80 FR 13304 - Imposition of Special Measure against Banca Privada d'Andorra as a Financial Institution of Primary Money Laundering Concern
DEPARTMENT OF THE TREASURY
Financial Crimes Enforcement Network Federal Register Volume 80, Issue 49 (March 13, 2015)
Financial Crimes Enforcement Network
Federal Register Volume 80, Issue 49 (March 13, 2015)
| Page Range | 13304-13309 | |
| FR Document | 2015-05724 |
[Federal Register Volume 80, Number 49 (Friday, March 13, 2015)] [Proposed Rules] [Pages 13304-13309] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-05724] ======================================================================= ----------------------------------------------------------------------- DEPARTMENT OF THE TREASURY Financial Crimes Enforcement Network 31 CFR Part 1010 RIN 1506-AB30 Imposition of Special Measure against Banca Privada d'Andorra as a Financial Institution of Primary Money Laundering Concern AGENCY: Financial Crimes Enforcement Network (``FinCEN''), Treasury. ACTION: Notice of proposed rulemaking. ----------------------------------------------------------------------- SUMMARY: In a finding, notice of which is published elsewhere in this issue of the Federal Register (``Notice of Finding''), the Director of FinCEN found that Banca Privada d'Andorra (``BPA'') is a financial institution operating outside of the United States that is of primary money laundering concern. FinCEN is issuing this notice of proposed rulemaking (``NPRM'') to propose the imposition of a special measure against BPA. DATES: Written comments on this NPRM must be submitted on or before May 12, 2015. ADDRESSES: You may submit comments, identified by 1506-AB30, by any of the following methods:Federal E-rulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments. Include 1506-AB30 in the submission. Mail: The Financial Crimes Enforcement Network, P.O. Box 39, Vienna, VA 22183. Include 1506-AB30 in the body of the text. Please submit comments by one method only. Comments submitted in response to this NPRM will become a matter of public record. Therefore, you should submit only information that you wish to make publicly available. Inspection of comments: Public comments received electronically or through the U.S. Postal Service sent in response to a notice and request for comment will be made available for public review on http://www.regulations.gov. Comments received may be physically inspected in the FinCEN reading room located in Vienna, Virginia. Reading room appointments are available weekdays (excluding holidays) between 10 a.m. and 3 p.m., by calling the Disclosure Officer at (703) 905-5034 (not a toll-free call). FOR FURTHER INFORMATION CONTACT: The FinCEN Resource Center at (800) 767-2825. SUPPLEMENTARY INFORMATION: I. Statutory Provisions On October 26, 2001, the President signed into law the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the ``USA PATRIOT Act''), Public Law 107-56. Title III of the USA PATRIOT Act amends the anti- money laundering provisions of the Bank Secrecy Act (``BSA''), codified at 12 U.S.C. 1829b, 12 U.S.C. 1951-1959, and 31 U.S.C. 5311-5314, 5316- 5332, to promote the prevention, detection, and prosecution of international money laundering and the financing of terrorism. Regulations implementing the BSA appear at 31 CFR Chapter X. The authority of the Secretary of the Treasury (the ``Secretary'') to administer the BSA and its implementing regulations has been delegated to the Director of FinCEN. Section 311 of the USA PATRIOT Act (``Section 311''), codified at 31 U.S.C. 5318A, grants the Director of FinCEN the authority, upon finding that reasonable grounds exist for concluding that a foreign jurisdiction, institution, class of transaction, or type of account is of ``primary money laundering concern,'' to require domestic financial institutions and financial agencies to take certain ``special measures'' to address the primary money laundering concern. II. Imposition of a Special Measure Against BPA as a Financial Institution of Primary Money Laundering Concern A. Special Measure As noticed elsewhere in this issue of the Federal Register, on March 6, 2015, the Director of FinCEN found that BPA is a financial institution operating outside the United States that is of primary money laundering concern (``Finding''). Based upon that Finding, the Director of FinCEN is authorized to impose one or more special measures. Following the consideration of all factors relevant to the Finding and to selecting the special measure proposed in this NPRM, the Director of FinCEN proposes to impose the special measure authorized by section 5318A(b)(5) (the ``fifth special measure''). In connection with this action, FinCEN consulted with representatives of the Federal functional regulators, the Department of Justice, and the Department of State, among others. B. Discussion of Section 311 Factors In determining which special measures to implement to address the primary money laundering concern, FinCEN considered the following factors. [[Page 13305]] 1. Whether Similar Action Has Been or Will Be Taken by Other Nations or Multilateral Groups Against BPA Other countries or multilateral groups have not yet taken action similar to the action proposed in this rulemaking that would: (1) Prohibit domestic financial institutions and agencies from opening or maintaining a correspondent account for or on behalf of BPA; and (2) require certain covered financial institutions to screen their correspondent accounts in a manner that is reasonably designed to guard against processing transactions involving BPA. FinCEN encourages other countries to take similar action based on the information contained in this NPRM and the Notice of Finding. 