(a) Definitions. For purposes of this section:
(1) Bank of Dandong means all subsidiaries,
branches, and offices of Bank of Dandong Co., Ltd. operating in any
jurisdiction.
(2) Correspondent
account has the same meaning as provided in section 1010.605(c)(1)(ii).
(3) Covered financial institution has the same meaning as provided in section 1010.605(e)(1).
(4) Foreign banking institution 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.
(5) Subsidiary means a company of which more than 50 percent
of the voting stock or analogous equity interest is owned by another
company.
(b) Prohibition
on accounts and due diligence requirements for covered financial institutions.
(1) Opening or maintaining correspondent accounts
for Bank of Dandong. A covered financial institution shall not
open or maintain in the United States a correspondent account for,
or on behalf of, Bank of Dandong.
(2) Prohibition on use of correspondent
accounts involving Bank of Dandong. A covered financial institution
shall take reasonable steps not to process a transaction for the correspondent
account of a foreign banking institution in the United States if such
a transaction involves Bank of Dandong.
(3) Special due
diligence of correspondent accounts to prohibit use.
(i) A covered financial institution
shall apply special due diligence to its foreign correspondent accounts
that is reasonably designed to guard against their use to process
transactions involving Bank of Dandong. At a minimum, that special
due diligence must include:
(A) Notifying those foreign correspondent account holders that the
covered financial institution knows or has reason to believe provide
services to Bank of Dandong that such correspondents may not provide
Bank of Dandong with access to the correspondent account maintained
at the covered financial institution; and
(B) Taking reasonable steps to identify any use of its foreign correspondent
accounts by Bank of Dandong, to the extent that such 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, other
due diligence measures it reasonably must adopt to guard against the
use of its foreign correspondent accounts to process transactions
involving Bank of Dandong.
(iii) A covered financial institution
that knows or has reason to believe that a foreign bank’s correspondent
account has been or is being used to process transactions involving
Bank of Dandong shall take all appropriate steps to further investigate
and prevent such access, including the notification of its correspondent
account holder under paragraph (b)(3)(i)(A) of this section and, where
necessary, termination of the correspondent account.
(4) Recordkeeping
and reporting.
(i) A covered financial institution is required to document its compliance
with the notice requirement set forth in paragraph (b)(3)(i)(A) of
this section.
(ii) Nothing in
this paragraph (b) shall require a covered financial institution to
report any information not otherwise required to be reported by law
or regulation.
