Imposition of Special Measure Against Bank of Dandong as a Financial Institution of Primary Money Laundering Concern

1Therefore, references to the authority of the Secretary of the Treasury under Section 311 of the USA PATRIOT Act apply equally to the Director of FinCEN. 2 81 FR 78715 (November 9, 2016). ‘‘1301.24’’ and removing ‘‘1301.21’’ and adding in its place ‘‘1301.31’’. § 1301.27 [Amended]

• 9. Amend newly redesignated
  § 1301.27 as follows:
• a. In paragraph (b), by removing
  ‘‘1301.14’’ and adding in its place ‘‘1301.24’’.
• b. In paragraph (d), by removing
  ‘‘1301.11 to 1301.24’’ and adding in its place ‘‘1301.21 to 1301.34’’. § 1301.30 [Amended]
• 10. Amend newly redesignated
      § 1301.30 by removing ‘‘1301.11 to 1301.24’’ and adding in its place ‘‘1301.21 to 1301.34’’. Christopher A. Marsalis, Senior Privacy Program Manager Enterprise Information Security & Policy, Tennessee Valley Authority. [FR Doc. 2017–24300 Filed 11–7–17; 8:45 am] BILLING CODE 8120–08–P DEPARTMENT OF THE TREASURY Financial Crimes Enforcement Network 31 CFR Part 1010 RIN 1506–AB38 Imposition of Special Measure Against Bank of Dandong as a Financial Institution of Primary Money Laundering Concern AGENCY: Financial Crimes Enforcement Network (‘‘FinCEN’’), Treasury. ACTION: Final rule. SUMMARY: FinCEN is issuing this final rule to prohibit covered U.S. financial institutions from opening or maintaining a correspondent account for, or on behalf of, Bank of Dandong Co., Ltd. (Bank of Dandong) as a financial institution of primary money laundering concern pursuant to Section 311 of the USA PATRIOT Act (Section 311). The rule further requires covered U.S. financial institutions to take reasonable steps not to process transactions for the correspondent account of a foreign banking institution in the United States if such a transaction involves Bank of Dandong. It also requires covered institutions to apply special due diligence to their foreign correspondent accounts that is reasonably designed to guard against their use to process transactions involving Bank of Dandong. DATES: This final rule is effective December 8, 2017. FOR FURTHER INFORMATION CONTACT: The FinCEN Resource Center, (800) 949– 2732. SUPPLEMENTARY INFORMATION:
      I. Background
      A. Statutory Provisions On October 26, 2001, the President signed into law the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107–56 (the USA PATRIOT Act). Title III of the USA PATRIOT Act amended the anti-money laundering (AML) provisions of the Bank Secrecy Act (BSA), codified at 12 U.S.C. 1829b, 12 U.S.C. 1951–1959, and 31 U.S.C. 5311–5314, 5316–5332, to promote the prevention, detection, and prosecution of international money laundering and the financing of terrorism. Regulations implementing the BSA appear at 31 CFR
      chapter X. The authority of the
      Secretary of the Treasury (the Secretary) to administer the BSA and its implementing regulations has been delegated to the Director of FinCEN.1
      Section 311 of the USA PATRIOT Act
      (Section 311), codified at 31 U.S.C. 5318A, grants FinCEN the authority, upon finding that reasonable grounds exist for concluding that a foreign jurisdiction, financial institution, class of transactions, or type of account is of ‘‘primary money laundering concern,’’ to require domestic financial institutions and financial agencies to take certain ‘‘special measures’’ to address the primary money laundering concern. The special measures enumerated under Section 311 are prophylactic safeguards that protect the U.S. financial system from money laundering and terrorist financing. FinCEN may impose one or more of these special measures in order to protect the U.S. financial system from these threats. Special measures one through four, codified at 31 U.S.C. 5318A(b)(1)–(b)(4), impose additional recordkeeping, information collection, and reporting requirements on covered U.S. financial institutions. The fifth special measure, codified at 31 U.S.C. 5318A(b)(5), allows FinCEN to prohibit or impose conditions on the opening or maintaining of correspondent or payable-through accounts for the identified institution by U.S. financial institutions. Section 311 identifies factors for the Secretary to consider and requires consultations with certain Federal agencies before making a finding that reasonable grounds exist for concluding that a jurisdiction, institution, class of transactions or type of account is of primary money laundering concern. The statute also provides similar procedures, including factors to consider and consultation requirements for selecting and imposing special measures.
      II. Background on North Korea
      Sanctions Evasion and Bank of Dandong A. North Korea’s Evasion of Sanctions North Korea continues to advance its nuclear and ballistic missile programs despite international censure and U.S. and international sanctions. In response to North Korea’s continued actions to proliferate weapons of mass destruction (WMDs), the United Nations Security Council (UNSC) has issued a number of United Nations Security Council resolutions (UNSCRs), including 1718 (2006), 1874 (2009), 2087 (2013), 2094 (2013), 2270 (2016), 2321 (2016), 2371 (2017), and 2375 (2017) that restrict North Korea’s financial and operational activities related to its nuclear and ballistic missile programs. Additionally, Executive Orders 13466, 13551, 13570, 13687, 13722, and 13810 have been issued to impose economic sanctions on North Korea pursuant to the International Emergency Economic Powers Act, and the U.S. Department of the Treasury has designated North Korean persons for asset freezes pursuant to other Executive Orders, such as Executive Order 13382, which targets WMD proliferators worldwide. To further protect the United States from North Korea’s illicit financial activity, FinCEN has issued multiple advisories since 2005 detailing its concerns surrounding the deceptive financial practices used by North Korea and North Korean entities and called on U.S. financial institutions to take appropriate risk mitigation measures. Moreover, on November 9, 2016, FinCEN finalized a rule under Section 311 prohibiting the opening or maintaining of correspondent accounts in the United States by covered financial institutions for, or on behalf of, North Korean banks.2 The final rule also requires U.S. financial institutions to apply additional due diligence measures in order to prevent North Korean financial institutions from gaining improper indirect access to U.S. correspondent accounts. The notice of finding associated with the final rule highlighted North Korea’s use of state￾controlled financial institutions and