Notice2022-02885
Agency Information Collection Activities; Proposed Renewal; Comment Request; Renewal Without Change of Prohibition on Correspondent Accounts for Foreign Shell Banks; Records Concerning Owners of Foreign Banks and Agents for Service of Legal Process
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
February 10, 2022
Issuing agencies
Treasury DepartmentFinancial Crimes Enforcement Network
Abstract
As part of its continuing effort to reduce paperwork and respondent burden, FinCEN invites comments on the proposed renewal, without change, of a currently approved information collection found in existing Bank Secrecy Act regulations. Specifically, the regulations prohibit covered financial institutions from maintaining correspondent accounts for or on behalf of a foreign shell bank. The regulations require that a covered financial institution take reasonable steps to ensure that any correspondent account that it maintains 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. The regulations also mandate that a covered financial institution maintaining correspondent accounts in the United States for foreign banks retain records in the United States identifying: The owners of each such foreign bank whose shares are not publicly traded, unless the foreign bank files a Form FR-Y with the Federal Reserve Board identifying the current owners of the foreign bank; and the name and address of a person who resides in the United States who is authorized to serve as each such foreign bank's agent for service of legal process for records regarding each such correspondent account. Although no changes are proposed to the information collection, this request for comments covers a future expansion of the scope of the annual hourly burden and cost estimate associated with these regulations. This request for comments is made pursuant to the Paperwork Reduction Act of 1995.
Full Text
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<title>Federal Register, Volume 87 Issue 28 (Thursday, February 10, 2022)</title>
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[Federal Register Volume 87, Number 28 (Thursday, February 10, 2022)]
[Notices]
[Pages 7919-7926]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-02885]
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DEPARTMENT OF THE TREASURY
Financial Crimes Enforcement Network
Agency Information Collection Activities; Proposed Renewal;
Comment Request; Renewal Without Change of Prohibition on Correspondent
Accounts for Foreign Shell Banks; Records Concerning Owners of Foreign
Banks and Agents for Service of Legal Process
AGENCY: Financial Crimes Enforcement Network (FinCEN), Treasury.
ACTION: Notice and request for comments.
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SUMMARY: As part of its continuing effort to reduce paperwork and
respondent burden, FinCEN invites comments on the proposed renewal,
without change, of a currently approved information collection found in
existing Bank Secrecy Act regulations. Specifically, the regulations
prohibit covered financial institutions from maintaining correspondent
accounts for or on behalf of a foreign shell bank. The regulations
require that a covered financial institution take reasonable steps to
ensure that any correspondent account that it maintains 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. The regulations also
mandate that a covered financial institution maintaining correspondent
accounts in the United States for foreign banks retain records in the
United States identifying: The owners of each such foreign bank whose
shares are not publicly traded, unless the foreign bank files a Form
FR-Y with the Federal Reserve Board identifying the current owners of
the foreign bank; and the name and address of a person who resides in
the United States who is authorized to serve as each such foreign
bank's agent for service of legal process for records regarding each
such
[[Page 7920]]
correspondent account. Although no changes are proposed to the
information collection, this request for comments covers a future
expansion of the scope of the annual hourly burden and cost estimate
associated with these regulations. This request for comments is made
pursuant to the Paperwork Reduction Act of 1995.
DATES: Written comments are welcome, and must be received on or before
April 11, 2022.
ADDRESSES: Comments may be submitted by any of the following methods:
<bullet> Federal E-rulemaking Portal: <a href="http://www.regulations.gov">http://www.regulations.gov</a>.
Follow the instructions for submitting comments. Refer to Docket Number
FINCEN-2022-0003 and the specific Office of Management and Budget (OMB)
control number 1506-0043.
<bullet> Mail: Policy Division, Financial Crimes Enforcement
Network, P.O. Box 39, Vienna, VA 22183. Refer to Docket Number FINCEN-
2022-0003 and OMB control number 1506-0043.
Please submit comments by one method only. Comments will be
reviewed consistent with the Paperwork Reduction Act of 1995 and
applicable OMB regulations and guidance. Comments submitted in response
to this notice will become a matter of public record. Therefore, you
should submit only information that you wish to make publicly
available.
FOR FURTHER INFORMATION CONTACT: The FinCEN Regulatory Support Section
at 1-800-767-2825 or electronically at <a href="/cdn-cgi/l/email-protection#4b2d39280b2d2225282e25652c243d"><span class="__cf_email__" data-cfemail="583e2a3b183e31363b3d36763f372e">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
I. Statutory and Regulatory Provisions
The legislative framework generally referred to as the Bank Secrecy
Act (BSA) consists of the Currency and Financial Transactions Reporting
Act of 1970, as amended by the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001 (USA PATRIOT Act), Public Law 107-56 (October 26,
2001), and other legislation, including most recently the Anti-Money
Laundering Act of 2020 (AML Act).\1\ The BSA is codified at 12 U.S.C.
