FinCEN postpones investment adviser AML rule for RIAs and ERAs

Originally scheduled for a January 1, 2026, the Financial Crimes Enforcement Network (FinCEN) has announced its intention to postpone the implementation of the Anti-Money Laundering (AML) / Countering the Financing of Terrorism (CFT) Program and Suspicious Activity Report (SAR) Filing Requirements for Registered Investment Advisers (RIAs) and Exempt Reporting Advisers (ERAs). The new anticipated effective date is now January 1, 2028.

This postponement offers a crucial window for RIAs and ERAs to refine their AML frameworks. FinCEN's decision, outlined in an official press statement, stems from a desire to revisit the scope of the regulation. Furthermore, FinCEN intends to collaborate with the Securities and Exchange Commission (SEC) to re-evaluate customer identification program (CIP) rule requirements specifically for investment advisers.

Key compliance obligations 

While the deadline has shifted, the fundamental principles of the IA AML Rule remain important for future compliance. When the rule comes into effect, RIAs and ERAs will be required to establish comprehensive, risk-based AML/CFT programs. These programmes must include:

• Internal policies, procedures and controls: Tailored to the firm’s specific risk profile.
• Designation of a dedicated compliance officer: Typically, the CCO for RIAs and the compliance lead for ERAs, responsible for overseeing the AML program.
• Ongoing employee training: To ensure staff can identify and report suspicious activities.
• Independent testing: Of the program’s effectiveness, conducted by internal personnel not involved in implementation or by qualified external parties.
• Risk-based customer due diligence (CDD) procedures: Including understanding the nature and purpose of customer relationships and monitoring for suspicious transactions.

Advisers will also be required to file SARs with FinCEN for transactions involving or aggregating at least $5,000 when there is suspicion of illegal activity, evasion of Bank Secrecy Act (BSA) reporting requirements, lack of business or apparent lawful purpose, or facilitation of criminal activity.

Additionally, compliance with the BSA’s Recordkeeping and Travel Rules, along with information-sharing provisions under Sections 314(a) and 314(b) of the USA PATRIOT Act, will be mandatory.

Applicability and exemptions

The rule's applicability to foreign-located investment advisers remains the same: it applies if they conduct advisory activities within the U.S. or provide advisory services to U.S. persons or foreign funds with U.S. investors.

Certain advisers will continue to be excluded from the rule's scope, including RIAs registered with the SEC solely as mid-sized advisers, multi-state advisers, or pension consultants, as well as RIAs not required to report any assets under management to the SEC on Form ADV. State-registered advisers, foreign private advisers and family offices (as defined in SEC regulations) are also exempt.

Preparatory steps still advised

Despite the postponement, RIAs and ERAs should view this extended timeline as an opportunity for more thorough preparation. Proactive steps, such as conducting comprehensive risk assessments, developing robust internal policies and procedures, appointing qualified compliance officers, and planning for ongoing training and independent testing, will be crucial for seamless compliance when the rule ultimately takes effect.

How can Ocorian help?

Our specialist team can help ensure your AML controls are robust enough to manage your financial crime risks actively and efficiently. We can assist in crafting policies and procedures for your compliance manual, creating and conducting employee training and serving as your independent AML program auditor.

We regularly support our clients in assessing AML risk, conducting health checks, ensuring governance is fit for purpose, getting policies right, training your people to understand risks and preparing for regulatory visits.

Contact our team today to discuss how we can assist your firm.