2. Whether the Imposition of the Fifth 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 The fifth special measure proposed by this rulemaking would prohibit covered financial institutions from opening or maintaining correspondent accounts for or on behalf of BPA after the effective date of the final rule implementing the fifth special measure. Currently, only four U.S. covered financial institutions maintain an account for BPA; therefore, FinCEN believes this action will not present an undue regulatory burden. As a corollary to this measure, covered financial institutions also would be required to take reasonable steps to apply special due diligence, as set forth below, to all of their correspondent accounts to help ensure that no such account is being used to provide services to BPA. For direct correspondent relationships, this would involve a minimal burden in transmitting a one-time notice to certain foreign correspondent account holders concerning the prohibition on processing transactions involving BPA through the U.S. correspondent account. U.S. financial institutions generally apply some level of screening and, when required, conduct some level of reporting of their transactions and accounts, often through the use of commercially-available software such as that used for compliance with the economic sanctions programs administered by the Office of Foreign Assets Control (``OFAC'') of the Department of the Treasury and to detect potential suspicious activity. To ensure that U.S. financial institutions are not being used unwittingly to process payments for or on behalf of BPA, directly or indirectly, some additional burden will be incurred by U.S. financial institutions to be vigilant in their suspicious activity monitoring procedures. As explained in more detail in the section-by-section analysis below, financial institutions should be able to leverage these current screening and reporting procedures to detect transactions involving BPA. 3. The Extent to Which the Proposed Action or 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 BPA The requirements proposed in this NPRM would target BPA specifically; they would not target a class of financial transactions (such as wire transfers) or a particular jurisdiction. BPA is not a major participant in the international payment system and is not relied upon by the international banking community for clearance or settlement services. Additionally, it is difficult to assess on the information available the extent to which BPA is used for legitimate business purposes. BPA provides services in private banking, personal banking, and corporate banking. These services include typical bank products such as savings accounts, corporate accounts, credit cards, and financing. BPA provides services to high-risk customers including international foreign operated shell companies, businesses likely engaged in unlicensed money transmission, and senior foreign political officials. Because of the demonstrated cooperation of high level management at BPA with TPMLs, BPA's legitimate business activity is at high risk of being abused by money launderers. Given this risk, FinCEN believes that any impact on the legitimate business activities of BPA is outweighed by the need to protect the US financial system. Moreover, the imposition of the fifth special measure against BPA would not have a significant adverse systemic impact on the international payment, clearance, and settlement system. 4. The Effect of the Proposed Action on United States National Security and Foreign Policy The exclusion of BPA from the U.S. financial system as proposed in this NPRM would enhance national security by making it more difficult for money launderers, transnational criminal organizations, human traffickers, and other criminals to access the U.S. financial system. More generally, the imposition of the fifth special measure would complement the U.S. Government's worldwide efforts to expose and disrupt international money laundering. Therefore, pursuant to the Finding that BPA is a financial institution operating outside of the United States of primary money laundering concern, and after conducting the required consultations and weighing the relevant factors, the Director of FinCEN proposes to impose the fifth special measure. III. Section-by-Section Analysis for Imposition of the Fifth Special Measure A. 1010.662(a)--Definitions 1. Banca Privada d'Andorra Section 1010.662(a)(1) of the proposed rule would define BPA to include all domestic and international branches, offices, and subsidiaries of BPA wherever located. Covered financial institutions should take commercially reasonable measures to determine whether a customer is a branch, office, or subsidiary of BPA. 2. Correspondent Account Section 1010.662(a)(2) of the proposed rule would define the term ``correspondent account'' by reference to the definition contained in 31 CFR 1010.605(c)(1)(ii). Section 1010.605(c)(1)(ii) defines a correspondent account to mean an account established to receive deposits from, or make payments or other disbursements on behalf of, a foreign bank, or to handle other financial transactions related to the foreign bank. Under this definition, ``payable through accounts'' are a type of correspondent account. In the case of a U.S. depository institution, this broad 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 rule as was 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.