Proposed Rule2026-17871
Proposal of Special Measure Regarding Banque Misr UAE as a Financial Institution Operating Outside of the United States of Primary Money Laundering Concern
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
September 1, 2026
Issuing agencies
Treasury DepartmentFinancial Crimes Enforcement Network
Abstract
FinCEN is issuing a notice of proposed rulemaking, pursuant to section 311 of the USA PATRIOT Act, that finds the five United Arab Emirates-based branches of Banque Misr (collectively, Banque Misr UAE) to be of primary money laundering concern and proposes imposing a special measure to: prohibit U.S. financial institutions from opening or maintaining a correspondent account for, or on behalf of, Banque Misr UAE; require U.S. financial institutions to take reasonable steps not to process a transaction for the correspondent account in the United States of a foreign banking institution if such a transaction involves Banque Misr UAE; and require U.S. financial institutions to apply special due diligence to their foreign correspondent accounts that are reasonably designed to guard against their use to process transactions involving Banque Misr UAE.
Full Text
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<title>Federal Register, Volume 91 Issue 168 (Tuesday, September 1, 2026)</title>
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[Federal Register Volume 91, Number 168 (Tuesday, September 1, 2026)]
[Proposed Rules]
[Pages 56085-56095]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-17871]
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DEPARTMENT OF THE TREASURY
Financial Crimes Enforcement Network
31 CFR Part 1010
RIN 1506-AB76
Proposal of Special Measure Regarding Banque Misr UAE as a
Financial Institution Operating Outside of the United States of Primary
Money Laundering Concern
AGENCY: Financial Crimes Enforcement Network (FinCEN), Treasury.
ACTION: Notice of proposed rulemaking.
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SUMMARY: FinCEN is issuing a notice of proposed rulemaking, pursuant to
section 311 of the USA PATRIOT Act, that finds the five United Arab
Emirates-based branches of Banque Misr (collectively, Banque Misr UAE)
to be of primary money laundering concern and proposes imposing a
special measure to: prohibit U.S. financial institutions from opening
or maintaining a correspondent account for, or on behalf of, Banque
Misr UAE; require U.S. financial institutions to take reasonable steps
not to process a transaction for the correspondent account in the
United States of a foreign banking institution if such a transaction
involves Banque Misr UAE; and require U.S. financial institutions to
apply special due diligence to their foreign correspondent accounts
that are reasonably designed to guard against their use to process
transactions involving Banque Misr UAE.
DATES: Written comments on the notice of proposed rulemaking must be
submitted on or before October 1, 2026.
ADDRESSES: Comments must be submitted in one of the following two ways
(please choose only one of the ways listed):
<bullet> Federal E-rulemaking Portal: <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
If you are reading this document on <a href="http://federalregister.gov">federalregister.gov</a>, you may use
the green ``SUBMIT A PUBLIC COMMENT'' button beneath this rulemaking's
title to submit a comment to the <a href="http://regulations.gov">regulations.gov</a> docket.
<bullet> Mail: Financial Crimes Enforcement Network, P.O. Box 39,
Vienna, VA 22183. Refer to Docket Number FINCEN-2026-0232 in the
submission.
Do not include any personally identifiable information (such as
name, address, or other contact information) or confidential business
information that you do not want publicly disclosed. All comments are
public records; they are publicly displayed exactly as received, and
will not be deleted, modified, or redacted. Comments may be submitted
anonymously. Follow the search instructions on <a href="https://www.regulations.gov">https://www.regulations.gov</a> to view public comments.
FOR FURTHER INFORMATION CONTACT: The FinCEN Resource Center at
<a href="http://www.fincen.gov/contact">www.fincen.gov/contact</a>.
SUPPLEMENTARY INFORMATION:
I. Statutory Provisions
Section 311 of the USA PATRIOT Act \1\ (section 311), codified at
31 U.S.C. 5318A, grants the Secretary of the Treasury (Secretary) the
authority to make a finding that ``reasonable grounds exist for
concluding'' that any of the following ``is of primary money laundering
concern'':
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\1\ Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001,
Public Law 107-56, 115 Stat. 272 (Oct. 26, 2001) (USA PATRIOT Act).
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(i) A jurisdiction outside of the United States;
(ii) One or more financial institutions operating outside of the
United States;
(iii) One or more classes of transactions within, or involving, a
jurisdiction outside of the United States; or
(iv) One or more types of accounts.\2\
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\2\ 31 U.S.C. 5318A(a)(1).
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Upon making such a finding, the Secretary is authorized to require
domestic financial institutions and
[[Page 56086]]
domestic financial agencies--collectively, ``covered financial
institutions'' \3\--to take certain ``special measures.'' Specifically,
pursuant to section 311, the Secretary may impose one or more of five
possible special measures as safeguards to defend the U.S. financial
system from money laundering and terrorist financing risks. Through
special measures one through four, the Secretary may impose additional
recordkeeping, information collection, and reporting requirements on
covered financial institutions.\4\ Through special measure five, the
Secretary may ``prohibit, or impose conditions upon, the opening or
maintaining in the United States of a correspondent account or payable-
through account'' for or on behalf of a foreign banking institution, if
such correspondent account or payable-through account involves the
financial institution operating outside of the United States found to
be of primary money laundering concern.\5\
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\3\ For purposes of this proposed rulemaking, the term ``covered
financial institution'' has the same meaning as provided at 31 CFR
1010.605(e)(1); see infra Section VI.A.3.
\4\ 31 U.S.C. 5318A(b)(1)-(4).
\5\ 31 U.S.C. 5318A(b)(5).
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Before making a finding that reasonable grounds exist for
concluding that a financial institution operating outside of the United
States (or other jurisdiction, account, or class of transactions) is of
primary money laundering concern, the Secretary is required to consult
with both the Secretary of State and the Attorney General.\6\ In
addition, among the information the Secretary determines to be relevant
in making such a finding about a financial institution, the Secretary
is required to consider the following potentially relevant
institutional factors:
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\6\ 31 U.S.C. 5318A(c)(1).
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<bullet> The extent to which such a financial institution is used
to facilitate or promote money laundering in or through a jurisdiction
outside the United States, including any money laundering activity by
organized criminal groups, international terrorists, or entities
involved in the proliferation of weapons of mass destruction (WMD) or
missiles.
<bullet> The extent to which such a financial institution is used
for legitimate business purposes in the jurisdiction; and
<bullet> The extent to which the action being proposed is
sufficient to ensure, with respect to transactions involving the
jurisdiction and institutions operating in the jurisdiction, that the
purposes of section 311 continue to be fulfilled, and to guard against
international money laundering and other financial crimes.\7\
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\7\ 31 U.S.C. 5318A(c)(2)(B)(i)-(iii). In addition, in the case
of a finding relating to a particular jurisdiction, section 311 sets
out certain ``jurisdictional factors'' that the Secretary may
consider, which are not relevant here. See 31 U.S.C.
5318A(c)(2)(A)(i)-(vii).
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In selecting one or more special measures, the Secretary ``shall
consult with the Chairman of the Board of Governors of the Federal
Reserve System, any other appropriate Federal banking agency (as
defined in section 3 of the Federal Deposit Insurance Act), the
Secretary of State, the Securities and Exchange Commission, the
Commodity Futures Trading Commission, the National Credit Union
Administration Board, and in the sole discretion of the Secretary, such
other agencies and interested parties as the Secretary may find
appropriate.'' \8\ When imposing special measure five, the Secretary
must do so ``in consultation with the Secretary of State, the Attorney
General, and the Chairman of the Board of Governors of the Federal
Reserve System.'' \9\ In addition, the Secretary is required to
consider the following factors:
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\8\ 31 U.S.C. 5318A(a)(4)(A).
\9\ 31 U.S.C. 5318A(b)(5).
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<bullet> Whether similar action has been or is being taken by other
nations or multilateral groups;
<bullet> Whether the imposition of any particular special measure
would create a significant competitive disadvantage, including any
undue cost or burden associated with compliance, for financial
institutions organized or licensed in the United States;
<bullet> The extent to which the action or the timing of the action
would have a significant adverse systemic impact on the international
payment, clearance, and settlement system, or on legitimate business
activities involving the particular jurisdiction, institution, class of
transactions, or type of account; and
<bullet> The effect of the action on United States national
security and foreign policy.\10\
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\10\ 31 U.S.C. 5318A(a)(4)(B)(i)-(iv).
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The authority of the Secretary to administer the Bank Secrecy Act
(BSA) \11\ and its implementing regulations, including the authority
under section 311 to make such a finding and to impose special
measures, has been delegated to FinCEN.\12\
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\11\ The BSA, as amended, is the popular name for a collection
of statutory authorities that FinCEN administers that is codified at
12 U.S.C. 1829b, 1951-1960 and 31 U.S.C. 5311-5314, 5316-5336, and
includes other authorities reflected in notes thereto. Regulations
implementing the BSA appear at 31 CFR Chapter X.
\12\ See Treasury Order 180-01 (Jan. 14, 2020).
