Shell Game Over: Banks Barred from Shady Foreign Ties
Published Date: 5/22/2025
Notice
Summary
FinCEN wants to keep the current rules that stop U.S. banks from working with shady foreign shell banks and require them to keep clear records about foreign bank owners. This renewal won’t change anything but asks for feedback to keep paperwork manageable. Banks and financial institutions should stay ready to follow these rules, which help keep money safe and clean.
Analyzed Economic Effects
3 provisions identified: 0 benefits, 3 costs, 0 mixed.
Ban on U.S. Accounts for Foreign Shell Banks
Covered financial institutions are prohibited from establishing, maintaining, administering, or managing correspondent accounts in the United States for or on behalf of a foreign shell bank. This rule remains in effect as part of the Bank Secrecy Act information collection renewal.
Mandatory Due Diligence on Correspondent Accounts
Covered financial institutions must take reasonable steps to ensure any correspondent account they establish, maintain, administer, or manage in the United States for a foreign bank is not used by the foreign bank to indirectly provide banking services to a foreign shell bank. This due diligence requirement is being renewed without change.
Recordkeeping on Foreign Bank Owners and U.S. Agents
A covered financial institution that maintains a correspondent account in the United States for a foreign bank must retain U.S.-based records identifying the owners of any foreign bank whose shares are not publicly traded, unless the foreign bank files a Form FR-Y with the Federal Reserve Board naming current owners. The institution must also retain the name and street address of a U.S. resident authorized to accept service of legal process for records about each correspondent account.
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