\1\ --------------------------------------------------------------------------- \1\ See 31 CFR 1010.605(c)(2)(i). --------------------------------------------------------------------------- In the case of securities broker-dealers, futures commission merchants, introducing brokers-commodities, and investment companies that are open-end companies (``mutual funds''), FinCEN is [[Page 13306]] also using the same definition of ``account'' for purposes of this rule as was established for these entities 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.\2\ --------------------------------------------------------------------------- \2\ See 31 CFR 1010.605(c)(2)(ii)-(iv). --------------------------------------------------------------------------- 3. Covered Financial Institution Section 1010.662(a)(3) of the proposed rule would define ``covered financial institution'' with the same definition used in the final rule implementing the provisions of section 312 of the USA PATRIOT Act,\3\ which in general includes the following: --------------------------------------------------------------------------- \3\ See 31 CFR 1010.605(e)(1). --------------------------------------------------------------------------- An insured bank (as defined in section 3(h) of the Federal Deposit Insurance Act (12 U.S.C. 1813(h)); a commercial bank; an agency or branch of a foreign bank in the United States; a Federally insured credit union; a savings association; a corporation acting under section 25A of the Federal Reserve Act (12 U.S.C. 611); a trust bank or trust company; a broker or dealer in securities; a futures commission merchant or an introducing broker- commodities; and a mutual fund. 4. Subsidiary Section 1010.662(a)(4) of the proposed rule would define ``subsidiary'' as a company of which more than 50 percent of the voting stock or analogous equity interest is owned by BPA. B. 1010.662(b)--Prohibition on Accounts and Due Diligence Requirements for Covered Financial Institutions 1. Prohibition on Opening or Maintaining Correspondent Accounts Section 1010.662(b)(1) of the proposed rule imposing the fifth special measure would prohibit covered financial institutions from establishing, maintaining, administering, or managing in the United States any correspondent account for or on behalf of BPA. 2. Special Due Diligence for Correspondent Accounts To Prohibit Use As a corollary to the prohibition on maintaining correspondent accounts for or on behalf of BPA, section 1010.662(b)(2) of the proposed rule would require a covered financial institution to apply special due diligence to all of its foreign correspondent accounts that is reasonably designed to guard against processing transactions involving BPA. As part of that special due diligence, covered financial institutions must notify those foreign correspondent account holders that the covered financial institutions know or have reason to know provide services to BPA that such correspondents may not provide BPA with access to the correspondent account maintained at the covered financial institution. Covered financial institutions should implement appropriate risk-based procedures to identify transactions involving BPA. A covered financial institution may satisfy the notification requirement by transmitting the following notice to its foreign correspondent account holders that it knows or has reason to know provide services to BPA: Notice: Pursuant to U.S. regulations issued under Section 311 of the USA PATRIOT Act, see 31 CFR 1010.662, we are prohibited from establishing, maintaining, administering, or managing a correspondent account for or on behalf of Banca Privada d'Andorra. The regulations also require us to notify you that you may not provide Banca Privada d'Andorra or any of its subsidiaries with 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 Banca Privada d'Andorra or any of its subsidiaries, we will be required to take appropriate steps to prevent such access, including terminating your account. A covered financial institution may, for example, have knowledge through transaction screening software that a correspondent processes transactions for BPA. The purpose of the notice requirement is to aid cooperation with correspondent account holders in preventing transactions involving BPA from accessing the U.S. financial system. However, FinCEN would 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 one-time notice by mail, fax, or email. FinCEN specifically solicits comments on the form and scope of the notice that would be required under the rule. The special due diligence would also include implementing risk- based procedures designed to identify any use of correspondent accounts to process transactions involving BPA. A covered financial institution would be expected to apply an appropriate screening mechanism to identify a funds transfer order that on its face listed BPA as the financial institution of the originator or beneficiary, or otherwise referenced BPA in a manner detectable under the financial institution's normal screening mechanisms. An appropriate screening mechanism could be the mechanism used by a covered financial institution to comply with various legal requirements, such as the commercially available software programs used to comply with the economic sanctions programs administered by OFAC. A covered financial institution would also be required to implement risk-based procedures to identify indirect use of its correspondent accounts, including through methods used to disguise the originator or originating institution of a transaction. Specifically, FinCEN