Although not yet subject to the Bank Secrecy Act, the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) have proposed anti-money laundering requirements for US investment advisers. The proposal requires advisers that are registered with the Securities and Exchange Commission (SEC) to establish Anti-Money Laundering (AML) programs, to report suspicious activities related to money laundering and terrorist financing, and to comply with other sections of the Bank Secrecy Act (BSA).
Although advisers owned by Bank Holding Companies (BHCs) are already subject to similar requirements applicable to their BHC parents (and enforced by the Federal Reserve), these advisers will likely experience an increase in regulatory oversight since the proposal now allows the SEC to enforce AML requirements. On the other hand, non-BHC owned advisers will experience more change, as they are not currently subject to any AML requirements.
Noncompliance stakes continue to rise, as evidenced by recent increased fines, deferred prosecution agreements, and at times targeted management accountability for AML and sanctions violations. In addition, noncompliance could cause fatal reputational damage due to early withdrawal of current investors, difficulty in obtaining new investors, and loss of trading counterparties or bank credit facilities.
If you would like us to consult on or prepare policies, procedures, and internal controls and to design a program that meets the Bank Secrecy Act requirements for Anti-Laundering or perform independent testing of an existing program please call us at 201-739-5555 for a free consultation.