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FinCEN Hits Pause: No AML Rule for Investment Advisers Until 2028

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On December 31, 2025, the U.S. Department of the Treasury’s (“Treasury”) Financial Crimes Enforcement Network (FinCEN) issued a...

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On December 31, 2025, the U.S. Department of the Treasury’s (“Treasury”) Financial Crimes Enforcement Network (FinCEN) issued a <a href="https://www.federalregister.gov/documents/2026/01/02/2025-24184/delaying-the-effective-date-of-the-anti-money-launderingcountering-the-financing-of-terrorism" target="_blank">final rule</a> formalizing its previously announced intention to reassess the specific requirements for anti-money laundering/counter-financing of terrorism (AML/CFT) program compliance by registered investment advisers (RIAs) (the “IA AML Rule”) and to delay the rule’s compliance deadline. The IA AML Rule, originally scheduled to take effect on January 1, 2026, is now postponed until January 1, 2028, following concerns raised by certain RIAs and other industry participants facing implementation challenges. The final rule reflects FinCEN’s previous <a href="https://www.federalregister.gov/documents/2025/09/22/2025-18271/delaying-the-effective-date-of-the-anti-money-launderingcountering-the-financing-of-terrorism" target="_blank">notice</a> of the proposed delay in rulemaking issued on September 22, 2025, as well as the <a href="https://www.fincen.gov/system/files/shared/IA-Rule-Exemptive-Relief-Order.pdf" target="_blank">exemptive relief order</a> issued on August 5, 2025, and Treasury’s July 2025 <a href="https://home.treasury.gov/news/press-releases/sb0201" target="_blank">announcement</a> of FinCEN’s intention to postpone and review the IA AML Rule.<a href="#_ftn1" target="_self">[1]</a>As adopted, the IA AML Rule amends the definition of “financial institution” under the Bank Secrecy Act (BSA) to include certain RIAs and exempt reporting advisers (ERAs). This amended definition subjects covered advisers to AML/CFT program requirements, including suspicious activity reporting (SAR) obligations. For more information about the IA AML Rule, please see our September 2024 <a href="https://www.mofo.com/resources/insights/240925-fincen-expands-its-reach-with-final-rules">Client Alert</a>.In the final rule, FinCEN notes that delaying the effective date will provide FinCEN additional time to review the IA AML Rule and ensure it is effectively tailored to the diverse business models and risk profiles within the investment adviser sector. While we can expect some changes to the IA AML Rule, it is unclear how substantial they will be. FinCEN will also consider timing issues with potential revisions to the IA AML Rule and other rulemakings related to the investment adviser sector (in particular, the <a href="https://www.sec.gov/files/rules/proposed/2024/bsa-1.pdf" target="_blank">joint proposed rule</a> establishing customer identification program (CIP) rule requirements for investment advisers). For more information about the joint proposed CIP rule, please see our July 2024 <a href="/resources/insights/240708-fincen-the-sec-will-the-real-ria" target="_self">Client Alert</a>.<h4>Looking Ahead</h4>Our BSA/AML and Investment Management teams are tracking these developments and will monitor for further updates from FinCEN as RIAs and other investment firms consider whether interim changes in compliance programs are appropriate.<hr class="divider"><a href="#_ftnref1" target="_self">[1]</a> See Client Alert: <a href="/resources/insights/250723-fincen-postpones-effective-date" target="_self">FinCEN Postpones Effective Date of AML/CFT Rule for Investment Advisers </a>(July 23, 2025).

