The Financial Crimes Enforcement Network (FinCEN) has announced a delay in enforcing the new anti-money laundering (AML rule) provisions for investment advisers, originally scheduled under the Bank Secrecy Act (BSA). This pause provides firms additional time to align policies, procedures, and reporting frameworks.
In 2023, the Financial Crimes Enforcement Network (FinCEN) finalized significant enhancements to the anti–money laundering (AML) framework for investment advisers under the Bank Secrecy Act (BSA). The new provisions were designed to:
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Strengthen customer due diligence (CDD) protocols by requiring advisers to identify and verify beneficial owners and take enhanced steps for politically exposed persons (PEPs)
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Mandate periodic risk assessments of advisory relationships and investment products
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Expand suspicious activity reporting (SAR) obligations, lowering thresholds for certain transaction patterns
These requirements aimed to close existing regulatory gaps and guard against the use of private wealth management vehicles for illicit finance.
FinCEN has now announced a six-month delay in enforcing the new AML provisions for registered investment advisers. Key points include:
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The original compliance deadline, which was set for January 1, 2026, is now extended to July 1, 2026.
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During the extension period, firms remain subject only to existing BSA obligations—no immediate implementation of the new CDD or SAR requirements is necessary.
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FinCEN will host a series of stakeholder roundtables and solicit additional comments on the rule’s practical impacts.
Implications for Advisers
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Advisers gain extra time to update internal AML policies and procedures, including CDD manuals and risk-based approach documentation.
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Additional months to design and deliver comprehensive staff training on enhanced due diligence, PEP screening, and SAR preparation.
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Firms must continue rigorous adherence to existing BSA requirements—failure to maintain current CDD and SAR programs can still trigger enforcement actions.
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Opportunity to conduct mock examinations and self-assessments under the new standard without immediate regulatory scrutiny.
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Pilot deployment of transaction-monitoring technology with advanced analytics, enabling smoother integration when the rule takes effect.
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Consideration of outsourced compliance solutions or shared utilities to manage increased CDD and SAR workloads efficiently.
Next Steps for Firms
Advisers should leverage this extension to:
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Review and Gap-Test
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Map current AML program components against the forthcoming requirements.
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Identify and document gaps in beneficial-owner identification, PEP screening, and SAR workflows.
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Engage Compliance Experts
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Consult external AML specialists or legal counsel to refine program changes.
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Participate in FinCEN’s stakeholder forums to raise practical concerns and clarify ambiguities.
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Monitor FinCEN Guidance
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Regularly check FinCEN’s website for updates, FAQs, and guidance documents.
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Subscribe to industry association alerts (e.g., Investment Adviser Association, SIFMA) for real-time analysis.
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Test Technology Solutions
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Run pilot projects with AML software platforms that support entity resolution, risk scoring, and automated SAR generation.
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Validate system outputs, refine rule parameters, and train end users before full roll-out.
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By proactively using the additional six months, investment advisers can minimize compliance headaches, optimize resource allocation, and enter the enhanced AML regime fully prepared.
FAQs
What existing BSA requirements continue to apply?
Firms must maintain their current CDD program, file SARs when suspicious transactions occur, implement an AML compliance officer role, and conduct independent testing of their AML program.
Will the delay affect other financial sectors?
No—this delay specifically applies to registered investment advisers. Banks, broker-dealers, and other BSA-covered entities must comply with any AML rules on their original timelines.
How can firms submit feedback to FinCEN?
Stakeholders can submit written comments via regulations.gov during the public comment period and participate in FinCEN’s virtual roundtables. Notices will be posted on FinCEN’s website under “Regulations & Guidance.”
Can firms voluntarily adopt the new requirements now?
Yes. Advisers seeking a competitive edge may implement the enhanced CDD and SAR protocols immediately. Voluntary early adoption demonstrates robust risk management to clients and regulators.
What penalties apply for failure to comply after the new deadline?
Non-compliance may result in civil monetary penalties, enforcement actions by FinCEN, and referral to the SEC for potential sanctioning. Penalty amounts can reach up to $100,000 per violation and accrue daily.