[Federal Register Volume 90, Number 181 (Monday, September 22, 2025)]
[Proposed Rules]
[Pages 45361-45365]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-18271]
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DEPARTMENT OF THE TREASURY
Financial Crimes Enforcement Network
31 CFR Part 1032
RIN 1506-AB58 and 1506-AB69
Delaying the Effective Date of the Anti-Money Laundering/
Countering the Financing of Terrorism Program and Suspicious Activity
Report Filing Requirements for Registered Investment Advisers and
Exempt Reporting Advisers
AGENCY: Financial Crimes Enforcement Network (FinCEN), Treasury.
ACTION: Notice of proposed rulemaking (NPRM).
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SUMMARY: FinCEN is proposing to amend the Anti-Money Laundering/
Countering the Financing of Terrorism (AML/CFT) Program and Suspicious
Activity Report (SAR) Filing Requirements for Registered Investment
Advisers and Exempt Reporting Advisers (IA AML Rule) to delay the
effective date by two years. The IA AML Rule is effective on January 1,
2026. This proposal seeks to amend the effective date to January 1,
2028.
DATES: Comments must be received by October 22, 2025.
ADDRESSES: Comments must be submitted in one of the following two ways
(please choose only one of the ways listed):
Electronically at https://www.regulations.gov. Follow the
``Submit a comment'' instructions. If you are reading this document on
federalregister.gov, you may use the green ``SUBMIT A PUBLIC COMMENT''
button beneath this rulemaking's title to submit a comment to the
regulations.gov docket. Refer to Docket Number FINCEN-2025-0072 and RIN
1506-AB58 and 1506-AB69.
You may mail written comments to the following address:
Policy Division, Financial Crimes Enforcement Network, P.O. Box 39,
Vienna, VA 22183. Refer to Docket Number FINCEN-2025-0072 and RIN 1506-
AB58 and 1506-AB69. Mailed comments must be received by the close of
the comment period.
Do not include any personally identifiable information (such as
name, address, or other contact information) or confidential business
information that you do not want publicly disclosed. All comments are
public records; they are publicly displayed exactly as received, and
will not be deleted, modified, or redacted. Comments may be submitted
anonymously.
Follow the search instructions on https://www.regulations.gov to
view public comments. In accordance with 5 U.S.C. 553(b)(4), a summary
of this rule may be found at www.regulations.gov under Docket Number
FINCEN-2025-0072.
FOR FURTHER INFORMATION CONTACT: FinCEN's Regulatory Support Section by
submitting an inquiry at www.fincen.gov/contact.
SUPPLEMENTARY INFORMATION:
I. Introduction
In this NPRM, FinCEN is proposing to amend the effective date of
the IA AML Rule \1\ to delay the obligations of covered investment
advisers (covered IAs) from January 1, 2026, to January 1, 2028.
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\1\ See U.S. Department of the Treasury (Treasury), FinCEN,
Anti-Money Laundering/Countering the Financing of Terrorism Program
and Suspicious Activity Report Filing Requirements for Registered
Investment Advisers and Exempt Reporting Advisers, 89 FR 72156
(Sept. 4, 2024) (IA AML Rule).
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II. IA AML Rule
On September 4, 2024, FinCEN published the IA AML Rule, which
defined certain investment advisers as ``financial institutions'' under
the Bank Secrecy Act (BSA).\2\ The IA AML Rule requires covered IAs to
establish AML/CFT programs, report suspicious activity, and keep
relevant records, among other requirements.\3\ In the 2024 Investment
Adviser Risk Assessment (IA Risk Assessment), Treasury described the
illicit finance risks associated with the investment adviser sector
that the IA AML Rule was designed to address, including that investment
advisers may be misused by money launderers, terrorist financers, or
other actors who seek access to the U.S. financial system for illicit
purposes and who threaten U.S. national security.\4\
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\2\ Pursuant to FinCEN's authority under the BSA, it may define
a business or agency as a ``financial institution'' if such business
or agency ``engages in any activity . . . determine[d] by regulation
to be an activity which is similar to, related to, or a substitute
for any activity'' in which a ``financial institution'' as defined
by the BSA is authorized to engage. See 31 U.S.C. 5312(a)(2)(Y).
\3\ See IA AML Rule, 89 FR at 72274-78.