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II. Summary
Banque Misr UAE consists of five UAE-based branches of the Arab
Republic of Egypt (Egypt)-based state-owned commercial bank, Banque
Misr.\13\
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\13\ Banque Misr UAE is also wholly owned by the government of
Egypt. Egypt-based Banque Misr commenced its operations in the UAE
in August 1972 under the name of Banque Du Caire. In July 2007,
these UAE branches were fully acquired by Banque Misr, wholly owned
by the government of Egypt. CBUAE, Licensing, <a href="https://www.centralbank.ae/en/licensing">https://www.centralbank.ae/en/licensing</a> (last accessed Aug. 6, 2026); see
also Banque Misr, Regional and Foreign Branches, <a href="https://www.banquemisr.com/en/CONTACT-US/Regional-and-Foreign-Branches">https://www.banquemisr.com/en/CONTACT-US/Regional-and-Foreign-Branches</a> (last
accessed Aug. 6, 2026); Banque Misr, History, <a href="https://banquemisr.com/Home/ABOUT%20US/History">https://banquemisr.com/Home/ABOUT%20US/History</a> (last accessed Aug. 6, 2026);
Banque Misr United Arab Emirates Branches, Financial Statements for
Year Ended 31 December 2025, <a href="https://www.banquemisr.ae/repository/images/2026/05/Banque-Misr-UAE_FS-31-Dec-2025-1.pdf">https://www.banquemisr.ae/repository/images/2026/05/Banque-Misr-UAE_FS-31-Dec-2025-1.pdf</a> (last accessed
Aug. 10, 2026).
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Based on public and non-public information, FinCEN assesses that
Banque Misr UAE serves as a critical access node to the U.S. dollar
(USD) for Iranian illicit finance, putting U.S. national security at
risk and undermining the integrity of the U.S. financial system. Egypt-
based Banque Misr, and its branches and operations in countries other
than the UAE, are expressly excluded from the definition of ``Banque
Misr UAE'' for the purposes of this NPRM.
This NPRM sets forth FinCEN's finding that Banque Misr UAE is a
financial institution operating outside of the United States of primary
money laundering concern. Accordingly, FinCEN proposes that, under
special measure five, covered financial institutions: (1) be prohibited
from opening or maintaining a correspondent account for, or on behalf
of, Banque Misr UAE; (2) take reasonable steps not to process a
transaction for the correspondent account in the United States of a
foreign banking institution if such a transaction involves Banque Misr
UAE; and (3) apply special due diligence to their foreign correspondent
accounts that is reasonably designed to guard against their use to
process transactions involving Banque Misr UAE.
III. Background
The Islamic Republic of Iran (Iran) is subject to comprehensive
U.S. sanctions,\14\ including a prohibition on opening or maintaining
correspondent
[[Page 56087]]
accounts in the United States for, or on behalf of, Iranian financial
institutions pursuant to section 311.\15\ To evade sanctions, Iran
relies on multi-jurisdictional ``shadow banking'' networks to sell oil
and other commodities abroad, launder the proceeds, fund weapons
procurement and support regional terrorist proxies. These shadow
banking networks consist of Iran-based exchange houses and front
companies that enable sanctioned Iranian entities to access USD and
financial system through U.S. correspondent banking accounts. Front
companies are predominantly registered in third-country jurisdictions
such as the UAE and the Special Administrative Region of Hong Kong
(Hong Kong) to obscure beneficial ownership, disguise the origin of
funds, and enable movement of proceeds linked to Iranian sanctions
evasion and other illicit activity. FinCEN previously identified
approximately USD 9 billion of potential Iranian shadow banking
activity that occurred through U.S. correspondent accounts in 2024.\16\
It is therefore critical to address the role that financial
institutions operating outside of the United States play in
facilitating Iranian shadow banking networks.
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\14\ The U.S. maintains comprehensive sanctions on Iran, which
prohibit most transactions and activities with Iran by U.S. persons
or within the United States, unless exempt or authorized by the U.S.
Department of the Treasury's Office of Foreign Assets Control
(OFAC). For more information, see OFAC, ``Iran Sanctions,'' (last
accessed Aug. 10, 2026).
\15\ See FinCEN, Imposition of Fifth Special Measure Against the
Islamic Republic of Iran as a Jurisdiction of Primary Money
Laundering Concern, 84 FR 59302 (Nov. 14, 2019); see also 31 CFR
1010.661.
\16\ FinCEN, FIN-2025-A002, FinCEN Advisory on the Iranian
Regime's Illicit Oil Smuggling Activities, Shadow Banking Networks,
and Weapons Procurement Efforts (June 6, 2025), <a href="https://www.fincen.gov/system/files/FinCEN-Advisory-Illicit-Oil-Smuggling-508.pdf">https://www.fincen.gov/system/files/FinCEN-Advisory-Illicit-Oil-Smuggling-508.pdf</a>; FinCEN, Financial Trend Analysis; Iranian Shadow Banking:
Trends in Bank Secrecy Act Data (Oct. 2025), <a href="https://www.fincen.gov/system/files/2025-10/FTA-Iranian-Shadow-Banking.pdf">https://www.fincen.gov/system/files/2025-10/FTA-Iranian-Shadow-Banking.pdf</a>; FinCEN, FIN-
2026-Alert002, FinCEN Alert on the Use of Front Companies, Financial
Facilitators, and Digital Asset Infrastructure by Iran's Islamic
Revolutionary Guard Corps to Evade Sanctions and Launder Proceeds
(May 11, 2026), <a href="https://www.fincen.gov/system/files/2026-05/FinCEN-Alert-IRGC.pdf">https://www.fincen.gov/system/files/2026-05/FinCEN-Alert-IRGC.pdf</a>.
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IV. Finding That Banque Misr UAE is a Financial Institution Operating
Outside of the United States
As set forth above, section 311 authorizes FinCEN, through
delegated authority and in pertinent part, to make a finding ``that
reasonable grounds exist for concluding'' that ``[one] or more
financial institutions operating outside of the United States'' is ``of
primary money laundering concern.'' \17\ A prerequisite to such a
finding is that the relevant institution is a ``financial institution
operating outside of the United States.'' \18\
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\17\ 31 U.S.C. 5318A(a)(1).
\18\ 31 U.S.C. 5318A(a)(1) authorizes the imposition of special
measures on, among others, ``financial institutions operating
outside of the United States.'' Of the five special measures
authorized by the statute, special measure five authorizes
``Prohibitions or Conditions on Opening or Maintaining Certain
Correspondent or Payable-Through Accounts.'' The statute goes on to
define the terms ``correspondent account'' and ``payable-through
account'' with reference to payments made on behalf of a ``foreign
financial institution''--a term otherwise undefined. For the
purposes of this NPRM, and under these facts, FinCEN finds that
Banque Misr UAE is both a foreign financial institution and a
financial institution outside of the United States.
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Banque Misr UAE is a commercial bank in the UAE offering a range of
retail and wholesale banking services.\19\ A ``financial institution''
for purposes of section 311 includes ``a commercial bank or trust
company.'' \20\ Banque Misr UAE is therefore a financial institution
within the meaning of section 311. Banque Misr UAE operates under UAE
banking regulations and is regulated by the Central Bank of the UAE
(CBUAE), the UAE financial supervisor.\21\ Accordingly, FinCEN finds
that reasonable grounds exist to conclude that Banque Misr UAE is a
financial institution operating outside of the United States.
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\19\ Banque Misr United Arab Emirates Branches, Financial
Statements for Year Ended 31 December 2025, <a href="https://www.banquemisr.ae/repository/images/2026/05/Banque-Misr-UAE_FS-31-Dec-2025-1.pdf">https://www.banquemisr.ae/repository/images/2026/05/Banque-Misr-UAE_FS-31-Dec-2025-1.pdf</a> (last accessed Aug. 10, 2026).
\20\ 31 U.S.C. 5312(a)(2)(B).
\21\ CBUAE, Licensing, <a href="https://www.centralbank.ae/en/licensing">https://www.centralbank.ae/en/licensing</a>
(last accessed Aug. 6, 2026).
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V. Finding That Banque Misr UAE is of Primary Money Laundering Concern
Pursuant to 31 U.S.C. 5318A(a)(1), FinCEN finds that reasonable
grounds exist for concluding that Banque Misr UAE is a financial
institution operating outside of the United States of primary money
laundering concern. Below is a discussion of the relevant statutory
factors FinCEN considered in making this finding.
A. The Extent to Which Banque Misr UAE Is Used To Facilitate or Promote
Money Laundering, Including Any Money Laundering Aactivity by Organized
Criminal Groups, International Terrorists, or Entities Involved in the
Proliferation of WMD or Missiles
Based on public and non-public information, FinCEN assesses that
Banque Misr UAE serves as a significant conduit for Iranian shadow
banking. FinCEN analyzed Iranian shadow banking between June 2025 and
June 2026, from non-public information made available to FinCEN, and
observed Banque Misr UAE to have a concerningly high percentage of
potential Iranian shadow banking to assets in the data available and
given the size of its assets.
