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The Morning Risk Report: U.S. Proposes Requiring Investment Advisers to Put in Place Anti-Money-Laundering Controls
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Good morning. U.S. investment advisers will soon need to start detecting and reporting suspected money laundering to the government under a newly proposed rule, reports Risk & Compliance Journal's Mengqi Sun, as the U.S. again attempts to rein in potential illicit finance flowing through the private funds sector.
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Who would this apply to? The new requirements, proposed Tuesday by the U.S. Treasury Department’s Financial Crimes Enforcement Network, would apply to investment advisers who register with the U.S. Securities and Exchange Commission and those who are exempted from registration but still required to report to the SEC.
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What's the proposal? Under the proposed rules, investment advisers would need to implement an anti-money-laundering and counterterrorism financing compliance program, file suspicious activity reports with FinCEN and keep records such as those related to fund transfers, similar to obligations in place for banks and broker-dealers. The proposed rule would also allow information sharing between FinCEN, law enforcement agencies and certain financial institutions.
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What's the current situation? Investment advisers, who earn compensation for providing advice to investors on securities, aren’t generally subject to comprehensive anti-money-laundering measures. Their clients range from individual investors to private institutions and high-net-worth individuals.
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Previous efforts: FinCEN has twice in the past tried to put in place anti-money-laundering rules on the investment adviser sector by proposing rulemakings, including as recently as in 2015. But neither proposed rule was completed.
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Content from: DELOITTE
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How EU AI Act May Accelerate Compliance Regime for U.S. Enterprises
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U.S.-based companies can consider four key actions to help prepare for far-reaching AI regulations expected from the European Union. Keep Reading ›
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Chair Gary Gensler has repeatedly stressed the SEC’s intent is to make sure investors are supplied with the information they need. PHOTO: EVELYN HOCKSTEIN/REUTERS
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SEC’s Gensler bracing for lawsuits over climate rule.
Securities and Exchange Commission head Gary Gensler said possible lawsuits challenging the agency’s proposed climate disclosure rule would be “part of our democracy,” but added that the SEC is working to craft a rule that holds up to judicial scrutiny.
The SEC has yet to release a final version of climate regulations first proposed nearly two years ago. But the wide-ranging proposal—which would require companies to report on climate-related risks and carbon emissions—has been criticized even from within the agency and is expected to face legal challenges.
“That’s part of our democracy. We live in a great democracy,” said Gensler, who spoke at Yale Law School on Tuesday. “That’s what the public wants. I think we’re doing everything according to the law and how the courts interpret the law, but as the courts shift their interpretations, jobs like mine are both more challenging and more interesting.”
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Insurance broker Arthur J. Gallagher says Justice Department bribery probe has ended.
Arthur J. Gallagher & Co. said a U.S. Justice Department investigation related to its insurance business with public entities in Ecuador has ended without charge.
The Rolling Meadows, Ill.-based insurance brokerage said in its annual report that the Justice Department’s Foreign Corrupt Practices Act unit wouldn’t pursue an enforcement action against it. The firm revealed the original investigation in a late 2022 quarterly filing.
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U.S. lawmakers have written to various government bodies, including the Department of Defense, seeking to investigate Chinese biotech companies WuXi AppTec and Wuxi Biologics over alleged ties to the Chinese military.
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Ukrainian officials presented fresh claims that Russian forces are using satellite internet terminals made by Elon Musk’s SpaceX.
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Behind the scenes, a group of powerful Wall Street investors has been feeding Washington a stream of evidence that showed that banned Venezuelan bonds were being traded by investors with ties to Russia.
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Grocery prices are still far above where they were before the pandemic. PHOTO: ALLISON DINNER/ASSOCIATED PRESS
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Hotter-than-expected inflation clouds rate-cut outlook.
Inflation eased again in January but came in above Wall Street’s expectations, clouding the Federal Reserve’s path to rate cuts and potentially giving the central bank breathing space to wait until the middle of the year.
The numbers. The Labor Department reported Tuesday that consumer prices rose 3.1% in January from a year earlier, versus a December gain of 3.4%. That marked the lowest reading since June. Still, the consumer-price index was higher than the predicted 2.9%, a disappointment for investors who hope the Fed will cut rates sooner rather than later.
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China emerged as a global power by turning itself into the world’s factory floor. It is expanding that power, and its military might, with another striking industrial feat: becoming the world’s shipyard.
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Central Intelligence Agency Director William Burns concluded negotiations with top Middle Eastern officials on Tuesday without making major strides toward a deal between Israel and Hamas that would free hostages and pause fighting in the Gaza Strip, according to officials familiar with the talks.
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U.K. wage growth eased a little less than forecast in the fourth quarter, while unemployment unexpectedly ticked down, signaling a stubbornly tight labor market and reflecting still-significant inflationary pressures.
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The Organization of the Petroleum Exporting Countries left its expectations for global oil-demand growth unchanged, but raised its economic forecast amid easing inflation and anticipated interest-rate cuts.
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A major winter storm rolled across the Northeastern U.S. Tuesday, causing about 1,200 flight cancellations, snarling commutes and dumping several inches of snow.
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