is concerned that BPA may attempt to disguise its transactions by relying on types of payments and accounts that would not explicitly identify BPA as an involved party. A financial institution may develop a suspicion of such misuse based on other information in its possession, patterns of transactions, or any other method available to it based on its existing systems. Under the proposed rule, a covered financial institution that suspects or has reason to suspect use of a correspondent account to process transactions involving BPA must take all appropriate steps to attempt to verify and prevent such use, including a notification to its correspondent account holder requesting further information regarding a transaction, requesting corrective action to address the perceived risk and, where necessary, terminating the correspondent account. A covered financial institution may re- establish an account closed under the rule if it determines that the account will not be used to process transactions involving BPA. FinCEN specifically solicits comments on the requirement under the proposed rule that covered financial institutions take reasonable steps to prevent any processing of transactions involving BPA. 3. Recordkeeping and Reporting Section 1010.662(b)(3) of the proposed rule would clarify that paragraph (b) of the 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 requirement that it notify those correspondent account holders that the covered financial institution knows, or has reason to [[Page 13307]] know, provide services to BPA, that such correspondents may not process any transaction involving BPA through the correspondent account maintained at the covered financial institution. IV. Request for Comments FinCEN invites comments on all aspects of the proposal to impose the fifth special measure against BPA and specifically invites comments on the following matters: 1. The impact of the proposed special measure upon legitimate transactions using BPA involving, in particular, U.S. persons and entities; foreign persons, entities, and governments; and multilateral organizations doing legitimate business. 2. The form and scope of the notice to certain correspondent account holders that would be required under the rule; 3. The appropriate scope of the proposed requirement for a covered financial institution to take reasonable steps to identify any use of its correspondent accounts to process transactions involving BPA; and 4. The appropriate steps a covered financial institution should take once it identifies use of one of its correspondent accounts to process transactions involving BPA. V. Regulatory Flexibility Act When an agency issues a rulemaking proposal, the Regulatory Flexibility Act (``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.'' (5 U.S.C. 603(a)). 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. A. Proposal To Prohibit Covered Financial Institutions From Opening or Maintaining Correspondent Accounts With Certain Foreign Banks Under the Fifth Special Measure 1. Estimate of the Number of Small Entities to Whom the Proposed Fifth Special Measure Will Apply For purposes of the RFA, both banks and credit unions are considered small entities if they have less than $500,000,000 in assets.\4\ Of the estimated 7,000 banks, 80 percent have less than $500,000,000 in assets and are considered small entities.\5\ Of the estimated 7,000 credit unions, 94 percent have less than $500,000,000 in assets.\6\ --------------------------------------------------------------------------- \4\ Table of Small Business Size Standards Matched to North American Industry Classification System Codes, Small Business Administration Size Standards (SBA Jan. 22, 2014) [hereinafter SBA Size Standards]. \5\ Federal Deposit Insurance Corporation, Find an Institution, http://www2.fdic.gov/idasp/main.asp; select Size or Performance: Total Assets, type Equal or less than $: ``500000'' and select Find. \6\ National Credit Union Administration, Credit Union Data, http://webapps.ncua.gov/customquery/; select Search Fields: Total Assets, select Operator: Less than or equal to, type Field Values: ``500000000'' and select Go. --------------------------------------------------------------------------- Broker-dealers are defined in 31 CFR 1010.100(h) as those broker- dealers required to register with the Securities and Exchange Commission (``SEC''). Because FinCEN and the SEC regulate substantially the same population, for the purposes of the RFA, FinCEN relies on the SEC's definition of small business as previously submitted to the Small Business Administration (``SBA''). The SEC has defined the term ``small entity'' to mean a broker or dealer that: ``(1) had total capital (net worth plus subordinated liabilities) of less than $500,000 on the date in the prior fiscal year as of which its audited financial statements, were prepared pursuant to Rule 17a-5(d) or, if not required to file such statements, a broker or dealer that had total capital (net worth plus subordinated debt) of less than $500,000 on the last business day of the preceding fiscal year (or in the time that it has been in business if shorter); and (2) is not affiliated with any person (other than a natural person) that is not a small business or small organization as defined in this release.'' \7\ Based on SEC estimates, 17 percent of broker-dealers are classified as ``small'' entities for purposes of the RFA.