Overall, FinCEN identified 103 potential Iranian shadow banking
front companies transacting approximately USD 1.8 billion, using
accounts with Banque Misr UAE from January 2024 to June 2026. This
includes approximately USD 520 million over the most recent 12-month
period. Banque Misr UAE customers involved in this activity include,
but are not limited to:
1. Alpa Trading FZCO. Alpa Trading FZCO, a UAE-based front company
operated by Iranian financial facilitators, knowingly facilitated
illicit flows of funds, including for the purchase of products on
behalf of Iran's Ministry of Defense and Armed Forces Logistics
(MODAFL) and the Islamic Revolutionary Guard Corps (IRGC), both of
which have been designated as Specially Designated Global Terrorists
(SDGTs) by OFAC.\22\ In September 2025, Alpa Trading FZCO was
designated as an SDGT pursuant to E.O. 13224, as amended, for having
materially assisted, sponsored, or provided financial, material, or
technological support for, or goods or services to or in support of,
Ramin Jalalian.\23\ Ramin Jalalian, an OFAC-designated Iranian currency
exchanger and businessman, worked at the instruction of MODAFL's supply
division, to bypass U.S. and European sanctions on Iran.\24\ FinCEN's
analysis of public and non-public information identified, between 2024
and 2025, Banque Misr UAE processed over USD 32 million in transactions
for Alpa Trading FZCO.
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\22\ On October 25, 2007, OFAC designated the Islamic
Revolutionary Guard Corps-Qods Force (IRGC-QF) pursuant to E.O.
13224 for its support to multiple terrorist organizations. On
October 13, 2017, OFAC designated its parent organization, the
Islamic Revolutionary Guard Corps (IRGC), pursuant to E.O. 13224 for
support to the IRGC-QF.
\23\ Department of the Treasury, Press Release, Treasury Targets
Financial Network Supporting Iran's Military (Sept. 16, 2025),
<a href="https://home.treasury.gov/news/press-releases/sb0248">https://home.treasury.gov/news/press-releases/sb0248</a> (last accessed
Aug. 12, 2026).
\24\ U.S. Department of the Treasury, Press Release, Treasury
Targets Shadow Banking Network Moving Billions for Iran's Military
(June 25, 2024), <a href="https://home.treasury.gov/news/press-releases/jy2431">https://home.treasury.gov/news/press-releases/jy2431</a>.
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2. Naba Alzaki Raw Materials Trading LLC. Naba Alzaki Raw Materials
Trading LLC, a UAE-based front company, has been used by Iran-based
Mohsen Khandan and Partners General Partnership Company (Khandan
Exchange) as part of Iran's shadow banking network.\25\ In July 2026,
OFAC
[[Page 56088]]
designated Naba Alzaki Raw Materials Trading LLC pursuant to E.O.
13902, for operating in the financial sector of the Iranian
economy.\26\ FinCEN's analysis of public and non-public information
identified that between March and July 2025, Banque Misr UAE processed
over USD 29 million in transactions for Naba Alzaki Raw Materials
Trading LLC.
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\25\ Khandan Exchange entered into contracts with OFAC-
designated Iranian banks, including Parsian Bank, Export Development
Bank, Bank Saderat, Bank Sepah, Sina Bank, Karafarin Bank, Saman
Bank, and Tejarat Bank. Khandan Exchange holds over USD 117 million
in foreign currency on behalf of sanctioned Iranian banks. U.S.
Department of the Treasury, Press Release, Treasury Targets Key
Supreme Leader Financier and Iran's Shadow Exchange Houses (July 10,
2026), <a href="https://home.treasury.gov/news/press-releases/sb0558">https://home.treasury.gov/news/press-releases/sb0558</a>.
\26\ U.S. Department of the Treasury, Press Release, Treasury
Targets Key Supreme Leader Financier and Iran's Shadow Exchange
Houses (July 10, 2026), <a href="https://home.treasury.gov/news/press-releases/sb0558">https://home.treasury.gov/news/press-releases/sb0558</a>.
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3. Midas Oil Trading DMCC. According to press reporting, UAE-based
Midas Oil Trading DMCC is a key money laundering entity on behalf of
Iranian Supreme Leader Mojtaba Khamenei.\27\ FinCEN's analysis of
public and non-public information identified that in January 2025,
Banque Misr UAE processed a transaction for over USD 1 million for
Midas Oil Trading DMCC.
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\27\ The Straits Times, ``How the son of Iran's supreme leader
built a global property empire'' (Mar. 9, 2026), <a href="https://www.straitstimes.com/world/middle-east/how-the-son-of-irans-supreme-leader-built-a-global-property-empire">https://www.straitstimes.com/world/middle-east/how-the-son-of-irans-supreme-leader-built-a-global-property-empire</a>.
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B. The Extent to Which Banque Misr UAE Is Used for Legitimate Business
Purposes
In making a finding that reasonable grounds exist for concluding
that a financial institution operating outside of the United States is
of primary money laundering concern so as to authorize the imposition
of special measures, FinCEN may consider the extent to which the
financial institution is ``used for legitimate business purposes.''
\28\
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\28\ 31 U.S.C. 5318A(c)(2)(B)(ii).
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Banque Misr UAE is a commercial bank offering a variety of
financial services, including retail and wholesale banking
services.\29\ According to the CBUAE, Banque Misr UAE is one of 63
registered banks in the country.\30\ Banque Misr UAE has approximately
USD 6 billion in assets.\31\ It has three direct U.S. correspondent
relationships through which it accesses the U.S. financial system.
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\29\ Banque Misr United Arab Emirates Branches, Financial
Statements for Year Ended 31 December 2025, <a href="https://www.banquemisr.ae/repository/images/2026/05/Banque-Misr-UAE_FS-31-Dec-2025-1.pdf">https://www.banquemisr.ae/repository/images/2026/05/Banque-Misr-UAE_FS-31-Dec-2025-1.pdf</a> (last accessed Aug. 10, 2026).
\30\ CBUAE, CB Register as of July 2026, <a href="https://www.centralbank.ae/en/licensing/#!#CBUAE%20Register/">https://www.centralbank.ae/en/licensing/#!#CBUAE%20Register/</a> (last accessed
Aug. 11, 2026).
\31\ According to Banque Misr's 2025 financial statement, the
bank had UAE Dirham (AED) 23,397,322 in assets as of December 31,
2025. The current AED/USD exchange rate is 0.27, equaling an
estimated asset size of around USD 6 billion. Banque Misr United
Arab Emirates Branches, Financial Statements for Year Ended 31
December 2025, <a href="https://www.banquemisr.ae/repository/images/2026/05/Banque-Misr-UAE_FS-31-Dec-2025-1.pdf">https://www.banquemisr.ae/repository/images/2026/05/Banque-Misr-UAE_FS-31-Dec-2025-1.pdf</a> (last accessed Aug. 10, 2026).
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Although FinCEN does not have fulsome insight into the scope of
Banque Misr UAE's legitimate activities, for purposes of this action,
FinCEN assumes that a portion of Banque Misr UAE's business activities
are legitimate. However, FinCEN has identified at least USD 1.8 billion
in potential Iranian shadow banking activity through Banque Misr UAE,
since 2024. FinCEN assesses that any legitimate activities do not
outweigh the risks posed by Banque Misr UAE's facilitation of Iranian
shadow banking, and the need to protect U.S. financial institutions
from the money laundering risks presented by Banque Misr UAE.
C. The Extent to Which the Action Proposed by FinCEN Would Guard
Against International Money Laundering and Other Financial Crimes
In making a finding that reasonable grounds exist for concluding
that a financial institution operating outside of the United States is
of primary money laundering concern, thereby authorizing the imposition
of special measures, FinCEN may consider the extent to which such
action is ``sufficient to ensure'' that the purpose of BSA
``continue[s] to be fulfilled, and to guard against international money
laundering and other financial crimes.'' \32\ FinCEN anticipates that,
by finding that Banque Misr UAE is a financial institution operating
outside the United States of primary money laundering concern and
imposing special measure five, as proposed here, U.S. financial
institutions, their foreign correspondents, and their regulators, may
act to mitigate the money laundering risks posed by transactions
involving Banque Misr UAE, and, that imposing special measure five
would sufficiently safeguard the U.S., and international, financial
systems by restricting the ability of Banque Misr UAE to access the
U.S. financial system.
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\32\ 31 U.S.C. 5318A(c)(2)(B)(iii).
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VI. Proposed Special Measure
Having found that Banque Misr UAE is a financial institution
operating outside of the United States that is of primary money
laundering concern, FinCEN proposes imposing a prohibition on covered
financial institutions under special measure five. Special measure five
authorizes the Secretary to prohibit or impose conditions upon the
opening or maintaining in the United States of a correspondent account
or payable-through account, if such account ``involves'' a financial
institution of primary money laundering concern.\33\ Banque Misr UAE
accesses USD through three direct correspondents account with U.S.
financial institutions. Thus, FinCEN has determined that special
measure five will most effectively mitigate the risks posed by Banque
Misr UAE.
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\33\ 31 U.S.C. 5318A(b)(5).
