[Federal Register Volume 76, Number 84 (Monday, May 2, 2011)]
[Proposed Rules]
[Pages 24410-24421]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-10482]
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DEPARTMENT OF THE TREASURY
Financial Crimes Enforcement Network
31 CFR Part 1060
RIN 1506-AB12
Financial Crimes Enforcement Network; Comprehensive Iran
Sanctions, Accountability, and Divestment Act of 2010 (``CISADA'')
Reporting Requirements Under Section 104(e)
AGENCY: Financial Crimes Enforcement Network (``FinCEN''), Treasury.
ACTION: Notice of proposed rulemaking.
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SUMMARY: FinCEN, to comply with the congressional mandate to prescribe
regulations under section 104(e) of the Comprehensive Iran Sanctions,
Accountability, and Divestment Act of 2010 (``CISADA'') and consistent
with its statutory mission under 31 U.S.C. 310, is proposing to issue
regulations that would require a U.S. bank that maintains a
correspondent account for a foreign bank to inquire of the foreign
bank, and report to FinCEN, with respect to whether the foreign bank
maintains a correspondent account for, or has processed one or more
transfers of funds within the preceding 90 calendar days, other than
through a correspondent account, related to any financial institution
designated by the U.S. Government in connection with Iran's
proliferation of weapons of mass destruction or delivery systems for
weapons of mass destruction, or in connection with Iran's support for
international terrorism. In addition, FinCEN is proposing to require a
U.S. bank that maintains a correspondent account for a foreign bank to
inquire of the foreign bank, and report to FinCEN, with respect to
whether the foreign bank has processed one or more transfers of funds
within the preceding 90 calendar days related to Iran's Islamic
Revolutionary Guard Corps (``IRGC'') or any of its agents or affiliates
designated by the U.S. Government. Under the proposed regulations, U.S.
banks will only be required to report this information to FinCEN upon
receiving a specific written request from FinCEN.
DATES: Written comments are welcome and must be received on or before
June 1, 2011.
ADDRESSES: FinCEN: You may submit comments, identified by Regulatory
Identification Number (RIN) 1506-AB12, by any of the following methods:
Federal E-rulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments. Include 1506-AB12 and
the caption ``Attention: CISADA Reporting Requirements Under Section
104(e)'' in the submission. Refer to Docket Number FINCEN-2011-0002.
Mail: FinCEN, P.O. Box 39, Vienna, VA 22183. Include 1506-
AB12 and the caption ``Attention: CISADA Reporting Requirements Under
Section 104(e)'' in the body of the text. Please submit comments by one
method only. Comments submitted in response to this notice of proposed
rulemaking will become a matter of public record. Therefore, you should
submit only information that you wish to make publicly available.
Inspection of comments: Public comments received electronically or
through the U.S. Postal Service in response to a notice and request for
comment will be made available for public review as soon as possible on
http://www.regulations.gov. Comments received may be physically
inspected in the FinCEN reading room located in Vienna, Virginia.
Reading room appointments are available weekdays (excluding holidays)
between 10 a.m. and 3 p.m., by calling the Disclosure Officer at (703)
905-5034 (not a toll-free call).
FOR FURTHER INFORMATION CONTACT: The FinCEN regulatory helpline at
(800) 949-2732 and select Option 8.
SUPPLEMENTARY INFORMATION:
I. Statutory Provisions
On July 1, 2010, the President signed CISADA \1\ into law. Section
104(c) of CISADA requires the Secretary of the Treasury (``the
Secretary'') to prescribe regulations to prohibit, or impose strict
conditions on, the opening or maintaining in the United States of
correspondent accounts and payable-through accounts for foreign
financial institutions that the Secretary finds knowingly engage in
sanctionable activities described in section 104(c)(2) of CISADA. The
relevant statutory language reads as follows:
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\1\ Public Law 111-195, 124 Stat. 1312 (2010).
``(c) PROHIBITIONS AND CONDITIONS WITH RESPECT TO CERTAIN
ACCOUNTS HELD BY FOREIGN FINANCIAL INSTITUTIONS.--
(1) IN GENERAL.--Not later than 90 days after the date of the
enactment of this Act, the Secretary of the Treasury shall prescribe
regulations to prohibit, or impose strict conditions on, the opening
or maintaining in the United States of a correspondent account or a
payable-through account by a foreign financial institution that the
Secretary finds knowingly engages in an activity described in
paragraph (2).
(2) ACTIVITIES DESCRIBED.--A foreign financial institution
engages in an activity described in this paragraph if the foreign
financial institution--
(A) facilitates the efforts of the Government of Iran (including
efforts of Iran's Revolutionary Guard Corps or any of its agents or
affiliates)--
(i) to acquire or develop weapons of mass destruction or
delivery systems for weapons of mass destruction; or
(ii) to provide support for organizations designated as foreign
terrorist organizations under section 219(a) of the Immigration and
Nationality Act (8 U.S.C. 1189(a)) or support for acts of
international terrorism (as defined in section 14 of the Iran
Sanctions Act of 1996 (Pub. L. 104-172; 50 U.S.C. 1701 note));
(B) facilitates the activities of a person subject to financial
sanctions pursuant to United Nations Security Council Resolution
1737 (2006), 1747 (2007), 1803 (2008), or 1929 (2010), or any other
resolution that is agreed to by the Security Council and imposes
sanctions with respect to Iran;
(C) engages in money laundering to carry out an activity
described in subparagraph (A) or (B);
(D) facilitates efforts by the Central Bank of Iran or any other
Iranian financial institution to carry out an activity described in
subparagraph (A) or (B); or
(E) facilitates a significant transaction or transactions or
provides significant financial services for--
(i) Iran's Revolutionary Guard Corps or any of its agents or
affiliates whose property or interests in property are blocked
pursuant to the International Emergency Economic Powers Act (50
U.S.C. 1701 et seq.); or
(ii) a financial institution whose property or interests in
property are blocked pursuant to that Act in connection with--
(I) Iran's proliferation of weapons of mass destruction or
delivery systems for weapons of mass destruction; or
(II) Iran's support for international terrorism.
(3) PENALTIES.--The penalties provided for in subsections (b)
and (c) of section 206 of the International Emergency Economic
[[Page 24411]]
Powers Act (50 U.S.C. 1705) shall apply to a person that violates,
attempts to violate, conspires to violate, or causes a violation of
regulations prescribed under paragraph (1) of this subsection to the
same extent that such penalties apply to a person that commits an
unlawful act described in section 206(a) of that Act.''
On August 16, 2010, the Office of Foreign Assets Control (``OFAC')
published the Iranian Financial Sanctions Regulations, 31 CFR Part 561
(the ``IFSR''). Section 561.201 of the IFSR implements section 104(c)
of CISADA. It states that the Secretary will, consistent with
authorities under CISADA, prohibit or impose strict conditions on the
opening or maintaining in the United States of correspondent accounts
or payable-through accounts for a foreign financial institution that
the Secretary finds knowingly engages in one or more of the
sanctionable activities described in section 561.201(a) of the IFSR.
Section 104(e) of CISADA requires the Secretary to prescribe
regulations to establish one or more specific requirements for U.S.
financial institutions maintaining correspondent accounts for foreign
financial institutions, in connection with the sanctionable activities
described in section 104(c)(2) of CISADA. The relevant statutory
language reads as follows:
``(e) REQUIREMENTS FOR FINANCIAL INSTITUTIONS MAINTAINING
ACCOUNTS FOR FOREIGN FINANCIAL INSTITUTIONS.--
(1) IN GENERAL.--The Secretary of the Treasury shall prescribe
regulations to require a domestic financial institution maintaining
a correspondent account or payable-through account in the United
States for a foreign financial institution to do one or more of the
following:
(A) Perform an audit of activities described in subsection
(c)(2) that may be carried out by the foreign financial institution.
(B) Report to the Department of the Treasury with respect to
transactions or other financial services provided with respect to
any such activity.
(C) Certify, to the best of the knowledge of the domestic
financial institution, that the foreign financial institution is not
knowingly engaging in any such activity.
(D) Establish due diligence policies, procedures, and controls,
such as the due diligence policies, procedures, and controls
described in section 5318(i) of title 31, United States Code,
reasonably designed to detect whether the Secretary of the Treasury
has found the foreign financial institution to knowingly engage in
any such activity.
(2) PENALTIES.--The penalties provided for in sections 5321(a)
and 5322 of title 31, United States Code, shall apply to a person
that violates a regulation prescribed under paragraph (1) of this
subsection, in the same manner and to the same extent as such
penalties would apply to any person that is otherwise subject to
such section 5321(a) or 5322.''
