April 28, 2011 –
FinCEN Proposes Regulations to Implement Section 104(e) of CISADA

Yesterday, the Financial Crimes Enforcement Network (“FinCEN”) issued a Notice of Proposed Rulemaking (“Proposed Rules”) to implement section 104(e) of the Comprehensive Iran Sanctions, Accountability and Divestment Act of 2010 (“CISADA”), imposing certain reporting requirements upon U.S. banks that maintain a correspondent account for a foreign bank.  The Proposed Rules will require such banks to inquire of the foreign bank, and report to FinCEN, information regarding correspondent accounts and transactions at the foreign bank related to Iran.

Among others, the Proposed Rules would require a U.S. bank to report to FinCEN the following information about foreign banks for which the U.S. bank maintains a correspondent account:

• Whether the foreign bank maintains a correspondent account for an Iranian-linked financial institution designated under the International Emergency Economic Powers Act (“IEEPA”);

• Whether the foreign bank has processed one or more transfers of funds within the preceding ninety (90) calendar days related to an Iranian-linked financial institution designated under the IEEPA, other than through a correspondent account; or

• Whether the foreign bank has processed one or more transfers of funds within the proceeding ninety (90) calendar days related to Iran’s Islamic Revolutionary Guard Corps (“IRGC”) or any IRGC-linked person designated under IEEPA.

For the purposes of the Proposed Rules, an “Iranian-linked financial institution designated under IEEPA” means a financial institution designated by the United States Government pursuant to the International Emergency Economic Powers Act (or listed in an annex to an Executive order issued pursuant to such Act) in connection with Iran’s proliferation of  weapons of mass destruction or delivery systems for weapons of mass destruction, or in connection with Iran’s support for international terrorism.  “IRGC-linkes person designated under IEEPA” means Iran’s Islamic Revolutionary Guard Corps or any of its agents or affiliates designated by the United States Government pursuant to the International Emergency Economic Powers Act (or listed in an annex to an Executive order issued pursuant to such Act).

The Proposed Rules would work together with other financial provisions of CISADA to isolate financial institutions designated by the U.S. government in connection with Iran’s proliferation of weapons of mass destruction (“WMD”) or delivery systems for WMD, or in connection with its support for international terrorism.

To read a complete copy of the Proposed Rules on the FinCEN website, click on the following link:

www.fincen.gov/statutes_regs/frn/pdf/CISADA_preamble.pdf