(a) Definitions. For purposes of this section:
(1) Commercial Bank of Syria means
any branch, office, or subsidiary of Commercial Bank of Syria operating
in Syria or in any other jurisdiction, including Syrian Lebanese Commercial
Bank.
(2) Correspondent
account has the same meaning as provided in section 1010.605(c)(1)(ii).
(3) Covered financial
institution includes:
(i) An insured bank (as defined in section
3(h) of the Federal Deposit Insurance Act (12 U.S.C. 1813(h)));
(ii) A commercial
bank;
(iii) An agency
or branch of a foreign bank in the United States;
(iv) A federally insured credit union;
(v) A savings association;
(vi) A corporation
acting under section 25A of the Federal Reserve Act (12 U.S.C. 611 et seq.);
(vii)
A trust bank or trust company that is federally regulated and is subject
to an anti-money laundering program requirement;
(viii) A broker or dealer in securities
registered, or required to be registered, with the Securities and
Exchange Commission under the Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.), except persons who register pursuant to
section 15(b)(11) of the Securities Exchange Act of 1934;
(ix) A futures commission
merchant or an introducing broker registered, or required to be registered,
with the Commodity Futures Trading Commission under the Commodity
Exchange Act (7 U.S.C. 1 et seq.), except persons who register
pursuant to section 4(f)(a)(2) of the Commodity Exchange Act; and
(x) A mutual fund,
which means an investment company (as defined in section 3(a)(1) of
the Investment Company Act of 1940 ((“Investment Company Act”) (15
U.S.C. 80a-3(a)(1))) that is an open-end company (as defined in section
5(a)(1) of the Investment Company Act (15 U.S.C. 80a-5(a)(1))) and
that is registered, or is required to register with the Securities
and Exchange Commission pursuant to the Investment Company Act.
(4) Subsidiary means a company of which more than 50 percent of the voting stock
or analogous equity interest is owned by another company.
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(b) Requirements for covered
financial institutions.
(1) Prohibition
on direct use of correspondent accounts. A covered financial
institution shall terminate any correspondent account that is open
or maintained in the United States for, or on behalf of, Commercial
Bank of Syria.
(2) Due diligence of correspondent accounts to prohibit
indirect use.
(i) A covered financial institution
shall apply due diligence to its correspondent accounts that is reasonably
designed to guard against their indirect use by Commercial Bank of
Syria. At a minimum, that due diligence must include:
(A) Notifying
correspondent account holders that the correspondent account may not
be used to provide Commercial Bank of Syria with access to the covered
financial institution; and
(B) Taking reasonable steps to identify any indirect use of its correspondent
accounts by Commercial Bank of Syria, to the extent that such indirect
use can be determined from transactional records maintained in the
covered financial institution’s normal course of business.
(ii) A covered financial
institution shall take a risk-based approach when deciding what, if
any, additional due diligence measures it should adopt to guard against
the indirect use of its correspondent accounts by Commercial Bank
of Syria.
(iii) A
covered financial institution that obtains knowledge that a correspondent
account is being used by the foreign bank to provide indirect access
to Commercial Bank of Syria shall take all appropriate steps to prevent
such indirect access, including, where necessary, terminating the
correspondent account.
(iv) A covered financial institution required to terminate a correspondent
account pursuant to paragraph (b)(2)(iii) of this section:
(A) Should do
so within a commercially reasonable time, and should not permit the
foreign bank to establish any new positions or execute any transaction
through such correspondent account, other than those necessary to
close the correspondent account; and
(B) May reestablish a correspondent
account closed pursuant to this paragraph if it determines that the
correspondent account will not be used to provide banking services
indirectly to Commercial Bank of Syria.
(3) Recordkeeping and reporting.
(i) A covered
financial institution is required to document its compliance with
the notice requirement set forth in paragraph (b)(2)(i)(A) of this
section.
(ii) Nothing
in this section shall require a covered financial institution to report
any information not otherwise required to be reported by law or regulation.
