A delay will give FinCEN time to issue clarifications and ensure advisers can build stronger, more effective AML programs
Washington, D.C. — MFA supports the Financial Crimes Enforcement Network’s (FinCEN) proposal to delay the effective date for applying key anti-money laundering requirements to investment advisers in a comment letter submitted today. Extending the compliance deadline for the Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) Program Rule to at least January 1, 2028, is essential to ensure FinCEN has sufficient time to issue necessary guidance and clarifications.
“MFA has long advocated for AML controls and strongly supports FinCEN’s efforts to combat illicit finance,” said Bryan Corbett, MFA President and CEO. “A delay and regulatory clarity are necessary for advisers to build stronger, more effective AML programs that meet FinCEN’s goals and serve investors well.”
Additional clarity and guidance are needed to prevent firms from expending unnecessary resources on compliance efforts that may not align with regulatory expectations. Key areas where MFA requested clarification include:
-
Defining advisory services: FinCEN must clarify which activities fall outside the scope of “advisory services,” such as administrative tasks and pre-engagement discussions.
-
Third-party oversight: FinCEN should confirm that advisers can rely on representations from service providers to meet AML due diligence requirements. Additional monitoring should be risk-based and not tied to rigid, fixed schedules.
-
Risk-based procedures: FinCEN should clarify expectations for applying AML procedures to private fund investors. Advisers must be able to rely on investor-provided information absent any reason to question its accuracy.
-
Special due diligence requirements: FinCEN should confirm that enhanced due diligence rules do not apply to accounts held by investment advisers or regulated institutions acting as nominees. MFA also urged clarification of the “beneficial owner” definition for private funds.
-
Suspicious activity report (SAR) filing obligations: FinCEN should clarify what types of transactions advisers must monitor, noting that private fund investor assets are held with custodians who themselves are obligated to file SARs where required.
-
SAR sharing and confidentiality: FinCEN should allow advisers to share SARs and related information with affiliates and fund personnel, consistent with bank and broker-dealer practices.
-
Funds transfer and travel rules: FinCEN should confirm that these rules have limited applicability to advisers, since private fund assets are typically held by regulated custodians.
MFA also urged FinCEN to align the AML Program Rule’s compliance date with the compliance date of any related AML rule, such as the Customer Identification Program (CIP) rule to help firms develop holistic compliance frameworks.
Read the full comment letter here.
###
The global alternative asset management industry — including hedge funds, private credit funds, and hybrid funds — serves thousands of public and private pension funds, charitable endowments, foundations, and other global institutional investors. The industry provides portfolio diversification and risk-adjusted returns to help meet their funding obligations and return targets throughout the economic cycle.
About MFA
Managed Funds Association (MFA), based in Washington, D.C., New York City, Brussels, and London, represents the global alternative asset management industry. MFA’s mission is to advance the ability of alternative asset managers to raise capital, invest it, and generate returns for their beneficiaries. MFA advocates on behalf of its membership and convenes stakeholders to address global regulatory, operational, and business issues. MFA has more than 180 fund manager members, including traditional hedge funds, private credit funds, and hybrid funds, that employ a diverse set of investment strategies. Member firms help pension plans, university endowments, charitable foundations, and other institutional investors diversify their investments, manage risk, and generate attractive returns throughout the economic cycle.
