Module 2 (Part 4) Flashcards
What topic is covered here
Key US legislative and regulatory initiatives
what does the USA PATRIOT Act have implications for
US institutions and non US institutions that DO BUSINESS in the US
What is the important section first mentioned
Section 311
What is its title
special measures for primary money laundering concerns
what does this section provide
the US treasury department with the authority to apply graduated, proportionate measures against a foreign jurisdiction, a foreign financial institution, a type of international transaction, or a type of account that the treasury secretary determines to be a “primary money laundering concern.”
What are the five special measures that the treasury department can require US financial institutions to follow
- Keep records and/or file reports on certain financial transactions, including a description of the transactions, the identities and addresses of the participants in the transactions, and the identifies of the beneficial owners of the funds involved.
- obtain information of the beneficial ownership of any account opened or maintained in the US by a foreign person or a foreign person’s representative
- identify and obtain information about customers who are permitted to use, or whose transactions are routed through, a foreign bank’s “payable-through” account
- Identify and obtain information about customers permitted to use or whose transactions are routed through, a foreign bank’s “correspondent” account.
- Close certain payable-through or correspondent accounts
What does section 312 cover
correspondent and private banking accounts
what does it require
due diligence/ EDD for foreign correspondent accounts and private banking for non-US persons
What does 312 say about the due diligence program
must be “appropriate, specific, and risk based”
where necessary, must include enhanced policies, procedures and controls reasonably designed to identify and report suspected money laundering in a correspondent account maintained in the US.
This due diligence program must also be included in the institution’s AML/CFT program
what are the 3 due diligence measures the program must address
- determining whether EDD is necessary
- assessing the money laundering risk presented by the correspondent account.
- Applying risk-based procedures and controls reasonably designed to detect and report suspected money laundering
what are the three items necessary for conducting enhanced scrutiny for possible money laundering and suspicious transactions
- Obtaining information relating to the foreign bank’s AML/CFT program
- Monitoring transactions in and out of the correspondent account in a manner reasonably designed to detect possible money laundering and suspicious activity
- obtaining information about the correspondent account that is being used as a payable - through account
under the private banking rule how is a private banking account defined
- an account with a minimum aggregate deposit of $1 million
- for one or more non-US persons, and
- which is assigned to a bank employee acting as a liason with the non-US person
For covered private banking accounts, US institutions must take what reasonable 4 steps
- Ascertain the identity of all nominal and beneficial owners of the accounts.
- ascertain whether any such owner is a SPF
- Ascertain the source of funds in the account and expected use of the account.
- monitor the account to ensure the activity in the account is consistent with the information provided as to the source of funds and the purpose and expected use of the account, as needed to guard against ML and to report any suspected ML or suspicious activity
What is the name of section 313
prohibition on correspondent accounts for foreign shell banks
what does this section do
prohibits US banks and securities brokers and dealers from maintaining correspondent accounts for foreign, unregulated shell banks that have no physical presence anywhere
what is section 319(a) called
forfeiture from US correspondent account
what does this section do in situations where funds hav ebeen deposited with a foreign bank
permits the US government to seize funds in the same amount from a correspondent bank account in th eUS that has been opened and maintained for the foreign bank
Is the government required to trace the funds
no, because they are deemed to have been deposited into the correspondent account
What is section 319(b) called
Records relating to correspondent accounts for foreign banks
What does this section allow the appropriate federal banking agency
to require a financial institution to produce within 120 hours (5 days) records or information related to the institution’s AML compliance or related to a customer of the institution or any account opened, maintained, administered or managed in the US by the financial institution
what does the section also require of foreign banks
to designate a registered agent in the US to accept service of subpoenas pursuant to this action
Under this section what must US banks and securities brokers and dealers that maintain correspondent accounts do
must keep records of the identity of the 25 percent owners of the foreign bank (unless publicly traded), as well as the name of the correspondent banks registered agent in the US.
What does OFAC stand for
Office of foreign asset control
what does OFAC do
administers and enforces economic trade sanctions based on US foreign policy and national security goals against targeted foreign countries, terrorists, international narcotics traffickers and those engaged in activities related to the proliferation of weapons of mass destruction