In order to comply with the congressional mandate to prescribe
regulations under section 104(e) of CISADA, and consistent with its
statutory mission under 31 U.S.C. 310, FinCEN is implementing section
104(e)(1)(B) of CISADA. FinCEN took into consideration the possibility
of implementing any one or more of the options under section 104(e)(1)
of CISADA, and determined that implementing section 104(e)(1)(B) is the
most useful vehicle for effecting the intent of section 104(e) at this
time. Section 104(e)(1)(B) of CISADA authorizes the Secretary to
prescribe regulations that require a domestic financial institution
maintaining a correspondent account in the United States for a foreign
financial institution to report to the Department of the Treasury
(``Treasury'') with respect to transactions or other financial services
provided with respect to sanctionable activities described in section
104(c)(2) of CISADA that may be carried out by the foreign financial
institution.
Section 104(e)(1)(B) of CISADA authorizes Treasury to require a
domestic financial institution maintaining a correspondent account for
a foreign financial institution to report to Treasury with respect to
transactions or other financial services the foreign financial
institution may provide with respect to sanctionable activities
described in section 104(c)(2) of CISADA. FinCEN believes that among
the services included within the concept of ``transactions or other
financial services provided'' by a foreign financial institution are
correspondent accounts the foreign financial institution maintains for
other foreign financial institutions and transfers of funds the foreign
financial institution processes for other foreign financial
institutions, individuals, or entities. Because a foreign financial
institution's provision of correspondent account services and transfer
of funds services to a financial institution designated by the U.S.
Government in connection with Iran's proliferation of weapons of mass
destruction or delivery systems for weapons of mass destruction, or in
connection with Iran's support for international terrorism may be
relevant to the sanctionable activities described under section
104(c)(2) of CISADA, FinCEN is focusing this reporting requirement on
the provision of information relating to such correspondent accounts
and transfers of funds.\2\ In addition, because a foreign financial
institution's provision of transfer of funds services to the IRGC or
any of its agents or affiliates designated by the U.S. Government may
also be relevant to the sanctionable activities described under section
104(c)(2) of CISADA, FinCEN is also focusing this reporting requirement
on the provision of information relating to such transfers of funds.\3\
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\2\ See, e.g., CISADA subsection 104(c)(2)(E)(ii), which
includes focus on the provision by foreign financial institutions of
significant financial services to financial institutions that are of
concern under CISADA.
\3\ See, e.g., CISADA subsection 104(c)(2)(E)(i), which includes
focus on the provision by foreign financial institutions of
significant financial services to entities or individuals that are
of concern under CISADA.
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FinCEN is proposing to implement section 104(e)(1)(B) of CISADA by
issuing regulations that would require a bank that maintains a
correspondent account for a foreign bank to inquire of the foreign
bank, and report to FinCEN, with respect to whether the foreign bank
maintains a correspondent account for an Iranian-linked financial
institution designated under the International Emergency Economic
Powers Act (``IEEPA''); \4\ whether the foreign bank has processed one
or more transfers of funds within the preceding 90 calendar days
related to an Iranian-linked financial institution designated under
IEEPA, other than through a correspondent account; and whether the
foreign bank has processed one or more transfers of funds within the
preceding 90 calendar days related to an IRGC-linked person designated
under IEEPA.\5\ Specifically, if a bank receives a written request from
FinCEN and the bank maintains a correspondent account for the foreign
bank(s) \6\ specified in FinCEN's request, the bank will be required to
report to FinCEN the following information:
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\4\ See below Section III.A. for the definition of Iranian-
linked financial institution designated under IEEPA.
\5\ See below Section III.A. for the definition of IRGC-linked
person designated under IEEPA.
\6\ The specific foreign banks about which FinCEN will be
requesting information will be those foreign banks which are of
interest to Treasury as they relate to CISADA.
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The name of any specified foreign bank that certifies that
it maintains a correspondent account for an Iranian-linked financial
institution designated under IEEPA, and certain information with
respect to such account;
The name of any specified foreign bank that certifies that
it has processed one or more transfers of funds within the preceding 90
calendar days related to an Iranian-linked financial institution
designated under IEEPA, other than
[[Page 24412]]
through a correspondent account, and certain information with respect
to such transfers of funds;
The name of any specified foreign bank that certifies that
it has processed one or more transfers of funds within the preceding 90
calendar days related to an IRGC-linked person designated under IEEPA,
and certain information with respect to such transfers of funds;
The name of any specified foreign bank that certifies that
it does not maintain a correspondent account for an Iranian-linked
financial institution designated under IEEPA, and/or it has not
processed one or more transfers of funds within the preceding 90
calendar days related to an Iranian-linked financial institution or an
IRGC-linked person designated under IEEPA; and
The name of any specified foreign bank for which the bank
has not been able to establish to its satisfaction that the foreign
bank does not maintain a correspondent account for an Iranian-linked
financial institution designated under IEEPA, and/or has not processed
one or more transfers of funds within the preceding 90 calendar days
related to an Iranian-linked financial institution or an IRGC-linked
person designated under IEEPA, together with the reason(s) for this,
such as the failure of the foreign bank to respond to the inquiry by or
a request from the bank, the failure of the foreign bank to certify its
response, or if the bank knows, suspects, or has reason to suspect that
the certification is incorrect.\7\
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\7\ If a foreign bank does not respond to an inquiry made by a
bank under this proposed rulemaking, the bank will be in compliance
with these proposed reporting requirements so long as the bank
reports to FinCEN that the foreign bank did not respond to the
bank's inquiry.
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In addition, FinCEN is proposing to require a bank to request, upon
inquiry of a specified foreign bank, that the foreign bank agree to
notify the bank if the foreign bank subsequently establishes a new
correspondent account for an Iranian-linked financial institution
designated under IEEPA at any time within 365 calendar days from the
date of the foreign bank's initial response, and report such
information to FinCEN.
FinCEN is also proposing to require a bank to report to FinCEN
instances in which the bank does not maintain a correspondent account
for a foreign bank specified in a written request from FinCEN. This
requirement will only apply when FinCEN specifically requests in
writing that the bank report such information. To the extent possible
and based on all available information, FinCEN intends to send requests
directly to banks that FinCEN believes may maintain correspondent
accounts with the specified foreign bank(s). The number of banks that
receive a request may vary in each specific case, based on the
availability of information to FinCEN and other circumstances.
II. Background Information
A. 31 CFR Part 561 Iranian Financial Sanctions Regulations--Office of
Foreign Assets Control
On August 16, 2010, OFAC published the IFSR, 31 CFR part 561. As
noted above, section 561.201 of the IFSR implements section 104(c) of
CISADA. It states that the Secretary will, consistent with authorities
under CISADA, prohibit or impose strict conditions on the opening or
maintaining in the United States of correspondent accounts or payable-
through accounts for a foreign financial institution that the Secretary
finds knowingly engages in one or more of the sanctionable activities
described in section 561.201(a) of the IFSR. The names of foreign
financial institutions that are found by the Secretary to knowingly
engage in such sanctionable activities, and for which U.S. financial
institutions may not open or maintain correspondent accounts or
payable-through accounts in the United States, will be published in the
Federal Register and listed in appendix A to the IFSR. If the Secretary
decides to impose strict conditions on the opening or maintaining of a
correspondent account or a payable-through account for a foreign
financial institution, the actual condition(s) to be imposed will be
specified upon the identification of the foreign financial institution
in an order or regulation published in the Federal Register.
B. Use of CISADA Reports
The reports will be used primarily to provide Treasury with
potentially useful information from U.S. banks regarding the nature of
foreign bank activities that may be relevant to CISADA. Based on the
reports, Treasury officials may decide to take immediate action under
section 104(c) of CISADA, or, among other things, to consult with those
foreign banks that maintain correspondent accounts with Iranian-linked
financial institutions designated under IEEPA, that have processed one
or more transfers of funds related to an Iranian-linked financial
institution or an IRGC-linked person designated under IEEPA, or that
have been unwilling to respond to inquiries from the banks at which the
foreign banks maintain correspondent accounts. An investigation by OFAC
into the activities of such foreign banks could result in a finding by
the Secretary under section 104(c) of CISADA and section 561.201 of the
IFSR. For example, when a bank reports that a foreign bank maintains a
correspondent account for an Iranian-linked financial institution
designated under IEEPA, or has processed one or more transfers of funds
related to an Iranian-linked financial institution or an IRGC-linked
person designated under IEEPA, OFAC could use the information to
corroborate or supplement data derived from other sources and may
request further information from the foreign bank to clarify whether
the foreign bank is facilitating significant transactions or providing
significant financial services for an Iranian-linked financial
institution or an IRGC-linked person designated under IEEPA. Such
transactions or services can be the basis for prohibiting or imposing
strict conditions on the foreign bank's correspondent or payable-
through accounts in the United States under section 104(c) of CISADA
and section 561.201 of the IFSR.
