Offshore practitioners trying to maintain a faint grasp on the dynamo that is US regulation may be forgiven for thinking the recent rule requiring hedge fund advisers to register with the Securities and Exchange Commission’s (SEC’s) Rule 203(b)(3)-2 bears a striking resemblance to an anti-money laundering rule proposed by the department of Treasury’s Financial Crimes Enforcement Network (FinCEN) in April 2003. Broadly speaking, both rules required investment advisers to set up compliance programmes (including mandatory periods for record retention), designate compliance officers and utilise similar carve-outs from regulation.
The Treasury’s proposed rule 68 FR 23646 (which has not yet been finalised), distinguished the two types of investment advisers requiring anti-money laundering programmes; SEC-registered advisers and unregistered advisers – that is, US-based advisers with more than $30m (£17.2m) of assets under management who are exempt from SEC registration (under the Advisers Act) by having less than 15 clients and not holding themselves out as investment advisers. In a show of bi-partisanship, the Treasury proposed allowing the SEC jurisdiction to inspect the programmes of unregistered advisers.
