What must investment advisers do to ensure compliance with anti-money laundering regulations?

Establishing and implementing written policies is essential for investment advisers to ensure compliance with anti-money laundering (AML) regulations. These policies serve as a framework for identifying, preventing, and reporting suspicious activities that could be indicative of money laundering or other financial crimes.

Written AML policies provide clear guidelines on due diligence processes, customer identification requirements, and monitoring activities. They detail the steps advisers must take when they detect suspicious transactions and lay out the procedures for reporting these activities to the appropriate authorities. By having these policies in place, firms can demonstrate their commitment to compliance and the integrity of the financial system.

The other choices do not provide a comprehensive approach to AML compliance. Random audits may help identify issues but do not establish the necessary policies and procedures. Submitting all transactions to federal regulators is not a practical requirement of AML regulations, as it would overwhelm the system and is not feasible for every transaction. Engaging only with known clients could reduce risk but does not address the requirement for a systemic approach, which includes broad-ranging policies and monitoring practices.