1829b, 12 U.S.C. 1951-1960, 31 U.S.C. 5311-5314 and 5316-5336, and
includes notes thereto, with implementing regulations at 31 CFR chapter
X.
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\1\ The AML Act was enacted as Division F, Sec. Sec. 6001-6511,
of the William M. (Mac) Thornberry National Defense Authorization
Act for Fiscal Year 2021, Public Law 116-283, 134 Stat 3388 (2021).
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The BSA authorizes the Secretary of the Treasury, inter alia, to
require financial institutions to keep records and file reports that
are determined to have a high degree of usefulness in criminal, tax,
and regulatory matters, or in the conduct of intelligence or counter-
intelligence activities to protect against international terrorism, and
to implement AML programs and compliance procedures.\2\ Regulations
implementing the BSA appear at 31 CFR chapter X. The authority of the
Secretary to administer the BSA has been delegated to the Director of
FinCEN.\3\
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\2\ Section 358 of the USA PATRIOT Act added language expanding
the scope of the BSA to intelligence or counter-intelligence
activities to protect against international terrorism. Section 6101
of the AML Act added language further expanding the scope of the BSA
but did not amend these longstanding purposes.
\3\ Treasury Order 180-01 (re-affirmed Jan. 14, 2020).
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31 U.S.C. 5318(j) prohibits covered financial institutions \4\ from
maintaining correspondent accounts in the United States for, or on
behalf of, foreign banks that do not have a physical presence in any
country. In addition, under 31 U.S.C. 5318(k), a covered financial
institution maintaining a correspondent account in the United States
for a foreign bank, must retain records identifying (i) the owners of
record and the beneficial owners of the foreign bank, and (ii) the name
and address of a person residing in the United States who is authorized
to accept service of legal process for the foreign bank. The
regulations implementing 31 U.S.C. 5318(j) and 31 U.S.C. 5318(k) appear
at 31 CFR 1010.630.
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\4\ A covered financial institution is any financial institution
described in subparagraphs (A) through (G) of 31 U.S.C. 5312(a)(2),
including an insured bank, as defined in section 3(h) of the Federal
Deposit Insurance Act (12 U.S.C. 1813(h)); a commercial bank or
trust company; a private banker; an agency or branch of a foreign
bank in the United States; any credit union; a thrift institution;
and a broker or dealer registered with the Securities and Exchange
Commission (SEC) under the Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.). 31 U.S.C. 5318(j)(1).
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31 CFR 1010.630(a)(1) prohibits covered financial institutions \5\
from establishing, maintaining, administering, or managing
correspondent accounts \6\ in the United States for, or on behalf of,
foreign shell banks.\7\ Covered financial institutions must take
reasonable steps to ensure that any correspondent account managed by a
covered financial institution in the United States is not being used by
a foreign bank \8\ to indirectly provide banking services to a foreign
shell bank.\9\
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\5\ See 31 CFR 1010.605(e)(2) for the definition of a covered
financial institution for purposes of 31 CFR 1010.630: (i) An
insured bank (as defined in section 3(h) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(h))); (ii) a commercial bank or trust
company; (iii) a private banker; (iv) an agency or branch of a
foreign bank in the United States; (v) a credit union; (vi) a
savings association; (vii) a corporation acting under section 25A of
the Federal Reserve Act (12 U.S.C. 611 et seq.); and (viii) a broker
or dealer in securities registered, or required to be registered,
with the Securities and Exchange Commission under the Securities
Exchange Act of 1934 (15 U.S.C. 78a, et seq.), except persons who
register pursuant to section 15(b)(11) of the Securities Exchange
Act of 1934.
\6\ 31 CFR 1010.605(c). For purposes of 31 CFR 1010.630, a
correspondent account is defined as an account established for a
foreign bank to receive deposits from, or to make payments or other
disbursements on behalf of, the foreign bank, or to handle other
financial transactions related to such foreign bank.
\7\ 31 CFR 1010.605(g). Foreign shell bank means a foreign bank
without a physical presence in any country.
\8\ 31 CFR 1010.100(u). A foreign bank is defined as a bank
organized under foreign law, or an agency, branch or office located
outside the United States of a bank. The term does not include an
agent, agency, branch or office within the United States of a bank
organized under foreign law.
\9\ 31 CFR 1010.630(a)(1)(iii) clarifies that covered financial
institutions are not prohibited from providing correspondent account
or banking services to a regulated affiliate.
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31 CFR 1010.630(a)(2) implements 31 U.S.C. 5318(k) and requires
covered financial institutions that maintain correspondent accounts in
the United States for foreign banks to retain records in the United
States identifying: (i) The owners of each such foreign bank whose
shares are not publicly traded,\10\ with one exception; \11\ and (ii)
the name and street address of a person who resides in the United
States and is authorized, and has agreed, to be an agent to accept
service of legal process for records regarding each such account.
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\10\ According to 31 CFR 1010.630(a)(2)(iii), publicly traded
refers to shares that are traded on an exchange or on an organized
over-the-counter market that is regulated by a ``foreign securities
authority'' as defined in section 3(a)(50) of the Securities
Exchange Act of 1934 (15 U.S.C. 78C(a)(50)).
