diff --git a/conf/iam_rules.json b/conf/iam_rules.json
index c6b0d4de..4a56e98e 100644
--- a/conf/iam_rules.json
+++ b/conf/iam_rules.json
@@ -52,6 +52,50 @@
                     "arn:aws:s3:::sharedbucket",
                     "arn:aws:s3:::sharedbucket/*"
                 ]
+            },
+            {
+                "Sid": "NavToUserFolder",
+                "Action": ["s3:ListBucket"],
+                "Effect": "Allow",
+                "Resource": ["arn:aws:s3:::companybucket"],
+                "Condition": {"StringEquals":{"s3:prefix":["", "home/", "home/user1/"]}}
+            },
+            {
+                "Sid": "UserFolder",
+                "Action": ["s3:ListBucket"],
+                "Effect": "Allow",
+                "Resource": ["arn:aws:s3:::companybucket"],
+                "Condition": {"StringLike":{"s3:prefix":["home/user1/*"]}}
+            },
+            {
+                "Sid": "UserFolderObjects",
+                "Action": ["s3:*"],
+                "Effect": "Allow",
+                "Resource": ["arn:aws:s3:::companybucket/home/user1/*"]
+            }
+        ]
+    },
+    "demo:user2": {
+        "Statement": [
+            {
+                "Sid": "NavToUserFolder",
+                "Action": ["s3:ListBucket"],
+                "Effect": "Allow",
+                "Resource": ["arn:aws:s3:::companybucket"],
+                "Condition": {"StringEquals":{"s3:prefix":["", "home/", "home/user2/"]}}
+            },
+            {
+                "Sid": "UserFolder",
+                "Action": ["s3:ListBucket"],
+                "Effect": "Allow",
+                "Resource": ["arn:aws:s3:::companybucket"],
+                "Condition": {"StringLike":{"s3:prefix":["home/user2/*"]}}
+            },
+            {
+                "Sid": "UserFolderObjects",
+                "Action": ["s3:*"],
+                "Effect": "Allow",
+                "Resource": ["arn:aws:s3:::companybucket/home/user2/*"]
             }
         ]
     },
diff --git a/conf/s3-iam.cfg.in b/conf/s3-iam.cfg.in
index 1fce9e2c..7dced850 100644
--- a/conf/s3-iam.cfg.in
+++ b/conf/s3-iam.cfg.in
@@ -50,7 +50,7 @@ use = egg:swift#staticweb
 [filter:iam]
 use = egg:swift3#iam
 log_level = DEBUG
-rules_file = %RULES_FILE%
+connection = file://%RULES_FILE%
 
 [filter:swift3]
 use = egg:swift3#swift3
diff --git a/tests/functional/s3-iam.sh b/tests/functional/s3-iam.sh
index 3020e1cd..dffbfa3c 100755
--- a/tests/functional/s3-iam.sh
+++ b/tests/functional/s3-iam.sh
@@ -9,8 +9,10 @@ AWSA2ADM="aws --profile a2adm --endpoint-url http://localhost:5000"
 # "a2u1" is only allowed some operations
 AWSA2U1="aws --profile a2u1 --endpoint-url http://localhost:5000"
 
-U1_BUCKET="user1bucket"
+COMPANY_BUCKET="companybucket"
 SHARED_BUCKET="sharedbucket"
+U1_BUCKET="user1bucket"
+
 TEMPDIR=$(mktemp -td s3-iam-XXXXXX)
 BIGFILE="$TEMPDIR/bigfile"
 dd if=/dev/urandom of="${BIGFILE}" bs=1M count=16
@@ -26,6 +28,7 @@ test_create_bucket() {
   # admin can create buckets
   ${AWSA1ADM} s3 mb s3://$U1_BUCKET
   ${AWSA1ADM} s3 mb s3://$SHARED_BUCKET
+  ${AWSA1ADM} s3 mb s3://$COMPANY_BUCKET
 }
 
 test_create_objects() {
@@ -45,6 +48,14 @@ test_create_objects() {
   ${AWSA1U1} s3 cp /etc/magic s3://${U1_BUCKET}/magic
   ${AWSA1U1} s3 cp /etc/magic s3://${U1_BUCKET}/not_so_magic
   ${AWSA1U1} s3 cp "${BIGFILE}" s3://${U1_BUCKET}/bigfiles/bigfile
+
+  # user1 can create objects in his company's bucket,
+  # but only in a specific folder.
+  OUT=$(${AWSA1U1} s3 cp /etc/magic s3://${COMPANY_BUCKET}/magic 2>&1 | tail -n 1)
+  echo "$OUT" | grep "AccessDenied"
+  OUT=$(${AWSA1U1} s3 cp /etc/magic s3://${COMPANY_BUCKET}/home/user2/magic 2>&1 | tail -n 1)
+  echo "$OUT" | grep "AccessDenied"
+  ${AWSA1U1} s3 cp /etc/magic s3://${COMPANY_BUCKET}/home/user1/magic
 }
 
 test_multipart_ops() {
@@ -92,6 +103,12 @@ test_read_objects() {
   ${AWSA1U1} s3 cp s3://${SHARED_BUCKET}/user1_magic "$TEMPDIR/user1_magic"
   ${AWSA1U1} s3 cp s3://${SHARED_BUCKET}/bigfiles/bigfile "$TEMPDIR/bigfile_from_shared_bucket"
 
+  # user1 can list objects from his folder in the company bucket,
+  # but not from other folders
+  OUT=$(${AWSA1U1} s3 ls s3://${COMPANY_BUCKET}/home/user2/ 2>&1 | tail -n 1)
+  echo "$OUT" | grep "AccessDenied"
+  ${AWSA1U1} s3 ls s3://${COMPANY_BUCKET}/home/user1/
+
   # admin can read objects from any bucket
   ${AWSA1ADM} s3 cp s3://${U1_BUCKET}/magic "$TEMPDIR/magic"
   ${AWSA1ADM} s3 cp s3://${U1_BUCKET}/bigfiles/bigfile "$TEMPDIR/bigfile_from_u1_bucket"
@@ -108,6 +125,9 @@ test_delete_objects() {
   # except objects prefixed by its user name.
   ${AWSA1U1} s3 rm s3://${SHARED_BUCKET}/user1_magic
 
+  # user1 can delete objects from its folder in his company's bucket
+  ${AWSA1U1} s3 rm s3://${COMPANY_BUCKET}/home/user1/magic
+
   # admin can delete objects from any bucket
   ${AWSA1ADM} s3 rm s3://${SHARED_BUCKET}/magic
   ${AWSA1ADM} s3 rm s3://${SHARED_BUCKET}/user1_bigfile
@@ -123,6 +143,7 @@ test_delete_buckets() {
   # admin can delete any bucket
   ${AWSA1ADM} s3 rb s3://$U1_BUCKET
   ${AWSA1ADM} s3 rb s3://$SHARED_BUCKET
+  ${AWSA1ADM} s3 rb s3://$COMPANY_BUCKET
 }
 
 test_create_bucket