FinCEN Hits Pause: No AML Rule for Investment Advisers Until 2028

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Marc-Alain’s practice focuses on advising and counseling domestic and foreign financial institutions on a variety of bank regulatory, Bank Secrecy Act/anti-money laundering (BSA/AML), countering the financing of terrorism (CFT), and transactional matters. Marc-Alain has significant experience representing global financial institutions in criminal and regulatory investigations and enforcement actions as well as addressing weaknesses and shortcomings in their BSA/AML compliance frameworks. He also advises clients on all AML-related issues in connection with ESG, M&A, strategic investments and private equity funds, embedded finance, blockchain and digital assets, and other corporate transactions. Marc-Alain is adept at assisting clients to build ground up BSA/AML policies and procedures, and he works closely with banks and fintechs to navigate BSA/AML considerations related to Banking-as-a-Service (BaaS) and other partnership arrangements.Further, Marc-Alain has significant experience in advising and counseling U.S. and international bank holding companies, banks, and other financial institutions on a variety of bank regulatory and transactional matters, including matters relating to:<ul><li>The Bank Holding Company Act</li><li>Regulation K and Y</li><li>The Bank Merger Act</li><li>The Dodd–Frank Act (with regard to the Volcker Rule, Living Wills, and Enhanced Prudential Standards, among others)</li><li>Applications to federal and state banking regulators for expansion of activities</li><li>Internal restructuring</li><li>New products, sales, and acquisitions of U.S. banks</li></ul>Prior to joining Morrison Foerster, Marc-Alain was an associate with two prominent global United States law firms, and he practiced law in Switzerland for several years.Marc-Alain is a member of the board of the Swiss American Lawyers Association of Greater New York (SALA). He is fluent in German, English, French, and Spanish and has a basic knowledge of Italian. He is admitted to practice in New York and Switzerland.

Marc-Alain Galeazzi

Partner

Kelley Howes is chair of the Investment Management Group, co-head of the Securities + Derivatives Regulatory Solutions team, and managing partner of the firm’s Denver office.Kelley has over 30 years’ experience advising U.S. registered investment companies (including mutual funds, exchange traded funds, and interval funds), business development companies, registered investment advisers, and exempt reporting advisers on a wide range of legal, regulatory, and compliance matters. She also counsels clients regarding investment company status matters under the Investment Company Act.Recognized as a go-to counsel for independent fund trustees, Kelley frequently advises registered funds and their trustees on corporate governance, compliance, and regulatory matters, mergers and reorganizations, and regulatory examination and enforcement matters.Kelley is consistently recognized as a top advisor in Chambers USA and Chambers Global, receiving multiple distinctions for Registered Funds. She has also been recognized in the Finance: Fintech category of The Legal 500 US awards.Prior to joining Morrison Foerster, she served as executive vice president and general counsel of Janus Capital Group Inc., a NYSE-listed global asset management holding company. She also previously served as senior vice president and general counsel of Janus Capital Management LLC, a U.S. registered investment advisory subsidiary of Janus Capital Group, and as president of the Janus funds and president of Janus Distributors LLC.Kelley previously served as a director of Young Americans Bank/Young Americans Center for Financial Education, ICI Mutual Insurance Company, and the Denver Metro Chamber of Commerce.

Kelley Howes

Chair of Investment Management Group

Derek Steingarten is a partner in Morrison Foerster’s Investment Management Group, and co-head of the Securities + Derivatives Regulatory Solutions team. He also serves on the global Environmental, Social, and Governance (ESG) steering committee at Morrison Foerster.Derek has 25 years of experience advising a wide range of registered and private fund sponsors and other institutional asset managers. He counsels clients on the fund formation, capital raising, marketing, and compliance needs of hedge funds, private equity funds, private credit funds and fund of funds, sub-advised funds, bank collective funds, institutional separate accounts, managed account platforms, mutual funds, ETFs, and other registered vehicles, such as interval funds and BDCs. His broad experience allows him to advise clients on regulatory and transactional issues in a way that is tailored to the lifecycles of their businesses and financial product offerings. This includes managing regulatory and governance issues under the Investment Company Act, the Investment Advisers Act, and other U.S. federal securities laws, including SEC examinations, investigations, regulatory enforcement, and disputes.Asset managers regularly engage Derek as an active partner in transaction negotiations and due diligence for wealth management industry acquisitions, lift-outs, and strategic combinations and restructurings. He has extensive experience with state- and federal-chartered trust companies and their specialized role within the wealth management industry. Derek is recognized in Chambers most recent legal ranking guides including Chambers Global 2025 and Chambers USA 2024 nationwide, with clients noting that he “offers quality business-oriented counsel and unfailing responsiveness” and that he is “thoughtful and clear in his advice.” <h4>Representative Experience</h4><ul><li>Rothschild & Co. in connection with the sale of two asset management units to a subsidiary of Wintrust Financial Corporation.</li><li>A global wealth manager, in a negotiated acquisition of a diversified asset management and fund advisory business.</li><li>Brooklyn Investment Group, a tech-enabled wealth management firm, in connection with its sale to Nuveen, a global asset manager.</li><li>Burgundy Asset Management Ltd., a leading independent wealth manager, in connection with the U.S. aspects of its negotiated sale agreement to Bank of Montreal (BMO).</li><li>Focus Financial Partners, Inc. in its acquisition of the cross-border wealth advisory business of Cardinal Point Capital Management Inc. and Cardinal Point Wealth Management, LLC.</li><li>A multi billion dollar private equity sponsor in its structuring and initial RIA acquisition transaction.</li><li>Prime Quadrant Corp. in its acquisition of Beekman Wealth Advisory, LLC.</li><li>Hightower Advisors, LLC in connection with its acquisition and integration of various businesses with multi-billion dollar AUM businesses with complex client account, fund and ETF relationships.</li></ul>