\11\ According to 31 CFR 1010.630(2)(ii), a covered financial
institution is not required to maintain records of the owner of a
non-publicly traded foreign bank if the foreign bank is required to
file with the Federal Reserve Board a Form FR-Y that identifies the
current owners of the foreign bank.
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31 CFR 1010.630(b) clarifies that a covered financial institution
will be deemed to be in compliance with the requirements of 31 CFR
1010.630(a) with respect to a foreign bank if the covered financial
institution obtains, at least once every three years, a certification
or recertification from the foreign bank. FinCEN has developed an
optional certification form \12\ that includes a request to the foreign
bank for the information required under 31 CFR 1010.630(a). Covered
financial
[[Page 7921]]
institutions may use the certification form to obtain the necessary
information for an initial certification and a recertification.
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\12\ Available at <a href="https://www.fincen.gov/sites/default/files/shared/Certification%20Regarding%20Correspondent%20Accounts%20for%20Foreign%20Banks.pdf">https://www.fincen.gov/sites/default/files/shared/Certification%20Regarding%20Correspondent%20Accounts%20for%20Foreign%20Banks.pdf</a>.
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31 CFR 1010.630(c) requires a covered financial institution to
request that a foreign bank verify or correct the information provided
in such bank's certification or recertification, if the covered
financial institution knows, suspects, or has reason to suspect that
such information is incorrect or no longer accurate. Additionally, the
covered financial institution may take other appropriate measures to
ascertain the accuracy of the information or obtain the correct
information.
If a covered financial institution has not obtained a
certification, recertification, or information needed for a
certification or recertification within 30 calendar days after the date
the account is established, and at least once every three years
thereafter, the covered financial institution must close all such
foreign bank's correspondent accounts within a commercially reasonable
time, and must restrict the foreign bank's ability to execute any new
transactions other than those necessary to close the account.\13\
Furthermore, if a covered financial institution conducting an interim
verification pursuant to 31 CFR 1010.630(c), has not obtained
verification of the information or corrected information within 90
calendar days after the date of undertaking the interim verification,
the covered financial institution must follow the same account closure
procedures set out above.\14\
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\13\ 31 CFR 1010.630(d)(2).
\14\ 31 CFR 1010.630(d)(3).
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31 CFR 1010.630(d)(4) prohibits covered financial institutions
from: (i) Re-establishing any account closed pursuant to 31 CFR
1010.630(d); and (ii) establishing any other correspondent account with
the foreign bank whose account was closed, unless the foreign bank
provides the appropriate certification or recertification. 31 CFR
1010.630(d)(5) states that a covered financial institution will not be
held liable for terminating a correspondent account in accordance with
31 CFR 1010.630(d).
31 CFR 1010.630(e) requires covered financial institutions to
retain any original document provided by a foreign bank, and the
original or a copy of any document otherwise relied upon by a covered
financial institution for purposes of complying with 31 CFR 1010.630,
for at least five years after the date that a covered financial
institution no longer maintains any correspondent account for such
foreign bank.
II. Paperwork Reduction Act of 1995 (PRA) \15\
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\15\ Public Law 104-13, 44 U.S.C. 3506(c)(2)(A).
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Title: Prohibition on correspondent accounts for foreign shell
banks; records concerning owners of foreign banks and agents for
service of legal process (31 CFR 1010.630).
OMB Control Number: 1506-0043.
Report Number: Optional form--certification regarding correspondent
accounts for foreign banks.
Abstract: FinCEN is issuing this notice to renew the OMB control
number for regulations prohibiting covered financial institutions from
maintaining correspondent accounts for foreign shell banks; and
requiring covered financial institutions to maintain records concerning
the owners of certain foreign banks, and agents based in the United
States who have agreed to accept service of legal process for records
regarding the foreign bank's correspondent accounts.
Affected Public: Businesses or other for-profit institutions.
Type of Review:
<bullet> Renewal without change of a currently approved information
collection.
<bullet> Propose for review and comment a renewal of the portion of
the PRA burden that has been subject to notice and comment in the past
(the ``traditional annual PRA burden'').
<bullet> Propose for review and comment a future expansion of the
scope of the PRA burden (the ``supplemental annual PRA burden'').
Frequency: As required.
Estimated Number of Respondents: 8,696 covered financial
institutions maintain correspondent accounts with foreign
banks.<SUP>16 17 </SUP>
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\16\ Data are from the Federal Reserve's Structured Data for
U.S. Banking Offices (see FRB: Structure Data for U.S. Banking
Offices of Foreign Entities (<a href="http://federalreserve.gov">federalreserve.gov</a>)) and quarterly call
report bank data (specifically, Schedule RC-E: Deposit liabilities,
line 5: liabilities of banks in foreign countries) from the
Financial Institution Retrieval Data System (FINDRS). Using these
two sources, FinCEN determines that as of Q3 2021, approximately
5,164 banking organizations (national and state banks, trusts,
thrifts and savings and loans, branches and agencies of foreign
banking organizations, representative offices, Edge Act
corporations, and agreement corporations) will be affected by this
rule on any given year. Specifically, we determine that there are
approximately: 190 Branches and agencies of foreign banks; 115
representative offices, Edge Act corporations, and agreement
corporations; and 4,859 U.S. banks (national and state chartered,
trusts, savings and loans, thrifts) that report values for deposit
liabilities of banks in foreign countries. Deposit liabilities in a
foreign country is an indication that a bank maintains at least one
correspondent account with a foreign financial institution.