\4\ See Treasury, 2024 Investment Adviser Risk Assessment (Feb.
1, 2024), available at https://home.treasury.gov/system/files/136/US-Sectoral-Illicit-Finance-Risk-Assessment-Investment-Advisers.pdf.
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III. Proposed Delay in Effective Date
FinCEN proposes to delay the effective date of the IA AML Rule by
two years. The IA AML Rule and all requirements set forth thereunder
would therefore be effective on January 1, 2028. FinCEN assesses that
delaying the effective date of the IA AML Rule would pose a number of
advantages.
By delaying the effective date, FinCEN will be afforded an
opportunity to review the IA AML Rule and, as applicable, ensure the IA
AML Rule is effectively tailored to the diverse business models and
risk profiles of types of firms within the investment adviser sector.
This review may afford FinCEN an opportunity to reduce any unnecessary
or duplicative regulatory burden and ensure the IA AML Rule strikes an
appropriate balance between cost and benefit--while still adequately
protecting the U.S. financial system and guarding against money
laundering, terrorist financing, and other illicit finance risks.
FinCEN invites interested parties to submit comments on the proposed
delay in the effective date of the IA AML Rule within 30 days of
publication of this NPRM. Under Executive Orders (E.O.s) 12866 and
13563, a comment period typically should be at least 60 days, but
shorter comment periods are permitted if they suffice to allow the
public a meaningful opportunity to comment on the proposed
regulation.\5\ A 30-day comment period is appropriate here given both
the simplicity of the proposed change and the need to provide
regulatory clarity to regulated parties as expeditiously as feasible.
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\5\ E.O. 12866, Regulatory Planning and Review, 58 FR 51735,
51740 (Oct. 4, 1993); E.O. 13563, Improving Regulation and
Regulatory Review, 76 FR 3821 (Jan. 21, 2011).
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IV. Regulatory Impact Analysis
FinCEN has analyzed the anticipated economic impacts of this
proposed rule to assess its obligations under E.O.s 12866, 13563, and
14192; \6\ the Regulatory Flexibility Act (RFA); \7\ the Unfunded
Mandates Reform Act (UMRA); \8\ and the Paperwork Reduction
[[Page 45362]]
Act (PRA).\9\ The results of this analysis are discussed in the
remainder of this section \10\ and Section V \11\ below. The public is
invited to comment on any and all aspects of the analysis, including
the data, assumptions, and methodological approaches upon which its
conclusions rely.\12\
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\6\ See 58 FR at 51740; 76 FR 3821; E.O. 14192, Unleashing
Prosperity Through Deregulation, 90 FR 9065 (Feb. 6, 2025).
\7\ See generally 5 U.S.C. 601 et seq.
\8\ Unfunded Mandates Reform Act of 1995, Public Law 104-4,
Sec. 202, 109 Stat. 48, 64 (1995).
\9\ Paperwork Reduction Act of 1995, Public Law 104-13, 109
Stat. 163 (1995).
\10\ See Section IV.A for analysis responsive to obligations
under E.O.s 12866, 13563, and 14192.
\11\ See Section V for analysis responsive to obligations under
the RFA, PRA, and UMRA.
\12\ In particular, FinCEN welcomes comments that provide data,
studies, or generalizable qualitative information when modifications
to the original analysis are recommended.
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A. Economic Considerations
The sum total of the combined economic effects of the proposed rule
may be difficult to quantify.\13\ Nevertheless, FinCEN anticipates that
the proposed delay could reduce certain direct costs by enabling
covered IAs to forgo select compliance-related activities and
expenditures \14\ in calendar years 2026 and 2027. The total dollar
value \15\ of this pro forma cost reduction has been estimated \16\ to
be approximately $1.45 billion dollars.\17\ FinCEN is mindful that
estimates of the expected change in costs associated with the proposed
rule are sensitive to a number of assumptions about the most
appropriate counterfactual baseline and the related methodological
approaches employed.\18\ FinCEN is also aware that a change in
previously quantified costs may not fully represent the scope of
economic effects of the proposed rule. Additional analysis with respect
to these issues is included in Section IV.A.b below.
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\13\ As the proposed rule merely delays the effective date of
the IA AML Rule, any potential changes to the scope of the IA AML
Rule are outside the scope of this proposed rule and any related
economic analysis.
