HedgeCo.Net (New York) – Senator Barack Obama has backed legislation that would require hedge funds to require their offshore clients toestablish anti-money laundering programs in the same way as other US financial institutions, under regulations to be issued by the Treasury Department.

It is not immediately clear whether the move will increase the transparency of US-owned assets in offshore accounts, but the legislation is being set up with the hopes of curbing tax evasion. The UShas in the past years signed tax information exchange agreements with Aruba, the Bahamas, Bermuda, the British Virgin Islands, the Cayman Islands, Guernsey, Jersey and theIsle of Man.

Obama has joined senators Carl Levin and Norm Coleman in introducing legislation aimed at stopping offshore tax haven and tax shelter abuses. Says Obama: “This is a basic issue of fairness andintegrity. We need to crack down on individuals and businesses that abuse our tax laws so that those who work hard and play by the rules aren’t disadvantaged.”

They believe the loss to the Treasury from offshore tax evasion could amount to $100 billion a year. They say abusive tax shelters add tens of billions of dollars more.

“This bill provides a powerful set of new tools to clamp down on offshore tax and tax shelter abuses. None of these offshore schemes would work without the secrecy that prevents US agencies fromenforcing our laws. Our bill offers innovative ways to combat offshore secrecy.” Levin says.

The bill would strengthen detection of offshore activities by requiring US financial institutions that open accounts for foreign entities controlled by US clients, open accounts or establish entitiesin offshore secrecy jurisdictions for US clients to report such actions to the IRS.

Alex Akesson
Contributing Writer
HedgeCo.Net
Email: Editor@hedgeco.net