\17\ According to the Securities and Exchange Commission (SEC),
as of March 31, 2021, there were 3,532 brokers or dealers in
securities registered with the SEC. FinCEN conservatively estimates
that each of these brokers or dealers in securities maintain at
least one correspondent account with a foreign financial
institution.
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Estimated Recordkeeping Burden:
In Part 1, FinCEN proposes for review and comment a renewal of the
estimate of the traditional annual PRA hourly burden, which includes a
scope and methodology similar to that used in the past, with the
incorporation of a more robust cost estimate. The scope and methodology
used in the past was limited to estimating the time necessary for a
covered financial institution to: (i) Obtain a certification form from
a foreign bank; (ii) obtain a recertification form from a foreign bank;
and (iii) maintain records provided by a foreign bank for the
certification or recertification. In Part 2, FinCEN proposes for review
and comment a methodology to estimate the hourly burden and the cost of
a future estimate of a supplemental annual PRA burden that includes the
burden and cost of (i) conducting due diligence on correspondent
accounts to determine if an interim verification is warranted; (ii)
conducting an interim verification; and (iii) determining if closing a
correspondent account is warranted. Finally, in Part 3, FinCEN solicits
input from the public about: (a) The accuracy of the estimate of the
traditional annual PRA burden; (b) the additional steps proposed to be
included in the future supplemental annual PRA burden; (c) the
criteria, metrics, and most appropriate questions FinCEN should
consider when researching the information to estimate the future
traditional and supplemental annual PRA burden, according to the
methodology proposed; and (d) any other comments about the regulations
and the current and proposed future hourly burden and cost estimates of
these requirements.
Part 1. Traditional Annual PRA Burden and Cost
There are practical challenges to determining the total number of
covered financial institutions that maintain correspondent accounts for
foreign banks, as well as estimating the total number of correspondent
accounts for foreign banks that each of those covered financial
institutions maintains. In addition, there are practical challenges in
estimating how many covered financial institutions need to obtain
certification or recertification forms from foreign banks annually,
along with estimating how often covered financial
[[Page 7922]]
institutions need to conduct interim verifications for foreign banks
for which they suspect the current information is no longer correct.
Further, FinCEN cannot estimate how frequently covered financial
institutions need to determine if correspondent account closure is
necessary. Because of these challenges, in the past FinCEN has
generally estimated the number of covered financial institutions that
maintain correspondent accounts for foreign banks, and limited the
burden estimate to the annual burden on covered financial institutions
to obtain certification forms and recertification forms, and maintain
records of the forms and any supporting documentation provided by
foreign banks.\18\
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\18\ When FinCEN renewed OMB control number 1506-0043 in 2018 it
estimated that there were 2,000 coved financial institutions with
correspondent accounts for 9,000 foreign banks. See 83 FR 42555,
Aug. 22, 2018.
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FinCEN estimates that the annual hourly burden for a covered
financial institution to obtain and maintain an initial certification
form from a foreign bank for which it maintains a correspondent account
is 15 hours. This estimate covers the burden to a covered financial
institution to: (i) Obtain assurances from the foreign bank that it is
not providing banking services, directly or indirectly, to a foreign
shell bank; (ii) obtain ownership information from the foreign bank, if
necessary; (iii) obtain the name of an agent based in the United States
who has agreed to accept service of legal process for records regarding
such correspondent account; (iv) review all documentation submitted by
the foreign bank; and (v) maintain records of all documentation
associated with the certification process for the foreign bank.\19\ As
noted above, FinCEN maintains an optional certification form that a
covered financial institution can send to a foreign bank to obtain all
of the information noted directly above, as required under 31 CFR
1010.630(a).
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\19\ The estimated annual recordkeeping burden associated with
certification and recertification, which requires that a covered
financial institution maintain such records for five years after a
foreign bank's correspondent account is closed, is incorporated
within the estimates for both certification and recertification.
