New FinCEN AML Rules Target Investment Advisers and Real Estate Professionals

The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has introduced new anti-money laundering (AML) requirements aimed at U.S. investment advisers and real estate professionals. These rules are designed to close longstanding loopholes that criminals and kleptocrats have exploited.

FinCEN’s latest AML rule reclassifies registered investment advisers (RIAs) and exempt reporting advisers (ERAs) as financial institutions. This reclassification applies to RIAs and ERAs registered with the Securities and Exchange Commission (SEC), mandating that they screen client transactions for potential illegal activities, in compliance with the Bank Secrecy Act (BSA). This brings these advisers in line with the obligations already placed on other financial institutions.

“Both rules deliver on key lines of effort outlined in the Biden-Harris administration’s U.S. Strategy on Countering Corruption,” FinCEN said in a press release on Wednesday.

The investment advisers rule, first proposed by FinCEN in February, will require RIAs and ERAs to implement several critical measures. According to a FinCEN fact sheet, the rule mandates that these advisers:

- Implement a risk-based and reasonably designed AML and countering the financing of terrorism (CFT) program;

- File Suspicious Activity Reports with FinCEN;

- Keep records related to the transmittal of funds as required by the BSA; and

- Fulfill additional obligations applicable to financial institutions under the BSA and FinCEN’s regulations, such as special information-sharing procedures.

“The rule will help address the uneven application of AML/CFT requirements across this industry,” FinCEN stated.

The SEC will be responsible for examining compliance with these new requirements, just as it does for broker-dealers, FinCEN noted in the fact sheet. The rule is set to take effect on January 1, 2026.

In parallel, FinCEN has also introduced a new AML rule targeting the real estate sector. This rule requires real estate professionals to report information to FinCEN regarding the buyer and seller in cash-only real estate transactions. Such transactions are viewed as higher risk for money laundering activities, FinCEN said.

First proposed in February, the real estate rule will require the reporting person involved in the sale to file specific information with FinCEN if the transaction is unfinanced and does not fall under certain exemptions. According to the FinCEN fact sheet, the required information includes:

- The legal entity (transferee entity) or trust (transferee trust) receiving ownership of the property;

- The beneficial owners of the transferee entity or transferee trust;

- Certain individuals signing documents on behalf of the transferee entity or transferee trust during the reportable transfer;

- The transferor (e.g., the seller);

- The residential real property being transferred; and

- Total consideration and specific details about any payments made.

The compliance date for this rule is set for December 1, 2025.

By fLEXI tEAM