SEC proposal calls for investment advisors to ID customers

May 15, 2024

A new rule proposed Monday, May 13, by the SEC and Treasury's Financial Crimes Enforcement Network (FinCEN) would require certain investment advisors to verify the identity of their customers to protect against money laundering, financing terrorism and other illicit finance activity.

Under the proposal, SEC-registered investment advisers (RIAs) and exempt reporting advisors (ERAs) would need to establish, document and maintain written customer identification programs (CIPs) to strengthen the anti-money laundering and countering the financing of terrorism framework for the investment adviser sector.

The rule, if adopted, would require RIAs and ERAs to implement a CIP that, among other requirements, includes procedures for verifying the identity of each customer to the extent reasonable and practicable.

The SEC will open a public comment period on the proposed rule for 60 days following its publication in the Federal Register.

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