Derek Steingarten

Elizabeth Sipes is a partner in the global Private Funds Practice, based in the Denver office.Elizabeth’s practice focuses on advising established and emerging sponsors on the formation, structuring, and operation of private equity funds, including venture capital, growth equity, buyout, private credit, and fund-of-funds, and other investment strategies.In her practice, Elizabeth advises sponsors on all aspects of fund formation and launch. This includes drafting and negotiating a spectrum of documentation ranging from term sheets, partnership agreements, side letters, and subscription agreements, to structuring general partner and upper-tier arrangements, including carry programs and other economic sharing programs.Additionally, Elizabeth represents institutional investors, including corporate venture capital programs, funds-of-funds, and family offices, assisting them with their alternative investments across various asset classes, including private equity, venture capital, hedge funds, and real estate.Beyond her professional pursuits, Elizabeth is actively involved in her community, serving on the board of directors of the Walking Mountains Science Center.Elizabeth has been recongized by Best Lawyers in America for Securities and Capital Markets Law (2021–2024).Prior to joining the firm, Elizabeth was co-chair of the Private Investment Funds practice at another international law firm.Elizabeth holds a J.D. magna cum laude from University of Illinois College of Law and a B.A. in French and business from Truman State University.

Elizabeth Sipes

Stephanie, Chair of the firm’s global Private Funds Group, has over 20 years of experience advising on private fund formation and operations, as well as on regulatory compliance matters. She represents U.S. domestic and global fund sponsors and institutional investors in connection with the formation of, and investments in, buyout funds, venture capital funds, secondary funds, debt funds, infrastructure funds, fund–of–funds, social impact funds and other private funds with a broad range of investment strategies. She has been described by a client as “extremely knowledgeable in the fund formation space, very good to work with and thoughtful about the needs of her clients.”Private Fund Sponsors. Stephanie represents fund sponsors and the management teams of private funds in the formation of their private funds, as well as in ongoing fund operations, including upper–tier planning, parallel and feeder fund structures, alternative and offshore vehicles, securities law matters, ERISA compliance, transfers or sales of partnership interests, including secondary transactions, and other tax and regulatory matters.She has considerable experience negotiating anchor investor arrangements, navigating cross–border fund matters, structuring co–investment and overage programs, representing firms and individual partners at the time of hire or departure (including involuntary removal), and the formation of feeder vehicles, parallel funds and special purpose vehicles. She also advises U.S. and international companies in the structuring of their corporate venture capital programs.Institutional Investors. Stephanie has advised institutional investors in hundreds of private fund formations, involving foreign and domestic funds ranging in size from $40 million to $21 billion. These investors, including state and corporate pension funds, sovereign wealth funds, universities, fund-of-funds, insurance companies, and other institutional investors, have commitments ranging from $5 million - $1 billion on a per-deal basis. Her experience includes representing significant limited partner investors in some of the largest private market funds ever raised.Investment Advisers. Stephanie advises fund sponsors and other investment advisers on the principal aspects of the Investment Advisers Act and the Dodd–Frank Act. She assists her clients in navigating the regulatory landscape, including new state and federal registration requirements, exemption eligibility, compliance programs and ongoing compliance matters.Stephanie works in the firm’s Palo Alto office and is active in the business community. Prior to joining the firm in 2005, she was a member of the fund formation group in the Palo Alto office of Cooley LLP.

