[ad_1]
The U.S. Treasury announced that it is working to address what it perceives to be money laundering risks associated with investment advisers. Specifically, authorities believe that without consistent and comprehensive anti-money laundering (“AML”) and counter-terrorism financing (“CFT”) obligations, corrupt officials and other illegal actors will It claims that the profits could be invested in the U.S. financial system. Hedge funds and private equity firms. The Treasury Department has indicated that it intends to issue a proposal in the first quarter of 2024 that would apply the AML/CFT requirements of the Bank Secrecy Act (“BSA”), including suspicious activity reporting requirements, to certain investment advisers.
In preparing this proposal, Treasury is reviewing and updating the 2015 Proposed Regulations (the “2015 Proposal”), which had similar objectives. The 2015 proposal targeted investment advisers that are or were required to be registered with the SEC. The proposal noted that the Treasury Department is considering incorporating other smaller investment advisers, such as state-regulated advisers and other advisers exempt from SEC registration, into future rulemakings. At the time of the proposal, the SEC estimated that the rule would cover more than 11,000 investment advisers reporting approximately $61.9 trillion in assets to their clients.
The 2015 proposal would designate investment advisers as financial institutions under the BSA, ensuring that they comply with BSA requirements and preventing investment advisers from being used to facilitate money laundering or money laundering. They would be required to develop and implement a rationally designed, written, risk-based program. Terrorist financing. Minimum requirements for such programs include:
- Establishing and implementing policies, procedures, and internal controls.
- Provide independent testing for compliance performed by advisory personnel or qualified external parties.
- Designate an individual or persons responsible for implementing and monitoring program operations and internal controls.and
- Provide ongoing training to the right people.
The 2015 proposed rule would require investment advisers to conduct risk-based assessments of their clients to determine the AML/CFT risks posed by their clients. Regarding expectations regarding such risk assessments, the Ministry of Finance states: “If the client is an individual, the important factors will be, among other things, the client’s source of funds and the jurisdiction in which the client is located.” and, where applicable, the legal and regulatory regime of that jurisdiction. The investment advisor’s previous experience with individuals or entities and referrals from other financial institutions may also be relevant factors. ”
The AML/CFT program required approval by the investment advisory firm’s board of directors or board of trustees; otherwise, the AML/CFT program requires approval by the investment advisory firm’s board of directors or trustees; Approval by another person would have been required.
The 2015 proposed rule stalled following the suspension of ongoing regulations in 2017. In December 2021, the Biden administration issued the following statement: US anti-corruption strategy The report revealed plans to reconsider the Treasury Department’s 2015 proposed rules that require minimum reporting standards for investment advisers and other types of equity funds. A few months later, on March 30, 2022, a group of U.S. senators sent a letter to the Treasury Department urging it to reinstate the AML rulemaking process for investment advisers. In this context, it was reported that the Ministry of Finance contacted industry bodies at the end of 2022 regarding plans to expand AML obligations for investment advisers. Now, one year later, the Treasury Department appears ready to bring new proposed rules to market in the first quarter of 2024.
While regaining momentum, the outlook for AML rules for investment advisers has historically been swayed by political winds. It remains to be seen how durable the reinstated rulemaking process will be for an election year. However, if this proposal becomes law, it will impose a significant new burden on investment advisors, so it is necessary to closely monitor its progress.
[ad_2]
Source link
