Starting January 1, 2026, many investment advisers in the United States will face a new regulatory mandate: implementing a full-fledged Anti-Money Laundering (AML) program. This move comes from the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN), which has long pushed to include advisers under the federal AML framework.
For an industry that has largely operated outside of these obligations, this marks a significant compliance shift. With trillions of dollars in assets managed by registered investment advisers (RIAs) and exempt private fund advisers, the concern is clear—bad actors can misuse investment channels for money laundering, terrorist financing, and other forms of financial crime.
A Long Time Coming
FinCEN’s interest in regulating the investment adviser space under AML law isn’t new. Proposals date back as far as 2002. But pushback from the industry repeatedly stalled implementation—until now. The 2024 proposal gained traction, driven by increased global concern around financial transparency and the U.S. government’s commitment to strengthen controls against illicit finance.
This new rule will finally fold many investment advisers into the compliance standards set by the Bank Secrecy Act (BSA)—a framework that’s been applied to banks, broker-dealers, and insurance firms for decades. FinCEN estimates this inclusion will close a critical gap in the financial system’s defense against criminal activity.
Who Must Comply?
The rule applies to advisers registered with the SEC under the Investment Advisers Act, including those exempt under venture capital and private fund adviser provisions. However, advisers that fall into certain categories—such as mid-sized advisers, pension consultants, or those with no assets under management—are excluded from this requirement.
This distinction makes it crucial for firms to first evaluate their registration status and asset reporting to determine applicability. If you’re managing client assets and fall under SEC oversight, it’s likely that these new AML requirements will apply to your operations.
Understanding the Core Requirements
The AML rule calls for the creation of a risk-based, ongoing compliance program tailored to an adviser’s specific operations and clients. At its heart, this program should include internal policies to detect suspicious activity, a designated AML compliance officer, and regular staff training. There must also be independent testing to ensure effectiveness and the ability to file Suspicious Activity Reports (SARs) with FinCEN.
Unlike banks, investment advisers are currently not required to implement Customer Identification Programs (CIPs) or collect beneficial ownership data for legal entity clients—but industry experts predict those layers could be added through future regulations.
The Role of "Customers" in AML
In this new compliance landscape, the term “customer” refers to any person or entity entering into an advisory relationship. Advisers who manage private funds or pooled investment vehicles are expected to assess the AML risks tied to the underlying investors in those funds, even if those investors don’t directly engage with the adviser.
This layered risk assessment isn’t merely a checkbox exercise. Advisers must evaluate ownership structures, fund compositions, and investor types to determine exposure to suspicious or unlawful financial behavior. It’s about understanding the full picture—who’s investing, where the money comes from, and whether it aligns with legal and business norms.
Can Duties Be Outsourced?
Yes—but not without responsibility. Advisers may work with third-party fund administrators to help build or operate their AML programs. However, liability remains with the adviser. That means if the outsourced program fails to meet federal requirements, the adviser is still accountable during SEC examinations or enforcement actions.
The SEC will oversee these examinations once the rule is active, bringing AML into the standard adviser audit process. Compliance readiness, then, must be provable—not just policy-bound but operationally sound.
Risk of Non-Compliance
The consequences for failing to implement an effective AML program aren’t just reputational. FinCEN holds authority to impose civil penalties for non-compliance, including hefty fines. With a growing focus on financial crime at both the federal and global level, enforcement isn’t likely to be lenient—especially for larger firms managing substantial assets.
What You Should Be Doing Now
The compliance deadline may be January 1, 2026, but that doesn’t mean firms should wait. Most industry advisors suggest implementing your AML framework by Q4 2025. This allows time to train staff, conduct dry-run testing, and fix any policy or operational gaps before the regulation goes live.
Given the broad nature of AML risk, many advisers are turning to external consultants or legal teams with experience in banking or broker-dealer compliance to help build programs. That cross-industry expertise can be invaluable, especially for firms encountering these frameworks for the first time.
Final Thoughts
The addition of AML responsibilities represents more than just another regulatory burden—it’s a recognition that investment advisers play a critical role in the broader financial ecosystem. As criminals grow more sophisticated in how they move and disguise money, the tools to detect and report those activities must evolve across all channels.
By preparing early, investment advisers not only avoid penalties—they reinforce client trust, enhance operational security, and demonstrate a commitment to ethical financial practices. In a time when transparency is currency, being AML-ready is more than compliance—it’s competitive advantage.