Complete 31 CFR compliance, all under one roof

While it’s unclear if there will be delays, carve-outs, or repeals, the rule aims to combat terrorism financing, fraud, and money laundering—issues that have bipartisan support. Similar 31 CFR requirements have been in place for over 20 years for banks and broker-dealers. This rule now aligns ERAs and RIAs with these standards. Implementation can be time-consuming, even with a solution like Passthrough’s, so firms delaying risk missing the January 1, 2026, deadline.

Some institutional investors are already adjusting their diligence standards to include more information on a firm’s AML program, potentially disqualifying firms without adequate standards. Others may still need education and may resist documentation requests. We recommend explaining the rules and risks associated with non-compliance to these LPs.

Even though Passthrough simplifies the process, adopting new policies and procedures is time-intensive. It requires applying these policies firm-wide, retroactively screening historical investors to meet standards, mapping audit controls, registering with FinCEN, and more. Beyond internal work, Passthrough and similar firms may reach capacity and may not be able to take on new clients, risking firms missing the January 1, 2026, deadline.

Depending on the severity of non-compliance, the SEC may initiate enforcement actions, from formal investigations to administrative actions, which may include penalties, fines, or sanctions. The firm may also face reputational risks by being publicly identified as non-compliant, and stakeholders or clients might pursue litigation. Once identified as non-compliant, a firm may encounter increased regulatory scrutiny, audits, or additional future examinations, potentially necessitating operational changes, restructuring, or even activity restrictions until compliance is achieved.

Yes, the rule applies to any LP invested in an active, non-liquidated fund linked to your registration. Collecting information from these LPs may be time-consuming.

No, as prior documents are often outdated or incomplete. Investors will need to complete documentation through Passthrough. With over 50,000 LPs on the platform, there’s a strong chance many of them already have profiles.

All covered employees at the firm, subject to the code of conduct, require training. Covered employees include those involved in the firm’s daily operations, including the investment team and front office.

We provide managed KYC/AML services in the U.S. and Cayman. While we don’t offer AMLCO/MLRO services in Cayman, we partner with firms that do.

You typically won’t need to involve legal or compliance consultants. Our source-of-wealth/source-of-funds solution is customized based on how your fund administrator currently manages your treasury needs.

While both the CTA and the recent 31 CFR update aim to curb money laundering, the CTA is separate from the requirements outlined here. Even though CTA and BOI reporting may not apply to many RIAs/ERAs, the 31 CFR requirements do apply.

No, these entities are subject to the jurisdiction’s regulations where they are domiciled. This rule only applies to U.S.-domiciled funds associated with your ERA or RIA SEC registration.