(a) (1)(A) Except as provided in paragraph (2) of this subsection,
subsections (a), (b), (c), (d), (f), (g), (i), (j), (k), and the second
sentence of subsection (e) of section 19 of the Federal Reserve Act
shall apply to every Federal branch and Federal agency of a foreign
bank in the same manner and to the same extent as if the Federal branch
or Federal agency were a member bank as that term is defined in section
1 of the Federal Reserve Act; but the Board either by general or specific
regulation or ruling may waive the minimum and maximum reserve ratios
prescribed under section 19 of the Federal Reserve Act and may prescribe
any ratio, not more than 22 per centum, for any obligation of any
such Federal branch or Federal agency that the Board may deem reasonable
and appropriate, taking into consideration the character of business
conducted by such institutions and the need to maintain vigorous and
fair competition between and among such institutions and member banks.
The Board may impose reserve requirements on Federal branches and
Federal agencies in such graduated manner as it deems reasonable and
appropriate.
(B)
After consultation and in cooperation with the State bank supervisory
authorities, the Board may make applicable to any State branch or
State agency any requirement made applicable to, or which the Board
has authority to impose upon, any Federal branch or agency under subparagraph
(A) of this paragraph.
(2) A branch or agency shall be subject
to this subsection only if (A) its parent foreign bank has total worldwide
consolidated bank assets in excess of $1,000,000,000; (B) its parent
foreign bank is controlled by a foreign company which owns or controls
foreign banks that in the aggregate have total worldwide consolidated
bank assets in excess of $1,000,000,000; or (C) its parent foreign
bank is controlled by a group of foreign companies that own or control
foreign banks that in the aggregate have total worldwide consolidated
bank assets in excess of $1,000,000,000.
[12 USC 3105(a).]
[Subsection
(b) added a new paragraph to the end of Federal Reserve Act section
13 (at
1-123.1).]
1-569
(c) Foreign
bank examinations and reporting.
(1) (A) The Board
may examine each branch or agency of a foreign bank, each commercial
lending company or bank controlled by 1 or more foreign banks or 1
or more foreign companies that control a foreign bank, and other office
or affiliate of a foreign bank conducting business in any State.
(B) (i) The Board shall coordinate examinations under this paragraph
with the Comptroller of the Currency, the Federal Deposit Insurance
Corporation, and appropriate State bank supervisors to the extent
such coordination is possible.
(ii)
The Board may request simultaneous examinations of each office of
a foreign bank and each affiliate of such bank operating in the United
States.
(iii) In exercising
its authority under this paragraph, the Board shall take all reasonable
measures to reduce burden and avoid unnecessary duplication of examinations.
(C)
Each Federal branch or agency, and each State branch or agency, of
a foreign bank shall be subject to on-site examination by an appropriate
Federal banking agency or State bank supervisor as frequently as would
a national bank or a State bank, respectively, by the appropriate
Federal banking agency.
(D) The cost of any examination under
subparagraph (A) shall be assessed against and collected from the
foreign bank or the foreign company that controls the foreign bank,
as the case may be, only to the same extent that fees are collected
by the Board for examination of any State member bank.
(2) Each branch or agency
of a foreign bank, other than a Federal branch or agency, shall be
subject to paragraph 20 and the provision requiring the reports of
condition contained in paragraph 6 of section 9 of the Federal Reserve
Act (12 U.S.C. 335 and 324) to the same extent and in the same manner
as if the branch or agency were a State member bank. In addition to
any requirements imposed under section 4 of this Act, each Federal
branch and agency shall be subject to subparagraph (a) of section
11 of the Federal Reserve Act (12 U.S.C. 248(a)) and to paragraph
5 of section 21 of the Federal Reserve Act (12 U.S.C. 483) to the
same extent and in the same manner as if it were a member bank.
[12
USC 3105(c). As amended by acts of Dec. 19, 1991 (105 Stat. 2291)
and Sept. 30, 1996 (110 Stat. 3009-411). Section 115(a) of the Riegle-Neal
Interstate Banking and Branching Efficiency Act of 1994 (12 USC 3105
note) provides as follows:
(a) Branches, agencies, and affiliates. Section
7(c)(1)(D) of the International Banking Act of 1978 shall not apply
with respect to any examination under section 7(c)(1)(A) of such Act
which begins before or during the 3-year period beginning on July
25, 1994.]