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In proposing this special measure, FinCEN considered the factors
set forth in section 311, as set forth below,\34\ as well as the other
special measures available under section 311. And, FinCEN consulted
with representatives and staff of the Board of Governors of the Federal
Reserve System, the Office of the Comptroller of the Currency, the
Secretary of State, the Securities and Exchange Commission, the
Commodity Futures Trading Commission, the National Credit Union
Administration, the Federal Deposit Insurance Corporation, and the
Attorney General.\35\ These consultations involved obtaining
interagency views on the imposition of special measure five and the
effects that such a prohibition would have on the U.S. domestic and
international financial systems.
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\34\ 31 U.S.C. 5318A(a)(4)(B)(i)-(iv).
\35\ 31 U.S.C 5318A(b)(5).
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A. Whether Similar Action Has Been or Is Being Taken by Other Nations
or Multilateral Groups Regarding Banque Misr UAE
FinCEN is not aware of any investigation by other nations regarding
Banque Misr UAE and no actions have been taken thus far that would
protect the U.S. financial system from the money laundering risks
presented by Banque Misr UAE.
B. Whether the Imposition of any Particular Special Measure Would
Create a Significant Competitive Disadvantage, Including any Undue Cost
or Burden Associated With Compliance, for Financial Institutions
Organized or Licensed in the United States
While FinCEN assesses that the prohibition proposed in this NPRM
would place some cost and burden on covered financial institutions,
these burdens are neither undue nor inappropriate in view of the threat
posed by the illicit activity facilitated by Banque Misr UAE.
Banque Misr UAE provides correspondent banking services to its
customers directly through three
[[Page 56089]]
correspondent relationships with U.S. financial institutions. These
accounts may be used for foreign exchange and money market
transactions. Covered financial institutions and transaction partners
have ample opportunity to arrange for alternative payment mechanisms in
the absence of correspondent banking relationships with Banque Misr
UAE.
Thus, a prohibition on correspondent banking with Banque Misr UAE
is expected to impose minimal additional compliance costs for covered
financial institutions, which would most commonly involve adding Banque
Misr UAE to preexisting sanctions screening and money laundering
monitoring tools. FinCEN assesses that given the risks posed by Banque
Misr UAE's facilitation of money laundering, the additional burden on
covered financial institutions in preventing the opening of
correspondent accounts with Banque Misr UAE, as well as conducting due
diligence on foreign correspondent account holders and notifying them
of the prohibition, will be minimal and not undue.
C. The Extent to Which the Action or the Timing of the Action Would
Have a Significant Adverse Systemic Impact on the International
Payment, Clearance, and Settlement System, or on Legitimate Business
Activities of Banque Misr UAE
FinCEN assesses that imposing the proposed special measure would
have minimal impact upon the international payment, clearance, and
settlement system. FinCEN assesses that prohibiting Banque Misr UAE's
access to U.S. correspondent banking channels would not affect overall
cross-border transaction volumes. Further, a prohibition under special
measure five would not prevent Banque Misr UAE from conducting
legitimate business activities in other foreign currencies, so long as
a covered financial institution is not involved.
D. The Effect of the Proposed Action on United States National Security
and Foreign Policy
As described above, evidence available to FinCEN demonstrates that
Banque Misr UAE serves as a significant conduit for Iranian shadow
banking. Imposing special measure five will: (1) close Banque Misr
UAE's access to the U.S. financial system; (2) inhibit Banque Misr
UAE's ability to act as an illicit finance facilitator; and (3) raise
awareness of the methods used by illicit actors to circumvent sanctions
and finance terrorism.
E. Consideration of Alternative Special Measures
In assessing the appropriate special measure to impose, FinCEN
considered alternatives to a prohibition on the opening or maintaining
in the United States of correspondent accounts or payable-through
accounts, including the imposition of one or more of the first four
special measures or imposing conditions on the opening or maintaining
of correspondent accounts under special measure five. Having considered
these alternatives, FinCEN assesses that, for the reasons set out
below, none of the other special measures available under section 311
or merely imposing conditions under special measures five would
appropriately address the risks posed by Banque Misr UAE and the urgent
need to prevent it from accessing the U.S. financial system through
correspondent banking.
Banque Misr UAE not only presents a significant money laundering
risk for Iranian shadow banking. Because of the nature and extent of
illicit funds transiting Banque Misr UAE, any special measure intended
to mandate additional information collection would likely be
ineffective and insufficient to address the risks posed by Banque Misr
UAE's continued access to the U.S. financial system. For example,
FinCEN considered special measure two, which may require domestic
financial institutions to ``obtain and retain information concerning
the beneficial ownership of any account opened or maintained in the
United States by a foreign person.'' \36\ However, FinCEN determined
that this special measure would likely be ineffective since the
concerns involving Banque Misr UAE do not involve the opening or
maintaining of accounts in the United States by foreign persons.
Likewise, FinCEN considered imposing additional reporting obligations
under special measures one, three, and four, and determined that such
obligations would not be effective. For instance, the provision under
special measure one--that ``the identity and address of the
participants in a transaction or relationship, including the identity
of the originator of any funds transfer'' be collected in records and
reports--could be circumvented by the operations of Iranian front
companies, wherein the reported identity of the originator serves to
obscure the true beneficial owner or originator.\37\ Moreover, the
requirements under special measures three and four that domestic
financial institutions obtain ``with respect to each customer (and each
such representative), information that is substantially comparable to
that which the depository institution obtains in the ordinary course of
business with respect to its customers residing in the United States,''
are also likely to be ineffective for the same reasons.\38\ Indeed, in
respect of all such special measures, FinCEN is already generally aware
of the money laundering threats posed by Banque Misr UAE's customer
base, which prompted this action, and merely requiring U.S.
institutions to collect additional information would impose a
disproportionate compliance burden, with no guarantee that the risks
presented by Banque Misr UAE would be addressed.
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\36\ 31 U.S.C. 5318A(b)(2).
\37\ 31 U.S.C. 5318A(b)(1)(B)(i).
\38\ 31 U.S.C 5318A(b)(3)(B); (b)(4)(B).
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FinCEN similarly assesses that merely imposing conditions under
special measure five would be inadequate to address the risks posed by
Banque Misr UAE 's activities. Special measure five enables FinCEN to
impose conditions as an alternative to a prohibition on the opening or
maintaining of correspondent accounts.\39\ Given Banque Misr UAE 's
facilitation of money laundering, FinCEN determined that imposing any
condition would not be an effective measure to safeguard the U.S.
financial system. FinCEN assesses that the estimated USD 1.8 billion
worth of potential Iranian shadow banking funds laundered through
Banque Misr UAE outweighs the value in providing conditioned access to
the U.S. financial system for any purportedly legitimate business
activity. Conditions on the opening or maintaining of correspondent
accounts would likely be inefficient or, given Banque Misr UAE's
inadequate AML/CFT controls, insufficient to prevent illicit financial
flows through the U.S. financial system.
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\39\ 31 U.S.C. 5318A(b)(5).
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In sum, FinCEN assesses that any condition or additional
recordkeeping or reporting requirement would be an ineffective or
inefficient way to safeguard the U.S. financial system from the illicit
behavior facilitated by Banque Misr UAE. Such measures would not
prevent Banque Misr UAE from accessing the correspondent accounts of
U.S. financial institutions, thus leaving the U.S. financial system
vulnerable to processing illicit transfers, resulting in significant
national security and money laundering risk. In addition, no
recordkeeping and/or reporting requirements or conditions would be
sufficient to guard against the risks posed by a financial institution
that
[[Page 56090]]
processes transactions designed to obscure the transactions' true
nature and are ultimately for the benefit of illicit actors. Therefore,
FinCEN has determined that a prohibition on opening or maintaining
correspondent banking relationships is the only special measure
available under section 311 that can adequately protect the U.S.
financial system from the illicit finance risk posed by Banque Misr
UAE. For these reasons, and after thorough consideration of alternate
measures, FinCEN assesses that no measures short of full prohibition on
correspondent or payable-through banking access would be sufficient to
address the money laundering risks posed by Banque Misr UAE.
VII. Section-by-Section Analysis
The goal of this proposed rule is to combat and deter illicit
activity, including illicit activity involving Iranian-affiliated money
laundering through Banque Misr UAE, and to prevent Banque Misr UAE from
using the U.S. financial system to enable illicit financial activity.
A. 1010.667(a)--Definitions
1. Definition of Banque Misr UAE
The term ``Banque Misr UAE'' means all subsidiaries, branches, and
offices of Banque Misr in the UAE operating as a financial institution
outside of the United States. This includes the two branches in Dubai
(located in Deira and Business Bay), one in Abu Dhabi, one in Sharjah,
and one in Ras Al Khaimah. Egypt-based Banque Misr, and its branches
and operations in countries other than the UAE are expressly excluded
from the definition of ``Banque Misr UAE'' for the purposes of this
NPRM.
2. Definition of Correspondent Account
The term ``correspondent account'' is defined by reference to the
definition contained in 31 CFR 1010.605(c)(1)(ii). In the case of a
U.S. depository institution, this definition includes most types of
banking relationships between a U.S. depository institution and a
foreign bank that are established to provide regular services,
dealings, and other financial transactions, including a demand deposit,
savings deposit, or other transaction or asset account, and a credit
account or other extension of credit. FinCEN is using the same
definition of ``account'' for purposes of this proposed rule as is
established for depository institutions in the final rule implementing
the provisions of section 312 of the USA PATRIOT Act, requiring
enhanced due diligence for correspondent accounts maintained for
certain foreign banks.\40\ Under this definition, ``payable-through
accounts'' are a type of correspondent account.
