The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has formally proposed to postpone the effective date of the landmark Anti-Money Laundering (AML) rule for investment advisers. The proposal, announced on September 19, 2025, seeks to delay the implementation date from January 1, 2026, to January 1, 2028. This two-year delay comes as part of a broader reassessment of the rule’s scope, design, and regulatory impact, in coordination with the Securities and Exchange Commission (SEC), and is expected to provide vital regulatory relief and allow for key adjustments before full compliance is required.
Background and Overview of the AML Rule
The AML rule for registered investment advisers (IAs) and exempt reporting advisers, finalized in 2024, marked a significant regulatory development in the financial sector. It formally classified certain investment advisers as “financial institutions” under the Bank Secrecy Act (BSA), thereby subjecting them to AML program requirements similar to those imposed on banks, brokers, and other financial entities. The key obligations under the rule include establishing comprehensive AML programs, conducting ongoing risk assessments, filing suspicious activity reports (SARs), and maintaining detailed records to enhance transparency and combat illicit finance risks, particularly those linked to money laundering, terrorist financing, and foreign adversaries exploiting vulnerabilities in the U.S. financial system.
Originally set to take effect on January 1, 2026, the rule aimed to address growing concerns about the ability of investment advisers to be potentially used to circumvent AML safeguards. However, the scope and complexity of the rule have raised concerns within the industry about the regulatory burden, implementation costs, and operational challenges, prompting calls for additional clarity and tailored requirements that appropriately reflect the diverse nature of the investment advisory sector.
Details of the Proposed Delay
FinCEN’s proposal, issued via a Notice of Proposed Rulemaking (NPRM), is narrowly tailored to formalize the postponement of the rule’s effective date without altering the substance of its provisions. The agency has made it clear that this pause is intended to provide needed time to reduce unnecessary or duplicative regulatory burdens while ensuring the AML requirements are proportionate, targeted, and balanced with the associated compliance costs and benefits.
FinCEN explains that the delay will allow it to revisit the AML obligations and the related Customer Identification Program (CIP) joint rulemaking with the SEC. This provides an opportunity to reassess and potentially refine key elements of the AML framework to better align with real-world risk profiles and operational realities faced by investment advisers.
Key highlights of FinCEN’s proposal include:
- Extension of the AML rule’s effective date from January 1, 2026, to January 1, 2028.
- Commitment to reopen rulemaking processes for both the AML program requirements and the CIP rule.
- Potential for further substantive amendments to the rule to ensure appropriate tailoring of regulatory obligations.
- Continued provision of exemptive relief to formally delay compliance timelines during this period.
Rationale for the Delay and FinCEN’s Broader Objectives
FinCEN’s decision to propose the delay reflects a strategic effort to balance regulatory objectives with the practical implications for the investment advisory industry. The agency emphasized the need to:
- Mitigate unnecessary regulatory costs and avoid duplicative reporting or compliance functions.
- Ensure the AML framework is suitably risk-based and tailored to the varied business models and risk exposures of different advisers.
- Enhance regulatory certainty and provide advisers with ample time to adapt to the new requirements.
- Collaborate closely with the SEC to harmonize overlapping regulatory efforts, especially regarding customer identification protocols.
These goals align with broader regulatory themes prioritizing efficiency, proportionality, and risk sensitivity across sectors under the current administration’s agenda, aiming to foster effective anti-money laundering measures without imposing undue strain on regulated entities.
Implications for Investment Advisers and the Industry
The proposed two-year postponement of the IA AML rule represents both a regulatory reprieve and a period of heightened uncertainty for investment advisers. On one hand, advisers gain additional time to prepare systems, policies, and training to meet the new demands. On the other, the possibility of future amendments means advisers must remain vigilant and flexible to adapt to evolving compliance landscapes.
Industry stakeholders are encouraged to actively engage in the public comment process for the NPRM, providing feedback on substantive elements of the rule as well as practical implementation considerations. This engagement is critical as FinCEN has signaled that any substantive changes will undergo separate rulemaking with appropriate notice and comment periods, and further extensions to the effective date may be considered depending on the nature of future amendments.
Coordination with SEC and Customer Identification Program
Alongside the AML rule, FinCEN and the SEC are jointly reviewing the customer identification program requirements that would require investment advisers to verify client identities rigorously. This reassessment aims to resolve any regulatory overlaps or inconsistencies between FinCEN’s AML expectations and SEC’s oversight, ultimately delivering a more coherent and manageable compliance framework.
The reconsideration of both rules during the delay period underscores the agencies’ commitment to aligning regulation with practical risk management and investor protection priorities.
Next Steps and Regulatory Process
With the NPRM published on September 19, 2025, the FinCEN comment period invites input from investment advisers, industry representatives, compliance professionals, and other stakeholders. Once the comment period closes, FinCEN will review submissions and consider amendments or refinements to the rule as necessary.
FinCEN also intends to issue exemptive relief orders to ensure that advisers are not required to comply with the original 2026 implementation deadline, providing formal legal clarity during the extension.
FinCEN’s formal proposal to delay the effective date of the investment adviser AML rule until January 1, 2028, marks a significant development in U.S. financial regulation. By allowing additional time to refine and tailor the rule’s provisions, this delay aims to strike an appropriate balance between robust anti-money laundering safeguards and manageable regulatory compliance for advisers. The ongoing joint efforts with the SEC to harmonize overlapping rules further signal an adaptive and collaborative approach to regulating the investment advisory sector.
Advisers should prepare for continued engagement with evolving AML regulatory expectations and leverage this delay period to strategically enhance their compliance programs. The phased approach to implementing the AML obligations promises more clarity and regulatory alignment ahead in the fight against financial crimes targeting the U.S. financial system.