OCC 2006-10
OCC Bulletin

    Subject:  Bank Secrecy Act/Anti-Money Laundering
Description:  FinCEN; Final Rule and Proposed Rule for Special 
              Due Diligence Programs for Certain Foreign Accounts

       Date:  February 28, 2006

TO:  Chief Executive Officers and Compliance Officers of All
   National Banks, Federal Branches and Agencies, Department and
   Division Heads, and All Examining Personnel

The Financial Crimes Enforcement Network (FinCEN) published the
attached final rule and proposed rule in the Federal Register on
January 4, 2006.  The final rule implements the international
correspondent banking provisions and the private banking
provisions of section 312 of the USA PATRIOT Act.
Simultaneously, FinCEN announced a related notice of proposed
rulemaking involving one key provision of section 312 that
requires enhanced due diligence for correspondent accounts
maintained for certain foreign banks.

Section 312 of the USA PATRIOT Act requires U.S. financial
institutions to perform due diligence and, in some cases,
enhanced due diligence, with regard to correspondent accounts
established or maintained for foreign financial institutions and
private banking accounts established or maintained for non-U.S.
persons.  The final rule implements the general due diligence
requirements pertaining to foreign financial institutions as well
as the due diligence and enhanced scrutiny requirements
pertaining to private banking accounts.  Specifically included in
the requirements is the duty to conduct enhanced scrutiny of any
private banking account that is maintained for senior foreign
political figures, their immediate family members, or persons
widely and publicly known to be close associates of such
individuals.
     
FinCEN has also released a notice of proposed rulemaking
regarding the key provision of section 312 that requires enhanced
due diligence for correspondent accounts maintained by certain
foreign banks.  The notice of proposed rulemaking focuses on
clarifying that U.S. financial institutions have some flexibility
in applying the enhanced due diligence procedures on a risk-
assessed basis, tailoring the enhanced due diligence to the risks
associated with the particular account.  The issuance of the
proposed rule opens a 60-day comment period, and FinCEN will take
into consideration all comments before issuing the final rule.
     
The final rule became effective on February 3.  Banking
institutions have 90 days from the time the regulation was
published in the Federal Register to establish and apply the due
diligence requirements to new correspondent and private banking
accounts.  A new account is one established at least 90 days
after the January 4 date of publication.  For existing accounts
and those accounts established before the 90-day time frame, the
final rule takes effect 270 days from the January 4 date of
publication.  The effective dates would be April 4 for new
accounts and October 2 for existing accounts.  The interim rule
will remain in effect until the new rule is effective.

FinCEN issued a fact sheet summarizing the basic requirements of
the final rule and the proposed rule.  The fact sheet is attached
to provide further guidance.  Questions may be addressed to your
supervisory office or to the Compliance Policy Department at
(202) 874-4428.


Ann F. Jaedicke
Deputy Comptroller for Compliance Policy

*    Attachment a: Final Rule--71 FR 496
     [http://www.occ.treas.gov/fr/fedregister/71fr496.pdf]
*    Attachment b: Notice of Proposed Rulemaking--71 FR 516
     [http://www.occ.treas.gov/fr/fedregister/71fr516.pdf]
*    Attachment c: Fact Sheet
     [http://www.fincen.gov/312factsheet.pdf]