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\40\ See 31 CFR 1010.605(c)(2)(i).
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In the case of securities broker-dealers, futures commission
merchants, introducing brokers in commodities, and investment companies
that are open-end companies (mutual funds), FinCEN is also using the
same definition of ``account'' for purposes of this proposed rule as
was established for these entities in the final rule implementing the
provisions of section 312 of the USA PATRIOT Act, requiring due
diligence for correspondent accounts maintained for certain foreign
banks.\41\
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\41\ See 31 CFR 1010.605(c)(2)(ii)-(iv).
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3. Definition of Covered Financial Institution
The term ``covered financial institution'' is defined by reference
to 31 CFR 1010.605(e)(1), the same definition used in the BSA rule (31
CFR 1010.610) requiring the establishment of due diligence programs for
correspondent accounts for foreign financial institutions. In general,
this definition includes the following:
<bullet> a bank;
<bullet> a broker or dealer in securities;
<bullet> a futures commission merchant or an introducing broker in
commodities; and
<bullet> a mutual fund.
4. Definition of Financial Institution Operating Outside of the United
States
Pursuant to 31 U.S.C. 5318A(e)(4), the term ``financial institution
operating outside of the United States'' means any business or agency
operating, in whole or in part, outside of the United States that
engages in any activity which is similar to, related to, or a
substitute for any activity in which any financial institution, as
defined in 31 U.S.C. 5312(a)(2), engages.
FinCEN is including this definition as the proposed definition of
``Banque Misr UAE'' incorporates this phrase. As discussed above, 31
U.S.C. 5312 permits FinCEN, by regulation, to define as a ``financial
institution'' any business or activity that engages in any activity
that FinCEN determines is an activity similar to, related to, or a
substitute for any activity in which any business defined as a
``financial institution'' in 31 U.S.C. 5312 is authorized to engage.
5. Definition of Foreign Banking Institution
The term ``foreign banking institution'' means 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.
6. Definition of Subsidiary
The term ``subsidiary'' means a company of which more than 50
percent of the voting stock or an otherwise controlling interest is
owned by another company.
B. 1010.667(b)--Prohibition on Accounts and Due Diligence Requirements
for Covered Financial Institutions
1. Prohibition on Opening or Maintaining Correspondent Accounts
Proposed section 1010.667(b)(1) prohibits covered financial
institutions from opening or maintaining in the United States a
correspondent account for, or on behalf of, Banque Misr UAE.
2. Prohibition on Use of Correspondent Accounts Involving Banque Misr
UAE
Proposed section 1010.667(b)(2) requires covered financial
institutions to take reasonable steps not to process a transaction for
the correspondent account of a foreign banking institution in the
United States if such a transaction involves Banque Misr UAE. Such
reasonable steps are described in 1010.667(b)(3), which sets forth the
special due diligence requirements a covered financial institution
would be required to take when it knows or has reason to believe that a
transaction involves Banque Misr UAE.
3. Special Due Diligence for Correspondent Accounts
As a corollary to the prohibition set forth in proposed section
1010.667(b)(1) and (2), proposed section 1010.667(b)(3) requires
covered financial institutions to apply special due diligence to all of
their foreign correspondent accounts that is reasonably designed to
guard against such accounts being used to process transactions
involving Banque Misr UAE. As part of that special due diligence,
covered financial institutions would be required to notify those
foreign correspondent account holders that the covered financial
institutions know or have reason to believe provide services to Banque
Misr UAE, that such correspondents may not provide Banque Misr UAE with
access to the correspondent account maintained at the covered financial
institution. A covered financial institution may satisfy this
notification requirement using the following notice:
[[Page 56091]]
Notice: Pursuant to U.S. regulations issued under Section 311 of
the USA PATRIOT Act, see 31 CFR 1010.667, we are prohibited from
opening or maintaining in the United States a correspondent account
for, or on behalf of, Banque Misr UAE. The regulations also require
us to notify you that you may not provide Banque Misr UAE, including
any of its subsidiaries, branches, and offices access to the
correspondent account you hold at our financial institution. If we
become aware that the correspondent account you hold at our
financial institution has processed any transactions involving
Banque Misr UAE, including any of its subsidiaries, branches, and
offices, we will be required to take appropriate steps to prevent
such access, including terminating your account.
The purpose of the notice requirement is to aid cooperation with
correspondent account holders in preventing transactions involving
Banque Misr UAE from accessing the U.S. financial system. FinCEN does
not require or expect a covered financial institution to obtain a
certification from any of its correspondent account holders that access
will not be provided to comply with this notice requirement.
Methods of compliance with the notice requirement could include,
for example, transmitting a notice by mail, fax, or email. The notice
should be transmitted whenever a covered financial institution knows or
has reason to believe that a foreign correspondent account holder
provides services to Banque Misr UAE.
Special due diligence also includes implementing risk-based
procedures designed to identify any use of correspondent accounts to
process transactions involving Banque Misr UAE. A covered financial
institution would be expected to apply an appropriate screening
mechanism to identify a funds transfer order that on its face listed
Banque Misr UAE as the financial institution of the originator or
beneficiary, or otherwise referenced Banque Misr UAE in a manner
detectable under the financial institution's normal screening
mechanisms. An appropriate screening mechanism could be the mechanisms
used by a covered financial institution to comply with various legal
requirements, such as commercially available software programs used to
comply with the economic sanctions programs administered by the OFAC.
4. Recordkeeping and Reporting
Proposed section 1010.667(b)(4) clarifies that the proposed rule
does not impose any reporting requirement upon any covered financial
institution that is not otherwise required by applicable law or
regulation. A covered financial institution must, however, document its
compliance with the notification requirement described above in section
1010.667(b)(3).
VIII. Request for Comments
FinCEN is requesting comments for 30 days after the publication of
this NPRM. Given Banque Misr UAE 's consistent and longstanding ties to
facilitating transactions for illicit actors, FinCEN assesses that a
30-day comment period for this NPRM strikes an appropriate balance
between ensuring sufficient time for notice to the public and
opportunity for comment on the proposed rule, while minimizing undue
national security risk posed to the U.S. financial system in processing
illicit transfers. FinCEN invites comments on all aspects of the
proposed rule, including the following specific matters:
1. FinCEN's proposal of a prohibition special measure five under 31
U.S.C. 5318A(b), as opposed to imposing special measures one through
four or imposing conditions under the special measure five;
2. The form and scope of the notice to certain correspondent
account holders that would be required under the rule; and
3. The appropriate scope of the due diligence requirements in this
proposed rule.
IX. Executive Order 14294
Section 5 of Executive Order 14294 directs that all future notices
of proposed rulemaking (NPRMs) and final rules published in the Federal
Register, the violation of which may constitute criminal regulatory
offenses, should include a statement identifying that the rule or
proposed rule is a criminal regulatory offense and the authorizing
statute.\42\ Executive Order 14294 directs agencies to draft this
statement in consultation with the Department of Justice.
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\42\ Executive Order 14294, ``Fighting Overcriminalization in
Federal Regulations'' 90 FR 20367 (issued May 9, 2025; published May
14, 2025), <a href="https://www.federalregister.gov/executive-order/14294">https://www.federalregister.gov/executive-order/14294</a>.
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Executive Order 14294 further directs that the regulatory text of
all NPRMs and final rules with criminal consequences published in the
Federal Register after May 9, 2025, should explicitly state a mens rea
requirement for each element of a criminal regulatory offense,
accompanied by citations to the relevant provisions of the authorizing
statute.
Willful violations of the proposed regulations set forth in this
proposed rule may be subject to criminal penalties pursuant to 31
U.S.C. 5322 and regulations promulgated in 31 CFR Chapter X. The
statutory authority for criminal liability requires a mens rea of
willfulness as an element pursuant to 31 U.S.C. 5322(a) and 31 U.S.C.
5322(b). FinCEN's existing regulation, 31 CFR 1010.840, that sets out
criminal penalties for violations of regulations promulgated in 31 CFR
Chapter X also includes a mens rea of willfulness. In drafting this
statement, FinCEN has consulted with the Department of Justice.
X. Regulatory Impact Analysis
FinCEN has analyzed this proposed rule under Executive Order
12866,\43\ Executive Order 13563,\44\ the Regulatory Flexibility Act
(RFA),\45\ the Unfunded Mandates Reform Act (UMRA),\46\ and the
Paperwork Reduction Act (PRA).\47\ As discussed above,\48\ the intended
effects of the imposition of special measure five with respect to
Banque Misr UAE are twofold. The rule is expected to: (1) combat and
deter money laundering in facilitation of Iranian illicit financing
associated with Banque Misr UAE; and (2) prevent Banque Misr UAE from
using the U.S. financial system to enable illicit financial activity.
