{"id":1398,"date":"2025-03-10T16:39:00","date_gmt":"2025-03-10T16:39:00","guid":{"rendered":"https:\/\/iqeq.com\/us\/insights\/new-fincen-rules-every-investment-adviser-should-know\/"},"modified":"2025-04-16T08:34:25","modified_gmt":"2025-04-16T08:34:25","slug":"new-fincen-rules-every-investment-adviser-should-know","status":"publish","type":"post","link":"https:\/\/iqeq.com\/us\/insights\/new-fincen-rules-every-investment-adviser-should-know\/","title":{"rendered":"New FinCEN rules every investment adviser should know"},"content":{"rendered":"<section class=\"text-block standard-spacing  \">    <div class=\"container fade-in\">\n        <p><em>By Alyssa Barcheers, Managing Director, U.S.<\/em><\/p>\n<p>In August 2024, the U.S. Financial Crimes Enforcement Network (FinCEN) <a href=\"https:\/\/iqeq.com\/insights\/fincen-adopts-aml-program-requirements-for-sec-rias-and-eras\">finalized a rule<\/a> that has been anticipated since the passage of the USA PATRIOT Act in 2001. Starting on January 1, 2026, SEC-registered investment advisers (RIAs) and exempt reporting advisers (ERAs) will be required to implement formal anti-money laundering and countering the financing of terrorism (AML\/CFT) programs.<\/p>\n<p>For decades, banks and broker-dealers have operated under strict AML requirements. The new rule from FinCEN brings investment advisers into the fold, with obligations to monitor transactions, conduct due diligence checks, and file suspicious activity reports (SARs), just as other regulated financial institutions are required to do under the Bank Secrecy Act.<\/p>\n<p>If you\u2019re an investment adviser, now is the time to prepare your AML policies, internal controls, and reporting procedures to get ahead of these changes. In this article, we\u2019ll cover what you need to know to comply.<\/p>\n<h2>What\u2019s changing for investment advisers?<\/h2>\n<p>Under the new FinCEN rule, SEC-registered RIAs and ERAs must implement and maintain active AML and CFT programs. These programs are designed to detect and prevent money laundering, terrorist financing, and other illicit activities.<\/p>\n<p><strong>To comply, investment advisers will need to:<\/strong><\/p>\n<ul>\n<li>Establish and maintain a formal AML program with clear policies and procedures<\/li>\n<li>Conduct ongoing customer due diligence (CDD), including client identity verification and risk assessments<\/li>\n<li>File certain reports, such as <a href=\"https:\/\/iqeq.com\/insights\/what-sec-advisers-need-to-know-about-sars-ctrs-and-recordkeeping-and-travel-rules\/\">Suspicious Activity Reports (SARs)<\/a>, with FinCEN for transactions that raise red flags<\/li>\n<li>Undergo independent compliance testing to ensure effective controls<\/li>\n<li>Maintain detailed records of certain financial transactions, such as cross-border transfers and large cash transactions<\/li>\n<li>Train employees on AML warning signs and reporting obligations<\/li>\n<\/ul>\n<p>For investment advisers who haven\u2019t had to comply with formal AML rules before, this shift marks a significant operational change. With only a few months before changes take effect, now is the time to familiarize yourself with updated FinCEN requirements and shore up internal procedures accordingly.<\/p>\n<h2>What investment advisers are required to do<\/h2>\n<p>As FinCEN\u2019s updated rule takes effect in January 2026, investment advisers have less than a year to build out an <a href=\"https:\/\/iqeq.com\/insights\/amlkyc-culture-needs-overhaul-how-technology-can-help-you-adapt\/\">updated AML program<\/a>.<\/p>\n<p>To stay compliant, firms should:<\/p>\n<h3>1. Implement a formal AML program<\/h3>\n<p>Investment advisers must establish risk-based policies and procedures to prevent financial crimes, including screening clients, monitoring transactions, and flagging suspicious activity.<\/p>\n<p>Your AML program should include:<\/p>\n<ul>\n<li><strong>An appointed AML Officer: <\/strong>A designated internal person responsible for program oversight<\/li>\n<li><strong>Independent compliance testing: <\/strong>Regular AML compliance testing performed by an independent party, not your AML Officer<\/li>\n<li><strong>Ongoing training: <\/strong>Train employees to recognize suspicious activity and understand their responsibilities under the new FinCEN rules<\/li>\n<li><strong>Ongoing customer due diligence: <\/strong>Verify client identities, assess risk levels, and continuously monitor transactions for potential money laundering activity<\/li>\n<\/ul>\n<h3>2. File Suspicious Activity Reports (SARs)<\/h3>\n<p>If an adviser \u201cknows, suspects, or has reason to suspect\u201d that a transaction involves illicit activity, they must report it to FinCEN. Even attempted suspicious transactions are subject to this rule.<\/p>\n<h3>3. Maintain comprehensive AML records<\/h3>\n<p>Advisers must keep detailed records of certain financial transactions, including:<\/p>\n<ul>\n<li>Cross-border transfers and extensions of credit over $3,000<\/li>\n<li>Currency transactions over $10,000<\/li>\n<\/ul>\n<h2>Why now is the best time to act<\/h2>\n<p>FinCEN\u2019s updated rule isn\u2019t just another regulatory update\u2014it\u2019s a major shift that brings investment advisers under the same AML rules as broker-dealers and banks. Advisers who don\u2019t comply by January 2026 could face regulatory penalties and enforcement actions, increased scrutiny from <a href=\"https:\/\/iqeq.com\/insights\/3-ways-to-use-technology-as-a-value-driver-for-lps\/\">investors and institutional LPs<\/a>, and reputational damage.<\/p>\n<h2>How IQ-EQ can help<\/h2>\n<p>FinCEN\u2019s new rules will create operational challenges for many investment advisers, but you don\u2019t have to tackle them alone. Our dedicated <a href=\"https:\/\/iqeq.com\/us\/services\/compliance-consulting-u-s\/\">AML and Regulatory Compliance<\/a> departments will design and implement a compliant AML program tailored to your firm\u2019s needs. Our experts can develop customer risk profiles, lead ongoing compliance training, and conduct independent testing.<\/p>\n<h4><strong><a href=\"https:\/\/iqeq.com\/us\/locations\/us-office-location\/#contact-us\">Get in touch<\/a> with our team today.<\/strong><\/h4>\n            <\/div>\n<\/section>","protected":false},"excerpt":{"rendered":"","protected":false},"author":6,"featured_media":1400,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","footnotes":""},"categories":[1],"tags":[],"expertise":[13,14],"service_category":[19],"class_list":["post-1398","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.1.1 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>New FinCEN Rules Investment Advisers Should Know | IQ-EQ U.S.<\/title>\n<meta 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