(a) Definitions. For purposes of this section:
(1) FBME Bank, Ltd. means all branches,
offices, and subsidiaries of FBME Bank, 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) 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 use of correspondent accounts. A covered financial institution
shall not open or maintain a correspondent account in the United States
for, or on behalf of, FBME Bank, Ltd.
(2) 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 FBME Bank, Ltd. At a minimum, that special
due diligence must include:
(A) Notifying those correspondent account holders that the covered
financial institution knows or has reason to know provide services
to FBME Bank, Ltd., that such correspondents may not provide FBME
Bank, Ltd. 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 FBME Bank, Ltd., 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 FBME Bank, Ltd.
(iii)
A covered financial institution that obtains knowledge that a foreign
correspondent account may be being used to process transactions involving
FBME Bank, Ltd. shall take all appropriate steps to further investigate
and prevent such access, including the notification of its correspondent
account holder under paragraph (b)(2)(i)(A) of this section and, where
necessary, termination of 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
FBME Bank Ltd.
(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 paragraph (b) shall require a covered financial institution to
report any information not otherwise required to be reported by law
or regulation.
