Anti-Money Laundering Rules For Advisors Back On The Front Burner

Friday, November 18, 2011 07:44
Anti-Money Laundering Rules For Advisors Back On The Front Burner

Tags: compliance

After years on the back burner, new requirements for RIAs to report suspicious customer activity are moving ahead again.

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The director of the Treasury's Financial Crimes Enforcement Network, which oversees anti-money-laundering compliance, recently confirmed that he is working with the SEC to finalize regulations for advisors.


The rule makers had reached the stage of collecting industry comments back in 2003, but the draft languished for years.


Part of the issue might've been the fact that advisors rarely accept direct custody of client funds in the way that banks and brokers do, but the custodians they work with are already bound by AML covenants.


This means that while an RIA employee can notice something unusual going on in a client's account flows, a significant problem would ordinarily get caught at the custodian level.


Nonetheless, FinCEN is coming up with new rules now. Whether they focus on unregistered investment funds -- a real source of concern in a post-Madoff world -- or all advisors remains to be seen.

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