Investment adviser rule would force fraud flags

WASHINGTON — The Biden administration is rolling out new record-keeping rules for U.S. investment advisers in its continued effort to clamp down on money laundering, illicit finance and fraud in the American financial system.

The Treasury Department’s Financial Crimes Enforcement Network — known as FinCEN — proposed a regulation Tuesday that would require investment advisers to develop anti-money laundering programs and file reports with the government when suspicious activity is detected by clients, among other things.

In an occupation rife with regulatory gaps that can be exploited to launder money and hide illicit wealth, investment advisers would face new rules that “level the regulatory playing field, protect U.S. economic and national security, and safeguard American businesses,” said FinCEN Director Andrea Gacki in a statement.

Last week the Treasury Department proposed a rule that would require real estate professionals to report information to the agency about nonfinanced sales of residential real estate to legal entities, trusts and shell companies.

All-cash purchases of residential real estate are considered at high risk for money laundering. The rule would not require the reporting of sales to individuals.

Additionally, the agency has rolled out a new database on small business ownership. The so-called beneficial ownership registry is expected to contain personal information on the owners of at least 32 million U.S. businesses.

Treasury Secretary Janet Yellen said last month that 100,000 businesses have registered for the new database.