Bank Secrecy Act and Anti-Money Laundering
Minimum Due Diligence Requirements
The requirements of 31 U.S.C. 5318(i), effective July
23, 2002, that applies to a financial institution are:
i) Due Diligence for United States Private Banking and
Correspondent Bank Accounts Involving Foreign Persons.--
(1) IN GENERAL.--Each financial institution that establishes,
maintains, administers, or manages a private banking account or a
correspondent account in the United States for a non-United States person,
including a foreign individual visiting the United States, or a
representative of a non-United States person shall establish appropriate,
specific, and, where necessary, enhanced, due diligence policies,
procedures, and controls that are reasonably designed to detect and report
instances of money laundering through those accounts.
(2) Additional Standards for Certain Correspondent Accounts.--
(A) In General.--Subparagraph (B) shall apply if a correspondent
account is requested or maintained by, or on behalf of, a foreign bank
operating--
(i) under an offshore banking license; or
(ii) under a banking license issued by a foreign country that has
been designated--
(I) as noncooperative with international anti-money laundering
principles or procedures by an intergovernmental group or organization of
which the United States is a member, with which designation the United
States representative to the group or organization concurs; or
(II) by the Secretary of the Treasury as warranting special
measures due to money laundering concerns.
(B) POLICIES, PROCEDURES, AND CONTROLS.--The enhanced due diligence
policies, procedures, an controls required under paragraph (1) shall, at a
minimum, ensure that the financial institution in the United States takes
reasonable steps--
(i) to ascertain for any such foreign bank, the shares of which are
not publicly traded, the identity of each of the owners of the foreign bank,
and the nature and extent of the ownership interest of each such owner;
(ii) to conduct enhanced scrutiny of such account to guard against
money laundering and report any suspicious transactions under subsection
(g); and
(iii) to ascertain whether such foreign bank provides correspondent
accounts to other foreign banks and, if so, the identity of those foreign
banks and related due diligence information, as appropriate under paragraph
(1).
(3) MINIMUM STANDARDS FOR PRIVATE BANKING ACCOUNTS.--If a private
banking account is requested or maintained by, or on behalf of, a non-United
States person, then the due diligence policies, procedures, and controls
required under paragraph (1) shall, at a minimum, ensure that the financial
institution takes reasonable steps--
(A) to ascertain the identity of the nominal and beneficial owners
of, and the source of funds deposited into, such account as needed to guard
against money laundering and report any suspicious transactions under
subsection (g); and
(B) to conduct enhanced scrutiny of any such account that is
requested or maintained by, or on behalf of, a senior foreign political
figure, or any immediate family member or close associate of a senior
foreign political figure that is reasonably designed to detect and report
transactions that may involve the proceeds of foreign corruption.
(4) DEFINITION.--For purposes of this subsection, the following
definitions shall apply:
(A) OFFSHORE BANKING LICENSE.--The term "offshore banking license"
means a license to conduct banking activities which, as a condition of the
license, prohibits the licensed entity from conducting banking activities
with the citizens of, or with the local currency of, the country which
issued the license.
(B) PRIVATE BANKING ACCOUNT.--The term "private banking account"
means an account (or any combination of accounts) that--
(i) requires a minimum aggregate deposits of funds or other assets
of not less than $1,000,000;
(ii) is established on behalf of 1 or more individuals who have a
direct or beneficial ownership interest in the account; and
{{12-31-01 p.8392}}(iii) is
assigned to, or is administered or managed by, in whole or in part, an
officer, employee, or agent of a financial institution acting as a liaison
between the financial institution and the direct or beneficial owner of the
account.
(j) Prohibition on United States Correspondent Accounts With Foreign
Shell Banks.--
(1) IN GENERAL.--A financial institution described in subparagraphs (A)
through (G) of section 5312(a)(2) (in this subsection referred to as a
"covered financial institution") shall not establish, maintain, administer,
or manage a correspondent account in the United States for, or on behalf of,
a foreign bank that does not have a physical presence in any country.
(2) Prevention of Indirect Service to Foreign Shell Banks.--A covered
financial institution shall take reasonable steps to ensure that any
correspondent account established, maintained, administered, or managed by
that covered financial institution in the United States for a foreign bank
is not being used by that foreign bank to indirectly provide banking
services to another foreign bank that does not have a physical presence in
any country. The Secretary of the Treasury shall, by regulation, delineate
the reasonable steps necessary to comply with this paragraph.
(3) EXCEPTION.--Paragraphs (1) and (2) do not prohibit a covered
financial institution from providing a correspondent account to a foreign
bank, if the foreign bank--
(A) is an affiliate of a depository institution, credit union, or
foreign bank that maintains a physical presence in the United States or a
foreign country, as applicable; and
(B) is subject to supervision by a banking authority in the country
regulating the affiliated depository institution, credit union, or foreign
bank described in subparagraph (A), as applicable.
(4) DEFINITIONS.--For purposes of this subsection--
(A) the term "affiliate" means a foreign bank that is controlled by
or is under common control with a depository institution, credit union, or
foreign bank; and
(B) the term "physical presence" means a place of business that--
(i) is maintained by a foreign bank;
(ii) is located at a fixed address (other than solely an electronic
address) in a country in which the foreign bank is authorized to conduct
banking activities, as which location the foreign bank--
(I) employs 1 or more individuals on a full-time basis; and
(II) maintains operating records related to its banking
activities; and
(iii) is subject to inspection by the banking authority which
licensed the foreign bank to conduct banking activities.