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FinCEN estimates the annual hourly burden for a covered financial
institution to obtain and maintain a recertification form from a
foreign bank for which it maintains a correspondent account is also 15
hours. FinCEN believes the hourly burden estimate for a recertification
is the same as for a certification because the covered financial
institution can use the same certification form to reconfirm all of the
information required in the initial certification.\20\
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\20\ When FinCEN renewed OMB control number 1506-0043 in 2018
the estimate included an annual estimate of the following three
items: (i) 20 hours to complete a certification for a foreign bank;
(ii) 5 hours to complete a recertification for a foreign bank; and
(iii) 9 hours to maintain records on the foreign bank's
certification/recertification. In this notice, FinCEN has revised
its estimate to incorporate the recordkeeping component of the
burden estimate within the certification and recertification
process. FinCEN also has revised its assessment of the time
necessary to conduct a recertification, as the process is identical
to a certification. For those reasons, FinCEN is estimating the
burden for a certification and corresponding recordkeeping is 15
hours; and the burden for a recertification and corresponding
recordkeeping is also 15 hours.
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As noted above, a covered financial intuition is required to obtain
an initial certification and recertification every three years from
each foreign bank for which it maintains a correspondent account.
FinCEN estimates that there are approximately 8,696 covered financial
institutions that maintain at least one correspondent account for a
foreign bank. FinCEN is using this number to approximate the number of
certifications and recertifications covered financial institutions need
to conduct annually.
FinCEN does not have a way to determine the total number of
correspondent accounts each covered financial institution maintains for
foreign banks. In addition, there are practical challenges in
estimating how often a covered financial institution needs to obtain
certification or recertification forms from foreign banks annually,
because certifications are only required when a new correspondent
account is opened and recertifications are only required every three
years. For those reasons, FinCEN estimates that each covered financial
institution will conduct one certification and one recertification
annually, for two of the foreign banks for which it maintains
correspondent accounts. FinCEN recognizes that some covered financial
institutions may only maintain a few correspondent accounts for foreign
banks, while other covered financial institutions may maintain multiple
correspondent accounts for foreign banks.
FinCEN's estimate of the traditional annual PRA burden, therefore,
is 260,880 hours, as detailed in Table 1 below:
Table 1--Hourly Burden for Each Covered Financial Institution To Obtain One Certification and One
Recertification Annually, Along With the Corresponding Recordkeeping Burden
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Estimated number Hourly burden to obtain and record a Total burden hours for covered
of covered certification or recertification financial institutions to obtain Grand total
financial per foreign bank and record certification and annual burden
institutions with -------------------------------------- recertification annually hours for covered
one or more -------------------------------------- financial
correspondent Certification and Recertification institutions to
accounts for recordkeeping and recordkeeping Certification and Recertification comply with 31
foreign banks (in hours) (in hours) recordkeeping and recordkeeping CFR 1010.630
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8,696 15 15 130,440 130,440 260,880
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To calculate the hourly costs of the burden estimate, FinCEN
identified six roles and corresponding staff positions involved in
obtaining, reviewing, and maintaining certification and recertification
forms from foreign banks: (i) General oversight (providing institution-
level process approval); (ii) general supervision (providing process
oversight); (iii) direct supervision (reviewing operational-level work
and cross-checking all or a sample of the work product against
supporting documentation); (iv) clerical work (engaging in research and
administrative review, and recordkeeping); (v) legal compliance
(ensuring the certification/recertification documents are in legal
compliance); and (vi) computer support (ensuring certification/
recertification documents can be properly stored and retrieved
electronically if desired).
FinCEN calculated the fully-loaded hourly wage for each of these
six roles by using the mean wage estimated by the U.S. Bureau of Labor
Statistics
[[Page 7923]]
(BLS),\21\ and computing an additional benefits cost as follows:
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\21\ The U.S. Bureau of Labor Statistics, May 2020 OEWS National
Industry-Specific Occupational Employment and Wage Estimates
(<a href="http://bls.gov">bls.gov</a>). The most recent data from the BLS corresponds to May
2021. For the benefits component of total compensation, see U.S.
Bureau of Labor Statistics, ``Table 9. Private industry workers, by
major occupational group: employer costs per hour worked for
employee compensation and costs as a percentage of total
compensation'', available at Employer Costs for Employee
Compensation Historical Tables--June 2021 (<a href="http://bls.gov">bls.gov</a>). The ratio
between benefits and wages for private industry workers is $10.83
(hourly benefits)/$25.80 (hourly wages) = 0.42, as of March 2021.
The benefit factor is 1 plus the benefit/wages ratio, or 1.42.
Multiplying each hourly wage by the benefit factor produces the
fully-loaded hourly wage per position.
\22\ For each occupation, FinCEN took the average of reported
mean hourly wage across 9 affected financial industries (as measured
at the most granular NAICS code available, whether at the 2, 3, 4 or
5 digit NAICS code; see the BLS May 2020 OEWS National Industry-
Specific Occupational Employment and Wage Estimates (<a href="http://bls.gov">bls.gov</a>)).
\23\ General oversight may include board of directors/trustees
approval.
\24\ Chief executive officer is the highest paid category in the
BLS Occupational Employment Statistics. For that reason, FinCEN is
conservatively estimating the highest wage rate available for its
cost analysis.
Table 2--Fully-Loaded Hourly Wage by Role and BLS Job Position for All Financial Institutions Covered By This
Notice
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Mean hourly Fully-loaded
Role BLS--code BLS--name wage \22\ Benefit factor hourly wage
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General oversight \23\........ 11-1010 Chief Executive $107.12 1.42 $152.11
\24\.