In the analysis below, FinCEN discusses the economic effects that are
expected to accompany adoption of the rule as proposed and assesses
such expectations in more granular detail. This discussion includes an
explanation of how the assumptions in FinCEN's cost model and
methodological choices have influenced FinCEN's conclusions. The public
is invited to comment on all aspects of FinCEN's practice.\49\
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\43\ Executive Order 12866, Regulatory Planning and Review, 58
FR 51735 (issued Sept. 30,1993; published Oct. 4, 1993).
\44\ Executive Order 13563, Improving Regulation and Regulatory
Review, 76 FR 3821 (issued Jan. 18, 2011; published Jan. 21, 2011).
\45\ 5 U.S.C. 601 et seq.
\46\ 2 U.S.C. 1532.
\47\ 44 U.S.C. 3507(a)(1)(D).
\48\ See supra Section VII.
\49\ See Section VII; see also Section X.D.
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A. Executive Orders
Executive Orders 12866 and 13563 direct agencies to assess costs
and benefits of available regulatory alternatives and, if regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health and safety
effects; distributive impacts; and equity). Executive Order 13563
emphasizes the importance of quantifying both costs and benefits,
reducing costs, harmonizing rules, and promoting flexibility.
[[Page 56092]]
It has been determined that this proposed rule is not a significant
regulatory action under section 3(f) of Executive Order 12866.
Accordingly, a regulatory impact analysis is not required.
B. Regulatory Flexibility Act
When an agency issues a rulemaking proposal, the RFA requires the
agency to ``prepare and make available for public comment an initial
regulatory flexibility analysis'' that will ``describe the impact of
the proposed rule on small entities.'' \50\ However, section 605 of the
RFA allows an agency to certify a rule, in lieu of preparing an
analysis, if the proposed rulemaking is not expected to have a
significant economic impact on a substantial number of small entities.
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\50\ 5 U.S.C. 603(a).
---------------------------------------------------------------------------
The population of affected covered financial institutions under the
proposed rule is limited to those financial institutions that maintain
foreign correspondent accounts. FinCEN is not in possession of any
data, studies, or qualitative evidence that any such covered financial
institution meets the applicable definitional criteria to be deemed a
``small entity'' under the RFA. Moreover, FinCEN assesses that if any
covered financial institution were a small entity, the changes in
activity necessary to comply with the proposed rule would be unlikely
to have a significant economic impact on such entity.
Under the proposed special measure, covered financial institutions
would be prohibited from opening or maintaining correspondent accounts
for, or on behalf of, Banque Misr UAE. As discussed above in Section
V.B, FinCEN has identified three such accounts. The imposition of the
proposed special measure would therefore be more likely to prevent
future correspondent accounts from being opened with small entities
than require activity be undertaken with respect to currently
maintained accounts. Given the relatively small size of Banque Misr UAE
as a financial institution operating outside of the United States and
the current absence of account opening activity, the economic impact on
small entities of continuing to forgo account opening is expected to be
minimal.
Covered financial institutions would also be required to take
reasonable measures to detect and prevent use of their correspondent
accounts to process transactions involving Banque Misr UAE. Neither set
of newly required activities proposed is expected to introduce
significant incremental burdens relative to covered financial
institutions' current obligations and ongoing diligence activities. For
example, all U.S. persons, including U.S. financial institutions, must
comply with OFAC sanctions, and covered U.S. financial institutions
generally have suspicious activity reporting requirements and systems
in place to screen transactions to comply with OFAC sanctions and
section 311 special measures administered by FinCEN. The systems that
U.S. financial institutions have in place to comply with these
requirements can easily be modified to adapt to this proposed rule.
Thus, the special due diligence that would be required under the
proposed rule--i.e., preventing the processing of transactions
involving Banque Misr UAE and the transmittal of notification to
certain correspondent account holders--is not expected to require a
significant change in due diligence activities for small U.S. financial
institutions. For these reasons, FinCEN certifies that the proposals
contained in this rulemaking are not expected to have a significant
impact on a substantial number of small businesses.
FinCEN invites comments from members of the public who believe
there would be a significant economic impact on small entities from the
imposition of a prohibition under special measure five regarding Banque
Misr UAE.
C. Unfunded Mandates Reform Act
Section 202 of the UMRA \51\ requires that an agency prepare a
budgetary impact statement before promulgating a rule that may result
in expenditure by the state, local, and tribal governments, in the
aggregate, or by the private sector, of USD 193 million or more in any
one year (USD 100 million in 1995, adjusted for
inflation).<SUP>52 53</SUP> If a budgetary impact statement is
required, section 202 of the UMRA also requires an agency to identify
and consider a reasonable number of regulatory alternatives before
promulgating a rule.
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\51\ 2 U.S.C. 1532, Public Law 104-4 (Mar. 22, 1995).
\52\ Id.
\53\ The U.S. Bureau of Economic Analysis reports the annual
value of the gross domestic product implicit price deflator for
calendar year 1995 (the year UMRA was enacted), as 66.939, and as
128.974 for the calendar year 2025 (the most recent available).
Thus, the inflation-adjusted estimate for USD 100 million is 128.974
/ 66.939 x USD 100 million, or USD192.7 million. U.S. Bureau of
Economic Analysis, Table 1.1.9. Implicit Price Deflators for Gross
Domestic Product, BEA Interactive Data Application.
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FinCEN has determined that this proposed rule would not result in
expenditures by state, local, and tribal governments in the aggregate,
or by the private sector, of USD 193 million or more in any one year.
Accordingly, FinCEN has not prepared a budgetary impact statement or
considered the regulatory alternatives outlined in Section V.E above
within the framework of the UMRA.
D. Paperwork Reduction Act
The recordkeeping and disclosure requirements contained in this
proposed rule that qualify as ``collections of information'' under the
PRA will be submitted to the Office of Management and Budget (OMB) for
review in accordance with the PRA.\54\ Under the PRA, an agency may not
conduct or sponsor, and a person is not required to respond to, a
collection of information unless it displays a valid control number
assigned by the OMB.\55\ Written comments and recommendations for the
proposed prohibition can be submitted by visiting <a href="http://www.reginfo.gov/public/do/PRAMain">www.reginfo.gov/public/do/PRAMain</a>. Find this particular document by selecting
``Currently under Review--Open for Public Comments'' or by using the
search function. Comments are welcome and must be received by October
1, 2026. In accordance with requirements of the PRA, 44 U.S.C.
3506(c)(2)(A), and its implementing regulations, 5 CFR part 1320, the
following information concerning the collection of information as
required by 31 CFR 1010.667 is presented to assist those persons
wishing to comment on the information collections.
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\54\ See 44 U.S.C. 3507(a)(1)(D). The PRA defines a ``collection
of information'' as ``the obtaining, causing to be obtained,
soliciting, or requiring the disclosure to third parties or the
public, of facts or opinions by or for an agency, regardless of form
or format, calling for either (i) answers to identical questions
posed to, or identical reporting or recordkeeping requirements
imposed on, ten or more persons, other than agencies,
instrumentalities, or employees of the United States; or (ii)
answers to questions posed to agencies, instrumentalities, or
employees of the United States which are to be used for general
statistical purposes[.]'' See 44 U.S.C. 3502(3).
\55\ 44 U.S.C. 3507(a)(3).
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The provisions in this proposed rule pertaining to the collection
of information can be found in sections 1010.667(b)(3)(i)(A) and
1010.667(b)(4). The notification requirement in section
1010.667(b)(3)(i)(A) is intended to aid cooperation from foreign
correspondent account holders in preventing transactions involving
Banque Misr UAE from being processed by the U.S. financial system. The
information required to be maintained by section 1010.667(b)(4) would
be used by federal agencies and certain self-regulatory organizations
to verify compliance by covered financial institutions with the
notification requirement in section
[[Page 56093]]
1010.667(b)(3)(i)(A). The collection of information would be mandatory.
Frequency: As required.
Description of Affected Financial Institutions: Only those covered
financial institutions defined in section 1010.667(a)(3) that are
engaged in correspondent banking with, or processing transactions
potentially involving, Banque Misr UAE as defined in section
1010.667(b)(1) and (2) are expected to incur incremental economic
effects.
Estimated Number of Potential Respondents: Approximately 14,554.
Table 1--Estimates of Covered Financial Institutions by Type
------------------------------------------------------------------------
Financial institution type Number of entities
------------------------------------------------------------------------
Banks with a federal functional regulator (FFR) \b\ 8,623
\a\..............................................
Banks without an FFR \c\.......................... \d\ 365
Broker-dealers in securities (broker-dealers) \e\. \f\ 3,277
Futures commission merchants (FCMs) and \h\ 954
Introducing brokers in commodities (IBCs) \g\....
Mutual funds \i\.................................. \j\ 1,335
------------------------------------------------------------------------
\a\ See 31 CFR 1010.100(t)(1); see also 31 CFR 1010.100(d) and 31 CFR
1020.210(a).
