But the roughly $2 trillion hedge-fund industry today remains free of any such government restrictions, and this week the Treasury Department formally withdrew its once proposed rules.

"Hedge funds do represent some risk because their operations and the identity of investors are generally not very transparent," said Steve Hudak, a spokesman for the Financial Crimes Enforcement Network of the Treasury Department. But "that risk needs to be studied and carefully assessed prior to implementing any anti-money-laundering regulations."

Hedge funds, which are largely unregulated investment pools whose investors are often wealthy individuals or sophisticated financial firms, have drawn increased scrutiny during the financial crisis.

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