\14\ The proposed amendment to delay the effective date would
not relieve covered IAs of BSA obligations that predate the
effective date of the IA AML Rule, if any, or other obligations
under the Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.)
(Advisers Act) with a regulatory nexus, if any. Therefore,
expenditures on activities undertaken that also satisfy those
obligations would not be considered affected by the proposed
amendment.
\15\ As expected to accrue to covered IAs, select customers, and
the federal government, estimated in 2022-value. See IA AML Rule, 89
FR at 72209-74.
\16\ See IA AML Rule, 89 FR at 72243, Table 5.26.
\17\ Id. The IA AML Rule originally projected aggregate expenses
of $800 million in 2026 and $780 million in 2027 in 2022 U.S. dollar
value. These expenditures were removed from the ten-year time series
of anticipated costs and the remaining eight year series discounted
at a seven percent rate to estimate the expected cost savings of the
proposed rule, including a two year upfront delay. The choice to
remove costs originally scheduled to accrue in years three (2026)
and four (2027) of the forecast model of costs reflects the way in
which start-up costs were originally built into the first three
years of the estimates.
\18\ This includes choices about the relevant discount rates to
apply and the appropriate time horizon to estimate over. In some
cases, a difference in these kinds of choices can change the
direction of expected effects on costs. For example, if affected
parties are assumed to be able to smooth a change in costs over a
fixed time horizon, then removing two years' worth of projected
costs over the same fixed period would result in an annualized
average cost decrease. If, instead, affected parties cannot smooth
changes over the same fixed period, then the annualized average
change in costs may stay the same or even increase because removing
two years' worth of projected cost also shortens the affected time
horizon. A simple exercise using the projected remaining costs
(approximately $6.5 billion) of the IA AML Rule (see supra notes 6
and 7) illustrates this. Relative to the originally projected
baseline, average annual costs decrease by approximately $160
million per year for ten years under the proposed rule, if cost
smoothing occurs, but increase by approximately $5 million per year
for eight years if cost smoothing does not occur.
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a. Baseline Updates
To better contextualize the quantified incremental economic effects
of the proposed rule, FinCEN assessed observable changes to the
baseline population of affected parties.\19\
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\19\ See generally IA AML Rule, 89 FR 72215-24.
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Since the publication of the IA AML Rule, the annual baseline
population has incurred a net increase of 335 \20\ expected covered
investment advisers, of which six \21\ are expected to be
definitionally small.\22\ Assuming that the population distribution in
the IA AML baseline analysis applies equally to these expected new
covered IAs, the net population increase would include 12 new
registered investment advisers (RIAs) with significant, 164 with
moderate, and 263 with limited AML/CFT measures in place. At the same
time, one exempt reporting adviser with significant, 35 with moderate,
and 68 with limited AML/CFT measures in place would no longer exist.
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\20\ This estimate is based on the assumption that the
proportion of new covered RIAs that would not qualify for an
exemption has remained the same as in the IA AML Rule (approximately
91.4 percent). Data on the number of IAs (including 15,870 RIAs and
5,743 ERAs) as of calendar year end 2024 was obtained from Industry
Statistics--Investment Adviser Association 2025, available at
https://www.investmentadviser.org/industry-snapshots/ (accessed Aug.
15, 2025). Since the publication of the IA AML Rule, the number of
covered RIAs increased by 438 and the number of ERAs decreased by
103.
\21\ This estimate is based on the assumption that the
proportion of new covered IAs that would be considered small for
purposes of Regulatory Flexibility Analysis has remained the same as
in the IA AML Rule (approximately 1.9 percent). See IA AML Rule, 89
FR at 72216, 72255-61.
\22\ The IA AML Rule relies on the small entity definition under
the Advisers Act rule adopted for purposes of the RFA. See IA AML
Rule, 89 FR at 72255-56.
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FinCEN additionally estimates that there would be an increase in
the total baseline population of covered IAs' expected customers of
approximately 10.2 million \23\ or 20.4 million \24\ that would not
have been taken into account at the time of the IA AML Rule's initial
publication but that would affect the costs of implementation were the
rule to, in practice, become effective in 2026 or 2028, respectively.
