Must-Pass Defense Bill Includes AML Rule for Advisors

What You Need to Know

If the provision is passed, it “presents a sea change for the industry.”
The Treasury Department’s Financial Crimes Enforcement Network proposed a similar rule change in 2015, which failed to gain traction.

INcluded in the must-pass defense bill, H.R. 7900, the National Defense Authorization Act for Fiscal Year 2023, is a provision that would require investment advisors to adopt anti-money laundering policies.

Page 1,229 of the massive bill, which is scheduled for a vote this week, includes a provision “to impose anti-money laundering safeguard on all necessary gatekeeper professions, including art dealers, investment advisors, real estate professionals, lawyers, accountants, trust or company service providers, public relations professionals, dealers of luxury vehicles, money service businesses, and other similar professions.’’

Nicolas Morgan, a partner at Paul Hastings in Los Angeles, said that if it stays in the bill, the provision is a “potentially huge” development for advisors.

Going back as far as September 2015, the Treasury Department’s Financial Crimes Enforcement Network, or FinCEN, proposed a rule change “that would massively increase the impact of anti-money laundering requirements to include a previously unaffected portion of the financial services industry: investment advisors,” Morgan said in a Tuesday email to ThinkAdvisor.