III. Section-By-Section Analysis
A. General (Sec. 1060.300(a))
FinCEN proposes to add 31 CFR 1060.300(a). This section would add a
requirement that upon receiving a written request from FinCEN, a bank
that maintains a correspondent account for a specified foreign bank
shall inquire of the foreign bank and report to FinCEN within 30 days,
to the best of the knowledge of the bank, with respect to any
correspondent account maintained by such foreign bank for an Iranian-
linked financial institution designated under IEEPA, any transfer of
funds related to an Iranian-linked financial institution designated
under IEEPA processed by such foreign bank within the preceding 90
calendar days, other than through a correspondent account, and any
transfer of funds related to an IRGC-linked person designated under
IEEPA processed by such foreign bank within the preceding 90 calendar
days.
Definitions
Bank
For the purpose of this proposed rulemaking the term ``bank'' is
defined in 31 CFR Sec. 1010.100(d). A bank includes each agent,
agency, branch, or office within the United States of persons doing
business in one or more of the following capacities: commercial banks
or trust companies, private banks, savings and loan associations,
national banks, thrift institutions, credit unions,
[[Page 24413]]
other organizations chartered under banking laws and supervised by
banking supervisors of any State, and banks organized under foreign
law.
FinCEN and Treasury have determined that limiting the reporting
requirement in this proposed rulemaking to banks will provide useful
information as it relates to CISADA, while limiting the obligations of
the financial industry. Although there are other financial institutions
that could fall within the scope of this rule in light of the breadth
of the definition of financial institution in CISADA and the breadth of
the definition of correspondent account, this rule focuses on those
financial institutions deemed to provide the services most
traditionally associated with correspondent banking. FinCEN and
Treasury may consider expanding this reporting requirement to other
types of financial institutions that maintain correspondent accounts
with foreign financial institutions if we determine that information
will be useful for Treasury's implementation of CISADA. FinCEN requests
comment as to whether this rulemaking should be expanded to include
other types of financial institutions, such as those financial
institutions included in FinCEN's definition of ``covered financial
institution.'' \8\
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\8\ See 31 CFR 1010.605(e) (defining a ``covered financial
institution'' as any one of a number of specific U.S. financial
institutions, including banks, broker-dealers, futures commission
merchants, and mutual funds).
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Correspondent Account
For the purpose of this proposed rulemaking the term
``correspondent account'' is defined in 31 CFR 1010.605(c)(1)(ii) and
means an account established for a foreign bank to receive deposits
from, or to make payments or other disbursements on behalf of, the
foreign bank, or to handle other financial transactions related to such
foreign bank.\9\ Although there is a reference in section 104(e) of
CISADA to payable-through accounts, as FinCEN is incorporating this
requirement into its regulations, such payable-through accounts are
subsumed within the definition of a correspondent account at 31 CFR
1010.610(b)(1)(iii)(B).\10\
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\9\ This definition of correspondent account is consistent with
the proposed rule's focus on U.S. banks' correspondent account
relationships with foreign banks.
\10\ 31 CFR 1010.610(b)(1)(iii)(B) states ``* * * a payable-
through account means a correspondent account maintained by a
covered financial institution for a foreign bank by means of which
the foreign bank permits its customers to engage, either directly or
through a subaccount, in banking activities usual in connection with
the business of banking in the United States.''
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Processed One or More Transfers of Funds
FinCEN is using the general phrase ``processed one or more
transfers of funds.'' This terminology is meant to address
circumstances through which transfers of funds are made without
requiring a correspondent account, specifically including circumstances
in which financial institutions are part of a common payments or
clearing mechanism that provides for transfers of funds among
participants without requiring bilateral correspondent account
relationships. FinCEN requests comment as to whether this terminology
should be further clarified, and if so, how and what terms should be
used in the alternative.
Foreign Bank
For the purpose of this proposed rulemaking the term ``foreign
bank'' is defined in 31 CFR 1010.100(u) and means a bank organized
under foreign law, or an agency, branch, or office located outside the
United States of a bank. The term does not include an agent, agency,
branch, or office within the United States of a bank organized under
foreign law.
FinCEN and Treasury have determined that limiting the reporting
requirement in this proposed rulemaking to information pertaining to
the activities of foreign banks will provide useful information as it
relates to CISADA, while limiting the obligations of the financial
industry. Although there are other foreign financial institutions that
maintain correspondent accounts with U.S. financial institutions that
could provide useful information with respect to CISADA-relevant
activities, this rule focuses on those foreign financial institutions
deemed to receive the services most traditionally associated with
correspondent banking. FinCEN and Treasury may consider expanding this
reporting requirement to include reports to FinCEN with respect to
other types of foreign financial institutions serviced by U.S.
financial institutions if we determine that such information will be
useful for Treasury's implementation of CISADA. FinCEN requests comment
as to whether this rulemaking should be expanded to include other types
of foreign financial institutions, such as those included in FinCEN's
definition of ``foreign financial institution,'' \11\ or OFAC's
definition of ``foreign financial institution'' \12\ in the IFSR.
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\11\ See 31 CFR 1010.605(f).
\12\ See 31 CFR 561.308.
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Iranian-Linked Financial Institution Designated Under IEEPA
For the purpose of this proposed rulemaking the term ``Iranian-
linked financial institution designated under IEEPA'' means a financial
institution designated by the United States Government pursuant to
IEEPA (or listed in an annex to an Executive order issued pursuant to
such Act) in connection with Iran's proliferation of weapons of mass
destruction or delivery systems for weapons of mass destruction, or in
connection with Iran's support for international terrorism.\13\
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\13\ See CISADA subsection 104(c)(2)(E)(ii).
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IRGC-Linked Person Designated Under IEEPA
For the purpose of this proposed rulemaking the term ``IRGC-linked
person designated under IEEPA'' means Iran's Islamic Revolutionary
Guard Corps or any of its agents or affiliates designated by the United
States Government pursuant to IEEPA (or listed in an annex to an
Executive order issued pursuant to such Act).\14\
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\14\ See CISADA subsection 104(c)(2)(E)(i).
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The names of persons whose property and interests in property are
blocked pursuant to IEEPA are published on OFAC's Specially Designated
Nationals and Blocked Persons List (``SDN List''). Iranian-linked
financial institutions designated under IEEPA are those whose property
and interests in property are blocked pursuant to 31 CFR part 544 or 31
CFR part 594 in connection with Iran's proliferation of weapons of mass
destruction or delivery systems for weapons of mass destruction or
Iran's support for international terrorism and are identified by
``[IFSR]'' tags located at the end of their entries on the SDN List
(e.g., [NPWMD][IFSR] or [SDGT][IFSR]). IRGC-linked persons designated
under IEEPA are those whose property and interests in property are
blocked pursuant to one or more parts of 31 CFR Chapter V and are
identified by ``[IRGC]'' tags located at the end of their entries on
the SDN List (e.g., [NPWD][IRGC] or [SDGT][IRGC]). OFAC's electronic
SDN List can be found at the following URL: http://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/default.aspx. The following
financial institutions meet the criteria of Iranian-linked financial
institutions designated under IEEPA ([IFSR] tags), and the following
persons meet the criteria of IRGC-linked persons designated under IEEPA
([IRGC] tags): http://www.treasury.gov/resource-center/sanctions/Programs/Documents/irgc_ifsr.pdf. These listings are part of the SDN
List,
[[Page 24414]]
administered by OFAC. Please note that OFAC's SDN List is dynamic and
should be reviewed regularly for the most current information regarding
Iranian-linked financial institutions designated under IEEPA and IRGC-
linked persons designated under IEEPA.
B. Duty To Inquire (Sec. 1060.300(b))
This section describes a bank's duty to inquire of a specified
foreign bank for which the bank maintains a correspondent account, as
to whether such foreign bank maintains a correspondent account for an
Iranian-linked financial institution designated under IEEPA, and/or has
processed one or more transfers of funds within the preceding 90
calendar days related to an Iranian-linked financial institution or an
IRGC-linked person designated under IEEPA. Upon receiving a written
request from FinCEN, a bank that maintains a correspondent account for
a specified foreign bank shall inquire of such foreign bank for the
purpose of having such foreign bank certify: whether it maintains a
correspondent account for an Iranian-linked financial institution
designated under IEEPA; whether it has processed one or more transfers
of funds within the preceding 90 calendar days related to an Iranian-
linked financial institution designated under IEEPA, other than through
a correspondent account; and whether it has processed one or more
transfers of funds within the preceding 90 calendar days related to an
IRGC-linked person designated under IEEPA. In addition, when the bank
makes its inquiry, the bank shall request that the foreign bank agree
to notify the bank if the foreign bank subsequently establishes a new
correspondent account for an Iranian-linked financial institution
designated under IEEPA at any time within 365 calendar days from the
date of the foreign bank's initial response.
