Drug Cartels. Terrorists. Russian Oligarchs. Money Laundering Risks Go ‘Way Beyond’ Fincen’s AML Rule
Traditional and private fund managers not only face growing money-laundering risks, they also need to ensure they are complying with fragmented anti-money laundering regulations in different regions, consultants said.
Asset managers are facing a higher risk of bringing on clients looking to launder illicit funds and a slew of anti-money laundering regulations testing their compliance programs, consultants told FundFire.
Still, RIAs and exempt reporting advisors typically pose lower money-laundering risks compared to banks and other financial institutions because their role is primarily focused on investment strategy and portfolio management as opposed to moving money and custodying assets, consultants said.
And not all compliance specialists have seen an uptick in the risk for managers.
Cynthia Kelly, STP Investment’s managing director of compliance, said money-laundering risks have not increased among investment advisors as a result of Fincen delaying its rule, and that most asset managers already take a risk-based approach to their anti-money laundering programs.
“[Fincen’s] rule itself is important… but it’s equally important to get it right,” said Kelly. “We all have our [anti-money laundering] obligations, regardless of whether there’s a written program required. We still have to know our customer. We are still liable for accepting funding, or allowing a custodian to accept funding, from someone that your due diligence wasn’t done on. If you missed something, you’re going to be held accountable for it.”
Read more from Cynthia and other experts in FundFire.
