[Code of Federal Regulations] [Title 12, Volume 2, Parts 200 to 219] [Revised as of January 1, 2001] From the U.S. Government Printing Office via GPO Access [CITE: 12CFR204.8] [Page 109-111] TITLE 12--BANKS AND BANKING CHAPTER II--FEDERAL RESERVE SYSTEM PART 204--RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS (REGULATION D)--Table of Contents Sec. 204.8 International banking facilities. (a) Definitions. For purposes of this part, the following definitions apply: (1) International banking facility or IBF means a set of asset and liability accounts segregated on the books and records of a depository institution, United States branch or agency of a foreign bank, or an Edge or Agreement Corporation that includes only international banking facility time deposits and international banking facility extensions of credit. (2) International banking facility time deposit or IBF time deposit means a deposit, placement, borrowing or similar obligation represented by a promissory note, acknowledgment of advance, or similar instrument that is not issued in negotiable or bearer form, and (i)(A) That must remain on deposit at the IBF at least overnight; and (B) That is issued to (1) Any office located outside the United States of another depository institution organized under the laws of [[Page 110]] the United States or of an Edge or Agreement Corporation; (2) Any office located outside the United States of a foreign bank; (3) A United States office or a non-United States office of the entity establishing the IBF; (4) Another IBF; or (5) A foreign national government, or an agency or instrumentality thereof,\10\ engaged principally in activities which are ordinarily performed in the United States by governmental entities; an international entity of which the United States is a member; or any other foreign international or supranational entity specifically designated by the Board;\11\ or --------------------------------------------------------------------------- \10\ Other than states, provinces, municipalities, or other regional or local governmental units or agencies or instrumentalities thereof. \11\ The designated entities are specified in 12 CFR 204.125. --------------------------------------------------------------------------- (ii) (A) That is payable (1) On a specified date not less than two business days after the date of deposit; (2) Upon expiration of a specified period of time not less than two business days after the date of deposit; or (3) Upon written notice that actually is required to be given by the depositor not less than two business days prior to the date of withdrawal; (B) That represents funds deposited to the credit of a non-United States resident or a foreign branch, office, subsidiary, affiliate, or other foreign establishment (foreign affiliate) controlled by one or more domestic corporations provided that such funds are used only to support the operations outside the United States of the depositor or of its affiliates located outside the United States; and (C) That is maintained under an agreement or arrangement under which no deposit or withdrawal of less than $100,000 is permitted, except that a withdrawal of less than $100,000 is permitted if such withdrawal closes an account. (3) International banking facility extension of credit or IBF loan means any transaction where an IBF supplies funds by making a loan, or placing funds in a deposit account. Such transactions may be represented by a promissory note, security, acknowledgment of advance, due bill, repurchase agreement, or any other form of credit transaction. Such credit may be extended only to: (i) Any office located outside the United States of another depository institution organized under the laws of the United States or of an Edge or Agreement Corporation; (ii) Any office located outside the United States of a foreign bank; (iii) A United States or a non-United States office of the institution establishing the IBF; (iv) Another IBF; (v) A foreign national government, or an agency or instrumentality thereof,\12\ engaged principally in activities which are ordinarily performed in the United States by governmental entities; an international entity of which the United States is a member; or any other foreign international or supranational entity specifically designated by the Board; \13\ or --------------------------------------------------------------------------- \12\ See footnote 10. \13\ See footnote 11. --------------------------------------------------------------------------- (vi) A non-United States resident or a foreign branch, office, subsidiary, affiliate or other foreign establishment (foreign affiliate) controlled by one or more domestic corporations provided that the funds are used only to finance the operations outside the United States of the borrower or of its affiliates located outside the United States. (b) Acknowledgment of use of IBF deposits and extensions of credit. An IBF shall provide written notice to each of its customers (other than those specified in Sec. 204.8(a)(2)(i)(B) and Sec. 204.8(a)(3) (i) through (v)) at the time a deposit relationship or a credit relationship is first established that it is the policy of the Board of Governors of the Federal Reserve System that deposits received by international banking facilities may be used only to support the depositor's operations outside the United States as specified in Sec. 204.8(a)(2)(ii)(B) and that extensions of credit by IBFs may be used only to finance operations outside of the United States as specified in Sec. 204.8(a)(3)(vi). In the case of loans to or deposits from foreign affiliates of U.S. residents, receipt of such [[Page 111]] notice must be acknowledged in writing whenever a deposit or credit relationship is first established with the IBF. (c) Exemption from reserve requirements. An institution that is subject to the reserve requirements of this part is not required to maintain reserves against its IBF time deposits or IBF loans. Deposit- taking activities of IBFs are limited to accepting only IBF time deposits and lending activities of IBFs are restricted to making only IBF loans. (d) Establishment of an international banking facility. A depository institution, an Edge or Agreement Corporation or a United States branch or agency of a foreign bank may establish an IBF in any location where it is legally authorized to engage in IBF business. However, only one IBF may be established for each reporting entity that is required to submit a Report of Transaction Accounts, Other Deposits and Vault Cash (Form FR 2900). (e) Notification to Federal Reserve. At least fourteen days prior to the first reserve computation period that an institution intends to establish an IBF it shall notify the Federal Reserve Bank of the district in which it is located of its intent. Such notification shall include a statement of intention by the institution that it will comply with the rules of this part concerning IBFs, including restrictions on sources and uses of funds, and recordkeeping and accounting requirements. Failure to comply with the requirements of this part shall subject the institution to reserve requirements under this part or result in the revocation of the institution's ability to operate an IBF. (f) Recordkeeping requirements. A depository institution shall segregate on its books and records the asset and liability accounts of its IBF and submit reports concerning the operations of its IBF as required by the Board. [46 FR 32429, June 23, 1981, as amended at 51 FR 9636, Mar. 20, 1986; 56 FR 15495, Apr. 17, 1991; 61 FR 69025, Dec. 31, 1996]