Of these projected new customers, for purposes of comparison to the IA
AML Rule PRA baseline customers, approximately 1.5 million or 1.8
million would be expected to incur the information collection burden
originally assigned to legal entities in the IA AML Rule PRA
analysis,\25\ which represents an increase of approximately 241,849 or
483,699 expected respondents in 2026 or 2028, respectively.\26\ In
observing these baseline trends, FinCEN is mindful that because the
population of affected entities is generally increasing, any delay in
the original effective date of the rule may increase the burden of
initial start-up costs both (1) on aggregate in terms of the number of
covered IAs and (2) per covered IA in terms of the number of customers
under its AML/CFT program.
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\23\ This estimate is derived from applying two years of the
respective expected annual growth rates from the IA AML Rule
regulatory impact analysis (``IA AML Rule RIA'') (9.5 percent per
year for individuals and legal entities, 6 percent for pooled
investment vehicles (PIVs)) to the baseline population of customers
implied by Table 5.7 and Table 5.15. The IA AML Rule uses the term
``customers'' for those natural and legal persons who enter into an
advisory relationship with an investment adviser. This is consistent
with terminology in the BSA and FinCEN's implementing regulations.
FinCEN acknowledges that the Advisers Act and its implementing
regulations primarily use the term ``clients,'' and so that term is
used in specific reference to Advisers Act requirements; otherwise
the term ``customers'' is used.
\24\ This estimate is derived from applying four years of the
respective expected annual growth rates from the IA AML Rule RIA
(9.5 percent per year for individuals and legal entities, 6 percent
for PIVs) to the baseline population of customers implied by Table
5.7 and Table 5.15.
\25\ In the IA AML Rule RIA, FinCEN assigned an expected
information collection-related burden to the legal entity customers
of covered IAs with limited baseline AML/CFT measures.
\26\ These estimates reflect an applied annual average expected
increase of 9.5 percent for two (four) years to the affected
baseline population of affected legal entities. FinCEN notes that
this growth rate exceeds the observed annual average growth in total
(asset management only) RIA customers as reported in the IA 2025
snapshot (see supra note 20, Table 2B) over calendar years 2018-
2024, which was approximately 8.1 (6.5) percent. To the extent that
the growth rates estimated in the IA AML Rule exceed the realized
growth rate in customer population for the majority of covered IAs,
this would attenuate the expected impact of a delayed effective date
on the increase in up-front or start-up costs.
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[[Page 45363]]
b. Expected Benefits and Costs
Notwithstanding that, from a practical perspective, a delay in the
effective date of the IA AML Rule would relieve covered IAs of certain
out-of-pocket costs in 2026 and 2027, the companionate quantification
of the overall economic effect of this change may be less tractable and
more sensitive to assumptions. The effect of a change in future costs
would reasonably be expected to vary by the means by which an affected
party intended to finance those expenditures. It would also depend on
affected parties' ex ante expectations about the duration of regulatory
obligations. Conceptually, the proposed rule introduces both changes to
expected benefits and to expected costs, and each of those changes
individually may not move either aggregate costs or aggregate benefits
in the same direction.
With respect to changes in expected costs, if the effect of the
proposed rule was conservatively interpreted to be strictly a shift by
two years of a cost profile that would otherwise continue into all
future time periods, then the rule's primary effect on economic costs
would generally be to uniformly delay unrealized costs by two years.
This implies substantial savings in 2026 and 2027, cost increases
associated with delayed ramp-up in 2028, and minor effects starting in
2029. Applying discount rates of seven and three percent over a ten-
year period, the net present value of the anticipated cost savings are
approximately $1,453.63 million and $1,523.60 million, respectively.
This corresponds to annualized savings of $183.01 million at a seven
percent discount rate and $153.06 million at a three percent discount
rate.\27\
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\27\ FinCEN expects that some aspects of this and other
estimates of cost reductions could be overstated because they do not
take into account that some expenditures assigned to effective year
1 have already occurred and are not reversible or would not be cost-
free to reverse. For example, to the extent that a covered IA may
have already reviewed their current policies and procedures to
assess the need for revisions (i.e., gap analysis) or already
undertaken steps to modify those policies and procedures
accordingly, the cost savings of regulatory delay would be
overestimated. Similarly, if it would become necessary to
retroactively conform representations to covered IAs' clients
customers about an IA's AML/CFT related policies and procedures
where disclosure materials have already been updated, but
implementation would be paused by the proposed delay, the estimated
changes in costs presented here would not include this newly
introduced potential retrofitting cost and would consequently
overstate the reduced burden proportionately. Cost reductions may
further be overstated to the extent that covered IAs opt to commence
voluntary compliance with AML/CFT program requirements in advance of
the proposed delayed effective date.
