The Financial Crimes Enforcement Network (FinCEN) has suggested a stricter anti-money laundering and combatting the financing of terrorism (AML/CFT) rule for investment advisers. This arm of the US Treasury also recommended a similar rule for the real estate industry a week ago on Wednesday, 7 February 2024.
FinCEN proposes stricter rule for investment advisers
It said this more rigid rule bridges regulation gaps, which paves the way for criminal financial dealings. FinCEN indicated that it had identified several finance and national security risks within the investment advisory sector. As an entry point for investments in US securities, real estate and other assets, these risks open the doors for local and foreign criminals to the US finance sphere.
Don’t miss out the latest news, subscribe to LeapRate’s newsletter
The risk assessment also tracked incidents where foreign ‘adversaries’ invested in US startups to access sensitive information and plot technological innovations. Regarding the new rules, investment advisers must apply AML/CFT steps as set out in the Bank Secrecy Act (BSA).
FinCEN said that this includes
implementing risk-based AML/CFT programs, reporting suspicious activity to FinCEN, and fulfilling recordkeeping requirements.
According to Reuters, this is a revival of a similar proposal aimed at preventing money laundering and the funding of terrorism tabled in 2015. This rule applies to all investment advisers registered with and reporting to the US Securities and Exchange Commission (SEC).
FinCEN commented:
But investment advisers, in their role as gatekeepers to the US financial system, are at risk of abuse by money launderers, corrupt officials, and other bad actors. Thousands of investment advisers overseeing the investment of tens of trillions of dollars into the US economy are generally not subject to comprehensive anti-money laundering and countering the financing of terrorism (AML/CFT) measures.
