FinCEN Proposes Implementation of an Anti-Money Laundering Program

Recognized by the Euromoney Legal Media Group for her expertise in structured finance, Deborah Festa is a partner at Milbank, Tweed, Hadley & McCloy LLP. Through the Los Angeles firm, Deborah Festa handles investment management practices and West Coast securitizations. She offers financial institutions guidance on business finance structure and banking regulations.

In an effort to reduce risk in a multitrillion-dollar industry, the Financial Crimes Enforcement Network (FinCEN) in August 2015 proposed that all Registered Investment Advisers must implement an anti-money laundering program into their practice. This requirement also impacts sub-advisers and select asset and hedge fund managers.

If passed, the FinCEN proposal stipulates that an anti-money laundering program must include written policies and controls that are governed by a compliance committee. Periodic testing and ongoing training should also be incorporated to ensure investment practices always take a risk-based approach. This approach involves evaluating the type of client, source of funds, and investment services sought to determine intended use.