(a) Definitions. For purposes of this section, the following terms
have the following meanings.
(1) Al-Huda Bank. The term “Al-Huda Bank” means all subsidiaries, branches, and offices
of Al-Huda Bank operating as a bank in any jurisdiction.
(2) Correspondent account. The term “correspondent account” has
the same meaning as provided in section 1010.605(c)(1)(ii).
(3) Covered financial institution. The term “covered financial institution”
has the same meaning as provided in section 1010.605(e)(1).
(4) Foreign banking institution. The term “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. The term “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) Prohibition
on opening or maintaining correspondent accounts for Al-Huda Bank. A covered financial institution shall not open or maintain in the
United States a correspondent account for, or on behalf of, Al-Huda
Bank.
(2) Prohibition on processing transactions involving
Al-Huda Bank. A covered financial institution shall take reasonable
steps not to process a transaction for the correspondent account in
the United States of a foreign banking institution if such a transaction
involves Al-Huda Bank.
(3) Special due diligence of correspondent
accounts to prohibit transactions.
(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 Al-Huda Bank. 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 Al-Huda Bank that such correspondents
may not provide Al-Huda Bank 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 Al-Huda Bank, 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 Al-Huda Bank.
(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 Al-Huda Bank 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 notification 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.
