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News October 18, 2004 Issue

Where Are the Adviser AML Rules?

Speaking at last week’s NRS conference, William Langford, senior policy advisor to the director of the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN), indicated that final AML rules for investment advisers might be adopted as early as first quarter 2005.

Langford noted that after the adviser rules were proposed, commenters pointed out a number of inconsistencies between the hedge fund proposal and the adviser proposal. He gave the example of the hedge fund proposal’s exclusion of certain types of investment vehicles, which the adviser proposal "inadvertently" swept in. "One thing we’ve learned" is that the hedge fund AML rule and the adviser AML rule "should be resolved together, and that’s what we are in the process of doing right now."

So when will FinCEN adopt the adviser AML rule? "I cannot predict when we will see a final regulation," said Langford. "I hope it’s first quarter of next year." He said that FinCEN was "very close" to issuing regulations in the insurance industry and for dealers in precious metals, stones, and jewels. After those rules are adopted, he said, "we will focus our attention in earnest to [the adviser and hedge fund] industries and hopefully wrap up our issues."