For the second time in two years, the investment management industry has received what feels like a reprieve. On July 21, 2025, Treasury announced a two-year delay of the Investment Adviser AML Program Rule under 31 CFR, pushing the effective date from January 1, 2026, to January 1, 2028.
FinCEN formalized this delay on August 5, 2025, with an official exemptive relief order that exempts covered investment advisers from all requirements of the IA AML Rule until the new effective date.
The order makes clear that this delay aligns with the Administration's "deregulatory policies focused on reducing any unnecessary or duplicative regulatory burden," while FinCEN conducts a comprehensive review to ensure the 31 CFR requirements "strike an appropriate balance between cost and benefit."
For many in the private markets community, this news might trigger a familiar reflex: "Great, we can put this on the back burner again." But that would be a costly mistake.
The waiting game continues, but the stakes have changed
The delay proves that many firms were right to be skeptical about the new rules’ implementation. But even though implementation has been delayed, enforcement is intensifying, not slowing down.
While FinCEN revisits the 31 CFR requirements through new rulemaking, the regulatory focus on financial crime has actually sharpened under the Trump Administration. Recent actions tell the story:
June 2025: FinCEN designated three Mexico-based financial institutions as primary money laundering concerns under the FEND Off Fentanyl Act.
May 2025: DOJ announced a new enforcement philosophy emphasizing "Focus, Fairness, and Efficiency,” rewarding proactive firms while promising a "laser focus" on threats.
Ongoing: OFAC continues multi-million-dollar settlements with financial institutions for sanctions violations.
Delay in rulemaking doesn't mean delay in enforcement.
Why this delay is good news
FinCEN acknowledged the need to "appropriately balance costs and benefits" and tailor the 31 CFR requirements to the "diverse business models and risk profiles" of advisers.
Smart firms will recognize this delay for what it really is: a gift of time to build superior programs without deadline pressure.
Consider the advantages:
Competitive differentiation: While competitors delay, you can position your firm as a leader in compliance. LPs increasingly view robust AML programs as table stakes.
Operational readiness: Building effective AML compliance takes time: risk assessments, policy development, system implementation, training, and testing. Starting now means your program will be battle-tested by 2028.
Cost efficiency: Implementing gradually over two years is far more cost-effective than scrambling to meet a deadline.
Regulatory influence: Firms with functioning programs will be better positioned to provide meaningful feedback during FinCEN's new rulemaking process.
Current obligations haven't disappeared
Even without the formal 31 CFR rule in effect, firms face real compliance obligations today:
OFAC sanctions requirements continue to apply to all U.S. persons, including investment advisers. Recent enforcement actions show these are being actively policed.
Anti-fraud obligations under securities laws can extend to AML-related misrepresentations, as the Navy Capital case demonstrated.
Contractual obligations with broker-dealers and banks often include AML compliance requirements that remain enforceable regardless of federal rule timing.
Use this time strategically
The firms that will thrive post-2028 are those treating this delay as an opportunity to build best-in-class programs. Here's what forward-thinking firms are doing now:
Conducting comprehensive risk assessments of client bases, investment strategies, and geographic exposures.
Reviewing investor-facing documents to ensure compliance representations are accurate and defensible.
Designating qualified AML officers and building internal expertise.
Engaging with service providers to develop implementation roadmaps.
As our 2025 Private Markets Financial Crime report shows, over 20% of funds encounter at least one sanctioned investor in their first 100 LPs. Having robust systems isn't just about regulatory compliance; it's about protecting your fund's reputation.
The path forward
The 2028 delay is regulatory mercy, not regulatory retreat. The firms that use this time wisely will enter the new era with competitive advantages and reduced risk profiles.
Building an effective AML program requires careful planning, whether you develop capabilities internally or partner with specialized providers. The key is starting now with a clear understanding of your risk profile and operational needs.
For firms looking to accelerate their AML readiness, Passthrough offers specialized expertise in private markets compliance. But regardless of your approach, the message is clear: use this delay strategically, not as an excuse to procrastinate.
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