On August 28, 2024, the Financial Crimes Enforcement Network (FinCEN) finalized a key rule extending anti-money laundering (AML) and countering the financing of terrorism (CFT) requirements to Investment Advisors (IAs).  

Effective January 1, 2026, this rule closes a gap in financial oversight frameworks by classifying IAs as financial institutions under the Bank Secrecy Act (BSA). IAs will now face full AML/CFT compliance for the first time.  

This rule is a direct response to rising terrorist financing concerns and widespread fraud. By expanding oversight to IAs, FinCEN aims to strengthen the integrity of the U.S. financial system and ensure that sectors are equipped to prevent illicit financial activities.  

Who is Now Covered Under FinCEN’s Final Rule?  

All SEC-registered investment advisors (RIAs) and exempt reporting advisors (ERAs) are now covered under FinCEN’s final rule. 

Multi-state advisers, pension consultants, state-registered advisers, family offices, and foreign private advisers are exempt. 

The new rule applies to U.S.-based advisory activities or those involving U.S. persons and foreign private funds with U.S. investors. For foreign-located investment advisers, the rule applies only to advisory activities that take place within the United States or involve U.S. persons.  

IAs that fail to comply with AML/CFT requirements face civil penalties of up to $5,000 per violation. Willful violations carry even steeper consequences, including criminal fines and up to 5 years imprisonment.  

Updated AML/CFT Compliance Requirements for IAs 

1. AML/CFT Program Implementation 

Investment advisers must implement a risk-based AML/CFT compliance program that includes written policies, internal controls, employee training, an appointed compliance officer, and independent testing of the program’s effectiveness.  

These programs should be tailored to the firm’s risk profile and business model. 

2. Suspicious Activity Reporting  

Advisers must file Suspicious Activity Reports (SARs) for transactions over $5,000 that involve illegal activity, attempts to evade BSA regulations, or have no clear legitimate purpose.  

3. Other AML/CFT Requirements 

The rule also mandates:  

• Currency Transaction Reports (CTRs) for cash transactions over $10,000 

• Compliance with the Recordkeeping and Travel Rules for fund transfers 

• Enhanced due diligence for certain high-risk accounts, including those with foreign financial institutions and non-U.S. persons. 

Financial & Operational Implications of the FinCEN IA Rule  

At the core of the new FinCEN IA Rule is enhanced due diligence. Advisers must gather detailed information on investors’ backgrounds, sources of wealth, and investment goals to build comprehensive risk profiles. Specialized due diligence is also required for correspondent and private banking accounts, especially those involving non-U.S. persons with significant assets.  

The cost of compliance is high, as IAs must invest in AML/CFT infrastructure, including advanced monitoring systems, compliance teams, and training programs. 

Board oversight will be mandatory, along with robust documentation, recordkeeping, and systems for monitoring and filing SARs, particularly in high-risk jurisdictions and for terrorist organizations.  

Ensure AML/CFT Compliance with Vcheck’s Expertise  

Firms must begin preparing now to meet the compliance deadline. This includes assessing current AML/CFT measures, conducting a risk assessment of the business and customer base, and implementing updated policies and procedures.  

U.S. companies will also need to invest in technology and staff training and establish third-party oversight where needed. 

Vcheck is uniquely positioned to help IAs meet new FinCEN demands. With capabilities across 150+ countries, we provide in-depth background checks on Subjects and entities. Our investigators speak 25+ languages to help clients navigate beneficial ownership in high-risk jurisdictions.  

Contact us to kickstart FinCEN compliance before the January 2026 deadline.