Anti-Money Laundering (AML) Source Tool

Anti-Money Laundering (AML) Source Tool:

• 
  over-the-counter derivatives contracts.

Prohibitions on Foreign Shell Banks: A broker-dealer is prohibited from establishing, maintaining, administering, or managing “correspondent accounts” in the U.S. for, or on behalf of, foreign “shell” banks (i.e., foreign banks with no physical presence in any country). Broker-dealers also must take steps to ensure that they are not indirectly providing correspondent banking services to foreign shell banks through foreign banks with which they maintain correspondent relationships. In order to assist institutions in complying with the prohibitions on providing correspondent accounts to foreign shell banks, Treasury has provided a model certification that can be used to obtain information from foreign bank correspondents. In addition, broker-dealers must obtain records in the United States of foreign bank owners and agents for service of process (Sections 313 and 319 of the USA PATRIOT Act).

Source Documents:

• Shell Bank Prohibition: 31 C.F.R. § 103.177. See also 31 C.F.R. § 103.175 (definitions).
   
• Final Rule Release: 67 Fed. Reg. 60562 (September 26, 2002).
   
• Extension of Implementation Date: 67 Fed. Reg. 78383(December 24, 2002).
   
• Other Rule-Related Documents:
   
• Interim Guidance: 66 Fed. Reg. 59342 (November 27, 2001).
   
• Proposed Rule: 66 Fed. Reg. 67460 (December 28, 2001).
   
• FinCEN Guidance:
   
• FIN-2006-G003: Frequently Asked Questions: Foreign Bank Recertifications under 31 C.F.R. § 103.77 (February 3, 2006).
   

'via Blog this'

• Other Rule-Related Documents:
   
• Enhanced Due Diligence Re-Proposed Rule: 71 Fed. Reg. 516(January 4, 2006).
• Proposed Rule: 67 Fed. Reg. 37736 (May 30, 2002).
   
• Interim Final Rule: 67 Fed. Reg. 48348 (July 23, 2002).
   
• FinCEN Guidance:
   
• Fact Sheet: Section 312 of the USA PATRIOT Act (December 2005).
   
• FIN-2006-G009: Application of the Regulations Requiring Special Due Diligence Programs for Certain Foreign Accounts to the Securities and Futures Industries (May 10, 2006).
   
• FIN-2008-A002: Guidance to Financial Institutions on the Continuing Money Laundering Threat Involving Illicit Iranian Activity (March 20, 2008).
   
• FIN-2008-A003: Guidance to Financial Institutions on the Money Laundering Threat Involving the Turkish Cypriot Administered Area of Cyprus (March 20, 2008).
   
• FIN-2008-A004: Guidance to Financial Institutions on the Money Laundering Threat Involving the Republic of Uzbekistan (March 20, 2008).
   
• NYSE Guidance:
   
• IM 02-34: Special Due Diligence for Correspondent Accounts and Private Banking Accounts (August 1, 2002).
   
• IM 06-50: Effective Dates for Section 312 of the USA PATRIOT Act(July 3, 2006).

6. Due Diligence Programs for Private Banking Accounts

Section 312 of the USA PATRIOT Act amended the BSA to require financial institutions, including broker-dealers, to establish and maintain a risk-based due diligence program for accounts defined as “private banking accounts,” and to provide enhanced scrutiny to any such accounts provided to “senior foreign political figures.”

A “private banking account” is defined as an account that: (a) requires a minimum deposit of assets of at least $1,000,000; (b) is established or maintained on behalf of one or more non-U.S. persons who are direct or beneficial owners of the account; and (c) has an employee assigned to the account who is a liaison between the broker-dealer and the non-U.S. person.

The definition of “senior foreign political figure” extends to any member of the political figure’s immediate family, and any person widely and publicly known to be a close associate of the foreign political figure as well as any entities formed for the benefit of such persons (such persons are commonly referred to as PEPs, or Politically Exposed Persons).

Broker-dealers providing private banking accounts must take reasonable steps to:

• determine the identity of all nominal and beneficial owners of the private banking accounts;
   
• determine whether any such owner is a “senior foreign political figure” and therefore subject to enhanced scrutiny that is reasonably designed to detect transactions that may involve the proceeds of foreign corruption;
   
• determine the source of funds deposited into the private banking account and the purpose and use of such account;
   
• review the activity of the account as needed to guard against money laundering; and
   
• report any suspicious activity, including transactions involving senior foreign political figures that may involve proceeds of foreign corruption.

Source Documents: