The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) announced its intention to delay the effective date of the Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) Program and Suspicious Activity Report (SAR) Filing Requirements for Registered Investment Advisers (RIAs) and Exempt Reporting Advisers (ERAs), known as the IA AML Rule, from January 1, 2026, to January 1, 2028.
Announcement of the delay
This decision was first revealed in a Treasury press release on December 30, 2025, with updates confirming exemptive relief on August 5, 2025, and a final rule on December 31, 2025. FinCEN cited the need to balance costs and benefits, tailor the rule to diverse business models in the investment adviser sector, and reduce regulatory uncertainty during a broader review. The postponement provides regulatory certainty through interim exemptive relief while FinCEN pursues rulemaking to formalize the extension and revisit the rule’s substance in coordination with the Securities and Exchange Commission (SEC).
This move follows FinCEN’s formal Notice of Proposed Rulemaking (NPRM) issued on September 19, 2025, which narrowly focused on shifting the effective date without altering the core requirements initially. Industry stakeholders had raised alarms about the original timeline, describing it as insufficient for compliance preparation given the rule’s sweeping scope. By extending the deadline, FinCEN addresses immediate pressures while signaling ongoing commitment to combating illicit finance risks exploited through investment advisers. The announcement reflects a pragmatic approach under the current administration, emphasizing proportionality in regulation.
Background of the IA AML rule
FinCEN finalized the IA AML Rule on August 28, 2024, designating certain RIAs and ERAs as “financial institutions” under the Bank Secrecy Act (BSA), subjecting them to AML/CFT obligations for the first time. The rule mandates covered advisers to establish risk-based AML programs approved by senior management, including internal policies, procedures, training, and independent testing to prevent money laundering, terrorist financing, and other illicit activities. Advisers must also file SARs for suspicious transactions involving $5,000 or more in funds or assets suspected of illegal origins evading BSA requirements, maintain records, and comply with funds transfer rules.
Modifications from the proposed rule narrowed coverage, exempting mid-sized advisers, multi-state advisers, pension consultants, and those not reporting assets on Form ADV, as well as bank/trust-sponsored funds and advisers advising other covered entities. ERAs under Advisers Act exemptions were included to close loopholes for illicit routing. FinCEN delegated examination and enforcement to the SEC, leveraging its existing oversight of broker-dealers. The original January 1, 2026, effective date allowed roughly 16 months for preparation, but surveys showed limited readiness, with only 22% of firms aligning policies despite 83% having some AML measures.
This rule closed a long-standing gap, as investment advisers managed trillions in assets without formal BSA AML duties, unlike banks and broker-dealers. It responded to risks from criminals and foreign adversaries exploiting U.S. financial assets via advisers. A related May 2024 joint rule proposed Customer Identification Programs (CIP) for advisers, now also under review.
Reasons for the two-year postponement
FinCEN explicitly stated the delay aims to ensure the rule is “effectively tailored” to advisers’ diverse risk profiles and business models, avoiding one-size-fits-all burdens. High compliance costs and short timelines were key concerns; industry groups like the Investment Adviser Association (IAA) argued the original deadline was “very hard” to meet, risking duplication with SEC rules. A survey by ACA Group, IAA, and Yuter Compliance found AML readiness as a top issue, second only to AI.
Regulatory uncertainty stemmed from unsettled obligations, prompting FinCEN to provide exemptive relief for certainty during review. Broader administration priorities emphasize cost-benefit balance, efficiency, and minimizing unnecessary regulations, mirroring rollbacks in crypto and bribery enforcement. FinCEN plans to reassess scope, potentially narrowing further, alongside CIP rule review with SEC. This postponement eases immediate costs while maintaining anti-illicit finance goals.
Critics like SEC Commissioner Hester Peirce questioned the AML expansion, arguing custodians already capture data and holistic review is needed to avoid excessive complexity. The delay aligns with FinCEN’s Request for Information on AML costs, seeking data on labor, software, and SAR filing expenses across non-bank institutions.
Industry reactions and stakeholder perspectives
Investment industry groups overwhelmingly welcomed the delay. IAA’s Gail Bernstein praised FinCEN for addressing “short compliance timeline and overbroad scope,” seeking balanced regulation without duplication. National Venture Capital Association’s Bobby Franklin highlighted risks to startup funding from misunderstanding venture’s illiquid nature. ACA Global’s compliance hub noted the extension signals enduring AML expectations but provides preparation time.
Adviser surveys underscored relief; 41% cited AML as a top concern pre-delay. Legal firms like Willkie Farr and Mayer Brown viewed it as targeted relief amid flux, urging ongoing preparation. However, investor advocates criticized harshly. Consumer Federation of America’s Corey Frayer accused the Trump administration of favoring “drug lords, corrupt politicians, and fentanyl smugglers,” citing rollbacks in crypto AML and foreign bribery.
Proponents see it as pragmatic, enabling tailored rules; opponents fear weakened defenses against illicit finance. Overall, the reaction split along industry versus consumer protection lines, with most advisers gaining breathing room.
Implications for investment advisers
Advisers gain two years to build compliant AML programs, potentially reducing rushed implementations and errors. Firms should assess risks, update policies, invest in monitoring tech, and train staff, as obligations remain intact pending revisions. Smaller RIAs and ERAs benefit most from cost deferral, avoiding immediate SAR filing and recordkeeping strains.
Resource allocation shifts to voluntary enhancements, leveraging existing 83% policy baseline. SEC coordination may streamline exams, but uncertainty persists on final scope. Long-term, a refined rule could lower burdens via proportionality. Firms must monitor rulemaking, as substantive changes loom.
Broader regulatory and economic context
The delay fits Trump administration deregulation, prioritizing efficiency post-reelection. It echoes pauses in other AML expansions, balancing illicit risk mitigation with growth. Economically, advisers manage $128 trillion AUM; compliance costs rival operating expenses, per survey. Deferral preserves capital flows to innovation without halting anti-crime efforts.
Globally, the U.S. leads in closing adviser gaps; delay maintains credibility while adapting. Future rules may integrate tech for cost efficiency. Ultimately, it fosters sustainable compliance.
FinCEN’s review could narrow coverage or simplify requirements by 2028. Joint SEC CIP revisit suggests holistic BSA updates. Advisers should proactively build programs, engage stakeholders, and track NPRMs. Expect cost surveys to inform tailoring. This positions the sector for robust, proportionate AML defenses.