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This conceptualization of costs, however, may not fully account for
the context of regulations that implement AML/CFT program and SAR
filing requirements, and, for example, presumes there would be no
change in the economic harms to national security or from illicit
financial activities that, but for the effective implementation of the
IA AML/CFT program regime, would otherwise transpire. Such unprevented
harms, which are generally difficult to quantify, would both create new
costs and reduce economic benefits \28\ to the public under the
proposed rule relative to the economic effects otherwise expected under
the IA AML Rule.
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\28\ See IA AML Rule, 89 FR at 72224-26.
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At the same time, the proposed delay may indirectly increase
economic benefits because of certain potential additional costs not
previously contemplated in the IA AML Rule, that a proposed delay in
the effective date could mitigate. These include potential economic
costs related to regulatory uncertainty, regulatory fragmentation,\29\
and costs associated with expediting compliance. Under the assumption
that mitigating these costs in addition to direct expenditures and
timing-related costs would enable covered IAs to engage in a more
productive use of resources, this could result in novel economic
benefits.
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\29\ See Joseph Kalmenovitz, Michelle Lowry, and Ekaterina
Volkova, ``Regulatory Fragmentation,'' Journal of Finance vol. 89,
no. 2 (Apr. 2025); see also Hongkang Xu, ``Regulatory Fragmentation
and Dividend Payouts,'' Accounting & Finance (2025).
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c. Alternatives
In partial fulfillment of its obligations under statutory
authorities, FinCEN considered several alternatives to the proposed
amendment. Of these alternatives, FinCEN is providing discussion of the
most salient, and those most sensitive to public comment for further
review.\30\
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\30\ See supra note 12.
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i. Status Quo
FinCEN is mindful that the proposed amendment to delay the
effective date may prolong the U.S. financial system's exposure to
previously identified vulnerabilities and illicit finance risks
associated with the investment adviser sector.\31\ At the same time,
the IA AML Rule imposes costs that, given other concurrent regulatory
changes and uncertainties, may now be higher than those identifiable at
the time of the IA AML Rule's initial promulgation. FinCEN has weighed
these potential costs to covered IAs, their customers, and the federal
government against the previously identified risks and believes that,
in contrast to maintaining the status quo effective date of January 1,
2026, a two-year delay appropriately balances trade-offs between
probable risks and costs.
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\31\ See supra note 4.
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ii. Other Alternatives
FinCEN considered other approaches to limiting the near-term costs
incurred by covered IAs and their customers while operationalizing the
IA AML Rule. FinCEN considered proposing a delayed effective date that
would be connected with, or conditioned on, the effective date of one
or more other rules that may impact the regulatory obligations of
covered IAs. However, FinCEN concluded that delaying in a manner that
is conditional on other regulatory effective dates may lead to
uncertainty and have less than the desired magnitude of impact in
reducing costs and, as a result, the costs of the potential harms from
this approach outweigh those associated with a two-year delay.
In addition, when a rule may potentially affect small entities with
greater relative economic impact, it is customary to consider potential
accommodations for them, like additional time to conduct the full suite
of changes to daily operations necessary for compliance. At the same
time, the agency must consider if such accommodations would
meaningfully benefit small entities without unduly undermining the
objectives that necessitated regulation. In connection with this
proposed rule, FinCEN considered affording an additional year delay to
covered IAs that would qualify as ``small'' under the categories
defined by the RFA.\32\ As in the IA AML Rule, FinCEN again concluded
that any alternative that affords differential compliance requirements
poses significant risk for exploitation as a regulatory loophole.\33\
Moreover, FinCEN estimated that to successfully implement a regime that
requires recorded documentation that one or more parties meet(s) the
eligibility criteria for a temporary waiver of requirements is unlikely
to be substantially less costly than the alternative compliance regime,
and thus both would not meaningfully reduce costs and would
unequivocally reduce the expected benefits relative to the proposed
rule. For these reasons FinCEN did not elect to propose
[[Page 45364]]
affording additional time to affected small entities.