To assist a bank in obtaining the required information from a
specified foreign bank, FinCEN is proposing a model certification
format for a bank to provide to a specified foreign bank when the bank
makes its inquiry regarding whether the specified foreign bank
maintains a correspondent account for an Iranian-linked financial
institution designated under IEEPA, and/or has processed one or more
transfers of funds within the preceding 90 calendar days related to an
Iranian-linked financial institution or an IRGC-linked person
designated under IEEPA. This proposed model certification will not
appear in the Code of Federal Regulations; however, it is included at
Appendix A to this Federal Register notice. In addition, FinCEN will
use its website to make this proposed model certification available to
the public. FinCEN requests comment as to the effectiveness of the
proposed model certification.
The proposed model certification includes language identifying the
purpose for which the bank is requesting information from the foreign
bank. As proposed, the model certification will include the following
language: ``The information contained in this Certification is sought
for purposes of Section 104(e) of the Comprehensive Iran Sanctions,
Accountability, and Divestment Act of 2010 (``CISADA'') (Public Law
111-195). This Certification will be used to provide the Department of
the Treasury with information regarding the nature of foreign bank
activities that may be relevant to CISADA.'' In addition, the model
certification will define foreign bank, bank, correspondent account,
Iranian-linked financial institution designated under IEEPA, and IRGC-
linked person designated under IEEPA in accordance with the proposed
rule.
In the certification, a foreign bank that maintains a correspondent
account with a bank is asked to certify to the bank either that (1) it
does not maintain a correspondent account(s) for an Iranian-linked
financial institution designated under IEEPA; or (2) it maintains a
correspondent account(s) for an Iranian-linked financial institution
designated under IEEPA. If a foreign bank certifies that it maintains a
correspondent account(s) for an Iranian-linked financial institution
designated under IEEPA, it is asked to report the following related
information for each such correspondent account: the name of the
Iranian-linked financial institution designated under IEEPA, the full
name(s) on the correspondent account and the correspondent account
number(s), applicable information regarding whether the correspondent
account has been blocked or otherwise restricted, other applicable
identifying information for the correspondent account, and the
approximate value in United States Dollars (``USD'') of transactions
processed through the correspondent account within the preceding 90
calendar days.
In the certification, a foreign bank that maintains a correspondent
account with a bank is also asked to certify to the bank either that
(1) it has not processed one or more transfers of funds within the
preceding 90 calendar days related to an Iranian-linked financial
institution designated under IEEPA, other than through a correspondent
account; or (2) it has processed one or more transfers of funds within
the preceding 90 calendar days related to an Iranian-linked financial
institution designated under IEEPA, other than through a correspondent
account. If a foreign bank certifies that it has processed one or more
transfers of funds within the preceding 90 calendar days related to an
Iranian-linked financial institution designated under IEEPA, other than
through a correspondent account, it is asked to report the following
related information for each Iranian-linked financial institution
designated under IEEPA: the name of the Iranian-linked financial
institution designated under IEEPA, the identity of the system or means
by which the transfer(s) of funds was processed, the full name on the
account(s) and the account number(s), if applicable, other applicable
identifying information for the transfer(s) of funds, and the
approximate value in USD of such transfer(s) of funds processed within
the preceding 90 calendar days.
In the certification, a foreign bank that maintains a correspondent
account with a bank is also asked to certify to the bank either that
(1) it has not processed one or more transfers of funds within the
preceding 90 calendar days related to an IRGC-linked person designated
under IEEPA; or (2) it has processed one or more transfers of funds
within the preceding 90 calendar days related to an IRGC-linked person
designated under IEEPA. If a foreign bank certifies that it has
processed one or more transfers of funds within the preceding 90
calendar days related to an IRGC-linked person designated under IEEPA,
it is asked to report the following related information for each IRGC-
linked person designated under IEEPA: the name of the IRGC-linked
person designated under IEEPA, the identity of the system or means by
which the transfer(s) of funds was processed, the full name on the
account(s) and the account number(s), if applicable, other applicable
identifying information for the transfer(s) of funds, and the
approximate value in USD of such transfer(s) of funds processed within
the preceding 90 calendar days.
As part of the certification, the foreign bank is asked to agree to
notify, in writing, the bank at which it maintains a correspondent
account if the foreign bank establishes a new correspondent account for
an Iranian-linked financial institution designated under IEEPA at any
time within 365 calendar days from the date of the foreign bank's
response. The certification form sets forth the expectation that the
notification shall be due to the bank within 30 calendar days of such
change. If a bank does not utilize the proposed model certification,
the bank will need to request separately that the foreign bank provide
such
[[Page 24415]]
information with respect to the establishment of a new correspondent
account for an Iranian-linked financial institution designated under
IEEPA.
C. Filing Procedures (Sec. 1060.300(c))
What To File (Sec. 1060.300(c)(1))
This section describes the filing procedures a bank shall follow to
report to FinCEN information required by this proposed rulemaking. Upon
receiving a written request from FinCEN, a bank is required to report
to FinCEN, in such format and manner as may be prescribed by FinCEN,
the following information for any specified foreign bank:
The name of any specified foreign bank, for which the bank
maintains a correspondent account, that certifies that it maintains a
correspondent account for an Iranian-linked financial institution
designated under IEEPA, together with the name of the Iranian-linked
financial institution designated under IEEPA, the full name(s) on the
correspondent account and the correspondent account number(s),
applicable information regarding whether the correspondent account has
been blocked or otherwise restricted, other applicable identifying
information for the correspondent account, and the approximate value in
USD of transactions processed through the correspondent account within
the preceding 90 calendar days;
The name of any specified foreign bank, for which the bank
maintains a correspondent account, that certifies that it has processed
one or more transfers of funds within the preceding 90 calendar days
related to an Iranian-linked financial institution designated under
IEEPA, other than through a correspondent account, together with the
name of the Iranian-linked financial institution designated under
IEEPA, the identity of the system or means by which such transfer(s) of
funds was processed, the full name on the account(s) and the account
number(s), if applicable, other applicable identifying information for
such transfer(s) of funds, and the approximate value in USD of such
transfer(s) of funds processed within the preceding 90 calendar days;
The name of any specified foreign bank, for which the bank
maintains a correspondent account, that certifies that it has processed
one or more transfers of funds within the preceding 90 calendar days
related to an IRGC-linked person designated under IEEPA, together with
the name of the IRGC-linked person designated under IEEPA, the identity
of the system or means by which such transfer(s) of funds was
processed, the full name on the account(s) and the account number(s),
if applicable, other applicable identifying information for such
transfer(s) of funds, and the approximate value in USD of such
transfer(s) of funds processed within the preceding 90 calendar days;
The name of any specified foreign bank, for which the bank
maintains a correspondent account, that certifies that it does not
maintain a correspondent account for an Iranian-linked financial
institution designated under IEEPA, that certifies that it has not
processed one or more transfers of funds within the preceding 90
calendar days related to an Iranian-linked financial institution
designated under IEEPA, other than through a correspondent account,
and/or that certifies that it has not processed one or more transfers
of funds within the preceding 90 calendar days related to an IRGC-
linked person designated under IEEPA;
The name of any specified foreign bank, for which the bank
maintains a correspondent account, about which the bank has not been
able to establish to its satisfaction that the foreign bank does not
maintain a correspondent account for an Iranian-linked financial
institution designated under IEEPA, has not processed one or more
transfers of funds within the preceding 90 calendar days related to an
Iranian-linked financial institution designated under IEEPA, other than
through a correspondent account, and/or has not processed one or more
transfers of funds within the preceding 90 calendar days related to an
IRGC-linked person designated under IEEPA, together with the reason(s)
for this, such as the failure of the foreign bank to respond to the
inquiry by or a request from the bank, the failure of the foreign bank
to certify its response, or if the bank knows, suspects, or has reason
to suspect that the certification is incorrect;
The name of any specified foreign bank, for which the bank
maintains a correspondent account, that notifies the bank that it has
established a new correspondent account for an Iranian-linked financial
institution designated under IEEPA at any time within 365 calendar days
from the date of the foreign bank's initial response, together with the
name of the Iranian-linked financial institution designated under
IEEPA, the full name(s) on the correspondent account and the
correspondent account number(s), applicable information regarding
whether the correspondent account has been blocked or otherwise
restricted, and other applicable identifying information for the
correspondent account; and
If applicable, confirmation that the bank does not
maintain a correspondent account for the specified foreign bank(s), but
only in instances in which FinCEN specifically requests that the bank
report such information.
If a bank utilizes the proposed model certification to inquire of a
specified foreign bank, the bank can submit the certification from the
specified foreign bank to FinCEN in order to comply with this proposed
reporting requirement. If a bank does not utilize the proposed model
certification to inquire of a specified foreign bank, the bank can
report to FinCEN, in such format and manner as may be prescribed by
FinCEN, the information required by this proposed rulemaking. If a
specified foreign bank, for which the bank maintains a correspondent
account, does not adequately respond to the bank's inquiry, the bank
can report to FinCEN, in such format and manner as may be prescribed by
FinCEN, the name of the foreign bank for which the bank has not been
able to establish to its satisfaction that the foreign bank does not
maintain a correspondent account for an Iranian-linked financial
institution designated under IEEPA, has not processed one or more
transfers of funds within the preceding 90 calendar days related to an
Iranian-linked financial institution designated under IEEPA, other than
through a correspondent account, and/or has not processed one or more
transfers of funds within the preceding 90 calendar days related to an
IRGC-linked person designated under IEEPA, together with the reason(s)
for this, such as the failure of the foreign bank to respond to the
inquiry by or a request from the bank, the failure of the foreign bank
to certify its response, or if the bank knows, suspects, or has reason
to suspect that the certification is incorrect.
