FinCEN final rule lessens impact on small registered investment advisers

Treasury’s Financial Crimes Enforcement Network (FinCEN) issued a final rule that brings certain investment advisers within the standards of FinCEN’s anti-money-laundering and countering-the-financing-of-terrorism (AML/CFT) programs.

An AICPA comment letter on the proposed rule in April expressed concern over the burden the requirements could impose on small registered investment advisers (RIAs), asserting that a firm with a staff smaller than 20 would have difficulty trying to “comfortably absorb” the requirements. The letter also suggested that thresholds be based on average assets under management (AUM) per client.

The final rule, Anti-Money Laundering/Countering the Financing of Terrorism Program and Suspicious Activity Report Filing Requirements for Registered Investment Advisers and Exempt Reporting Advisers (FINCEN-2024-0006 and RIN 1506-AB58), doesn’t consider staff size but does consider total AUM.

The changes resulted in FinCEN estimating that the final rule will affect 212 RIAs after the previously proposed rule estimated that 573 RIAs would be affected.

“Any regulatory framework should aim to support the ability of smaller firms to thrive and contribute positively to the financial services landscape,” Dan Snyder, CPA/PFS, AICPA director–Personal Financial Planning, said in a news release that accompanied the April comment letter.

When the final rule goes into effect Jan. 1, 2026, certain RIAs will be included in the definition of “financial institution” for purposes of the Bank Secrecy Act, requiring them to report “suspicious activity” to FinCEN within the standards of AML/CFT programs.

According to a FinCEN fact sheet, the final rule will require affected RIAs to:

• Implement a risk-based and reasonably designed AML/CFT program;
• File certain reports, such as Suspicious Activity Reports (SARs), with FinCEN;
• Keep certain records, such as those relating to the transmittal of funds (i.e., comply with the Recordkeeping and Travel Rules); and
• Fulfill certain other obligations applicable to financial institutions subject to the Bank Secrecy Act and FinCEN’s implementing regulations, such as special information-sharing procedures.

— To comment on this article or to suggest an idea for another article, contact Bryan Strickland at Bryan.Strickland@aicpa-cima.com.