General supervision........... 11-3031 Financial 74.59 1.42 105.92
Manager.
Direct supervision............ 13-1041 Compliance 35.81 1.42 50.85
Officer.
Clerical work (research, 43-3099 Financial Clerk. 23.27 1.42 33.04
review, and recordkeeping).
Legal compliance.............. 23-1010 Lawyers and 85.66 1.42 121.64
Judicial Law
Clerks.
Computer support.............. 11-3021 Computer and 77.77 1.42 110.43
Information
Systems
Managers.
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FinCEN estimates that, in general and on average,\25\ each role
would spend different amounts of time on each portion of the
traditional annual PRA burden, as follows:
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\25\ By ``in general,'' FinCEN means without regard to outliers
(e.g., financial institutions that maintain correspondent accounts
for foreign banks with complexities that are uncommonly higher or
lower than those of the population at large). By ``on average,''
FinCEN means the mean of the distribution of each subset of the
population.
Table 3--Weighted Average Hourly Cost of Foreign Bank Certifications/
Recertifications and Recordkeeeping
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Role % Time Hourly cost
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General Oversight....................... 16.67 $25.35
General Supervision..................... 16.67 17.65
Direct Supervision...................... 16.67 8.48
Clerical Work........................... 16.67 5.51
Legal Compliance........................ 16.67 20.27
Computer Support........................ 16.67 18.41
-------------------------------
Equal Weighted Average Hourly Cost.. .............. * 95.67
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\*\ $95.67 rounded to $96.00.
The total estimated cost of the traditional annual PRA burden is
$25,044,480, as reflected in Table 4 below:
Table 4--Total Cost of Traditional Annual PRA Burden
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Steps Hourly burden Hourly cost Total cost
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Time taken for covered financial institutions to obtain \26\ 130,440 \27\ $96.00 $12,522,240
certification requirements from foreign banks, including
recordkeeping. (divided between the roles listed in Table 2)...
Time taken for covered financial institutions to obtain \28\ 130,440 \29\ 96.00 12,522,240
recertification requirements from foreign banks, including
recordkeeping. (divided between the roles listed in Table 2)...
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Total cost.................................................. .............. .............. 25,044,480
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Part 2. Supplemental Annual PRA Burden
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\26\ See Table 1.
\27\ See Table 3.
\28\ See Table 1.
\29\ See Table 3.
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[[Page 7924]]
In the future, FinCEN intends to add a supplemental annual PRA
burden calculation that will include the estimated hourly burden and
cost to a covered financial institution to: (i) Conduct due diligence
over correspondent accounts maintained for foreign banks to determine
if an interim verification is warranted; (ii) conduct an interim
verification; and (iii) determine if closing a correspondent account is
warranted.
As noted in Section I above, if a covered financial institution
knows, suspects, or has reason to suspect that any information provided
by a foreign bank in its certification or recertification is incorrect
or no longer accurate, the covered financial institution must request
that the foreign bank verify or correct the information. Additionally,
the covered financial institution may take other appropriate measures
to ascertain the accuracy of the information or obtain the correct
information.
As also noted in Section I above, if a covered financial
institution has not obtained a certification, recertification, or
documentation of the information necessary for the certification or
recertification within 30 calendar days after the date the account is
established, and at least once every three years thereafter, the
covered financial institution must close all correspondent accounts
with such foreign bank within a commercially reasonable time, and
restrict the foreign bank from engaging in transactions, other than
transactions necessary to close the account. Additionally, if a covered
financial institution needs to conduct an interim verification and has
not obtained, from the foreign bank or otherwise, verification of the
information or corrected information within 90 calendar days after the
date of undertaking the interim verification, the covered financial
institution must follow the same account closure procedures.
On September 29, 2020, FinCEN issued a notice and request for
comment on the proposed renewal without change of the due diligence
programs for correspondent accounts for foreign financial institutions
and for private bank accounts.\30\ That notice included renewing the
OMB control number associated with 31 CFR 1010.610 (due diligence
programs for foreign financial institutions),\31\ and outlined a future
supplemental annual PRA burden calculation to include the estimated
hourly burden and cost to maintain records and document compliance with
the due diligence procedures and enhanced due diligence (EDD)
procedures for foreign correspondent accounts.
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\30\ See 85 FR 61104, Sept. 29, 2020.
\31\ OMB control number 1506-0046.
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Under 31 CFR 1010.610(a), covered financial institutions are
required to establish due diligence policies, procedures, and controls
that include each of the following for any correspondent account
established, maintained, administered, or managed: (i) Determining
whether any such foreign correspondent account is subject to EDD; (ii)
assessing the money laundering risks presented by each such foreign
correspondent account; and (iii) applying risk-based procedures and
controls to each such foreign correspondent account reasonably designed
to detect and report known or suspected money laundering activity,
including a periodic review of the correspondent account activity
sufficient to determine consistency with information obtained about the
type, purpose, and anticipated activity of the account.
