Regulatory Alerts2006-01-04
Added
Special Due Diligence Programs for Certain Foreign Accounts
The Financial Crimes Enforcement Network issues a final rule effective February 3, 2006, to implement section 312 of the USA PATRIOT Act by requiring U.S. financial institutions to establish due diligence policies for correspondent and private banking accounts held by non-U.S. persons. This rule supersedes an interim final rule issued in July 2002 and defines covered institutions as federally regulated banks, savings associations, credit unions, trust companies, securities broker-dealers, futures commission merchants, introducing brokers, and mutual funds, while excluding money services businesses, casinos, and operators of credit card systems. The regulation mandates enhanced scrutiny for correspondent accounts maintained for foreign banks operating under offshore licenses or in jurisdictions designated as non-cooperative with anti-money laundering principles, and requires identification of beneficial owners and sources of funds for private banking accounts.