A privately managed investment vehicle that pools capital from accredited or institutional investors and employs various advanced investment strategies. Hedge funds typically maintain relationships with financial institutions for custodial, brokerage, and transactional services.
Main/
Hedge Fund
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Code
AT0024
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Name
Hedge Fund
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Version
1.0
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Category
Financial Institutions & Service Providers
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Created
2025-03-12
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Modified
2025-04-02
Related Techniques
Hedge funds are targeted or formed by criminals to:
- Hide large inflows of illicit proceeds as standard hedge fund subscriptions or redemptions.
- Fabricate or manipulate investor returns, inflating or deflating valuations to mask suspicious activity.
Their complex, often transnational, structures challenge financial institutions' oversight, as fund performance and ownership data can be obscured or falsified.
Hedge funds, whether complicit or unaware, enable criminals to:
- Introduce large amounts of illicit capital under complex partnership agreements.
- Exploit high investment thresholds and minimal public reporting.
- Employ shell entities or layered structures to hide the ultimate source of funds.
Due to the high complexity and sparse oversight, financial institutions often fail to detect these laundering tactics.