In August 2015, the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) proposed regulations that would require investment advisers subject to SEC registration to establish anti-money laundering (AML) programs.1 The proposal also adds such investment advisers to the definition of “financial institutions” under the Bank Secrecy Act (BSA), which consequently requires them to report suspicious activity to FinCEN and subjects them to reporting and recordkeeping requirements under the BSA.

Background FinCEN has been contemplating AML regulations for investment advisers for over a decade. In 2003, FinCEN proposed regulations that would have required SEC-registered investment advisers and a significant number of unregistered advisers to establish AML programs.2 In 2008, FinCEN withdrew that proposal, stating that it would “continue[] to consider the extent to which BSA requirements should be imposed on investment advisors.”3 In subsequent years, FinCEN directors noted in public remarks that the agency was in the process of drafting new AML regulations covering investment advisers.4 In light of these developments, as well as SEC no-action relief permitting investment advisers to perform broker dealers’ customer identification program obligations,5 some investment advisers have already implemented voluntary AML programs.

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