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\32\ See 5 U.S.C. 601(3)-(6).
\33\ See IA AML Rule, 89 FR at 72260-61.
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B. Executive Orders 12866, 13563, and 14192
This rule was deemed ``Economically Significant'' by the Office of
Information and Regulatory Affairs. Per E.O. 12866, if a regulatory
action is expected to result in a rule that would have an annual effect
on the economy equal to or greater than $100 million,\34\ a regulatory
impact analysis is required. Accordingly, the forgoing analysis was
conducted because it is expected to result in effects beyond this
threshold.
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\34\ 58 FR at 51740-41; 76 FR at 3822.
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When final, this action is expected to be considered an E.O. 14192
deregulatory action.\35\ We estimate that this rule generates $88.88
million in annualized cost savings at a 7% discount rate, discounted
relative to year 2024, over a perpetual time horizon.
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\35\ E.O. 14192, Unleashing Prosperity Through Deregulation, 90
FR 9065 (Jan. 31, 2025); OMB, Guidance Implementing Section 3 of
Executive Order 14192, Titled ``Unleashing Prosperity Through
Deregulation,'' M-25-20 (Mar. 26, 2025), available at https://www.whitehouse.gov/wp-content/uploads/2025/02/M-25-20-Guidance-Implementing-Section-3-of-Executive-Order-14192-Titled-Unleashing-Prosperity-Through-Deregulation.pdf.
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V. Compliance With Other Authorities
A. Regulatory Flexibility Act
Pursuant to the RFA,\36\ FinCEN certifies that the proposed rule
would not have a significant economic impact on a substantial number of
small entities. The factual basis for this determination \37\ is
described below.
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\36\ See 5 U.S.C. 605(b); 5 U.S.C. 601 et seq.
\37\ See 5 U.S.C. 605(b).
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While it is not clear whether the reduction in expenditures for
calendar years 2026 and 2027 contemplated by the proposed rule would
constitute a significant economic impact for affected small
entities,\38\ FinCEN asserts that the rule would not affect a
substantial number of these entities.\39\
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\38\ At the time of promulgation, the IA AML Rule surmised that
``using information from the SUSB for firms with revenues below $50
million, FinCEN estimates that the annualized cost burden of the
final rule would be approximately 4.7 percent of revenues or 0.8
percent of AUM for a small investment adviser. FinCEN is unable to
conclusively determine whether such a cost burden would be
``significant'' for purposes of the RFA.'' IA AML Rule, 89 FR at
72255-59.
\39\ The term ``substantial number'' is not operationally
defined under the RFA. However, one recommendation is to treat an
expected significant economic burden that affects 25 percent or more
of affected small entities as substantial. See U.S. Small Business
Administration, How to Comply with the Regulatory Flexibility Act,
Chapter 1 (Aug. 2017), available at https://advocacy.sba.gov/wp-content/uploads/2019/06/How-to-Comply-with-the-RFA.pdf.
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Based on the analysis in the IA AML Rule, small covered IAs
constitute less than two percent of the population of covered IAs.\40\
Furthermore, using numbers from the updated baseline in this notice in
addition to the IA AML Rule RIA, FinCEN continues to estimate that
small covered IAs constitute less than three percent of small IAs.\41\
Therefore, even if all the small IAs affected by the proposed rule were
conclusively determined to be significantly impacted, they would still
fall short by a full order of magnitude of comprising a ``substantial
number'' either as a percentage of the total population of covered IAs
or as a percentage of the total population of small IAs.
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\40\ Small covered IAs were estimated to constitute
approximately 1.9 percent of covered IAs in the IA AML Rule. IA AML
Rule, 89 FR at 72215.
\41\ The updated baseline population of small covered IAs is
estimated to be 391 (385 from the IA AML Rule RIA baseline + 6 from
the NPRM baseline). See IA AML Rule, 89 FR at 77215-16. The IA AML
Rule estimated that the total population of small IAs was 13,430 in
2023, meaning at the time the IA AML Rule was originally published
the proportion of small covered IAs was approximately 2.9 percent of
all small IAs. FinCEN estimates that because 391/13,430 is also
approximately 2.9 percent and that any expected increase in the
total population of small IAs since 2023 would have the effect of
increasing the denominator (lowering the ratio of covered small IAs
to all small IAs), it may reasonably continue to expect that the
proportion of small IAs affected by this NPRM remains near or below
three percent.