FinCEN believes that in the process of complying with 31 CFR
1010.610(a), covered financial institutions would identify instances in
which an interim verification is warranted, as a result of receiving
identifying information about a foreign bank for which the covered
financial institution maintains a correspondent account that is no
longer correct or accurate. Further FinCEN believes that the due
diligence being conducted to comply with 31 CFR 1010.610(a) would be
coordinated with the identification of foreign banks that have not
provided the required certification, recertification, or interim
verification within the required timeframes, resulting in the closure
of correspondent accounts with such foreign banks consistent with 31
CFR 1010.610(d).
FinCEN assesses that the provisions of 31 CFR 1010.630 are in large
part conducted in connection with the due diligence and EDD covered
financial institutions conduct on foreign correspondent accounts as
required by 31 CFR 1010.610. In future supplemental annual PRA burden
estimates for 31 CFR 1010.610 and 31 CFR 1010.630, FinCEN will consider
whether the burden estimates for these two regulatory requirements
should be linked and estimated together.
FinCEN does not have the necessary information to provide a
tentative estimate for these supplemental PRA hourly burdens and costs
within the current notice. In addition, FinCEN does not have all the
necessary information to precisely estimate the traditional annual PRA
burden. For that reason, FinCEN is relying to some extent on estimates
used in prior renewals of this OMB control number and the applicable
regulations. FinCEN further recognizes that after receiving public
comments as a result of this notice, future traditional annual PRA
hourly burden and cost estimates may vary significantly. FinCEN intends
to conduct more granular studies of the actions included in the
proposed scope of the supplemental annual PRA burden in the near
future, to arrive at more precise estimates of net BSA hourly burden
and cost.\32\ The data obtained in these studies also may result in a
significant variation of the estimated traditional annual PRA burden.
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\32\ Net hourly burden and cost are the burden and cost a
financial institution incurs to comply with requirements that are
unique to the BSA, and that do not support any other business
purpose or regulatory obligation of the financial institution.
Burden for purposes of the PRA does not include the time and
financial resources needed to comply with an information collection,
if the time and resources are for things a business (or other
person) does in the ordinary course of its activities if the agency
demonstrates that the reporting activities needed to comply are
usual and customary. 5 CFR 1320.3(b)(2). For example, depending on
the nature of the correspondent account, a covered financial
institution may be collecting and maintaining some of the same
information on the foreign bank correspondent account holder as is
required by 31 CFR 1010.630, in order to satisfy other obligations
including: (i) Protecting the financial institution from fraud
against itself or its customers; (ii) complying with other non-BSA
regulatory requirements such as those imposed by the specific
Federal functional regulator; or (iii) improving the financial
institution's marketing efforts, or the credit analysis of any
lending facilities granted to the foreign bank.
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Estimated Recordkeeping Burden: The average estimated annual PRA
burden, measured in hours per correspondent account maintained by a
covered financial institution for a foreign bank, is 15 hours per
account for the purpose of fulfilling the covered financial
institution's initial certification and corresponding recordkeeping
obligations, and 15 hours per account for the purpose of fulfilling the
covered financial institution's recertification and recordkeeping
requirements every three years.
Estimated Number of Respondents/Responses: 8,696 covered financial
institutions maintain correspondent accounts for foreign banks.
Estimated Total Annual Recordkeeping Burden: The estimated
[[Page 7925]]
total annual PRA burden is 260,880 hours, as set out in Table 1.
Estimated Total Annual Recordkeeping Cost: The estimated total
annual PRA cost is $25,044,480, as set out in Table 4.
An Agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless the collection of
information displays a valid OMB control number. Records required to be
retained under the BSA must be retained for five years.
Part 3--Request for Comments
(a) Specific request for comments on the traditional annual PRA
hourly burden and cost.
FinCEN invites comments on any aspect of the traditional annual PRA
burden, as set out in Part 1 of this notice. In particular, FinCEN
seeks comments on the adequacy of: (i) FinCEN's assumptions underlying
its estimate of the burden; (ii) the estimated number of hours required
by each portion of the burden; and (iii) the organizational levels of
the covered financial institution engaged in each portion of the
burden, their estimated hourly remuneration, and the estimated
proportion of participation by each role. FinCEN encourages commenters
to include any publicly available sources for alternative estimates or
methodologies.
(b) Specific request for comments on the proposed criteria for
determining the scope of a supplemental annual PRA hourly burden and
cost estimate.
FinCEN invites comments on any aspect of the criteria for a future
estimate of the supplemental annual PRA burden, as set out in Part 2 of
this notice.
(c) Specific request for comments on the appropriate criteria and
methodology required to obtain information to more precisely estimate
the supplemental annual PRA hourly burden and cost.