If a bank receives a notification from a specified foreign bank
regarding the establishment of a new correspondent account for an
Iranian-linked financial institution designated under IEEPA, the bank
shall report to FinCEN, in such format and manner as may be prescribed
by FinCEN, the information required by this proposed rulemaking,
including the name of the specified foreign bank, the name of the
Iranian-linked financial institution designated under IEEPA for which
the specified foreign bank has established a new correspondent account,
the full name(s) on the correspondent account and the correspondent
account number(s), applicable information regarding whether the
correspondent account has been blocked or otherwise restricted, and
other applicable identifying
[[Page 24416]]
information for the correspondent account.
If a bank receives a written request from FinCEN regarding a
specified foreign bank, for which the bank does not maintain a
correspondent account, and FinCEN has specifically requested that the
bank report instances in which the bank does not maintain a
correspondent account for such specified foreign bank, the bank shall
report this information to FinCEN, in such format and manner as may be
prescribed by FinCEN.
When To File (Sec. 1060.300(c)(2))
A bank is required to report the information required by this
proposed rulemaking to FinCEN within 30 days of the date of the written
request from FinCEN. If a bank receives notification from a foreign
bank that the foreign bank has established a new correspondent account
for an Iranian-linked financial institution designated under IEEPA, the
bank is required to report the information required by this proposed
rulemaking within 10 days of receiving that notification. FinCEN
requests comment as to whether these proposed timeframes are
appropriate.
D. Record Retention (Sec. 1060.300(d))
This section describes the recordkeeping requirements applicable to
this proposed rulemaking. A bank shall maintain for a period of five
years a copy of any report filed and the original or any business
record equivalent of any supporting documentation for a report,
including a foreign bank certification or other responses to an inquiry
under this proposed rulemaking.
E. No Other Action Required (Sec. 1060.300(e))
Paragraph (e) states that ``[n]othing in this section shall be
construed to require a bank to take any action, or to decline to take
any action, other than the requirements identified in this section,
with respect to an account established for, or a transaction engaged in
with, a foreign bank. However, nothing in this section relieves a bank
of any other applicable regulatory obligation.'' While this paragraph
clarifies that the section does not require a bank to take any steps
with respect to the foreign bank other than those relating to the
collection of information outlined in this section, it also clarifies
that this section does not preclude a bank from taking any other
action, including restricting or terminating a correspondent account
relationship with a foreign bank, or filing a suspicious activity
report, based on the bank's risk-based assessment of the facts and bank
policy.
IV. Executive Order 12866
Executive Orders 13563 and 12866 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, of reducing costs, of harmonizing rules, and of promoting
flexibility. This rule has been designated a ``significant regulatory
action'' although not economically significant, under section 3(f) of
Executive Order 12866. Accordingly, the rule has been reviewed by the
Office of Management and Budget.
V. Unfunded Mandates Reform Act of 1995 Statement
Section 202 of the Unfunded Mandates Reform Act of 1995 (``Unfunded
Mandates Act''), Public Law 104-4 (March 22, 1995), requires that an
agency prepare a budgetary impact statement before promulgating a rule
that may result in expenditure by State, local, and Tribal governments,
in the aggregate, or by the private sector, of $100 million or more in
any one year. If a budgetary impact statement is required, section 205
of the Unfunded Mandates Act also requires an agency to identify and
consider a reasonable number of regulatory alternatives before
promulgating a rule. FinCEN has determined that it is not required to
prepare a written statement under section 202.
VI. Regulatory Flexibility Act
Pursuant to the Regulatory Flexibility Act (``RFA'') (5 U.S.C. 601
et seq.), FinCEN certifies that this proposed regulation would not have
a significant economic impact on a substantial number of small
entities. The proposed rule would apply to banks that maintain
correspondent accounts with foreign banks. As previously stated in our
final rules implementing section 312,\15\ 313,\16\ and 319(b) \17\ of
the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001, Public Law
107-56, most banks that maintain correspondent accounts with foreign
banks tend to be large banks. We expect that small banks will be less
likely to maintain correspondent accounts with foreign banks. In most
cases, small banks utilize their domestic correspondent accounts with
large banks to conduct transactions with foreign banks. Accordingly, a
regulatory flexibility analysis is not required. FinCEN invites
comments on the impact of this proposal on small entities.
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\15\ Anti-Money Laundering Programs; Special Due Diligence
Programs for Certain Foreign Accounts, 71 FR 496 (Jan. 4, 2006).
\16\ Anti-Money Laundering Requirements--Correspondent Accounts
for Foreign Shell Banks; Recordkeeping and Termination of
Correspondent Accounts for Foreign Banks, 67 FR 60562 (Sept. 26,
2002).
\17\ Id.
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VII. Paperwork Reduction Act
The collection of information contained in this proposed rule is
being submitted to the Office of Management and Budget for review in
accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
3507(d)). Under the Paperwork Reduction Act, an agency may not conduct
or sponsor, and an individual is not required to respond to, a
collection of information unless it displays a valid OMB control
number. Comments on the information collection should be sent to the
Desk Officer for the Department of the Treasury, Office of Information
and Regulatory Affairs, Office of Management and Budget, Paperwork
Reduction Project (1506), Washington, DC 20503, or by the Internet to
[email protected] with a copy to the Financial Crimes
Enforcement Network by mail or as part of the comments through the
Internet. Comments are welcome and must be received by July 1, 2011.
Reporting Requirements Under Section 104(e) of CISADA
The collection of information in this proposal is in 31 CFR
1060.300. The information may be transmitted to one or more departments
or agencies of the United States of America for the purpose of
fulfilling such departments' and agencies' governmental functions. The
collection of information is mandatory. FinCEN is proposing to issue
regulations that would require a bank to report to FinCEN, upon
request, certain information regarding certain foreign banks specified
by FinCEN.
Description of Affected Financial Institutions: Banks as defined in
31 CFR 1010.100(d).
Estimated Number of Affected Financial Institutions: 350 banks.
FinCEN estimates that approximately 350 banks maintain
correspondent accounts with foreign banks.\18\
[[Page 24417]]
However, FinCEN estimates that on average only around five percent of
banks that maintain correspondent accounts with foreign banks will have
an account with the specific foreign bank about which FinCEN is
requesting information. This smaller proportion of actual affected
financial institutions in each case of a request is based on the fact
that foreign banks generally only hold a limited number of
correspondent account relationships with separate U.S. banks. For this
reason, the estimated number of financial institutions that may
maintain a correspondent account with a specific foreign bank
identified in any one request from FinCEN will be in the range of 18
banks. In order to further reduce the number of affected financial
institutions, when possible, FinCEN will rely on information available
to Treasury to help limit the number of banks requested to provide
information with respect to the foreign banks that are the subject of
specific requests. In turn, FinCEN intends to send requests directly to
banks that FinCEN, based on all available information, believes
maintain correspondent accounts with the specified foreign bank(s). The
number of banks that receive a request may vary in each specific case,
based on the availability of information to FinCEN and other
circumstances.
---------------------------------------------------------------------------
\18\ 177 banks reported a balance due as of September 30, 2010
in either line item 3.a. or 3.b. of Schedule RC-A--Cash and Balances
Due From Depository Institutions on the Consolidated Reports of
Condition and Income for a Bank with Domestic and Foreign Offices--
FFIEC 031, or on the Consolidated Reports of Condition and Income
for a Bank with Domestic Offices Only--FFIEC 041. Line item 3.a.
represents balances due from foreign branches of other U.S. banks
and line item 3.b. represents balances due from other banks in
foreign countries and foreign central banks. As of September 30,
2010, 7,020 banks, regulated by either the Board of Governors of the
Federal Reserve System, the Federal Deposit Insurance Corporation,
or the Office of the Comptroller of the Currency, filed either FFIEC
031 or FFIEC 041. 177 of those 7,020 banks reported a balance due
for a correspondent account with a foreign bank. These numbers do
not include agents, agencies, branches, or offices within the U.S.
of a bank organized under foreign law, which are also included
within the definition of bank for purposes of this proposed
rulemaking. According to the Federal Reserve Board Structure Data
for U.S. Banking Offices of Foreign Entities, there are
approximately 214 U.S. Offices of Foreign Banking Organizations, as
of September 30, 2010. See http://www.federalreserve.gov/releases/iba/201009/bycntry.htm. Of those 214 U.S. Offices of Foreign Banking
Organizations, approximately 43 only operate in the U.S. as
representative offices. See http://www.federalreserve.gov/releases/iba/201009/bytype.htm. Representative offices do not maintain
correspondent accounts. For this reason, FinCEN is conservatively
estimating that it is likely the remaining 171 U.S Offices of
Foreign Banking Organizations do maintain some form of correspondent
account with a foreign bank. This results in a total estimate of 348
U.S banks and foreign banks operating in the U.S. that maintain a
correspondent account with a foreign bank.
