Treasury Working on Anti-Money Laundering Rules for FAs

The U.S. Treasury Department is planning to issue an anti-money laundering rule for investment advisors in the first quarter of 2024.

The department stated that it is re-evaluating its initial 2015 rule proposal and plans to submit an amended proposal that will apply its “anti-money laundering and countering the financing of terrorism” (AML/CFT) regime to select investment advisors.

“Investment advisors are not subject to consistent or comprehensive AML/CFT obligations in the United States, creating the risk that corrupt officials and other illicit actors may invest ill-gotten gains in the U.S. financial system through hedge funds, private equity firms and other investment services,” the agency said.

Treasury proposed a rule in 2015 that would have applied AML requirements to hedge funds, private equity managers, and certain other advisors, who do not currently have to reveal the names of beneficial owners, but lobbying efforts by those industries contributed to the rule’s demise.

Treasury noted at the time that it is “possible for money launderers to evade scrutiny more effectively by operating through investment advisors rather than through broker-dealers or banks directly.”