\b\ This includes 4,336 Federal Deposit Insurance Corporation- (FDIC-)
insured depository institutions (i.e., federally regulated banks)
according to the FDIC's Quarterly Bank Profile for Q4 2025, p. 2
(<a href="https://www.fdic.gov/quarterly-banking-profile/past-quarterly-banking-profiles">https://www.fdic.gov/quarterly-banking-profile/past-quarterly-banking-profiles</a> profiles). It also includes 4,287 National Credit Union Administration-
chartered credit unions (i.e., federally regulated credit unions) as
of December 31, 2025, according to the National Credit Union
Administration's Quarterly Credit Union Data Summary: 2025 Q4, p. i
(<a href="https://ncua.gov/analysis/credit-union-corporate-call-report-data/quarterly-data-summary-reports">https://ncua.gov/analysis/credit-union-corporate-call-report-data/quarterly-data-summary-reports</a>).
\c\ 31 CFR 1020.210(b).
\d\ The Board of Governors of the Federal Reserve System Master Account
and Services Database (<a href="https://www.federalreserve.gov/paymentsystems/master-account-and-services-database-existing-access.htm">https://www.federalreserve.gov/paymentsystems/master-account-and-services-database-existing-access.htm</a>) contains
data as of November 30, 2025, on financial institutions that use
Federal Reserve Bank financial services, including those with no
additional Federal regulator. FinCEN used this data to identify 365
banks and credit unions with no additional Federal regulator using
Federal Reserve Bank financial services.
\e\ 31 CFR 1010.100(t)(2).
\f\ This estimate is based on U.S. Securities and Exchange Commission
(SEC) data on active broker-dealers available at ``Company Information
About Active Broker-Dealers'' (<a href="https://www.sec.gov/foia-services/frequently-requested-documents/company-information-about-active-broker-dealers">https://www.sec.gov/foia-services/frequently-requested-documents/company-information-about-active-broker-dealers</a> dealers), which listed 3,277 active broker-dealers registered with the
SEC as of December 31, 2025.
\g\ 31 CFR 1010.100(t)(8) and (9).
\h\ According to the Commodity Futures Trading Commission data on FCMs
available at ``Financial Data for FCMs'' (<a href="https://www.cftc.gov/MarketReports/financialfcmdata/index.htm">https://www.cftc.gov/MarketReports/financialfcmdata/index.htm</a>), there were 66 FCMs as of
December 31, 2025. The number of IBCs as of December 31, 2025 (888)
was obtained from the National Futures Association, ``NFA Membership
Totals'' website (<a href="https://www.nfa.futures.org/registration-membership/membership-and-directories.html">https://www.nfa.futures.org/registration-membership/membership-and-directories.html</a>). Because deduplication of entities
registered as both FCMs and IBCs was not feasible, this estimate may
double-count some entities registered in both categories. FinCEN,
however, believes this subpopulation may be small.
\i\ See 31 CFR 1010.100(t)(10); see also 31 CFR 1010.100(gg).
\j\ This estimate is based on the number of registered investment
companies filing Form N-1A in SEC's Annual Registered Investment
Company Update: Form N-CEN Data, Period Ending December 2025, May
2026, table 1.3, p.4 (<a href="https://www.sec.gov/files/annual-registered-investment-company-update-20260512.pdf">https://www.sec.gov/files/annual-registered-investment-company-update-20260512.pdf</a>).
Estimated Number of Expected Respondents: Approximately 128.\56\
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\56\ While this regulation would apply to all covered
institutions described in Table 1, in practice the burden would only
be imposed on select institutions that maintain correspondent
accounts for foreign banks. Table 2 presents an estimate of this
subpopulation of banks, broker-dealers, FCMs and IBCs, and mutual
funds based on data from the most recent calendar year end.
---------------------------------------------------------------------------
FinCEN's estimate of expected respondents is based on its
observation of total populations demonstrating capacity or maintenance
of correspondent accounts as defined by the proposed rule. As noted
above, the observed number of covered financial institutions that
maintain direct correspondent accounts included in those proposed to be
affected by this NPRM is considerably lower (three, or approximately
two percent of projected expected affected respondents). As such, the
PRA burden estimates presented in the following analysis are likely to
be conservative and may overstate the burden that would be incurred in
practice.
Table 2--Estimates of Affected Financial Institutions by Type
------------------------------------------------------------------------
Financial institution type Number of entities
------------------------------------------------------------------------
Banks with an FFR................................. \a\ 66
Banks without an FFR.............................. \b\ 12
Broker-dealers.................................... \c\ 29
FCMs and IBCs..................................... \d\ 9
Mutual funds...................................... \e\ 12
------------------------------------------------------------------------
\a\ Data are from the Federal Financial Institution Examination Council
Central Data Repository for Reports of Condition and Income (Call
Reports) and Uniform Bank Performance Reports, available for most FDIC-
insured institutions. Using this source of data, FinCEN determines
that as of Q4 2025, approximately 66 banks (as defined by FinCEN
regulations, see 31 CFR 1010.100(d)) would be affected by this
proposed rule in any given year. Specifically, as of Q4 2025, there
were approximately 66 banks that reported non-zero values for deposit
liabilities of banks in foreign countries. Deposit liabilities in a
foreign country is an indication that a bank maintains correspondent
accounts with a foreign financial institution.
\b\ The Board of Governors of the Federal Reserve System Master Account
and Services Database contains data on financial institutions that use
Federal Reserve Bank financial services, including those with no
additional Federal regulator. FinCEN used this data to identify an
additional 12 international banking entities with no additional
Federal regulator and that do not file Call Reports, but that are also
likely to maintain correspondent accounts with a foreign financial
institution.
[[Page 56094]]
\c\ Broker-dealers, unless they are publicly traded, are not required
to make reports indicating whether they have foreign correspondent
accounts or hold foreign deposits. FinCEN reviewed financial statement
data from 10-Q and 6-K filings with the SEC and identified nine
publicly traded broker-dealers with U.S. operations that reported
foreign deposits. FinCEN also examined Suspicious Activity Reports
filed by broker-dealers in 2024 to identify another two non-publicly
traded broker-dealers who appeared likely to be maintaining foreign
deposits. However, because many broker-dealers are not publicly
traded--so there may be less information about their business publicly
available--and because many did not file Suspicious Activity Reports,
FinCEN conservatively estimates that the proportion of broker-dealers
with foreign correspondent accounts is similar to the proportion for
banks (approximately 0.9 percent). 0.9 percent of 3,277 active broker-
dealers is approximately 29 broker-dealers assumed to have foreign
correspondent accounts.
\d\ FCMs, IBCs, and mutual funds generally use intermediary U.S. banks
to move and maintain client deposits and funds for investment.
Therefore, it is unlikely that many of these institutions maintain
direct correspondent accounts with foreign financial institutions
outside of their existing upstream banking relationships. However,
because these institutions may in some cases receive deposits from,
make payments or other disbursements, or otherwise transact directly
with foreign financial institutions, FinCEN conservatively estimates
that the proportion of FCMs, IBCs, and mutual funds with foreign
correspondent accounts is similar to the proportion for banks
(approximately 0.9 percent). 0.9 percent of 954 active FCMs and IBCs
is approximately nine FCMs and IBCs assumed to have foreign
correspondent accounts.
\e\ 0.9 percent of 1,335 active mutual funds is approximately 12 mutual
funds assumed to have foreign correspondent accounts.
Estimated Average Annual Burden in Hours per Affected Financial
Institution:
Imposing special measure five as described in this proposed rule is
expected to result in a new, incremental recordkeeping and disclosure
burden on certain covered financial institutions as described above.
Each anticipated component of this is outlined below.
Each affected covered financial institution is expected to incur
recordkeeping and disclosure burdens associated with preparing and
retaining the materials necessary to demonstrate compliance with the
proposed requirements. This is expected to include records related to:
A. Documenting the reasonable steps the financial institution
undertakes to ensure no transactions involving Banque Misr UAE are
processed for a foreign correspondent account, including:
1. Any investigative activities undertaken when the financial
institution knows or has reason to believe that a foreign bank's
correspondent account has been or is being used to process transactions
involving Banque Misr UAE.
2. Any subsequent activities undertaken to prevent such access,
including, where necessary, termination of the correspondent account.
B. Notifying, and documenting that the financial institution has
provided notice to, foreign correspondent account holders that the
financial institution knows or has reason to believe provide services
to Banque Misr UAE, informing such correspondents that they may not
provide Banque Misr UAE with access to the correspondent account
maintained at the financial institution.
C. Documenting the reasonable steps it took with respect to special
due diligence requirements, including but not limited to, the reasoning
that informed decisions to adopt (or not adopt) new measures adding to
its existing risk-based approach, and those new measures, if adopted.
The estimated average annual burden associated with the collection
of information in this proposed rule is, in total, one business day, or
eight hours per affected financial institution.
Estimated Total Annual Burden in Year One: Approximately 1,024
hours.\57\
---------------------------------------------------------------------------
\57\ 128 expected respondents multiplied by eight hours per
respondent equals 1,024 total annual burden hours.