---------------------------------------------------------------------------
Estimated Average Annual Burden Hours Per Affected Financial
Institution: Fewer than 31 hours per bank
FinCEN estimates that while there may be a series of requests to
U.S. banks at the outset of implementing this regulation, subsequent
requests will be infrequent. The scope of any request may be with
respect to one foreign bank or a number of foreign banks (for example,
a number of foreign banks operating in the same jurisdiction). FinCEN
believes that regardless of the number of requests transmitted, such
requests will pertain to 50 foreign banks or fewer in any given year.
Financial Institutions That Maintain a Correspondent Account for a
Specified Foreign Bank
A bank will only be required to comply with the requirements of
this proposed rulemaking if the bank receives a written request from
FinCEN. As noted above, FinCEN estimates that on average fewer than
five percent of the banks that maintain correspondent accounts with
foreign banks, i.e., fewer than 18 banks, will maintain correspondent
accounts with the specific foreign bank about which FinCEN is
requesting information. If FinCEN makes requests with respect to fewer
than 50 foreign banks per year and fewer than 18 banks are required to
respond, per request, with regard to a correspondent account they
maintain with a specified foreign bank, there will be fewer than 900
CISADA-related reports per year.
Each time a bank receives a request from FinCEN regarding a
specific foreign bank for which it maintains a correspondent account,
it will incur a reporting burden associated with section 1060.300(b)
(inquiry); a reporting burden associated with section 1060.300(c)
(reporting); and a recordkeeping burden associated with section
1060.300(d) (record retention).
The estimated average reporting burden associated with section
1060.300(b) for one request from FinCEN is one hour per responding U.S.
bank with respect to each specific foreign bank about which FinCEN is
requesting information. The estimated average reporting burden
associated with section 1060.300(c) for one request from FinCEN is one
hour per bank. The estimated average recordkeeping burden associated
with section 1060.300(d) for one request from FinCEN is one hour per
bank. This results in a total estimated average burden of three hours
per bank with respect to each foreign bank about which FinCEN is
requesting information. In the unlikely scenario in which the same bank
were required to respond to FinCEN with respect to each foreign bank
about which FinCEN is seeking information in any given year, the
estimated annual burden hours would be 150. It is more likely that a
particular U.S. bank will only have to respond to FinCEN queries in
more limited situations and the average time spent per bank will be
much less. FinCEN believes that even with respect to the banks that are
most active in the provision of correspondent accounts to foreign
banks, they are likely to be required to respond to FinCEN with respect
to one fifth of the foreign banks about which FinCEN is seeking
information, which corresponds to roughly 30 burden hours per year
based on the above calculations.
Financial Institutions That Do Not Maintain a Correspondent Account for
a Specified Foreign Bank
In certain instances FinCEN may request that if a bank receives a
written request from FinCEN regarding a specified foreign bank, and the
bank does not maintain a correspondent account for such specified
foreign bank, the bank report this information to FinCEN. As noted
above, FinCEN intends to send requests to banks that FinCEN is aware
have a correspondent account with a specified foreign bank as often as
possible. In instances in which FinCEN is not aware of which banks
maintain a correspondent account for a specified foreign bank, FinCEN
may send requests to those banks FinCEN believes might have a
correspondent account with a specified foreign bank.
In instances in which FinCEN is sending a request to a small number
of banks that FinCEN believes might have a correspondent account with a
specified foreign bank, FinCEN may request, in the written request sent
to those banks, that the banks that do not have an account with the
specified foreign bank report such information to FinCEN. FinCEN
believes that we will rarely be sending a request to a large number of
banks that we are not certain have an account with the specified
foreign bank for which we are requesting information. In those rare
cases, FinCEN would most likely not ask those banks to report if they
do not maintain a correspondent account with such foreign bank.
FinCEN believes that the estimated average reporting burden for a
bank to report to FinCEN that it does not maintain a correspondent
account for the foreign bank specified in a request from FinCEN will
only be 30 minutes per request. FinCEN also estimates that across the
50 requests FinCEN anticipates making annually, on average only two to
five banks will receive a
[[Page 24418]]
request from FinCEN regarding a foreign bank for which they do not
maintain a correspondent account, and for which FinCEN requests that
they report such information. This means that no more than 250 banks
will be required to report that they do not maintain a correspondent
account with a foreign bank specified in a request from FinCEN in any
given year. This also means that no more than 125 estimated annual
burden hours will be expended each year. FinCEN also estimates that no
single bank will receive a request from FinCEN more than two times per
year regarding a specified foreign bank for which it does not maintain
a correspondent account, and for which FinCEN requests that it report
such information. This corresponds to roughly one estimated average
annual burden hour per bank.
Estimated Total Annual Burden: 2,825 total annual burden hours.
Fewer than 900 CISADA-related reports anticipated each year
(provided by a varying number of banks) multiplied by three burden
hours per report. (2,700 total annual burden hours). Fewer than 250
reports from banks that do not maintain a correspondent account with a
specified foreign bank (provided by a varying number of banks)
multiplied by 30 minutes of burden per report. (125 total annual burden
hours).
Request for Comments Regarding the Paperwork Reduction Act Analysis
FinCEN is seeking comments on these estimates. Comments are
specifically requested concerning:
Whether the proposed collection of information is
necessary for the proper performance of the functions of FinCEN and
other components of Treasury, including whether the information will
have practical utility;
The accuracy of the estimated burden associated with the
proposed collection of information;
How the quality, utility, and clarity of the information
to be collected may be enhanced; and
How the burden of complying with the proposed collection
of information may be minimized, including through the application of
automated collection techniques or other forms of information
technology.
VIII. Request for Comments
FinCEN invites comments on any and all aspects of this proposal.
FinCEN specifically invites comment on requests above, as well as
the following:
Effects of the Rule on Foreign Correspondent Account Relationships:
FinCEN is also seeking comments regarding the impact of this
information collection on banks' correspondent account relationships
with foreign banks.
Minimum Dollar Threshold for Reporting on Transfers of Funds
Related to an Iranian-Linked Financial Institution Designated Under
IEEPA or an IRGC-Linked Person Designated Under IEEPA: FinCEN is also
seeking comments regarding whether setting a minimum dollar threshold
for a foreign bank to be required to report on transfers of funds
processed within the preceding 90 calendar days related to an Iranian-
linked financial institution designated under IEEPA or related to an
IRGC-linked person designated under IEEPA would lessen the reporting
obligations, while still providing useful information. FinCEN seeks
comments regarding what that minimum dollar threshold should be.
List of Subjects in 31 CFR Part 1060
Banks, Banking, Counter-terrorism, Foreign banking, Reporting and
recordkeeping requirements, Terrorism.
Authority and Issuance
For the reasons set forth above, part 1060 is added to read as
follows:
PART 1060--PROVISIONS RELATING TO THE COMPREHENSIVE IRAN SANCTIONS,
ACCOUNTABILITY, AND DIVESTMENT ACT OF 2010
Sec.
1060.100 [Reserved]
1060.200 [Reserved]
1060.300 Reporting obligations on foreign bank relationships with
Iranian-linked financial institutions designated under IEEPA and
IRGC-linked persons designated under IEEPA.
1060.400 [Reserved]
1060.500 [Reserved]
1060.600 [Reserved]
1060.700 [Reserved]
1060.800 Penalties.
Authority: Pub. L. 111-195, 124 Stat. 1312.
Sec. 1060.100 [Reserved]
Sec. 1060.200 [Reserved]
Sec. 1060.300 Reporting obligations on foreign bank relationships
with Iranian-linked financial institutions designated under IEEPA and
IRGC-linked persons designated under IEEPA.
(a) General.
(1) Upon receiving a written request from FinCEN, a bank (as
defined in 31 CFR 1010.100(d)) that maintains a correspondent account
(as defined in 31 CFR 1010.605(c)(1)(ii)) for a specified foreign bank
(as defined in 31 CFR 1010.100(u)) shall inquire of the foreign bank,
and report to FinCEN, to the best of the knowledge of the bank, with
respect to any correspondent account maintained by such foreign bank
for an Iranian-linked financial institution designated under IEEPA; any
transfer of funds related to an Iranian-linked financial institution
designated under IEEPA processed by such foreign bank within the
preceding 90 calendar days, other than through a correspondent account;
and any transfer of funds related to an IRGC-linked person designated
under IEEPA processed by such foreign bank within the preceding 90
calendar days.
