(a) Requirements
for covered financial institutions.
(1) Prohibition
on correspondent accounts for foreign shell banks.
(i) A covered financial institution
shall not establish, maintain, administer, or manage a correspondent
account in the United States for, or on behalf of, a foreign shell
bank.
(ii) A covered financial
institution shall take reasonable steps to ensure that any correspondent
account established, maintained, administered, or managed by that
covered financial institution in the United States for a foreign bank
is not being used by that foreign bank to indirectly provide banking
services to a foreign shell bank.
(iii) Nothing in paragraph (a)(1) of this section prohibits a covered
financial institution from providing a correspondent account or banking
services to a regulated affiliate.
(2) Records of
owners and agents.
(i) Except as provided in paragraph
(a)(2)(ii) of this section, a covered financial institution that maintains
a correspondent account in the United States for a foreign bank shall
maintain records in the United States identifying the owners of each
such foreign bank whose shares are not publicly traded and the name
and street address of a person who resides in the United States and
is authorized, and has agreed to be an agent to accept service of
legal process for records regarding each such account.
(ii) A covered financial institution
need not maintain records of the owners of any foreign bank that is
required to have on file with the Federal Reserve Board a Form FR
Y-7 that identifies the current owners of the foreign bank as required
by such form.
(iii) For purposes
of paragraph (a)(2)(i) of this section, publicly traded refers to
shares that are traded on an exchange or on an organized over-the-counter
market that is regulated by a foreign securities authority as defined
in section 3(a)(50) of the Securities Exchange Act of 1934 (15 U.S.C.
78c(a)(50)).
(b) Safe harbor. Subject to paragraphs (c) and (d) of this section,
a covered financial institution will be deemed to be in compliance
with the requirements of paragraph (a) of this section with respect
to a foreign bank if the covered financial institution obtains, at
least once every three years, a certification or recertification from
the foreign bank.
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(c) Interim verification. If at any time a covered financial institution knows, suspects,
or has reason to suspect, that any information contained in a certification
or recertification provided by a foreign bank, or otherwise relied
upon by the covered financial institution for purposes of this section,
is no longer correct, the covered financial institution shall request
that the foreign bank verify or correct such information, or shall
take other appropriate measures to ascertain the accuracy of the information
or to obtain correct information, as appropriate. See paragraph (d)(3)
of this section for additional requirements if a foreign bank fails
to verify or correct the information or if a covered financial institution
cannot ascertain the accuracy of the information or obtain correct
information.
(d) Closure of correspondent
accounts.
(1) Accounts existing on October 28, 2002. In
the case of any correspondent account that was in existence on October
28, 2002, if the covered financial institution has not obtained a
certification (or recertification) from the foreign bank, or has not
otherwise obtained documentation of the information required by such
certification (or recertification), on or before March 31, 2003, and
at least once every three years thereafter, the covered financial
institution shall close all correspondent accounts with such foreign
bank within a commercially reasonable time, and shall not permit the
foreign bank to establish any new positions or execute any transaction
through any such account, other than transactions necessary to close
the account.
(2) Accounts established after October 28, 2002. In the case of any correspondent account established after October
28, 2002, if the covered financial institution has not obtained a
certification (or recertification), or has not otherwise obtained
documentation of the information required by such certification (or
recertification) within 30 calendar days after the date the account
is established, and at least once every three years thereafter, the
covered financial institution shall close all correspondent accounts
with such foreign bank within a commercially reasonable time, and
shall not permit the foreign bank to establish any new positions or
execute any transaction through any such account, other than transactions
necessary to close the account.
(3) Verification of previously provided
information. In the case of a foreign bank with respect to which
the covered financial institution undertakes to verify information
pursuant to paragraph (c) of this section, if the covered financial
institution has not obtained, from the foreign bank or otherwise,
verification of the information or corrected information within 90
calendar days after the date of undertaking the verification, the
covered financial institution shall close all correspondent accounts
with such foreign bank within a commercially reasonable time, and
shall not permit the foreign bank to establish any new positions or
execute any transaction through any such account, other than transactions
necessary to close the account.
(4) Reestablishment of closed accounts
and establishment of new accounts. A covered financial institution
shall not reestablish any account closed pursuant to this paragraph
(d), and shall not establish any other correspondent account with
the concerned foreign bank, until it obtains from the foreign bank
the certification or the recertification, as appropriate.
(5) Limitation
on liability. A covered financial institution shall not be liable
to any person in any court or arbitration proceeding for terminating
a correspondent account in accordance with this paragraph (d).
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(e) Recordkeeping requirement. A
covered financial institution shall retain the original of any document
provided by a foreign bank, and the original or a copy of any document
otherwise relied upon by the covered financial institution, for purposes
of this section, for at least 5 years after the date that the covered
financial institution no longer maintains any correspondent account
for such foreign bank. A covered financial institution shall retain
such records with respect to any foreign bank for such longer period
as the Secretary may direct.
(f) Special rules concerning information requested prior to October 28,
2002.
(1) Definition. For purposes of this paragraph
(f) the term “Interim Guidance” means:
(i) The Interim Guidance of the Department
of the Treasury dated November 20, 2001 and published in the Federal
Register on November 27, 2001; or
(ii) The guidance issued in a document published in the Federal
Register on December 28, 2001.
(2) Use of Interim
Guidance certification. In the case of a correspondent account
in existence on October 28, 2002, the term “certification” as used
in paragraphs (b), (c), (d)(1), and (d)(3) of this section shall also
include the certification appended to the Interim Guidance, provided
that such certification was requested prior to October 28, 2002 and
obtained by the covered financial institution on or before December
26, 2002.
(3) Recordkeeping requirement. Paragraph (e)
of this section shall apply to any document provided by a foreign
bank, or otherwise relied upon by a covered financial institution,
for purposes of the Interim Guidance.