FinCEN invites comments on the most appropriate and comprehensive
way to ask covered financial institutions about the annual hourly
burden and cost attributable solely to: (i) Conducting due diligence
over correspondent accounts maintained for foreign banks to determine
if an interim verification is warranted; (ii) conducting an interim
verification; and (iii) determining if closing a correspondent account
is warranted.
The supplemental annual PRA hourly burden and cost estimate of the
recordkeeping necessary to comply with identifying and conducting
interim verifications, and identifying and closing correspondent
accounts, as appropriate, must take into consideration only the effort
involved in obtaining those data elements that are used exclusively for
complying with requirements under 31 CFR 1010.630. Given the complexity
of determining what portion of the effort to include in the estimate,
FinCEN seeks comments from the public regarding any questions we should
consider posing in future notices, in addition to the specific
questions for comment outlined directly below. Also, due to the evident
difficulty involved in estimating: (i) The total number of covered
financial institutions that maintain correspondent accounts for foreign
banks; (ii) the number of such correspondent accounts per covered
financial institution; and (iii) the frequency of certifications,
recertifications, interim verifications, and account closures per
covered financial institution, FinCEN welcomes any suggestions as to
how to derive these estimates by using publicly available information.
(d) Specific questions for comment associated with certification
and recertification of foreign banks' records:
<bullet> Correspondent Accounts for Foreign Banks
<bullet> On average, how many correspondent accounts does your
financial institution maintain for foreign banks?
<bullet> Is compliance with 31 CFR 1010.630 conducted in
conjunction with your financial institution's overall due diligence
over correspondent accounts for foreign financial institutions, as
required by 31 CFR 1010.610?
<bullet> On average, of the correspondent accounts maintained by
your financial institution for foreign banks, how many are not publicly
traded or do not file a Form FR-Y7 with the Federal Reserve?
<bullet> What steps does your financial institution take to
ascertain whether a foreign bank is publicly traded or has filed a Form
FR-7?
<bullet> Does your financial institution have a process to track
correspondent accounts for foreign banks for reasons other than to
comply with the BSA requirements?
<bullet> Certification and Recertification Procedures
<bullet> Does your financial institution obtain an initial
certification during customer onboarding of a foreign bank?
<bullet> Does your financial institution open a correspondent
account for a foreign bank, if it fails to provide the information
required as part of the initial certification form at the time of
onboarding?
<bullet> Does your financial institution track when foreign banks
are required to recertify?
<bullet> Does your financial institution require foreign banks to
certify or recertify as part of the periodic review or EDD process, as
required under 31 CFR 1010.610?
<bullet> At what point prior to the due date of the recertification
does your financial institution request recertification from a foreign
bank?
<bullet> Does your financial institution obtain recertification
more often than every three years?
<bullet> Does your financial institution use the sample
certification form provided by FinCEN, or does your financial
institution use a bespoke form or other method to obtain a statement of
certification?
<bullet> On average, how long does it take your financial
institution to obtain certification or recertification from a foreign
bank for which you maintain a correspondent account?
<bullet> On average, how long does it take your financial
institution to review the information provided by a foreign bank as
part of its certification or recertification?
<bullet> Does senior management play a role in reviewing the
information that your financial institution obtains from foreign
bank(s) as part of certification or recertification?
<bullet> Interim Verification
<bullet> If your financial institution has reason to suspect that
the information provided by a foreign bank in its certification or
recertification is incorrect, what steps are taken by your financial
institution to obtain the correct information?
<bullet> If it is determined by your financial institution that the
information obtained for a foreign bank during the certification or
recertification is incorrect, is senior management notified?
<bullet> What steps are taken by the financial institution with
respect to the foreign bank's correspondent account if the correct
information cannot be obtained?
<bullet> On average, on an annual basis, how many interim
verifications does your financial institution need to conduct, because
it suspects a foreign bank's current certification information is no
longer correct? How long does the process take?
<bullet> Account Closure
<bullet> Are there instances where a foreign bank wishes to
reestablish a correspondent banking relationship with your financial
institution after the foreign bank's account was closed due to a
failure to certify or recertify?
[[Page 7926]]
<bullet> Does your financial institution have a review and approval
process involving senior management to close a foreign bank's
correspondent account if it fails to certify or recertify?
(e) General request for comments.
Comments submitted in response to this notice will be summarized
and/or included in the request for OMB approval. All comments will
become a matter of public record. Comments are invited on: (i) Whether
the collection of information is necessary for the proper performance
of the functions of the agency, including whether the information shall
have practical utility; (ii) the accuracy of the agency's estimate of
the burden of the collection of information; (iii) ways to enhance the
quality, utility, and clarity of the information to be collected; (iv)
ways to minimize the burden of the collection of information on
respondents, including through the use of automated collection
techniques or other forms of information technology; and (v) estimates
of capital or start-up costs and costs of operation, maintenance, and
purchase of services to provide information.
Himamauli Das,
Acting Director, Financial Crimes Enforcement Network.
[FR Doc. 2022-02885 Filed 2-9-22; 8:45 am]
BILLING CODE P
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</html>Indexed from Federal Register on February 10, 2022.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.