(2) For the purposes of this section, an ``Iranian-linked financial
institution designated under IEEPA'' means a financial institution
designated by the United States Government pursuant to the
International Emergency Economic Powers Act (or listed in an annex to
an Executive order issued pursuant to such Act) in connection with
Iran's proliferation of weapons of mass destruction or delivery systems
for weapons of mass destruction, or in connection with Iran's support
for international terrorism. For the purposes of this section, an
``IRGC-linked person designated under IEEPA'' means Iran's Islamic
Revolutionary Guard Corps or any of its agents or affiliates designated
by the United States Government pursuant to the International Emergency
Economic Powers Act (or listed in an annex to an Executive order issued
pursuant to such Act).
Note to Paragraph (a)(2)
Section 104(c) of the Comprehensive Iran Sanctions,
Accountability, and Divestment Act of 2010 (``CISADA''), Public Law
111-195, 124 Stat. 1312, provides the Secretary of the Treasury with
authority to prohibit, or impose strict conditions on, the opening or
maintaining in the United States of a correspondent account or a
payable-through account by a foreign financial institution that the
Secretary finds knowingly engages in certain specified activities.
Those specified activities include facilitating a significant
transaction or transactions or providing significant financial services
for a financial institution whose property or interests in property are
blocked pursuant to the International Emergency Economic Powers Act (50
U.S.C. 1701 et seq.) in connection with Iran's proliferation of weapons
of mass destruction or delivery systems for weapons of mass
destruction, or in connection with Iran's support for international
terrorism, or for Iran's Islamic Revolutionary Guard Corps or any of
its agents or affiliates whose
[[Page 24419]]
property or interests in property are blocked pursuant to that Act.
(b) Duty to inquire.
Upon receiving a written request from FinCEN, a bank that maintains
a correspondent account for a specified foreign bank shall inquire of
such foreign bank for the purpose of having such foreign bank certify:
whether it maintains a correspondent account for an Iranian-linked
financial institution designated under IEEPA; whether it has processed
one or more transfers of funds within the preceding 90 calendar days
related to an Iranian-linked financial institution designated under
IEEPA, other than through a correspondent account; and whether it has
processed one or more transfers of funds within the preceding 90
calendar days related to an IRGC-linked person designated under IEEPA.
Upon such inquiry, a bank shall request that the foreign bank agree to
notify the bank if the foreign bank subsequently establishes a new
correspondent account for an Iranian-linked financial institution
designated under IEEPA at any time within 365 calendar days from the
date of the foreign bank's initial response.
(c) Filing Procedures.
(1) What to file. Upon receiving a written request from FinCEN, a
bank shall report to FinCEN, in such format and manner as may be
prescribed by FinCEN, the following information for any specified
foreign bank:
(i) The name of any specified foreign bank, for which the bank
maintains a correspondent account, that certifies that it maintains a
correspondent account for an Iranian-linked financial institution
designated under IEEPA, and the following related information:
(A) The name of the Iranian-linked financial institution designated
under IEEPA;
(B) The full name(s) on the correspondent account and the
correspondent account number(s);
(C) Applicable information regarding whether the correspondent
account has been blocked or otherwise restricted;
(D) Other applicable identifying information for the correspondent
account; and
(E) The approximate value in U.S. dollars of transactions processed
through the correspondent account within the preceding 90 calendar
days;
(ii) The name of any specified foreign bank, for which the bank
maintains a correspondent account, that certifies that it has processed
one or more transfers of funds within the preceding 90 calendar days
related to an Iranian-linked financial institution designated under
IEEPA, other than through a correspondent account, and the following
related information:
(A) The name of the Iranian-linked financial institution designated
under IEEPA;
(B) The identity of the system or means by which such transfer(s)
of funds was processed;
(C) The full name on the account(s) and the account number(s), if
applicable;
(D) Other applicable identifying information for such transfer(s)
of funds; and
(E) The approximate value in U.S. dollars of such transfer(s) of
funds processed within the preceding 90 calendar days;
(iii) The name of any specified foreign bank, for which the bank
maintains a correspondent account, that certifies that it has processed
one or more transfers of funds within the preceding 90 calendar days
related to an IRGC-linked person designated under IEEPA, and the
following related information:
(A) The name of the IRGC-linked person designated under IEEPA;
(B) The identity of the system or means by which such transfer(s)
of funds was processed;
(C) The full name on the account(s) and the account number(s), if
applicable;
(D) Other applicable identifying information for such transfer(s)
of funds; and
(E) The approximate value in U.S. dollars of such transfer(s) of
funds processed within the preceding 90 calendar days;
(iv) The name of any specified foreign bank, for which the bank
maintains a correspondent account, that certifies that it does not
maintain a correspondent account for an Iranian-linked financial
institution designated under IEEPA, that certifies that it has not
processed one or more transfers of funds within the preceding 90
calendar days related to an Iranian-linked financial institution
designated under IEEPA, other than through a correspondent account,
and/or that certifies that it has not processed one or more transfers
of funds within the preceding 90 calendar days related to an IRGC-
linked person designated under IEEPA;
(v) The name of any specified foreign bank, for which the bank
maintains a correspondent account, about which the bank has not been
able to establish to its satisfaction that the foreign bank does not
maintain a correspondent account for an Iranian-linked financial
institution designated under IEEPA, has not processed one or more
transfers of funds within the preceding 90 calendar days related to an
Iranian-linked financial institution designated under IEEPA, other than
through a correspondent account, and/or has not processed one or more
transfers of funds within the preceding 90 calendar days related to an
IRGC-linked person designated under IEEPA, together with the reason(s)
for this, such as the failure of the foreign bank to respond to the
inquiry by or a request from the bank, the failure of the foreign bank
to certify its response, or if the bank knows, suspects, or has reason
to suspect that the certification is incorrect;
(vi) The name of any specified foreign bank, for which the bank
maintains a correspondent account, that notifies the bank that it has
established a new correspondent account for an Iranian-linked financial
institution designated under IEEPA at any time within 365 calendar days
from the date of the foreign bank's initial response, and the following
related information:
(A) The name of the Iranian-linked financial institution designated
under IEEPA;
(B) The full name(s) on the correspondent account and the
correspondent account number(s);
(C) Applicable information regarding whether the correspondent
account has been blocked or otherwise restricted; and
(D) Other applicable identifying information for the correspondent
account; and
(vii) If applicable, confirmation that the bank does not maintain a
correspondent account for the specified foreign bank(s), but only in
instances in which FinCEN specifically requests that the bank report
such information.
(2) When to file. (i) A bank shall report to FinCEN within 30 days
of the date of the request from FinCEN. (ii) Reports based on
subsequent notifications received from a foreign bank regarding the
establishment of a new correspondent account for an Iranian-linked
financial institution designated under IEEPA shall be due within 10
days of receipt of the notification.
(d) Retention of records. A bank shall maintain for a period of
five years a copy of any report filed and the original or any business
record equivalent of any supporting documentation for a report,
including a foreign bank certification or other responses to an inquiry
under this section.
(e) No other action required. Nothing in this section shall be
construed to require a bank to take any action, or to decline to take
any action, other than the requirements identified in this section,
with respect to an account
[[Page 24420]]
established for, or a transaction engaged in with, a foreign bank.
However, nothing in this section relieves a bank of any other
applicable regulatory obligation.
Sec. 1060.400 [Reserved]
Sec. 1060.500 [Reserved]
Sec. 1060.600 [Reserved]
Sec. 1060.700 [Reserved]
Sec. 1060.800 Penalties.
A person violating any requirement under this part is subject to
the penalties provided for in sections 5321(a) and 5322 of title 31,
United States Code, in the same manner and to the same extent as such
penalties would apply to any person that is otherwise subject to such
section 5321(a) or 5322.
Dated: April 26, 2011.
James H. Freis, Jr.,
Director, Financial Crimes Enforcement Network.
Note: This appendix will not appear in the Code of Federal
Regulations; however, FinCEN will use its Web site to make this
proposed model certification available to the public.
Appendix A
Certification for Purposes of Section 104(e) of the Comprehensive Iran
Sanctions, Accountability, and Divestment Act of 2010 and 31 CFR
1060.300
[OMB Control Number xxxx-xxxx]
The information contained in this Certification is sought for
purposes of Section 104(e) of the Comprehensive Iran Sanctions,
Accountability, and Divestment Act of 2010 (``CISADA'') (Public Law
111-195). This Certification will be used to provide the Department
of the Treasury with information regarding the nature of foreign
bank activities that may be relevant to CISADA.
This Certification may be completed by a foreign bank that
maintains a correspondent account with a U.S. bank (see definitions
below). An entity that is not a foreign bank is not required to
complete this Certification.
