Gunster- Banking and Financial Services, March 2009
On March 10, 2009, the Financial Crimes Enforcement Network (“FinCEN”) issued a report assessing the impact of the final rules concerning Special Due Diligence Programs for Certain Foreign Accounts, which implement Section 312 of Title III of the USA Patriot Act (“Report”).
In January 2006, FinCEN issued a final rule requiring that covered financial institutions implement due diligence procedures for correspondent accounts andprivate banking accounts for non-US persons.
In August 2007, FinCEN completed the last phase of that rulemaking process with the issuance of a final rule requiring that covered institutions apply risk based procedures to the accounts of foreign banks operating under: (i) an offshore banking license; (ii)a license issued by a country designated as being non-cooperative with international anti-money laundering principles or procedures; or (iii) a license issued by a country designated by the Secretary of the Treasury as warranting special measures due to money laundering concerns.
Collectively, the 2006 and 2007 rules set forth the Special Due Diligence requirements implementing Section 312 (collectively, referred to as the “FinalRule”).
To complete the Report, FinCEN analyzed the effects of the Final Rule by reviewing inquiries from financial institutions to FinCEN’s Regulatory Helpline, Suspicious Activity Report filings, and feedback from the Federal Banking Agencies.
According to the Report, the special due diligence requirements of the Final Rule appear to have been understood and implemented by the covered financial institutions. However, FinCEN found that some of the most notable questions/concerns include: (i) defining what constitutes a correspondent account and determining whether enhanced due diligence should be applied to a particular account; (ii) whether accepting letters ofcredit and cashing negotiable instruments would constitute the establishment of a correspondent account; and (iii) how to obtain information needed to determine the risk presented by certain accounts and how to obtain lists that would help a financial institution perform special due diligence.
* * *
Should you wish to receive further information concerning matters discussed in this publication, please contact:
Clemente L. Vazquez-Bello305.376.6082 ▪ [email protected]
Andres A. Fernandez305.376.6097 ▪ [email protected]
Marina Olman305.376.6069 ▪ [email protected]
This publication is for general information only. It is not legal advice, and legal counsel should be contacted before any action is taken which might be influenced by this publication.