\8\ --------------------------------------------------------------------------- \7\ 17 CFR 240.0-10(c). \8\ 76 FR 37572, 37602 (June 27, 2011) (the SEC estimates 871 small broker-dealers of the 5,063 total registered broker-dealers). --------------------------------------------------------------------------- Futures commission merchants (``FCMs'') are defined in 31 CFR 1010.100(x) as those FCMs that are registered or required to be registered as a FCM with the Commodity Futures Trading Commission (``CFTC'') under the Commodity Exchange Act (``CEA''), except persons who register pursuant to section 4f(a)(2) of the CEA, 7 U.S.C. 6f(a)(2). Because FinCEN and the CFTC regulate substantially the same population, for the purposes of the RFA, FinCEN relies on the CFTC's definition of small business as previously submitted to the SBA. In the CFTC's ``Policy Statement and Establishment of Definitions of `Small Entities' for Purposes of the Regulatory Flexibility Act,'' the CFTC concluded that registered FCMs should not be considered to be small entities for purposes of the RFA.\9\ The CFTC's determination in this regard was based, in part, upon the obligation of registered FCMs to meet the capital requirements established by the CFTC. --------------------------------------------------------------------------- \9\ 47 FR 18618, 18619 (Apr. 30, 1982). --------------------------------------------------------------------------- For purposes of the RFA, an introducing broker-commodities dealer is considered small if it has less than $35,500,000 in gross receipts annually.\10\ Based on information provided by the National Futures Association (``NFA''), 95 percent of introducing brokers-commodities dealers have less than $35.5 million in Adjusted Net Capital and are considered to be small entities. --------------------------------------------------------------------------- \10\ SBA Size Standards at 28. --------------------------------------------------------------------------- Mutual funds are defined in 31 CFR 1010.100(gg) as those investment companies that are open-end investment companies that are registered or are required to register with the SEC. Because FinCEN and the SEC regulate substantially the same population, for the purposes of the RFA, FinCEN relies on the SEC's definition of small business as previously submitted to the SBA. The SEC has defined the term ``small entity'' under the Investment Company Act to mean ``an investment company that, together with other investment companies in the same group of related investment companies, has net assets of $50 million or less as of the end of its most recent fiscal year.'' \11\ Based on SEC estimates, 7 percent of mutual funds are classified as ``small entities'' for purposes of the RFA under this definition.\12\ --------------------------------------------------------------------------- \11\ 17 CFR 270.0-10. \12\ 78 FR 23637, 23658 (April 19, 2013). --------------------------------------------------------------------------- As noted above, 80 percent of banks, 94 percent of credit unions, 17 percent of broker-dealers, 95 percent of introducing brokers- commodities, zero FCMs, and 7 percent of mutual funds are small entities. The limited number of foreign banking institutions with which BPA maintains or will maintain accounts will likely limit the number of affected covered financial institutions to the largest U.S. banks, which actively engage in international transactions. Thus, the prohibition on maintaining correspondent accounts for foreign banking institutions that engage in transactions involving BPA under the fifth special measure would not impact a substantial number of small entities. 2. Description of the Projected Reporting and Recordkeeping Requirements of the Fifth Special Measure The proposed fifth special measure would require covered financial institutions to provide a notification [[Page 13308]] intended to aid cooperation from foreign correspondent account holders in preventing transactions involving BPA from accessing the U.S. financial system. FinCEN estimates that the burden on institutions providing this notice is one hour. Covered financial institutions would also be required to take reasonable measures to detect use of their correspondent accounts to process transactions involving BPA. All U.S. persons, including U.S. financial institutions, currently must exercise some degree of due diligence to comply with OFAC sanctions and suspicious activity reporting requirements. The tools used for such purposes, including commercially available software used to comply with the economic sanctions programs administered by OFAC, can easily be modified to identify correspondent accounts with foreign banks that involve BPA. Thus, the special due diligence that would be required by the imposition of the fifth special measure--i.e., the one-time transmittal of notice to certain correspondent account holders, the screening of transactions to identify any use of correspondent accounts, and the implementation of risk-based measures to detect use of correspondent accounts--would not impose a significant additional economic burden upon small U.S. financial institutions. B. Certification For these reasons, FinCEN certifies that the proposals contained in this rulemaking would not 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 the fifth special measure regarding BPA. VI. Paperwork Reduction Act The collection of information contained in this proposed rule is being submitted to the Office of Management and Budget for review in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)). Comments on the collection of information should be sent to the Desk Officer for the Department of Treasury, Office of Information