MFA Submits Comments to FinCEN Regarding Customer Due Diligence Proposals
On October 2, 2014, the Managed Funds Association ("MFA") submitted comments to the proposed rulemaking issued by FinCEN in August 2014. In its comments, the MFA supports the FinCEN proposal to exempt SEC-registered investment advisors and entities registered with the CFTC, including commodity pool operators and commodity trading advisors, from an obligation to identify the natural persons who are beneficial owners of legal entity customers.
The MFA also favors the proposal to exempt pooled investment vehicles, including hedge funds operated or advised by financial institutions, from the identification of beneficial owners requirements. The MFA's comments highlight the likely logistic and substantial administrative hurdles that hedge funds and pooled investment vehicles would face if required to identify beneficial owners, and assert that any incremental benefit served by requiring these entities to collect and report identifying information would be minimal.
See: MFA Comment Letter.
Related news: FinCEN Issues Proposed Rulemaking Aimed at Identifying Beneficial Owners of Legal Entity Customers (with Avergun Comment) (August 1, 2014).
Commentary
The MFA's reasonable comments should be considered in the context of the already significant reporting and diligence obligations governing hedge funds and pooled investment vehicles as well as the frequently changing ownership of such entities.