Section 312 Correspondent and Private Banking Accounts

Question 1

to whom does the Sec 312 applies

Answer 1

foreign correspondent accounts and private banking for non-US persons.

Question 2

Correspondent bank portion applies to

Answer 2

US banks, credit unions, thrift institutions,
trust banks, broker- dealers, futures commission merchants and introducing brokers in commodities
and mutual funds, and US-based agencies and branches of foreign banks.

Question 3

what does the Foreign National Institute means in Sec 312

Answer 3

This include foreign banks, foreign branches of US
banks, foreign businesses that would be considered broker-dealers, futures commission merchants,
introducing brokers in commodities, mutual funds if they operate in the US, and money transmitters
or currency exchangers organized in a foreign country.

Question 4

Per Section 312 , the sue diligence program should be..

Answer 4

“appropriate, specific and risk-based,

Question 5

what three measure should the due diligence program address

Answer 5

Determining whether enhanced due diligence is necessary.
2. Assessing the money laundering risk presented by the correspondent account.
3. Applying risk-based procedures and controls reasonably designed to detect and report sus-
pected money laundering.

Question 6

Per 312, when should the enhanced due diligence procedures should be appiled to correspondent account established for a foreign bank (Part-1)

Answer 6

If they are perating under
An offshore banking license.
• A license issued by a foreign country designated as non-cooperative by an international organi-
zation, with which designation the Treasury Secretary agrees.
• A license issued by a foreign country that has been designated by the US Secretary of the
Treasury as warranting special measures pursuant to Section 311 of the USA PATRIOT Act.

Question 7

If these suitation occur, how the enhanced due diligence that must be implemented in correspondent accounts maintained by foreign bank (Part-1)

Answer 7

Conducting enhanced scrutiny for possible money laundering and suspicious transactions,
including:
-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 pay-
able-through account
— Obtaining information relating to the foreign bank’s AML program

Question 8

If these suitation occur, how the enhanced due diligence that must be implemented in correspondent accounts maintained by foreign bank (Part-1)

Answer 8

Determining, for any such foreign bank whose shares are not publicly traded, the identity of
each of the owners of the foreign bank with the power to vote 10 percent or more of any class of
securities of the bank, and the nature and extent of the ownership interest of each such owner.

Determining whether the correspondent account is being used by other foreign banks that have
a correspondent relationship with the foreign bank for which the correspondent account was
established, and taking reasonable steps to assess and mitigate the money laundering risks
associated with such accounts.