Last August, the SEC and FinCEN finalized a sweeping anti-money laundering rule for RIAs (registered investment advisors) and ERAs (exempt reporting advisors). Eight months later, most firms still haven’t acted. Many are even unaware that the rule exists. Among those who are, there’s hope that a Trump administration might roll it back.
We’re not neutral — we offer a 31 CFR compliance solution. Title 31 of the Code of Federal Regualtions speaks to rules on money and finance, with Parts 1010 and 1032 being the specific rules that apply AML regulations to RIAs and ERAs. But while we can’t predict the future, we can lay out why we believe this rule is here to stay.
These rules are finalized — not proposed
This isn’t a draft rule that can be quietly withdrawn. It’s finalized and adopted. Rolling it back would require congressional repeal — and there’s no sign of appetite for that.
Terrorist financing isn’t a partisan issue. The original push to bring investment advisers under AML obligations came from the Trump administration in 2018. And today, sanctions continue to be released regularly. Those sanctions are toothless without a way to prevent bad actors from participating in capital markets.
Enforcement has already started
In early 2025, the SEC fined exempt reporting adviser Navy Capital for misrepresenting its AML program to investors. The firm allegedly provided documentation that made it appear compliant — but didn’t follow through. That led to a $150,000 penalty.
This isn’t theoretical. The SEC has shown it will enforce AML obligations — and ERAs and RIAs are now in scope.
Private markets are already being used by sanctioned actors
Terrorist financing in private markets isn’t hypothetical. It’s widely reported that terrorist groups and cartels hold private market assets.
We’ve seen it firsthand. Passthrough works with hundreds of firms on KYC/AML. Many relied on counsel or fund administrators to run basic screens previously. But our investigations on those same investors have surfaced individuals on active sanctions lists, with ties to terrorism, who funded capital calls to and received distributions from blue-chip firms.
The SEC has always taken AML seriously
Banks and broker-dealers have followed these same AML rules since the Patriot Act in 2001 — and they still haven’t mastered it. In 2024 alone, they paid $4.3B in AML-related fines.
The SEC has shown a consistent willingness to enforce AML compliance. No matter the administration, these rules have been treated as a national security issue — not regulatory red tape.
Market behavior signals this rule is real
When we launched our 31 CFR offering, no one else had a solution. Now? Fund administrators and compliance consultants are rushing to stand up offerings. Many have chosen to partner with Passthrough instead of building their own.
They wouldn’t be investing if they didn’t believe this market is real — and growing.
Lobbyists are no longer talking about repeal
We’ve engaged with industry groups since the rule was proposed. Early conversations focused on repeal. Today, those same groups are discussing implementation timing, CIP alignment, and technical guidance. The conversation has moved from "if" to "how."
Global pressure isn’t going away
The U.S. has lagged behind Europe and the UK on AML standards for investment advisers. The Financial Actions Task Force (FATF) greylist exists for countries that fall too far out of step.
In 2021, Cayman was greylisted by FATF for lax enforcement — despite strong AML laws on paper. It took two years of reform to get off the list, and Cayman now enforces some of the toughest AML standards in the world.
Falling out of alignment with FATF could weaken the U.S.'s position in global capital markets. That’s a risk no regulator wants to take.
We’ll know more soon — but we still have the same deadline
SEC chair Atkins was just appointed April 9th. His priorities are still taking shape, but so far, we’ve heard noise around digital assets, market structure, and Material Nonpublic Information enforcement. He hasn’t spoken publicly about AML for ERAs and RIAs — yet.
He’ll either break his silence on it, or his silence will be one more indication that the rule isn’t changing.
Most firms haven’t started preparing — waiting for certainty that may never come. But with only a few months left to build and operationalize an AML program, firms that wait much longer risk scrambling to catch up.
Want to know what your firm’s requirements are or how our team can help with your AML compliance needs? Reach out to learn more about our services.
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