With FinCEN’s new anti-money laundering rule taking effect on 1 January 2026, SEC-registered investment advisers are entering unfamiliar territory, where compliance stretches far beyond investment practices into every piece of content a firm produces.
According to Luthor, the scale of the sector makes the stakes clear. The SEC-registered investment adviser industry now oversees $144.6tn in assets across 15,870 advisers serving 68.4 million clients. Meanwhile, AML-related fines reached $5bn in 2023 alone, a 69% jump on the previous year.
Luthor recently took the time to discuss the new FInCEN AML rule and the key things RIAs need to know.
FinCEN issued its final rule on 28 August 2024, designating nearly all SEC-registered investment advisers and exempt reporting advisers (ERAs) as “financial institutions” under the Bank Secrecy Act. Covered firms must implement risk-based AML programmes, file Suspicious Activity Reports (SARs), maintain fund transfer records, and meet other BSA obligations. FinCEN has delegated examination and enforcement to the SEC, meaning examiners will scrutinise RIAs for AML compliance in the same way they do broker-dealers.
The urgency stems from a glaring regulatory gap. A Treasury risk assessment documented sanctioned individuals, corrupt officials and fraudsters exploiting advisers’ lack of mandatory AML duties to access the US financial system, with bad actors from Russia and China funnelling money through private funds to acquire sensitive US technologies. State-registered advisers, family offices and foreign private advisers are excluded, but the vast majority of advisory assets are captured, with industry estimates suggesting more than 20,000 firms will fall under the rule.
Enforcement has already begun. In January 2025, the SEC charged Navy Capital, which paid a $150,000 penalty after failing to vet investors despite claiming to follow voluntary AML procedures. The same month, LPL Financial was fined $18m for systemic breakdowns in customer identification and monitoring. Since July 2024, the SEC has brought at least nine AML-related actions totalling over $100m in penalties.
The data underlines why regulators care. Financial institutions filed a record 4.6 million SARs in FY 2023, and 85.7% of IRS-referred prosecutions were supported by a related BSA filing. In 2024, US regulators accounted for 95% of global AML penalties by value, at roughly $4.6bn.
RIAs should now be drafting written policies, appointing an AML compliance officer, training staff and arranging independent testing. Willful failure to implement an adequate programme can attract civil penalties of up to $25,000 per day, with individual reporting failures carrying fines of up to $100,000 per violation. Come 2026, ignorance will not be a viable defence, as compliance will be examined and enforced from day one.
Read the full Luthor post here.
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