With the Trump administration willing to reconsider regulations adopted under its predecessor, an advisor industry group is calling for a second look at new anti-money-laundering requirements for RIAs.
Tracy Soehle, associate general counsel for the Investment Adviser Association, said she and her colleagues have heard a considerable number of RIAs express anxieties about federal anti-money-laundering regulations scheduled to take effect at the start of 2026.
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The Investment Adviser Association, representing roughly 600 advisory firms and related entities, has long warned the requirements will fall especially heavily on small RIAs. Now IAA executives are hoping President Donald Trump's willingness to reconsider regulations adopted under his predecessor means the anti-money-laundering rules can receive a second look.
"I don't think it'll get called back," Soehle said. "But I'm hopeful that we will get a positive reaction from the Treasury and the SEC and we'll get another chance to comment on it."
Willingness to change on new regs
The executive branch under Trump has shown itself willing on several occasions in recent months to reconsider rules and procedures adopted under the previous administration. On Friday, the Securities and Exchange Commission announced it was
The rule, which mandates fund investments align with fund names, was scheduled to take effect in December for funds managing $1 billion or more and in June 2026 for firms managing less. In delaying the start dates, the SEC said it was seeking "to balance the investor benefit of the amended Names Rule framework with funds' needs for additional time to implement the amendments properly, develop and finalize their compliance systems, and test their compliance plans."
The SEC has also been
As for the new anti-money-laundering rule, the IAA sent the Treasury Department
The global fight against money laundering
The requirements come amid growing concerns that the U.S. financial system is being used by groups and criminals looking to perpetuate illicit acts like undermining domestic cybersecurity or financing Russia's war with Ukraine.
"Investment advisors are important gatekeepers to the American economy, overseeing the investment of tens of trillions of dollars," FinCEN Director Andrea Gacki said when the rule
Recent prominent cases show regulators remain eager to ensure wealth managers are helping in the fight against money laundering.
Soehle said she thinks chances are slim lawmakers will want to eliminate the new requirements for RIAs. Support for anti-money-laundering measures is too strong on both sides of the political aisle for the proposals to be abandoned outright.
Room for improvement with AML
But Soehle thinks there are plenty of tweaks that can be made. For one, she and other industry advocates think the rules are redundant in many cases.
Most RIAs work with outside broker-dealers, custodians and other entities that are already subject to anti-money-laundering requirements. Those institutions currently provide a backstop meant to prevent many of the illicit transactions federal regulators are seeking to squelch.
Also particularly burdensome are the practical requirements of the new rule. Among other things, firms must now adopt reams of new policies and procedures, appoint an internal anti-money-laundering officer charged with overseeing the efforts and enlist an independent tester to make sure everything is going according to plan. Once the rule is in effect, they will also be required to provide FinCEN with suspicious activity reports flagging any instance of possibly untoward money movement.
Soehle said most advisors lack the systems needed for turning in the required reports and will have to seek out vendors. Firms, she said, also struggle to find employees on staff for independent review of their anti-money-laundering policies.
That requirement, she said, is particularly hard on small firms.
"If you're a 10-person firm, it's going to be difficult to find someone within your organization that has the knowledge and understanding of the AML requirements to conduct independent testing," Soehle said. "That then could necessitate you going outside and hiring a consulting firm to do your independent review for you."
Doing AML due diligence with IDs
The other moving piece in all this is another anti-money-laundering proposal that has yet to be formally adopted. The Treasury Department and the Securities and Exchange Commission in May last year
They'd have to collect names, dates of birth, addresses and government ID numbers, such as Social Security numbers. The information would then be checked against lists of terrorists, criminals and other persona non grata maintained by government agencies.
Soehle noted that the comment period for the ID proposal was closed before the other anti-money-laundering rule received its final approval. So the IAA and other groups submitted opinions on ID checks without even knowing what the final version of the related rule looked like.
Now she's hoping both proposals will be reopened.
"I think, ideally, we could look at the two rules together and make comments, particularly comments that would help smaller advisors achieve more efficiency," Soehle said.
Duplicative AML efforts
RIAs now risk spending meaningful time, money and human resources trying to set up compliance systems that may prove inadequate when the new ID requirement is adopted. Sacks also said there is some validity to the concerns about redundancy.
Many RIAs, he noted, have adopted their own policies aimed at combatting money laundering. What's more, he said, most registered investment advisors don't actually handle clients' money — instead entrusting that to broker-dealers and custodians. That makes them not the most natural point in attempts to combat actual money laundering and terrorist financing.
Sacks agreed that it's likely regulators will reopen the anti-money-laundering rule, but not for wholesale reconsideration or rescission.
"This needs to be done very thoughtfully to find ways to truly bolster the system," he said.
Big firms have weighed in with similar concerns.
"Instead, the proposal extends to more than 20,000 adviser firms, the vast majority of which manage assets for individual investors who maintain accounts with a bank or broker-dealer, and are thus covered by AML programs and for which the risk of being exploited by Russian oligarchs or criminal enterprises in China is quite low," according to the letter, written by
An exception for the little guys?
One of the tweaks groups like the IAA has pushed for are carve-outs for small firms. The new anti-money-laundering rule set to take effect in 2026 now generally applies to all roughly 15,000 investment advisor firms registered with the SEC, as well as so-called exempt reporting advisors working with private funds and venture capital funds and with less than $150 million under management.
One of the few exceptions is for "midsize" advisors, defined as SEC-registered firms managing between $25 million and $100 million. The IAA and other groups have called that exemption largely meaningless because so few practices fall into that midsize category.
The IAA has instead pushed for a carve-out for firms with 100 or fewer employees. Now Soehle is hoping for a chance to raise those arguments with regulators again.
"I think to the extent that they reopen the rule for comment, we would go back again, and we would ask them to reconsider the definition of smaller advisors," she said.
