On August 25th, the Financial Crimes Enforcement Network (FinCEN) in the US proposed a new rule that would classify investment advisers that are required to register with the Securities and Exchange Commission (SEC) as “financial institutions” that are required by the Bank Secrecy Act to have formal anti-money laundering programs, including filing Currency Transaction Reports (CTR) for large cash transactions. FinCEN's news release notes that the advisers covered by the new rule would include those for some private equity firms, hedge funds and other private funds.
The news release also notes that the change brings these firms in line with other firms, such as mutual funds and broker-dealers, who already have these obligations. And, it notes that “Requiring investment advisers to file CTRs and comply with the recordkeeping requirements of the BSA may also deter illicit actors from using them as conduits.”
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