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The necessity for any additional economic analysis under the RFA
\42\ depends on the two aforementioned conditions holding jointly: the
expected economic effect must be significant, and it must be so for a
significant number of small entities. FinCEN believes that, by
explaining why at least one of the two criteria is clearly not met, it
has provided the threshold analysis \43\ necessary for certification.
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\42\ See 5 U.S.C. 603.
\43\ See supra note 42. FinCEN considerations have attempted to
reflect best practices in threshold analysis per SBA Advocacy
guidance. To the extent that members of the public believe this
analysis errs for lack of material data, information, or other
salient considerations, comment is requested.
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B. Paperwork Reduction Act
The substance of this NPRM pertains to amending the IA AML Rule
exclusively with respect to the effective date. The PRA analysis in the
IA AML Rule was originally constructed to be generally insensitive to
potential changes in the timing of implementation.\44\ As such, there
is no incremental PRA burden associated with this proposed rule, and no
modifications to previous burden estimates are required.
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\44\ See IA AML Rule, 89 FR at 72261-74.
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C. Unfunded Mandates Reform Act
Pursuant to the UMRA, FinCEN has considered whether the proposed
rule is likely to result in the promulgation of a final rule that would
result in an incremental expenditure of $187 million or more annually
by State, local, and Tribal governments or by the private sector.\45\
As FinCEN expects the quantifiable immediate economic effect of the
proposed amendment to be a decrease in expenditures, it has concluded
further analysis under UMRA is not required.
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\45\ The U.S. Bureau of Economic Analysis reported the annual
value of the gross domestic product (GDP) deflator in 1995 (the year
in which UMRA was enacted) as 66.939, and 2024 as 125.230. See U.S.
Bureau of Economic Analysis, ``Table 1.1.9. Implicit Price Deflators
for Gross Domestic Product'' (accessed Aug. 20, 2025). Thus, the
inflation adjusted estimate for $100 million is 125.230 divided by
66.939, multiplied by 100, or $187.080 million.
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VI. Requests for Comment
1. Are there material facts, data, or information that, had they
been considered, would have led FinCEN to conclude that a different
formulation or duration of proposed delay of the IA AML Rule effective
date would better serve the public interest? What would this
alternative formulation be?
2. Are there any additional costs or benefits to the proposed rule
that should have been considered, articulated, or quantified? Any
considered, articulated, or quantified costs or benefits that should
have been done so differently? By what order of magnitude would such
differences be expected to change FinCEN's conclusions?
3. Are there additional regulatory alternatives that would achieve
the same balance of reduced costs without forgoing the intended
benefits of the IA AML Rule that FinCEN should consider implementing
instead of the proposed rule? If so, please describe in as much detail
as practicable both the suggested alternative and the basis for a
determination that it would similarly, or more efficiently, accomplish
the same regulatory objectives.
List of Subjects in 31 CFR Part 1032
Administrative practice and procedure, Anti-money laundering,
Banks, Banking, Brokers, Brokerage, Investment advisers, Money
laundering, Mutual funds, Reporting and recordkeeping requirements,
Securities, Small business, Suspicious transactions, Terrorist
financing.
Authority and Issuance
For the reasons stated in the preamble, FinCEN proposes to delay
the
[[Page 45365]]
effective date of the rule adding 31 CFR part 1032, published at 89 FR
72156, until January 1, 2028, and to amend 31 CFR part 1032 as follows:
PART 1032--RULES FOR INVESTMENT ADVISERS
0
1. The authority citation continues to read as follows:
Authority: 12 U.S.C. 1829b and 1951-1959; 31 U.S.C. 5311-5314
and 5316-5336; title III, sec. 314, Pub. L. 107-56, 115 Stat. 307.
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2. Revise Sec. 1032.210(c) to read as follows:
Sec. 1032.210 Anti-money laundering/countering the financing of
terrorism programs for investment advisers.
(c) Effective date. An investment adviser must develop and
implement an AML/CFT program that complies with the requirements of
this section on or before January 1, 2028.
Andrea M. Gacki,
Director, Financial Crimes Enforcement Network.
[FR Doc. 2025-18271 Filed 9-19-25; 8:45 am]
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