Industry groups welcome delay of AML rule for RIAs

Two of the largest organizations representing investment advisers and asset managers are voicing support for a federal proposal to postpone new anti-money laundering requirements for RIAs, while urging regulators to use the extra time to address lingering concerns about compliance burdens and regulatory overlap.

The Financial Crimes Enforcement Network, or FinCEN, recently proposed delaying the effective date of its anti-money laundering and countering the financing of terrorism (AML/CFT) program and suspicious activity report (SAR) filing requirements for registered investment advisers and exempt reporting advisers. The rule, originally set to take effect January 1, 2026, would instead be pushed back two years, to January 1, 2028.

The proposal to delay the AML rule prompted a reaction from Senator Elizabeth Warren, Congresswoman Maxine Waters, and Congressman Andy Kim, who in a joint open letter last month cited risks to national security among other concerns.

But in separate comment letters, the Investment Adviser Association and the Investment Company Institute both welcomed the proposed extension, citing the need for a more tailored approach that reflects the diversity of adviser business models and avoids duplicating existing requirements imposed on other financial institutions.

In its letter published Tuesday, the IAA said the two-year delay would provide “the opportunity to ensure that any AML and CIP requirements for investment advisers are appropriately tailored to reduce unnecessary or duplicative regulatory burdens while achieving the agencies’ policy goals.” The group also noted that the extension would offer “welcome appropriate clarity for advisers with respect to their compliance resources and budget planning.”

The association’s letter emphasized that smaller advisory firms, which make up the majority of the industry – the IAA's most recent snapshot report found 93% of RIA firms across the country had less than 100 employees – could be disproportionately affected by the current rule as written. 

The IAA recommended that regulators consider headcount, rather than assets under management, when assessing the impact of new rules.

A joint survey by the IAA, ACA Group, and Yuter Compliance Consulting, conducted before FinCEN's proposed delay, found 41% of compliance leaders at RIAs considered anti-money laundering as a top priority, sharply higher than the 6% of respondents who flagged it in 2024.

Meanwhile, the ICI echoed concerns about overlapping compliance obligations. The institute said it “supports the proposed delay of the effective date for the AML/CFT Program and Suspicious Activity Reporting Requirements for Registered Investment Advisers and Exempt Reporting Advisers until January 1, 2028.”

The group's comment letter also urged FinCEN to “eliminate duplicative burdens on investment advisers and other financial institutions, facilitate risk-based approaches to compliance, permit advisers to avoid duplicative AML/CFT activities without requiring formal contractual delegations in certain circumstances, clarify advisers’ obligations when they have limited customer information, and clarify obligations for certain non-U.S. advisers.”

Both organizations highlighted the importance of aligning the AML rule with related customer identification program (CIP) requirements, which remain under review.

The IAA warned that requiring compliance with the AML rule before finalizing the CIP rule “would defeat FinCEN’s stated objective of having advisers reasonably design and implement AML programs and impose undue and unnecessarily costly burdens on advisers.”

The ICI similarly cautioned that if the CIP proposal continues to be delayed, advisers could face “regulatory uncertainty and unnecessary costs.”