Stephanie Thomas

Chair of Global Private Funds Group

Deborah L. Connor, former chief of the Money Laundering and Asset Recovery Section (MLARS) of the U.S. Department of Justice (DOJ), is a partner in MoFo’s Investigations + White Collar Defense Group. With more than 25 years of service at DOJ, most recently leading its anti-money laundering (AML)/Bank Secrecy Act (BSA) enforcement, Deborah is a leading authority in criminal AML/BSA matters. Drawing upon her unmatched experience in criminal investigations, litigation, and enforcement, Deborah focuses on guiding financial institutions, multinational companies, and individuals through cross-border internal investigations, regulatory enforcement defense, white collar criminal defense, and compliance counseling involving legal issues pertaining to sanctions, anti-corruption, AML/BSA, and cryptocurrency, among others.As chief and principal deputy chief of MLARS, Deborah supervised investigations and prosecutions of numerous high-profile cases involving allegations of corporate and financial misconduct and resolutions involving deferred prosecution and non-prosecution agreements in relation to financial institutions and emerging technologies in the financial services markets, as well as blockchain-based digital assets. As chief, she exercised supervisory authority over the DOJ’s AML program, specifically any charges involving violations of BSA statutes. Deborah has worked with domestic regulators, including the Financial Crimes Enforcement Network, the Office of the Comptroller of the Currency, the Federal Reserve, and the Office of Foreign Assets Control, as well as enforcement officials throughout the federal government, including the Departments of State, Commerce, and Treasury. She was also responsible for helping to oversee the Department’s Asset Forfeiture Program. Deborah also served as senior counsel to the assistant attorney general for the Criminal Division.Prior to joining the Criminal Division, Deborah had a distinguished 16-year career as an assistant U.S. attorney in the U.S. Attorney’s Office for the District of Columbia, where she held several leadership positions and supervised hundreds of prosecutors. In her last five years with the office, Deborah served as chief of the Fraud and Public Corruption Section, where she supervised the office’s white collar prosecutions including complex AML and sanctions evasion investigations and prosecutions against global financial institutions and their employees, civil and criminal forfeiture cases, and major financial fraud actions involving corporations and government agencies. As a criminal prosecutor, Deborah has investigated a broad range of white collar and other federal criminal matters, tried over 40 criminal trials in both D.C. Superior and Federal Courts, supervised more than 100 criminal trials, and briefed and argued criminal appeals. Deborah began her career at DOJ as a civil trial attorney in the Antitrust Division’s former Computers and Finance Section.Deborah received numerous awards while at DOJ, including five Special Achievement Awards, and the United States Attorney’s Star Award in the U.S. Attorney’s Office. During her time at the Criminal Division, Ms. Connor twice received the Assistant Attorney General’s Exceptional Service Award and the Assistant Attorney General’s Award for Distinguished Service. In 2021, Deborah was named one of Global Investigations Review’s (GIR) Top 100 Women in Investigations.Prior to joining DOJ, Deborah was a litigation associate at a large D.C.-based law firm, and before entering the practice of law, she joined a large Chicago-based commercial bank, where she served as a relationship manager for U.S. subsidiaries of multinational corporations.Deborah is a frequent speaker on AML and financial crimes enforcement. She has participated as a keynote speaker or panelist at conferences such as the American Bar Association’s (ABA) National Institute on White Collar Crime, ABA’s Financial Crimes Enforcement Conference, the Association of Certified Anti-Money Laundering Specialists’ (ACAMS) Annual AML & Anti-Financial Crime Conference, the Practising Law Institute, and the American Gaming Association.Deborah received her J.D. cum laude from Georgetown University Law Center, where she served on the Georgetown Law Journal as a notes editor. She received her B.A. from Miami University of Ohio.<h4>Representative Experience</h4><ul><li>Supervised the investigation and resolution of a matter involving a global financial institution and its European subsidiary related to fraud on financial investors. The matter resulted in a deferred prosecution agreement with the parent and a guilty plea with a subsidiary, guilty pleas of three employees, financial penalties, fines, and disgorgement.</li><li>Supervised the investigation and resolution of a matter involving a global financial institution and a foreign subsidiary in connection with bond deal underwriting. The matter resulted in a deferred prosecution agreement, a guilty plea for a subsidiary, financial penalties, and the conviction of two former high-level employees.</li><li>Supervised the investigation and resolution of a matter involving a foreign sovereign wealth fund, as part of the misappropriation of over $4.5 billion from the fund. The matter resulted in seizures of over $1.7 billion in assets as part of a civil forfeiture recovery.</li><li>Supervised the investigation and resolution of a matter involving a foreign financial institution related to a money laundering conspiracy in connection with a bribery scheme. The matter resulted in a deferred prosecution agreement, financial penalties, forfeiture, and the guilty pleas of two employees.</li><li>Supervised the investigation and resolution of a matter involving a foreign financial institution related to the processing of transactions in violation of U.S. sanctions. The matter resulted in a parent-level guilty plea and a non-prosecution agreement with a subsidiary, in addition to forfeiture.</li></ul>

