May 13 (Reuters) – Two U.S. financial regulators on Monday cut back on money laundering by requiring fund advisers to document the identities of their customers as part of a broader effort to keep dirty money out of the investment industry. jointly proposed new rules to combat this.
The new rules were proposed by the U.S. Securities and Exchange Commission and the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN). In February, FinCEN proposed requiring investment advisers to implement anti-money laundering programs and calling on real estate professionals to flag suspicious transactions.
The new rules apply to SEC-registered investment advisers and fund advisers who are exempt from registration due to the nature and amount of their clients’ funds. Treasury officials told reporters Monday that the rule does not apply to advisers registered at the state level because the risk of illicit financing is lower.
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As conflicts intensify in Europe, the Middle East and elsewhere, the U.S. government is tightening its control over the financial system to prevent adversaries’ money from leaving Wall Street and U.S. bank accounts.
The proposal announced Monday follows a U.S. Treasury risk assessment this year that found questionable transfers of funds are increasingly associated with both registered and exempt investment advisers.
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Monday’s proposal was not unanimous. Republican SEC Commissioner Mark Ueda disagreed, saying regulators should have first determined the scope of investment advisory services covered by the Bank Secrecy Act, a key anti-money laundering statute.
Ueda said in a statement that while the proposal’s goals are “commendable,” there are “reasonable questions about whether imposing additional burdens on investment advisers will meaningfully contribute to these efforts.” said.
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Report by Douglas Gillison. Editing: David Gregorio
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