In FinCEN’s Ownership Rule, a Back Door to Regulating Hedge Funds Swings Ajar

By Colby Adams

A U.S. Treasury Department proposal that asks banks to identify corporate owners could also end up shining a light on the often murky hedge fund sector, say attorneys. A plan forwarded in July by the department's Financial Crimes Enforcement Network (FinCEN) would attempt to rein in the illicit use of anonymous shell companies by requiring banks, mutual funds, broker dealers, futures commission merchants and other financial institutions to identify the individuals who own 25 percent of, or otherwise control, corporate accounts. FinCEN could additionally ask banks to identify the hedge fund managers or both the managers and the investors who...