Aug 12 2002

U.S. Treasury Department Proposes to Implement Section 312 of the USA PATRIOT Act

The Treasury Department recently issued and sent to the Federal Register a proposed rule implementing a portion of the USA PATRIOT Act. Section 312 of the PATRIOT Act, when enacted, will require some U.S. financial institutions to take appropriate, and in some cases, enhanced, anti-money laundering measures to ensure the validity of correspondent and private banking accounts that they maintain for non-U.S. persons.

This proposed rule will require certain U.S. financial institutions to establish a "due diligence program" that will, as its purpose, detect and report acts of money laundering in correspondent accounts. According to the Office of Public Affairs, financial institutions will also be required to "conduct enhanced due diligence for accounts maintained for foreign banks from certain jurisdictions considered of higher risk for money laundering."

These U.S. financial institutions will also be required to "take reasonable steps to determine the owners of, and source of funds deposited into, private banking accounts" of non-U.S. persons, according to the Office of Public Affairs. Accounts for senior foreign political individuals must also be scrutinized to check for incidents of foreign corruption.

This proposed rule will be open for public comments for 30 days after it is published in the Federal Register. Comments (original plus four copies) should be mailed to: FinCEN, P.O. Box 39, Vienna, VA 22183, Attn: Section 312 Regulations. Comments may also be emailed to regcomments@fincen.treas.gov with "Attention: Section 312 Regulations" in the subject line.

The USA PATRIOT Act of 2001 was signed into law October 26, 2001 by President Bush. For more information on Section 312 of the PATRIOT Act, visit http://www.treas.gov/press/releases/docs/nprm.pdf.