FinCEN announced a proposed rule to designate investment advisers that are registered with the SEC as “financial institutions” subject to the Bank Secrecy Act’s regulatory scheme. There reportedly are over 11,000 such investment advisers.
Similar proposals date back to 2003. The proposed rule would impose CTR and SAR (suspicious activity) reporting obligations, among other requirements. Investment advisers also will be required to create and implement anti-money laundering programs, which would include training, compliance personnel, and independent testing.
FinCEN stated that investment advisers may be perceived as low-risk access points to the financial system for money launderers and terrorists. In addition, when financial institutions interact with investment advisers, those financial institutions often may not know the identity of the investment adviser’s client.
FinCEN also believes that “investment advisers may be uniquely situated to appreciate a broader understanding of their clients’ movement of funds through the financial system because of the types of advisory activities in which they engage.”
FinCEN requested comments on the proposed rule.