---------------------------------------------------------------------------
Estimated Total Annual Cost in Year One: Approximately USD
130,079.\58\
---------------------------------------------------------------------------
\58\ The wage rate applied here is a general composite hourly
wage (USD 89.24), scaled by a private-sector benefits factor of 1.42
(USD 127.03 = USD 89.24 x 1.42). This incorporates Bureau of Labor
Statistics (BLS) mean wage data associated with the six occupational
codes (11-1010: Chief Executives; 11-3021: Computer and Information
Systems Managers; 11-3031: Financial Managers; 13-1041: Compliance
Officers; 23-1010: Lawyers and Judicial Law Clerks; 43-3099:
Financial Clerks, All Other) for each of the nine groupings of North
American Industry Classification System industry codes that FinCEN
determined are most directly comparable to its 11 categories of
potentially affected financial institutions as delineated in 31 CFR
parts 1020 to 1030. See BLS, May 2025--National industry-specific
and by ownership, <a href="https://www.bls.gov/oes/tables.htm">https://www.bls.gov/oes/tables.htm</a>. Given that
many occupations provide benefits beyond wages (e.g., insurance and
paid leave), FinCEN applies the private sector benefit factor to the
unloaded wage rate to reflect the total cost to the employer. The
benefit factor is the ratio of total compensation (which includes
wages and benefits) to wages. Total compensation = USD 45.65 and
Wages and salaries = USD 32.07 (1.42 = USD 45.65 / USD 32.07) as of
June 2025, based on the private industry workers series data
downloaded from BLS, Employer Costs for Employee Compensation data,
<a href="https://www.bls.gov/news.release/archives/ecec_09122025.pdf">https://www.bls.gov/news.release/archives/ecec_09122025.pdf</a>. 1,024
total annual burden hours multiplied by USD 127.03 per hour equals a
total annual cost of USD 130,079.
---------------------------------------------------------------------------
In subsequent years, FinCEN estimates that the average annual
burden associated with the collection of information would be
significantly reduced.\59\ FinCEN expects that the ongoing burden of
compliance with FinCEN special measures would primarily accrue in
connection with the opening of new foreign correspondent accounts, at
which point a covered financial institution would need to ensure that
new account holders receive information on entities subject to special
measures and agree not to conduct transactions on their behalf. FinCEN
has previously estimated that financial institutions that maintain
foreign correspondent accounts will open an average of ten new accounts
per year.\60\ FinCEN expects the time burden of special measure
compliance associated with these new accounts would not exceed 15
minutes (0.25 hours) per affected financial institution.
---------------------------------------------------------------------------
\59\ See discussion of how compliance with the proposed rule is
expected to be integrated into covered financial institutions'
broader OFAC sanctions and 311 special measures compliance
activities at Section IX.B.
\60\ See FinCEN, 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, 90
FR 21987, 21994 (May 22, 2025), <a href="https://www.federalregister.gov/d/2025-09162/p-134">https://www.federalregister.gov/d/2025-09162/p-134</a>.
---------------------------------------------------------------------------
Table 3 presents a summary of FinCEN's PRA burden estimates as
expected to accrue during the first three years in which the rule is
effective and provides a basis for the expected average annual costs as
estimated over the same time horizon.
Table 3--PRA Three-Year Pro Forma Burden Estimates
----------------------------------------------------------------------------------------------------------------
Number of Hours per Total burden
Year respondents respondent hours
----------------------------------------------------------------------------------------------------------------
1............................................................... 128 8.00 1,024.00
2............................................................... 128 0.25 32.00
3............................................................... 128 0.25 32.00
Average......................................................... 128 2.83 362.67
----------------------------------------------------------------------------------------------------------------
[[Page 56095]]
Estimated Three-Year Average Aggregate Annual Burden: Approximately
363 hours on average, per year.\61\
---------------------------------------------------------------------------
\61\ This estimate is the average of 1,024 expected burden hours
in year one of implementation and 32 hours in years two and three,
respectively, rounded to the nearest whole hour.
---------------------------------------------------------------------------
Estimated Three-Year Average Aggregate Annual Cost: Approximately
USD 46,111.89.\62\
---------------------------------------------------------------------------
\62\ An average annual burden over years one through three of
363 hours multiplied by USD 127.03 per hour equals an average annual
cost of USD 46,111.89.
---------------------------------------------------------------------------
General Request for Comments: Comments are invited on: (1) whether
the proposed collection of information found in section 1010.667(b)(4)
is necessary for the proper performance of the mission of FinCEN,
including whether the information would have practical utility; (2) the
accuracy of FinCEN's estimate of the burden of the proposed collection
of information; (3) ways to enhance the quality, utility, and clarity
of the information required to be maintained; (4) ways to minimize the
burden of the required collection of information, including through the
use of automated collection techniques or other forms of information
technology; and (5) estimates of capital or start-up costs and costs of
operation, maintenance, and purchase of services to report the
information.
XI. Regulatory Text
List of Subjects in 31 CFR Part 1010
Administrative practice and procedure, Banks, Banking, Brokers,
Crime, Foreign banking, Terrorism.
Authority and Issuance
For the reasons set forth in the preamble, FinCEN proposes amending
31 CFR part 1010 as follows:
PART 1010-GENERAL PROVISIONS
0
1. The authority citation for part 1010 continues to read as follows:
Authority: 12 U.S.C. 1829b and 1951-1959; 31 U.S.C. 5311-5314,
5316-5336; title III, sec. 314, Pub. L. 107-56, 115 Stat. 307; sec.
2006, Pub. L. 114-41, 129 Stat. 458-459; sec. 701 Pub. L. 114-74,
129 Stat. 599; sec. 6403, Pub. L. 116-283, 134 Stat. 3388.
0
2. Add 1010.667 to read as follows:
1010.667 Special measures regarding Banque Misr UAE
(a) Definitions. For purposes of this section, the following terms
have the following meanings.
(1) Banque Misr UAE. The term ``Banque Misr UAE'' means all five
branches of Banque Misr located in the United Arab Emirates as well as
any other offices, branches, affiliates, or subsidiaries of Banque Misr
located in the United Arab Emirates. Egypt-based Banque Misr, and its
offices, branches, affiliates, and operations in countries other than
the United Arab Emirates are expressly excluded from the definition of
``Banque Misr UAE''.
(2) Correspondent account. The term ``correspondent account'' has
the same meaning as provided in 1010.605(c)(l)(ii).
(3) Covered financial institution. The term ``covered financial
institution'' has the same meaning as provided in 1010.605(e)(1).
(4) Financial institution operating outside of the United States.
The term ``financial institution operating outside of the United
States'' means any business or agency operating, in whole or in part,
outside of the United States that engages in any activity which is
similar to, related to, or a substitute for any activity in which any
financial institution, as defined in 31 U.S.C. 5312(a)(2), engages.
(5) Foreign banking institution. The term ``foreign banking
institution'' means 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.
(6) Subsidiary. The term ``subsidiary'' means a company of which
more than 50 percent of the voting stock or an otherwise controlling
interest is owned by another company.
(b) Prohibition on accounts and due diligence requirements for
covered financial institutions.
(1) Prohibition on opening or maintaining correspondent accounts
for Banque Misr UAE. A covered financial institution shall not open or
maintain in the United States a correspondent account for, or on behalf
of, Banque Misr UAE.
(2) Prohibition on processing transactions involving Banque Misr
UAE. A covered financial institution shall take reasonable steps not to
process a transaction for the correspondent account in the United
States of a foreign banking institution if such a transaction involves
Banque Misr UAE.
(3) Special due diligence of correspondent accounts to prohibit
transactions.
(i) A covered financial institution shall apply special due
diligence to its foreign correspondent accounts that is reasonably
designed to guard against their use to process transactions involving
Banque Misr UAE. At a minimum, that special due diligence must include:
(A) Notifying those foreign correspondent account holders that the
covered financial institution knows or has reason to believe provide
services to Banque Misr UAE that such correspondents may not provide
Banque Misr UAE with access to the correspondent account maintained at
the covered financial institution; and
(B) Taking reasonable steps to identify any use of its foreign
correspondent accounts by Banque Misr UAE, to the extent that such use
can be determined from transactional records maintained in the covered
financial institution's normal course of business.
(ii) A covered financial institution shall take a risk-based
approach when deciding what, if any, other due diligence measures it
reasonably must adopt to guard against the use of its foreign
correspondent accounts to process transactions involving Banque Misr
UAE.
(iii) A covered financial institution that knows or has reason to
believe that a foreign bank's correspondent account has been or is
being used to process transactions involving Banque Misr UAE shall take
all appropriate steps to further investigate and prevent such access,
including the notification of its correspondent account holder under
paragraph (b)(3)(i)(A) of this section and, where necessary,
termination of the correspondent account.
(4) Recordkeeping and reporting.
(i) A covered financial institution is required to document its
compliance with the notification requirement set forth in this section.
(ii) Nothing in paragraph (b) of this section shall require a
covered financial institution to report any information not otherwise
required to be reported by law or regulation.
Dated: August 28, 2026.
Jimmy L. Kirby,
Deputy Director, Financial Crimes Enforcement Network.
[FR Doc. 2026-17871 Filed 8-31-26; 8:45 am]
BILLING CODE 4810-02-P
</pre></body>
</html>Indexed from Federal Register on September 1, 2026.
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.