Proposed Imposition of Special Measures Against VEF Banka 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.
PART 103—FINANCIAL
RECORDKEEPING AND REPORTING OF CURRENCY AND FINANCIAL TRANSACTIONS

1. The authority citation for part 103
   is revised to read as follows:
   Authority: 12 U.S.C. 1829b and 1951–1959; 31 U.S.C. 5311–5314, 5316–5332; title III, secs. 311, 312, 313, 314, 319, 326, 352, Pub.
   L. 107–56, 115 Stat. 307.
2. Subpart I of part 103 is proposed
   to be amended by adding new § 103.191, as follows:
   § 103.191 Special measures against Multibanka. (a) Definitions. For purposes of this
   section:
   (1) Correspondent account has the same meaning as provided in § 103.175(d)(1)(ii). (2) Covered financial institution has the same meaning as provided in § 103.175(f)(2) and also includes:
   (i) A futures commission merchant or an introducing broker registered, or required to register, with the Commodity Futures Trading Commission under the Commodity Exchange Act (7 U.S.C. 1 et seq.); and (ii) An investment company (as defined in section 3 of the Investment Company Act of 1940 (15 U.S.C. 80a–3)) that is an open-end company (as defined in section 5 of the Investment Company Act (15 U.S.C. 80a–5)) and that is registered, or required to register, with the Securities and Exchange Commission under section 8 of the Investment Company Act (15 U.S.C. 80a–8). (3) Multibanka means any branch, office, or subsidiary of joint stock company Multibanka operating in Latvia or any other jurisdiction. (4) Subsidiary means a company of which more than 50 percent of the voting stock or analogous equity interest is owned by another company. (b) Requirements for covered financial institutions—(1) Prohibition on direct use of correspondent accounts. A covered financial institution shall terminate any correspondent account that is established, maintained, administered, or managed in the United States for, or on behalf of, Multibanka. (2) Special due diligence of correspondent accounts to prohibit indirect use. (i) A covered financial institution shall apply special due diligence to its correspondent accounts that is reasonably designed to guard against their indirect use by Multibanka. At a minimum, that special due diligence must include:
   (A) Notifying correspondent accountholders that they may not provide Multibanka with access to the correspondent account maintained at the covered financial institution; and (B) Taking reasonable steps to identify any indirect use of its correspondent accounts by Multibanka to the extent that such indirect use can be determined from transactional records maintained in the covered financial institution’s normal course of business. (ii) A covered financial institution shall take a risk-based approach when deciding what, if any, other due diligence measures it should adopt to guard against the indirect use of its correspondent accounts by Multibanka. (iii) A covered financial institution that obtains knowledge that a correspondent account is being used by the foreign bank to provide indirect access to Multibanka, shall take all appropriate steps to block such indirect access, including, where necessary, terminating the correspondent account. (3) Recordkeeping and reporting. (i) A covered financial institution is required to document its compliance with the notice requirement set forth in paragraph (b)(2)(i)(A) of this section. (ii) Nothing in this section shall require a covered financial institution to report any information not otherwise required to be reported by law or regulation. Dated: April 21, 2005. William J. Fox, Director, Financial Crimes Enforcement Network. [FR Doc. 05–8279 Filed 4–21–05; 1:18 pm] BILLING CODE 4810–02–P DEPARTMENT OF THE TREASURY 31 CFR Part 103 RIN 1506–AA82 Financial Crimes Enforcement Network; Amendment to the Bank Secrecy Act Regulations—Imposition of Special Measure Against VEF Banka AGENCY: Financial Crimes Enforcement Network (FinCEN), Treasury. ACTION: Notice of proposed rulemaking. SUMMARY: FinCEN is issuing this notice of proposed rulemaking to impose a special measure against joint stock company VEF Banka (VEF) as a financial institution of primary money laundering concern, pursuant to the authority contained in 31 U.S.C. 5318A. DATES: Written comments on the notice of proposed rulemaking must be submitted on or before May 26, 2005. ADDRESSES: You may submit comments, identified by RIN 1506-AA82, by any of the following methods:

• Federal e-rulemaking portal: http://
  www.regulations.gov. Follow the instructions for submitting comments.
• E-mail:
  regcomments@fincen.treas.gov. Include RIN 1506-AA82 in the subject line of the message.
• Mail: FinCEN, P.O. Box 39, Vienna,
  VA 22183. Include RIN 1506–AA82 in the body of the text. Instructions: It is preferable for comments to be submitted by electronic mail because paper mail in the Washington, DC, area may be delayed. Please submit comments by one method only. All submissions received must include the agency name and the Regulatory Information Number (RIN) for this rulemaking. All comments received will be posted without change to http://www.fincen.gov, including any personal information provided. Comments may be inspected at FinCEN between 10 a.m. and 4 p.m. in the FinCEN reading room in Washington, DC. Persons wishing to inspect the comments submitted must request an appointment by telephone at (202) 354– 6400 (not a toll-free number). FOR FURTHER INFORMATION CONTACT:
  Regulatory Policy and Programs Division, FinCEN, (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 (the USA PATRIOT Act), Public Law 107–

56. Title III of the USA PATRIOT Act
    amends the anti-money laundering 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
    Part 103. 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’’) added section 5318A to the BSA, granting the Secretary the authority, upon finding that reasonable grounds exist for concluding that a foreign jurisdiction, institution, class of transactions, or type of account is of