Deborah Connor

Malka Levitin is an associate in the Financial Services Practice Group at Morrison Foerster. Her practice focuses on advising banks, Fintechs, and other financial services companies on regulatory and transactional matters, and includes providing counsel on the Bank Holding Company Act, the Bank Secrecy Act, money transmission, lending, ACH processing, and other money movement issues.Her financial services expertise includes a multi-year review of a bank’s compliance program, counseling foreign banks on branch, agency, and representative office activity, and obtaining a trust company charter for a cryptocurrency company. She has advised generally on the regulation of crypto-assets, ACH and deposit account agreements, and Banking as a Service models and the use of an FBO account. On behalf of clients, Malka has also managed inquiries, investigations, and audits from financial services regulators, including by guiding client responses and presentations to regulators.Malka further has significant experience with anti-money laundering and counter-financing of terrorism issues under the Bank Secrecy Act. In addition to providing general regulatory advice in this area, she has assisted clients with drafting BSA/AML policies and procedures, including for clients in the crypto-asset and cannabis spaces.With respect to pro bono work, Malka maintains an active practice. She has worked on expediting an asylum application, drafting a complaint against a university for Title VI violations, and pursuing multiple cases involving religious rights under the Religious Land Use and Institutionalized Persons Act.Malka graduated from Columbia Law School, where she was a staff editor for the Journal of Transnational Law. She received her B.A. summa cum laude from Queens College, where she graduated second in her class.

Malka Levitin

Associate

Aaron Russ is an associate in the Washington, D.C. office and a member of the firm’s Investment Management Group and Securities + Derivatives Regulatory Solutions team. He draws from his experience at the U.S. Securities and Exchange Commission (SEC) to advise clients on their regulatory, compliance, operational, and governance needs.He regularly advises private fund managers, wealth managers, innovative investment advisory fintech firms, and other registered investment advisers and exempt reporting advisers on the various regulatory and compliance issues that arise in connection with the operation of an advisory business, including compliance with the federal securities laws (Investment Advisers Act of 1940, the Investment Company Act of 1940, the Securities Act of 1933, and the Securities Exchange Act of 1934);<ul><li>drafting and negotiating advisory agreements and service provider agreements;</li><li>SEC registration issues, including structuring to rely on registration exemptions or comply with SEC guidance (e.g., avoiding integration issues and structuring participating affiliate arrangements);</li><li>preparing and updating regulatory filings (e.g., Form ADV, Form PF, and Form CRS);</li><li>drafting and updating compliance programs to address changes to regulations and the adviser’s business (e.g., offering new products and services, use of artificial intelligence) to promote compliance with federal securities laws;</li><li>counseling investment advisers in SEC examinations and other interactions with regulators;</li><li>advising on all aspects of investment adviser marketing and the offering of private funds (e.g., advising on marketing materials, responses to RFPs, compliance with the Securities Act offering exemptions, broker-dealer issues, and performance track record reporting);</li><li>counseling investment advisory firms on the regulatory aspects of M&A activity and related transactional issues; and</li><li>assisting private fund managers comply with various regulatory and compliance issues that arise in connection with the formation, offering, and operation of private funds (e.g., advising on offering materials, placement agent agreements, subscription agreements, and investment company status issues).</li></ul>Aaron previously served as senior counsel for the Division of Investment Management for the SEC. In his role as senior counsel, he drafted rule text and guidance for Commission rulemakings under the Investment Advisers Act, including the Marketing Rule. While at the SEC, he also worked in the Office of Compliance, Inspections, and Examinations (now known as the Division of Examinations), where he counseled SEC examiners on investment adviser and investment company examinations involving both private and registered funds, as well as broker-dealer examinations.Highly regarded for his deep knowledge of the Advisers Act Marketing Rule, Aaron frequently shares his insights through writing and speaking engagements with publications such as Practicing Law Institute (PLI), The Review of Securities & Commodities Regulation, and Strafford.Aaron earned his J.D., summa cum laude, from the University of Illinois College of Law. He also holds a dual B.A. in Economics and Political Science from the University of Michigan.