1-570
(d) Establishment of foreign
bank offices in the United States.
(1) No foreign bank may establish a branch
or an agency, or acquire ownership or control of a commercial lending
company, without the prior approval of the Board.
(2) Except as provided in paragraph (6),
the Board may not approve an application under paragraph (1) unless
it determines that—
(A) the foreign bank engages directly
in the business of banking outside of the United States and is subject
to comprehensive supervision or regulation on a consolidated basis
by the appropriate authorities in its home country; and
(B) the foreign bank has
furnished to the Board the information it needs to adequately assess
the application.
(3) In acting on any application under
paragraph (1), the Board may take into account—
(A) whether
the appropriate authorities in the home country of the foreign bank
have consented to the proposed establishment of a branch, agency or
commercial lending company in the United States by the foreign bank;
(B) the financial and
managerial resources of the foreign bank, including the bank’s experience
and capacity to engage in international banking;
(C) whether the foreign bank has provided
the Board with adequate assurances that the bank will make available
to the Board such information on the operations or activities of the
foreign bank and any affiliate of the bank that the Board deems necessary
to determine and enforce compliance with this Act, the Bank Holding
Company Act of 1956, and other applicable Federal law;
(D) whether the foreign
bank and the United States affiliates of the bank are in compliance
with applicable United States law; and
(E) for a foreign bank that presents
a risk
to the stability of United States financial system, whether the home
country of the foreign bank has adopted, or is making demonstrable
progress toward adopting, an appropriate system of financial regulation
for the financial system of such home country to mitigate such risk.
1-570.1
(4) In acting on an application
under paragraph (1), the Board shall not make the size of the foreign
bank the sole determinant factor, and may take into account the needs
of the community as well as the length of operation of the foreign
bank and its relative size in its home country. Nothing in this paragraph
shall affect the ability of the Board to order a State branch, agency,
or commercial lending company subsidiary to terminate its activities
in the United States pursuant to any standard set forth in this Act.
(5) The Board may impose
such conditions on its approval under this subsection as it deems
necessary.
(6) (A) If the Board is unable
to find, under paragraph (2), that a foreign bank is subject to comprehensive
supervision or regulation on a consolidated basis by the appropriate
authorities in its home country, the Board may nevertheless approve
an application by such foreign bank under paragraph (1) if—
(i) the appropriate
authorities in the home country of the foreign bank are actively working
to establish arrangements for the consolidated supervision of such
bank; and
(ii) all other
factors are consistent with approval.
(B) In deciding whether to use its discretion
under subparagraph (A), the Board shall also consider whether the
foreign bank has adopted and implements procedures to combat money
laundering. The Board may also take into account whether the home
country of the foreign bank is developing a legal regime to address
money laundering or is participating in multilateral efforts to combat
money laundering.
(C) In approving an application under this paragraph, the Board,
after requesting and taking into consideration the views of the appropriate
State bank supervisor or the Comptroller of the Currency, as the case
may be, may impose such conditions or restrictions relating to the
activities or business operations of the proposed branch, agency,
or commercial lending company subsidiary, including restrictions on
sources of funding, as are considered appropriate. The Board shall
coordinate with the appropriate State bank supervisor or the Comptroller
of the Currency, as appropriate, in the implementation of such conditions
or restrictions.
(D) Any condition or restriction imposed by the Board in connection
with the approval of an application under authority of this paragraph
may be modified or withdrawn.
(7) (A) The Board
shall take final action on any application under paragraph (1) not
later than 180 days after receipt of the application, except that
the Board may extend for an additional 180 days the period within
which to take final action on such application after providing notice
of, and the reasons for, the extension to the applicant foreign bank
and any appropriate State bank supervisor or the Comptroller of the
Currency, as appropriate.
(B) The Board may deny any application
if it does not receive information requested from the applicant foreign
bank or appropriate authorities in the home country of the foreign
bank in sufficient time to permit the Board to evaluate such information
adequately within the time periods for final action set forth in subparagraph
(A).
(C) A foreign
bank may waive the applicability of this paragraph with respect to
any application under paragraph (1).
[12 USC 3105(d). As
amended by acts of Dec. 19, 1991 (105 Stat 2286); Sept. 30, 1996 (110
Stat. 3009-412); and July 21, 2010 (124 Stat. 1440).]
1-570.2
(e) Termination of foreign bank offices
in the United States.
