![Risk.net](https://www.risk.net/sites/default/files/styles/print_logo/public/2018-09/print-logo.png?itok=1TpHrpuP)
Patriot Act due diligence rules finalised
Section 312 demands closer AML inspection of foreign banks
The Financial Crimes Enforcement Network (FinCEN) has issued final rules mandating enhanced risk-based due diligence requirements for US institutions in their relationships with certain foreign banks.
Under the new rules clarifying and finalising Section 312 of the US Patriot Act, US financial institutions must identify the owners of potentially suspect foreign banks if they are not publicly traded and ascertain whether such banks provide correspondent accounts to other foreign banks, thereby providing them with access to the US financial system.
The new provision also mandates that, in making their risk assessments, financial institutions should consider the nature of a foreign bank’s business, available information on the foreign bank’s anti-money laundering (AML) record, and information on the nature of the foreign supervisory regulations under which the bank is operating.
Section 312 of the controversial Patriot Act requires US financial institutions to perform due diligence, and in some cases enhanced due diligence, regarding accounts established for foreign financial institutions and private banking accounts established for non-US nationals.
The final rule applies to the accounts of a small category of foreign banks, including those with offshore banking licences, and certain high-risk banks subject to international or US Treasury determinations.
“As international anti-money laundering standards improve globally, risk assessments for foreign banks should become easier to conduct. Common standards are increasingly protecting both sides of the international relationship and US banks can take comfort in the fidelity of their foreign customers while foreign banks will find it easier to process their US transactions,” says James Freis, director of FinCEN.
The final rule completes the implementation of Section 312, following a lengthy consultation period on appropriate due diligence requirements for the banking activities of non-US persons.
The changes to Section 312 are effective from September 10, 2007. Enhanced due diligence requirements are set to apply from February 5, 2008.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
More on Regulation
Vendors lack silver bullet for FRTB’s fund-linked issue
EU and UK legislators tried to ease capital charge by leaning on vendors, but problems persist
Does Basel’s internal loss multiplier add up?
As US agencies mull capital reforms, one regulator questions past losses as an indicator of future op risk
US Treasury official calls for SLR relief during market stress
Under Secretary Liang also urges scrutiny of “artificial incentives” for Treasury futures in 40-Act rules
US banks seek to open vendors’ black box on green data
Inaugural Fed climate scenario analysis flags lack of transparency around third-party models
Why FRTB models are on the edge of extinction
With only four banks known to be applying to use internal models for market risk, the fate of advanced modelling looks precarious
Reframing the Fed’s discount window
Funding window incentives and collateralised credit lines could transform bank liquidity in a crisis, argues Bill Nelson
Attention shifts to US, UK after European Union postpones FRTB
Risk Live: Global timeline still unclear, with banks hoping lawmakers will use delay to soften rules
Go your own way: departures pose new challenges for CFTC
Loss of Democratic majority would impede chairman’s ambitions for regulatory agenda
Most read
- Harvesting the FX skew premium
- How steepener trades burned hedge funds, and what happened next
- House of cards? The $3 trillion (non-systemic) real estate risk