Regulatory Alerts2010-06-08
Added
Application of Section 311 Special Measures to Payments under a Stand-By Letter of Credit
FinCEN determines that payments under a standby letter of credit backing a third-party obligation to a foreign bank subject to Section 311 special measures do not constitute the opening or maintenance of a prohibited correspondent account. The ruling clarifies that such instruments represent contingent obligations on behalf of the U.S. customer rather than formal relationships providing regular services to the sanctioned foreign bank. Consequently, U.S. financial institutions are not prohibited from processing these specific payments, though they must implement policies to monitor for suspicious activity.
Topics
Share