The U.S. Treasury Department, the Securities and Exchange Commission and the Board of Governors of the Federal Reserve System have recommended to Congress ways to apply anti-money laundering regulations to mutual fund companies. The recommendations are intended to comply with the PATRIOT Act, which was signed by President Bush in October of 2001. The act directed the Treasury to expand money-laundering rules in an effort to crack down on the financial networks of terrorists.
In a report to legislators, the agencies included an analysis of different types of investment companies operating in the marketplace and how anti-money laundering rules should be applied to them. In essence, the report suggests methods for applying the Bank Secrecy Act, which Congress approved in 1970 to prevent money laundering, to investment companies. The report discusses both investment companies that are registered with the SEC and those that are not.
The Treasury department has already proposed or issued regulations governing unregistered investment companies, such as hedge funds, the department said in a statement.