(a) In general. A covered financial institution shall maintain a due diligence program
that includes policies, procedures, and controls that are reasonably
designed to detect and report any known or suspected money laundering
or suspicious activity conducted through or involving any private
banking account that is established, maintained, administered, or
managed in the United States by such financial institution. The due
diligence program required by this section shall be a part of the
anti-money laundering program otherwise required by this chapter.
(b) Minimum requirements. The
due diligence program required by paragraph (a) of this section shall
be designed to ensure, at a minimum, that the financial institution
takes reasonable steps to:
(1) Ascertain the identity of all nominal and beneficial owners of
a private banking account;
(2) Ascertain
whether any person identified under paragraph (b)(1) of this section
is a senior foreign political figure;
(3) Ascertain the source(s) of funds deposited into a private banking
account and the purpose and expected use of the account; and
(4) Review the activity of the account
to ensure that it is consistent with the information obtained about
the client’s source of funds, and with the stated purpose and expected
use of the account, as needed to guard against money laundering, and
to report, in accordance with applicable law and regulation, any known
or suspected money laundering or suspicious activity conducted to,
from, or through a private banking account.
3-1705.26
(c) Special requirements for senior foreign political
figures.
(1) In the
case of a private banking account for which a senior foreign political
figure is a nominal or beneficial owner, the due diligence program
required by paragraph (a) of this section shall include enhanced scrutiny
of such account that is reasonably designed to detect and report transactions
that may involve the proceeds of foreign corruption.
(2) For purposes of this paragraph (c),
the term proceeds of foreign corruption means any asset or property
that is acquired by, through, or on behalf of a senior foreign political
figure through misappropriation, theft, or embezzlement of public
funds, the unlawful conversion of property of a foreign government,
or through acts of bribery or extortion, and shall include any other
property into which any such assets have been transformed or converted.
(d) Special procedures when
due diligence cannot be performed. The due diligence program
required by paragraph (a) of this section shall include procedures
to be followed in circumstances in which a covered financial institution
cannot perform appropriate due diligence with respect to a private
banking account, including when the covered financial institution
should refuse to open the account, suspend transaction activity, file
a suspicious activity report, or close the account.
3-1705.27
(e) Applicability rules. The provisions of
this section apply to covered financial institutions as follows:
(1) General rules.
(i) Private banking accounts established
on or after July 5, 2006. Effective July 5, 2006, the requirements
of this section shall apply to each private banking account established
on or after such date.
(ii) Private banking accounts established before
July 5, 2006. Effective October 2, 2006, the requirements of
this section shall apply to each private banking account established
before July 5, 2006.
(2) Special rules for certain banks and
for brokers or dealers in securities, futures commission merchants,
and introducing brokers. Until the requirements of this section
become applicable as set forth in paragraph (e)(1) of this section,
the requirements of 31 U.S.C. 5318(i)(3) shall continue to apply to
a covered financial institution listed in section 1010.605(e)(1)(i)
through (vi), (viii), or (ix).
(3) Special rules for federally regulated
trust banks or trust companies, and mutual funds. Until the requirements
of this section become applicable as set forth in paragraph (e)(1)
of this section, the requirements of 31 U.S.C. 5318(i)(3) shall not
apply to a covered financial institution listed in section 1010.605(e)(1)(vii)
or (x).
(4) Exemptions.
(i) Exempt financial institutions. Except as provided in this section, a financial institution defined
in 31 U.S.C. 5312(a)(2) or (c)(1) or section 1010.100(t) is exempt
from the requirements of 31 U.S.C. 5318(i)(3) pertaining to private
banking accounts.
(ii) Other compliance obligations of financial institutions
unaffected. Nothing in paragraph (e)(4) of this section shall
be construed to relieve a financial institution from its responsibility
to comply with any other applicable requirement of law or regulation,
including title 31, United States Code, and this chapter.
