What Happened
On July 21, 2025, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) announced that it intends to postpone the effective date of its 2024 investment advisor AML rule for registered investment advisers and exempt reporting advisers (IA AML Rule). FinCEN has also committed to revisit its joint rulemaking with the Securities Exchange Commission (SEC) regarding requirements for advisers to implement customer identification programs (CIP).
The IA AML Rule would require registered investment advisers and exempt reporting advisers, to comply with regulatory obligations similar to what banks, brokers, and other financial institutions must follow. Core components include:
- Implementing a risk-based, written AML/CFT program tailored to the adviser’s business model, designed to prevent money laundering and terrorist financing
- Conducting independent testing of the program’s effectiveness, either internally (with independence) or via qualified external parties
- Appointing one or more AML compliance officers responsible for oversight of the program
- Providing ongoing AML training to relevant personnel
- Applying risk-based customer due diligence (CDD) procedures to understand the nature and purpose of client relationships and to monitor suspicious activity
- Filing Suspicious Activity Reports (SARs) and complying with Currency Transaction Reports (CTRs) and the Recordkeeping and Travel Rules, as well as participating in BSA-mandated information sharing programs and special due diligence measures where applicable.
FinCEN says it will use the rulemaking process and its exemptive authority to delay compliance obligations until January 1, 2028, and the agency will reopen the rulemaking to revisit both the AML requirements and the related CIP proposal. Exemptive relief is expected soon, so advisers will not need to comply by the original 2026 deadline.
Why It Matters
- The two-year extension provides time to refine compliance programs but does not eliminate bank‑style AML obligations.
- FinCEN intends to tailor the regime to better fit diverse adviser business models, so the rule may shrink or broaden.
- The joint CIP proposal remains under review and may evolve separately or ahead of the larger rule framework.
Considerations for Fund Managers Going Forward
- Stay agile: Keep draft AML/CFT policies on the shelf; they may need recalibration, not reinvention.
- Engage early: Submit comments when FinCEN reopens the docket. Credible arguments and input from advisers can influence the rulemaking process, especially with respect to how digital asset and venture strategies are treated.
- Mind the CIP gap: Customer identification rules may land sooner than the broader AML package; prepare onboarding workflows now.
- Update investor onboarding questionnaires to anticipate expanded beneficial ownership capture,
- Leverage the reprieve: Use the two-year window to test transaction monitoring technology and train staff against evolving fraud typologies.
- Inventory existing KYC/AML controls and benchmark them against FinCEN’s four pillar standards.
- Designate a point person now so your program has an owner when the rule comes back online.
- Coordinate with custodians, administrators and banking partners to ensure data flows support future suspicious activity reporting.