DIFFERENT ANGLE by Kenneth Rijock
The Financial Crimes Enforcement network has announced that the Final Rule regarding important portions of Section 312 of the USA PATRIOT Act are effective as of 10 September, 2007, and the Enhanced Due Diligence requirements will apply as of 5 February, 2008, for correspondent accounts opened for certain foreign banks on or after that date. Accounts opened in the period between the September effective date and 5 February are not required to apply Enhanced Due Diligence until 5 May, 2008. See details below.
- Section 312 of the USA PATRIOT Act requires US financial institutions to perform due diligence and, in some cases, enhanced due diligence, with regard to correspondent accounts established or maintained for foreign financial institutions and private banking accounts established or maintained for non-US persons. This Final Rule applies to the accounts of three specific categories of foreign banks, including those with an offshore banking license, and certain high-risk banks subject to well-recognised international or US Treasury Department determinations.
- The Final Rule states that US financial institutions must identify, for due diligence purposes, the owners of these foreign banks if their shares are not publicly traded and also ascertain whether such foreign banks provide correspondent accounts to other foreign banks and, therefore, provide them with access to the US financial system. In making their risk assessments, financial institutions should consider, amongst other factors, the nature of the foreign banks' business, reasonably available information on the foreign banks' anti-money laundering record, and information on the nature of the foreign supervisory regulations under which the bank is operating.
Readers who have not yet read the Final Rule please access it at:
http://www.occ.treas.gov/ftp/bulletin/2007-33b.pdf
The facts and opinions stated in this article are those of the author and not those of World-Check. World-Check does not warrant the accuracy of any facts and opinions stated in this article, does not endorse them, and accepts no responsibility for them.
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