A Foreign Bank is a bank organized under foreign law, or an
agency, branch, or office located outside the United States of a
bank (see definition at 31 CFR 1010.100(u)). A Bank includes each
agent, agency, branch, or office within the United States of persons
doing business in one or more of the following capacities:
commercial banks or trust companies, private banks, savings and loan
associations, national banks, thrift institutions, credit unions,
other organizations chartered under banking laws and supervised by
banking supervisors of any State, and banks organized under foreign
law (see definition at 31 CFR 1010.100(d)).
A Correspondent Account for a foreign bank is an account
established for a foreign bank to receive deposits from, or to make
payments or other disbursements on behalf of, the foreign bank, or
to handle other financial transactions related to such foreign bank
(see definition at 31 CFR Sec. 1010.605(c)(1)(ii)).
An Iranian-Linked Financial Institution Designated Under IEEPA
is a financial institution designated by the United States
Government pursuant to the International Emergency Economic Powers
Act (``IEEPA'') (or listed in an annex to an Executive order issued
pursuant to such Act) in connection with Iran's proliferation of
weapons of mass destruction or delivery systems for weapons of mass
destruction, or in connection with Iran's support for international
terrorism. Iranian-Linked Financial Institutions Designated Under
IEEPA are identified by ``[IFSR]'' tags located at the end of their
entries on the Specially Designated Nationals and Blocked Persons
List (``SDN List'') (e.g., [NPWMD][IFSR] or [SDGT][IFSR]). The
Office of Foreign Assets Control's (``OFAC'') electronic SDN List
can be found at the following URL: http://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/default.aspx. The following
financial institutions meet the criteria of Iranian-Linked Financial
Institutions Designated Under IEEPA ([IFSR] tags): http://www.treasury.gov/resource-center/sanctions/Programs/Documents/irgc_ifsr.pdf. These listings are part of the SDN List, administered by
OFAC. Please note that OFAC's SDN List is dynamic and should be
reviewed regularly for the most current information regarding
Iranian-Linked Financial Institutions Designated Under IEEPA.
An IRGC-Linked Person Designated Under IEEPA is Iran's Islamic
Revolutionary Guard Corps or any of its agents or affiliates
designated by the United States Government pursuant to IEEPA (or
listed in an annex to an Executive order issued pursuant to such
Act). IRGC-Linked Persons Designated Under IEEPA are identified by
``[IRGC]'' tags located at the end of their entries on the SDN List
(e.g., [NPWMD][IRGC] or [SDGT][IRGC]). OFAC's electronic SDN List
can be found at the following URL: http://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/default.aspx. The following persons
meet the criteria of IRGC-Linked Persons Designated Under IEEPA
([IRGC] tags): http://www.treasury.gov/resource-center/sanctions/Programs/Documents/irgc_ifsr.pdf. These listings are part of the
SDN List, administered by OFAC. Please note that OFAC's SDN List is
dynamic and should be reviewed regularly for the most current
information regarding IRGC-Linked Persons Designated Under IEEPA.
A. The undersigned financial institution, --------------------
(``Foreign Bank'') hereby certifies as follows:
B. Correspondent Account maintained for an Iranian-Linked
Financial Institution Designated Under IEEPA: Check box to certify.
[squ] Foreign Bank hereby certifies that it does not maintain a
correspondent account(s) for an Iranian-Linked Financial Institution
Designated Under IEEPA.
[squ] Foreign Bank hereby certifies that it does maintain a
correspondent account(s) for an Iranian-Linked Financial Institution
Designated Under IEEPA. (If this box has been selected please fill
out the below information for each correspondent account maintained
for an Iranian-Linked Financial Institution Designated Under IEEPA).
----------------------------------------------------------------------------------------------------------------
Approximate Value
Applicable in U.S. Dollars
Iranian-Linked Information Other Applicable (``USD'') of
Financial Full Name(s) on regarding whether Identifying Transactions
Institution Correspondent Correspondent the Correspondent Information for Processed through
Designated Under Account Account Number(s) Account has been the Correspondent the Correspondent
IEEPA Blocked or Account Account Within
Otherwise Preceding 90
Restricted Calendar Days
----------------------------------------------------------------------------------------------------------------
1 ................. ................. ................. ................. .................
2 ................. ................. ................. ................. .................
3 ................. ................. ................. ................. .................
4 ................. ................. ................. ................. .................
5 ................. ................. ................. ................. .................
----------------------------------------------------------------------------------------------------------------
(Add more rows as needed.)
C. Processed one or more transfers of funds related to an
Iranian-Linked Financial Institution Designated Under IEEPA other
than through a correspondent account: Check box to certify.
[square] Foreign Bank hereby certifies that it has not processed
one or more transfers of funds within the preceding 90 calendar days
related to an Iranian-Linked Financial Institution Designated Under
IEEPA, other than through a correspondent account detailed above.
[square] Foreign Bank hereby certifies that it has processed one
or more transfers of funds within the preceding 90 calendar days
[[Page 24421]]
related to an Iranian-Linked Financial Institution Designated Under
IEEPA, other than through a correspondent account detailed above.
(If this box has been selected please fill out the below information
for each Iranian-Linked Financial Institution Designated Under
IEEPA).
----------------------------------------------------------------------------------------------------------------
Approximate Value
in USD of
Transfer(s) of
Iranian-Linked Identify System Other Applicable Funds Processed
Financial or Means by Which Full Name on Account Number(s) Identifying (other than
Institution Transfer(s) of Account(s) (if (if applicable) Information for through a
Designated Under Funds Was applicable) the Transfer(s) Correspondent
IEEPA Processed of Funds Account) Within
Preceding 90
Calendar Days
----------------------------------------------------------------------------------------------------------------
1 ................. ................. ................. ................. .................
2 ................. ................. ................. ................. .................
3 ................. ................. ................. ................. .................
4 ................. ................. ................. ................. .................
5 ................. ................. ................. ................. .................
----------------------------------------------------------------------------------------------------------------
(Add more rows as needed.)
D. Processed one or more transfers of funds related to an IRGC-
Linked Person Designated Under IEEPA: Check box to certify.
[square] Foreign Bank hereby certifies that it has not processed
one or more transfers of funds within the preceding 90 calendar days
related to an IRGC-Linked Person Designated Under IEEPA.
[square] Foreign Bank hereby certifies that it has processed one
or more transfers of funds within the preceding 90 calendar days
related to an IRGC-Linked Person Designated Under IEEPA. (If this
box has been selected please fill out the below information for each
IRGC-Linked Person Designated Under IEEPA).
----------------------------------------------------------------------------------------------------------------
Approximate Value
Identify System Other Applicable in USD of
IRGC-Linked or Means by Which Full Name on Account Number(s) Identifying Transfer(s) of
Person Designated Transfer(s) of Account(s) (if (if applicable) Information for Funds Processed
Under IEEPA Funds Was applicable) the Transfer(s) Within Preceding
Processed of Funds 90 Calendar Days
----------------------------------------------------------------------------------------------------------------
1 ................. ................. ................. ................. .................
2 ................. ................. ................. ................. .................
3 ................. ................. ................. ................. .................
4 ................. ................. ................. ................. .................
5 ................. ................. ................. ................. .................
----------------------------------------------------------------------------------------------------------------
(Add more rows as needed.)
E. General
Foreign Bank hereby agrees to notify in writing the Bank if
Foreign Bank establishes a new Correspondent Account for an Iranian-
Linked Financial Institution Designated Under IEEPA at any time
within 365 calendar days from the date of this response. Foreign
Bank agrees to provide such notification within 30 calendar days of
such change.
Foreign Bank understands that the Bank will provide a copy of
this Certification to the U.S. Department of the Treasury. Foreign
Bank further understands that the statements contained in this
Certification may be transmitted to one or more departments or
agencies of the United States of America for the purpose of
fulfilling such departments' and agencies' governmental functions.
I, -------------------- (name of signatory), certify that I have
read and understand this Certification, that the statements made in
this Certification are complete and correct, and that I am
authorized to execute this Certification on behalf of Foreign Bank.
[Name of Foreign Bank]-------------------------------------------------
[Signature]------------------------------------------------------------
[Printed Name]---------------------------------------------------------
[Title]----------------------------------------------------------------
Executed on this ------------------ day of --------------, 20----.
To be completed by the Bank: ------------
I, -------------------- (name of signatory), have read and
understand this Certification; the statements made in this
Certification are complete and correct, to the best of the knowledge
of the Bank; and the Bank does not know, suspect, or have reason to
suspect that the Certification made by Foreign Bank is incorrect. I
am authorized to submit this document on behalf of the Bank.
[Name of Bank]---------------------------------------------------------
[Signature]------------------------------------------------------------
[Printed Name]---------------------------------------------------------
[Title]----------------------------------------------------------------
Submitted on this ------------------ day of ----------, 20----.
[FR Doc. 2011-10482 Filed 4-29-11; 8:45 am]
BILLING CODE 4810-35-P