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Senators ask the Treasury and S.E.C. to close a loophole obscuring investments by oligarchs.

Two Democratic senators called on financial regulators to close a two-decade-old loophole that has allowed hedge funds, private equity firms and other private funds to avoid having to do basic know-your-customer and anti-money-laundering checks.

In letters sent on Tuesday to the top officials at the Treasury Department and the Securities and Exchange Commission, Senator Elizabeth Warren of Massachusetts and Senator Sheldon Whitehouse of Rhode Island said it makes no sense to exempt private investment funds from doing the same basic customer background checks that banks, brokerages, mutual funds and casinos must do.

That exemption could complicate efforts to find the U.S. assets of Russian oligarchs who are the subject of sanctions as a result of the war in Ukraine.

In their letter to Treasury Secretary Janet Yellen and Gary Gensler, the S.E.C. chairman, the senators said closing the loophole would “help the U.S. government track down the hidden wealth of sanctioned Russian elites and better combat money laundering, terrorism, the proliferation of weapons of mass destruction, and other criminal activity.”

U.S. authorities sometimes struggle to track offshore money because fund managers aren’t subject to the Bank Secrecy Act, which requires most regulated financial institutions to carefully vet their customers and stop potential money laundering.

Ms. Warren and Mr. Whitehouse suggested that the Treasury could interpret additional powers given to financial regulators in the aftermath of the Sept. 11 terror attacks as covering private funds.

But there are other potential approaches. One is to amend the Bank Secrecy Act to cover investment advisers and others. And other supporters of increased oversight say the Investment Advisers Act gives the S.E.C. the authority to require private funds to conduct know-your-customer checks.

The holdings of rich and powerful Russians have come under intense scrutiny after the United States and other Western nations targeted their ability to conduct business following the invasion of Ukraine.

One Russian billionaire, Roman Abramovich, has invested in U.S. hedge funds and private equity funds through complex arrangements of shell companies that, in some cases, has prevented participants from knowing whose money they were helping to manage, according to a report from The New York Times. (While the British government has imposed sanctions on Mr. Abramovich, the United States has not.)

In another example, Fort Ross Ventures, a California venture capital firm, has taken investment dollars from Sberbank, a Russian state-owned bank that has been the subject of sanctions by the U.S. and British governments.

But overall, private funds in the United States have been largely silent on whether they have money from Russian sources.

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