ICI Supports Requiring Advisers to Establish Anti-Money Laundering Programs

Washington, DC, July 7, 2003 - The Institute continues to support efforts to combat money laundering in the financial services industry, including a proposed rule that would require investment advisers to establish anti-money laundering programs.

Background
FinCEN is proposing to amend its Bank Secrecy Act rules to require certain investment advisers that manage client assets to establish anti-money laundering programs, to establish minimum requirements for such programs, and to delegate its authority to examine certain investment advisers for compliance with such program requirements to the Securities and Exchange Commission.

ICI Position
In a recent comment letter, the Institute expresses support the proposal to apply anti-money laundering requirements to investment advisers. Although such a step is not specifically required by the USA PATRIOT Act, the Institute states that it is appropriate as a matter of public policy to treat investment advisers as "financial institutions" for purposes of the Bank Secrecy Act and to require them to establish anti-money laundering programs.

In particular, the Institute supports the provision that would permit an investment adviser to exclude from its anti-money laundering program any pooled investment vehicle it advises that is itself subject to an anti-money laundering program requirement (which would include mutual funds). According to the proposing release, this exclusion is intended to "prevent overlap and redundancy," which is an approach that the Institute has consistently encouraged. The Institute also commends FinCEN for its efforts to tailor the proposed investment adviser anti-money laundering program rule to avoid unnecessary duplication and encourages FinCEN to apply the same principle in other contexts.

Related Links
The Institute has consistently expressed strong support for efforts to combat money laundering, including the introduction of anti-money laundering programs and customer identification programs.