 1, 2028. The proposed rulemaking principally cites the opportunity to continue to review and tailor the IA AML Rule to best serve the goals of the Rule and the businesses that it will regulate. The advisers that are covered by this rule greatly vary in size, complexity, and risk profile, and FinCEN has recognized that more time is needed to effectively and efficiently implement the Rule.
The proposed rulemaking also recognizes that the delay would save covered investment advisers the costs required to ensure compliance with the Rule, at least for another two years. FinCEN further recognized that those costs may be higher than when the IA AML Rule was promulgated. As a result, the delay will have notable economic savings for covered advisers.
The delay does bring about certain risks, however. Namely, during the period would-be covered advisers are not required to comply with the Rule there is an inherent increase in the risk of economic harms that may otherwise be prevented by the Rule. Even considering this risk, FinCEN asserts that a delay in the Rule is the proper course of action.