Treasury Renews Rules Against Foreign Shell Banks, No Changes Planned
Published Date: 5/22/2025
Notice
Summary
FinCEN is renewing rules that stop U.S. banks from working with shady foreign shell banks and require them to keep records about who owns foreign banks and who can accept legal papers in the U.S. No changes are planned, but they want your feedback by July 21, 2025. This keeps financial crime in check without adding new costs or paperwork.
Analyzed Economic Effects
6 provisions identified: 1 benefits, 5 costs, 0 mixed.
Ban on U.S. Correspondent Accounts for Foreign Shell Banks
Covered financial institutions are prohibited from establishing, maintaining, administering, or managing correspondent accounts in the United States for foreign shell banks (foreign banks without a physical presence in any country). Covered institutions must also take reasonable steps to ensure correspondent accounts for foreign banks are not used to indirectly provide services to foreign shell banks.
Account Closure Timelines If Certification Missing
If a covered financial institution has not obtained required certification or documentation within 30 calendar days after account establishment, it must close the foreign bank's correspondent accounts within a commercially reasonable time and restrict new positions or transactions except those necessary to close the account. If an interim verification is started and not completed within 90 calendar days, the same closure procedures apply.
Estimated Population and Compliance Burden
FinCEN estimates 12,637 covered financial institutions in scope, but expects about 104 institutions to maintain correspondent accounts for foreign banks and thus incur the recordkeeping obligations. FinCEN assigns estimated burden hours per activity: 20 hours to complete an initial certification, 5 hours for a recertification, and 9 hours for maintaining records (FinCEN also reduced the per-account burden for certain checks to one hour per foreign correspondent account per year).
U.S. Recordkeeping of Foreign Bank Owners and Agent
If a covered financial institution maintains a correspondent account in the United States for a foreign bank whose shares are not publicly traded, it must retain in the United States records identifying the foreign bank's owners (as defined) and the name and street address of a person in the United States who has agreed to be an agent to accept service of legal process for records regarding that correspondent account.
Three-Year Certification Safe Harbor
A covered financial institution is deemed in compliance with the certification requirements if it obtains a certification or recertification from the foreign bank at least once every three years. FinCEN provides an optional certification form that institutions may use.
Five-Year Document Retention Requirement
Covered financial institutions must retain any original document provided by a foreign bank, and the original or a copy of any document relied upon to comply with these rules, for at least five years after the date the institution no longer maintains any correspondent account for that foreign bank, or longer if directed by the Secretary.
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