(1) The Board, after notice and opportunity
for hearing and notice to any appropriate State bank supervisor, may
order a foreign bank that operates a State branch or agency or commercial
lending company subsidiary in the United States to terminate the activities of such branch,
agency, or subsidiary if the Board finds that—
(A) (i) the foreign bank is not subject
to comprehensive supervision or regulation on a consolidated basis
by the appropriate authorities in its home country; and
(ii) the appropriate authorities
in the home country of the foreign bank are not making demonstrable
progress in establishing arrangements for the comprehensive supervision
or regulation of such foreign bank on a consolidated basis;
(B) (i) there is reasonable cause to believe that such foreign bank,
or any affiliate of such foreign bank, has committed a violation of
law or engaged in an unsafe or unsound banking practice in the United
States; and
(ii) as a result
of such violation or practice, the continued operation of the foreign
bank’s branch, agency or commercial lending company subsidiary in
the United States would not be consistent with the public interest
or with the purposes of this Act, the Bank Holding Company Act of
1956, or the Federal Deposit Insurance Act; or
(C) for a foreign bank
that presents a risk to the stability of the United States financial
system, the home country of the foreign bank has not adopted, or made
demonstrable progress toward adopting, an appropriate system of financial
regulation to mitigate such risk.
However, in making findings under this paragraph, the
Board shall not make size the sole determinant factor, and may take
into account the needs of the community as well as the length of operation
of the foreign bank and its relative size in its home country. Nothing
in this paragraph shall affect the ability of the Board to order a
State branch, agency, or commercial lending company subsidiary to
terminate its activities in the United States pursuant to any standard
set forth in this Act.
1-570.3
(2) The Board may issue an order under
paragraph (1) without providing for an opportunity for a hearing if
the Board determines that expeditious action is necessary in order
to protect the public interest.
(3) An order issued under paragraph (1)
shall take effect before the end of the 120-day period beginning on
the date such order is issued unless the Board extends such period.
(4) Any foreign bank required
to terminate activities conducted at offices or subsidiaries in the
United States pursuant to this subsection shall comply with the requirements
of applicable Federal and State law with respect to procedures for
the closure or dissolution of such offices or subsidiaries.
(5) The Board may transmit
to the Comptroller of the Currency a recommendation that the license
of any Federal branch or Federal agency of a foreign bank be terminated
in accordance with section 4(i) if the Board has reasonable cause
to believe that such foreign bank or any affiliate of such foreign
bank has engaged in conduct for which the activities of any State
branch or agency may be terminated under paragraph (1).
1-570.4
(6) (A)
In the case of contumacy of any office or subsidiary of the foreign
bank against which—
(i) the Board has issued an order under paragraph
(1); or
(ii) the Comptroller
of the Currency has issued an order under section 4(i) or a refusal
by such office or subsidiary to comply with such order, the Board
or the Comptroller of the Currency may invoke the aid of the district
court of the United States within the jurisdiction of which the
office or subsidiary is located.
(B) Any court referred to in subparagraph
(A) may issue an order requiring compliance with an order referred
to in subparagraph (A).
(7) Not later than 1 year after the date
of enactment of this subsection, the Board, in consultation with the
Secretary of the Treasury, shall develop and publish criteria to be
used in evaluating the operation of any foreign bank in the United
States that the Board has determined is not subject to comprehensive
supervision or regulation on a consolidated basis. In developing such
criteria, the Board shall allow reasonable opportunity for public
review and comment.
[12 USC 3105(e). As
added by act of Dec. 19, 1991 (105 Stat. 2286) and amended by acts
of Oct. 28, 1992 (106 Stat. 4081, 4082); Sept. 30, 1996 (110 Stat.
3009-413); and July 21, 2010 (124 Stat. 1440).]
1-570.5
(f) Judicial review.
(1) Any foreign bank—
(A) whose
application under subsection (d) or section 10(a) has been disapproved
by the Board;
(B)
against which the Board has issued an order under subsection (e) or
section 10(b); or
(C) against which the Comptroller of the Currency has issued an order
under section 4(i) of this Act,
may obtain a review of such order in the United States
court of appeals for any circuit in which such foreign bank operates
a branch, agency, or commercial lending company that has been required
by such order to terminate its activities, or in the United States
Court of Appeals for the District of Columbia Circuit, by filing a
petition for review in the court before the end of the 30-day period
beginning on the date the order was issued.
