What agencies oversee and regulate hedge funds?

Actually, hedge funds - because of their privatization of ownership - are mostly exempt from the SEC. They are regulated by managers and advisers, and the regulations vary by national, state, and federal jurisdictions. The Dodd-Frank Wall Street Reform Act of 2010 required all hedge fund advisers in the US with assets of $150 million or more to register with the SEC, but every country is different. It appears many other acts have been passed attempting to gain control over hedge funds, so the author of your blog was probably right: it sounds like it requires quite a bit of jumping through hoops.

The hedge funds are regulated by the Securities and Exchange Commission, even though they are more lightly regulated, they are still regulated. They have to satisfy AML legislation and know your client regulations, just like any other company in the investment field. They have more leeway in terms of the securities in which they invest and how they invest in them, but the relationships with clients clearly have to be regulated in order to avoid having money moving around the economy without any oversight.