Fri, Aug 28, 2015

FinCEN proposes AML requirements for Investment Advisors

On 25 August 2015, Financial Crimes Enforcement Network (FinCEN) proposed a rule to address money laundering vulnerabilities within the US financial system.

This proposed rule would require certain investment advisers to establish anti-money laundering (AML) programs, along with reporting suspicious activity to FinCEN pursuant to the Bank Secrecy Act (BSA). Additionally, investment advisers will be included in the definition of a “financial institution”, which would require them to file Currency Transaction Reports (CRTs) and to maintain records relating to the transmittal of funds.

Those seeking to launder money may seek to gain access to the US financial system through an investment adviser as a way of avoiding detection by the AML programs of financial institutions. The proposed rule would bring investment advisers under similar regulation as other financial institutions subject to the BSA, such as mutual funds, broker-dealers and banks. Requiring investment advisers to file CTRs and comply with recordkeeping requirements may deter those attempting to launder money from using investment advisers as a conduit.

The proposed rule would apply to investment advisers registered with the US Securities and Exchange Commission (SEC), including advisers to certain hedge funds, private equity funds, and other private funds. For the purposes of compliance with such rule, FinCEN would delegate its examination authority to the SEC.

Financial Services Compliance and Regulation

End-to-end governance, advisory and monitorship solutions to detect, mitigate, drive efficiencies and remediate operational, legal, compliance and regulatory risk.

Anti-Money Laundering

Kroll’s anti-money laundering (AML) solutions are designed to help minimize the risks associated with money laundering and other illicit activities and to ensure compliance through the development and management of ongoing compliance programs and processes.