Regulation Name: Proposed Rulemaking for Investment Advisers’ Customer Identification Program
Publishing Date: 21 May 2024
Region:  United States
Agency: FinCEN

The Financial Crimes Enforcement Network (FinCEN) and the Securities and Exchange Commission (SEC) have jointly proposed a new rule requiring certain investment advisers to implement a Customer Identification Program (CIP). This initiative aims to strengthen anti-money laundering (AML) and countering the financing of terrorism (CFT) measures by mandating that investment advisers verify their customers’ identities. This proposed rule seeks to fortify the financial system against illicit activities and increase transparency within the investment advisory sector.

The rule specifies that investment advisers must establish and maintain a written CIP, detailing procedures for customer identity verification. This proactive measure aims to mitigate money laundering risks and ensure regulatory compliance. The costs of implementing these requirements will vary, depending on the size and nature of the investment adviser’s operations. On average, the internal compliance cost is projected to be about $1,169, with additional external costs estimated at $584.

Stakeholders are encouraged to provide feedback on the proposed rule to FinCEN and the SEC. This collaborative regulatory effort highlights the commitment to protecting the financial system from illicit activities and upholding the integrity of the investment advisory sector. By staying informed and engaging in the regulatory process, stakeholders can contribute to a more secure financial environment that adheres to high standards of compliance and transparency. Further updates on this regulatory initiative and its potential impact on the investment advisory landscape will follow.

Read the full amendment here.