(2) Section 706 of title 5, United States
Code (other than paragraph (2)(F) of such section) shall apply with
respect to any review under paragraph (1).
[12 USC 3105(f). As
added by act of Dec. 19, 1991 (105 Stat. 2286).]
1-570.6
(g) Consultation with state bank supervisor. The Board shall request and consider any views of the appropriate
State bank supervisor with respect to any application or action under
subsection (d) or (e).
[12 USC 3105(g). As
added by act of Dec. 19, 1991 (105 Stat. 2286).]
1-570.7
(h) Limitations on powers of state branches
and agencies.
(1) After the end of the 1-year period
beginning on the date of enactment of the Federal Deposit Insurance
Corporation Improvement Act of 1991, a State branch or State agency
may not engage in any type of activity that is not permissible for
a Federal branch unless—
(A) the Board has determined that such
activity is consistent with sound banking practice; and
(B) in the case of an insured
branch, the Federal Deposit Insurance Corporation has determined that
the activity would pose no significant risk to the deposit insurance
fund.
(2)
A State branch or State agency shall be subject to the same limitations
with respect to loans made to a single borrower as are applicable
to a Federal branch or Federal agency under section 4(b).
(3) This section does not limit
the authority of the Board or any State supervisory authority to impose
more stringent restrictions.
[12 USC 3105(h). As
added by act of Dec. 19, 1991 (105 Stat. 2286).]
1-570.71
(i) Proceedings related to conviction for
money laundering offenses.
(1) If the Board finds or receives written
notice from the Attorney General that—
(A) any foreign bank
which operates a State agency, a State branch which is not an insured
branch, or a State commercial lending company subsidiary;
(B) any State agency;
(C) any State branch which
is not an insured branch; or
(D) any State commercial lending subsidiary,
has been found guilty of any money laundering offense,
the Board shall issue a notice to the agency, branch, or subsidiary
of the Board’s intention to commence a termination proceeding under
subsection (e).
(2)
For purposes of this subsection—
(A) The term “insured
branch” has the meaning given such term in section 3(s) of the
Federal Deposit Insurance Act.
(B) The term “money laundering offense” means any criminal offense under section 1956 or 1957 of title
18, United States Code, or under section 5322 of title 31, United
States Code.
[12 USC 3105(i). As
added by act of Oct. 28, 1992 (106 Stat. 4056).]
1-570.8
(j) Study on equivalence of foreign bank
capital. Not later than 180 days after enactment of this subsection,
the Board and the Secretary of the Treasury shall jointly submit to
the Committee on Banking, Housing, and Urban Affairs of the Senate
and the Committee on Banking, Finance and Urban Affairs of the House
of Representatives a report—
(1) analyzing the capital standards contained
in the framework for measurement of capital adequacy established by
the Supervisory Committee of the Bank for International Settlements,
foreign regulatory capital standards that apply to foreign banks conducting
banking operations in the United States, and the relationship of the
Basle and foreign standards to risk-based capital and leverage requirements
for United States banks; and
(2) establishing guidelines for the adjustments
to be used by the Board in converting data on the capital of such
foreign banks to the equivalent risk-based capital and leverage requirements
for United States banks for purposes of determining whether a foreign
bank’s capital level is equivalent to that imposed on United States
banks for purposes of determinations under section 7 of the International
Banking Act of 1978 and sections 3 and 4 of the Bank Holding Company
Act of 1956.
An update shall be prepared
annually explaining any changes in the analysis under paragraph (1)
and resulting changes in the guidelines pursuant to paragraph (2).
[12 USC 3105(j).
As added by act of Dec. 19, 1991 (105 Stat. 2304).]
1-570.81
(k) Management of shell branches.
(1) A branch or agency of a foreign bank
shall not manage, through an office of the foreign bank which is located
outside the United States and is managed or controlled by such branch
or agency, any type of activity that a bank organized under the laws
of the United States, any State, or the District of Columbia is not
permitted to manage at any branch or subsidiary of such bank which
is located outside the United States.
(2) Any regulations promulgated to carry
out this section—
(A) shall be promulgated in accordance
with section 13; and
(B) shall be uniform, to the extent practicable.
[12 USC 3105(k). As
added by act of Sept. 29, 1994 (108 Stat. 2360).]
