European Union lawmakers are nearing an agreement on hedge fund legislation that would significantly restrict the ability of funds based in some offshore tax havens to raise money from EU investors, the lawmaker in charge of the legislation at the European Parliament said Tuesday.

The proposal would require European authorities to create a "black list" of countries, with European investors being prohibited from sending their money to funds based in those countries. To escape the list, countries would have to satisfy a list of four or possibly five criteria, said Jean-Paul Gauzès, the French politician who is leading debate on the legislation at the Parliament.