The Federal Reserve provided additional details on how financial institutions can seek an extension to make their illiquid fund investments compliant with Dodd-Frank.

The Fed believes that in general, extensions -- which can last for up to five years -- may be granted to allow additional time for compliance, except in certain cases.

These cases included situations when an institution has not demonstrated meaningful progress to conform or divest illiquid funds, has a Volcker-deficient compliance program, or where there are concerns about evasion.

Any extensions provided, however, are the last the Fed is allowed to give. Besides indicating the length of the extension, applications for extensions should include details about the funds in question, a certification that the funds are considered illiquid, and information on efforts to divest the funds.