Over the past year, many advisory firms have been quietly preparing for a major regulatory shift. Drafting AML policies, vetting service providers, reworking onboarding flows—it’s been a slow burn of behind-the-scenes work for teams already stretched thin.
That pressure eased slightly when FinCEN announced it would postpone its new anti-money laundering rule for investment advisers. Originally set to take effect in 2026, the rule is now delayed until 2028. The announcement, released in late July, came with another signal: the rule isn’t simply delayed. It’s being reconsidered.
Read the official press release here.
For smaller firms, this is a rare opening to shape how the final rule will land—and to get ahead of it without panic. The underlying compliance expectations haven’t disappeared, and investor scrutiny around financial crime risk continues to grow.
This article breaks down what’s changed, what firms should be watching for, and how to make this delay work in your favor.
Background on the IA AML Rule
As we already know, in February 2024, FinCEN proposed a rule that would formally bring investment advisers under the umbrella of the Bank Secrecy Act. Why? Because, as banks and broker-dealers have long operated under BSA standards, advisers remained an outlier. That has raised red flags with regulators, particularly as private fund structures became more opaque and international financial risks continued to evolve.
The rule as proposed would apply to two broad categories:
- SEC-registered investment advisers (RIAs)
- Exempt reporting advisers (ERAs)
It would require both to implement written, risk-based AML programs, designate compliance officers, conduct ongoing customer due diligence, and file suspicious activity reports (SARs). Firms would also need to keep records that support their AML efforts and prepare to justify those records to federal regulators.
FinCEN noted that the absence of AML obligations for advisers created vulnerabilities in the U.S. financial system. But the proposal quickly generated concern. Around 15,000 firms fall within its scope. Many are small shops without a dedicated compliance function, let alone a full AML apparatus. The complexity and breadth of the rule raised questions about feasibility, proportionality, and the risk of duplicating SEC oversight.
The Delay, Explained
The AML rule was supposed to kick in at the start of 2026. That felt close. Too close, for many advisory firms still wrapping their heads around what the rule would actually mean for them. In late July, FinCEN hit pause and pushed the effective date out to 2028. But this wasn’t just about giving everyone more time.
Behind the scenes, FinCEN had been hearing it loud and clear: the rule, as written, didn’t make sense for every firm. Advisers flagged a long list of concerns—from redundant requirements to the risk of layering new obligations on top of existing SEC rules. Smaller firms, in particular, argued that the proposed rule didn’t account for their size, scope, or the low-risk nature of many of their client relationships.
So, FinCEN didn’t just delay. It reopened the whole conversation. That means more comment periods. More back-and-forth with stakeholders. A chance to reshape what this rule looks like before it becomes law.
For compliance teams, this is rare breathing room. It’s also a bit of a do-over. Instead of scrambling toward a hard deadline with limited clarity, firms now have space to think, test, and plan without the panic.
The rule isn’t going away. But it might return in a more flexible, better-targeted form—especially if firms stay engaged and help FinCEN understand what “realistic” looks like on the ground.
What Else Is on the Table
The AML rule isn’t the only regulatory item FinCEN is reconsidering. The agency also plans to revisit the Customer Identification Program (CIP) rule, which was originally proposed in 2003 alongside the SEC but never finalized.
The CIP rule would require investment advisers to:
- Collect and verify identifying information about clients
- Maintain those records for inspection
- Screen names against government watch lists
These requirements, while standard in banking, would be new for many advisers. The decision to pair the AML and CIP reconsiderations signals a coordinated effort to rethink how anti-financial crime controls are introduced in sectors that were previously overlooked.
It also reflects a broader trend in 2025: regulators are recalibrating their rollout strategies. The CFPB and CFTC have taken similar steps this year, opting for more sequencing and feedback cycles rather than pushing through blunt policies. There’s growing recognition that rules, however well-intentioned, must be tailored to the operational realities of the businesses they target.
What This Means for Investment Advisers
No AML obligations are currently in effect for investment advisers, but that doesn’t mean nothing is happening. In practice, many advisers already face indirect AML expectations from banks, fund administrators, or institutional clients. LPs have started asking tougher questions. Due diligence requests now often include detailed probes into client verification, onboarding protocols, and red flag escalation.
So while federal enforcement may be years away, market pressure is already here. Advisers who show they have a thoughtful approach to financial crime risk (even without a mandate) will stand out. Those who wait until 2027 to start building may find themselves behind.
The delay also gives firms room to breathe. There’s now time to develop internal playbooks, test policy language, clarify vendor roles, and understand how their risk profile compares to what regulators might ultimately require. For small firms in particular, it’s a rare opportunity to scale compliance incrementally, not reactively.
Practical Steps to Take Now
You don’t need to build a bank-grade AML program overnight. But you do need to start laying the groundwork. Here are six practical moves firms can make today:
- Run a policy review. Pull together everything you currently do around client onboarding, risk screening, and reporting. Even if it’s ad hoc, it’s a starting point. Identify what’s already strong and where formal documentation is missing.
- Draft a working AML policy. Use the 2024 proposal as a basis, with clear statements about your firm’s size, scope, and risk tolerance. Better done than perfect. Even better? Clarity over perfection.
- Assign ownership. Someone in your firm should be responsible for tracking FinCEN’s process, coordinating any prep work, and serving as a point of contact for vendors or external counsel.
- Educate your team. Do the obvious. Hold a short internal session explaining what the rule is, why it matters, and how your firm plans to respond. That alone builds confidence and institutional memory.
- Plan to comment. When FinCEN reopens the docket, participate. If you think a certain requirement would strain your operations or duplicate existing work, don’t hesitate to say so. Regulators are more likely to listen if the feedback is practical, specific, and comes from firms in the trenches.
- Use the right tools. Compliance platforms like Smartria can help model potential rule scenarios, centralize documentation, and identify risks early. Technology won’t solve everything, but it keeps the wheel from being reinvented every quarter.
Conclusion
Regulatory delays like this one aren’t rare. We’ve seen them with Form CRS, with the DOL fiduciary rule, and with climate disclosures. Some rules come back stronger. Some come back slower… and some don’t come back at all.
But the smart firms don’t wait to find out. They plan based on what’s already on the table, build what they can, and make sure they’re never caught flat-footed when enforcement resumes.
FinCEN’s AML rule is not a back-burner issue. It’s just one that’s giving you extra prep time. Use it. Get your policies in shape, your team informed, and your systems flexible enough to adjust once the final rule lands.
Smartria helps advisory firms manage compliance that keeps pace with change. If your team wants to turn regulatory uncertainty into a readiness advantage, this is your window to act.