and Regulatory Affairs, Office of Management and Budget, Paperwork Reduction Project (1506), Washington, DC 20503 (or by email to oira [email protected]) with a copy to FinCEN by mail or email at the addresses previously specified. Comments should be submitted by one method only. Comments on the collection of information should be received by May 12, 2015. In accordance with the requirements of the Paperwork Reduction Act and its implementing regulations, 5 CFR 1320, the following information concerning the collection of information as required by 31 CFR 1010.662 is presented to assist those persons wishing to comment on the information collection. A. Proposed Information Collection Under the Fifth Special Measure The notification requirement in section 1010.662(b)(2)(i) is intended to aid cooperation from correspondent account holders in denying BPA access to the U.S. financial system. The information required to be maintained by section 1010.662(b)(3)(i) would be used by federal agencies and certain self-regulatory organizations to verify compliance by covered financial institutions with the provisions of 31 CFR 1010.662. The collection of information would be mandatory. Description of Affected Financial Institutions: Banks, broker- dealers in securities, futures commission merchants and introducing brokers-commodities, and mutual funds. Estimated Number of Affected Financial Institutions: 5,000. Estimated Average Annual Burden in Hours Per Affected Financial Institution: The estimated average burden associated with the collection of information in this proposed rule is one hour per affected financial institution. Estimated Total Annual Burden: 5,000 hours. FinCEN specifically invites comments on: (a) Whether the proposed collection of information is necessary for the proper performance of the mission of FinCEN, including whether the information would have practical utility; (b) the accuracy of FinCEN's estimate of the burden of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information required to be maintained; (d) 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 (e) estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to report the information. 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 OMB control number. VII. Executive Order 12866 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, of reducing costs, of harmonizing rules, and of promoting flexibility. It has been determined that the proposed rule is not a ``significant regulatory action'' for purposes of Executive Order 12866. List of Subjects in 31 CFR Part 1010 Administrative practice and procedure, banks and banking, brokers, counter-money laundering, counter-terrorism, foreign banking. Authority and Issuance For the reasons set forth in the preamble, part 1010, chapter X of title 31 of the Code of Federal Regulations, is proposed to be amended as follows: 0 1. The authority citation for part 1010 is revised to read as follows: Authority: 12 U.S.C. 1829b and 1951-1959; 31 U.S.C. 5311-5314, 5316-5332 Title III, secs. 311, 312, 313, 314, 319, 326, 352, Pub. L. 107-56, 115 Stat. 307. 0 2. Add Sec. 1010.662 to read as follows: Sec. 1010.662 Special measures against Banca Privada d'Andorra. (a) Definitions. For purposes of this section: (1) Banca Privada d'Andorra means all branches, offices, and subsidiaries of Banca Privada d'Andorra wherever located. (2) Correspondent account has the same meaning as provided in Sec. 1010.605(c)(1)(ii). (3) Covered financial institution has the same meaning as provided in Sec. 1010.605(e)(1). (4) Subsidiary means a company of which more than 50 percent of the voting stock or analogous equity interest is owned by another company. (b) Prohibition on accounts and due diligence requirements for covered financial institutions--(1) Prohibition on use of correspondent accounts. A covered financial institution shall terminate any correspondent account that is established, maintained, administered, or managed in the United States for, or on behalf of, Banca Privada d'Andorra. (2) Special due diligence of correspondent accounts to prohibit use. (i) A covered financial institution shall apply special due diligence to its foreign correspondent accounts that is reasonably designed to guard against [[Page 13309]] their use to process transactions involving Banca Privada d'Andorra. 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 know provide services to Banca Privada d'Andorra that such correspondents may not provide Banca Privada d'Andorra 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 Banca Privada d'Andorra, 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 Banca Privada d'Andorra. (iii) A covered financial institution that obtains knowledge that a foreign correspondent account may be being used to process transactions involving Banca Privada d'Andorra shall take all appropriate steps to further investigate and prevent such access, including the notification of its correspondent account holder under paragraph (b)(2)(i)(A) and, where necessary, termination of the correspondent account. (3) Recordkeeping and reporting. (i) A covered financial institution is required to document its compliance with the notice requirement set forth in paragraph (b)(2)(i)(A) of this section. (ii) Nothing in this paragraph (b) shall require a covered financial institution to report any information not otherwise required to be reported by law or regulation. Dated: March 6, 2015. Jennifer Shasky Calvery, Financial Crimes Enforcement Network. [FR Doc. 2015-05724 Filed 3-12-15; 8:45 am] BILLING CODE 4810-2-P
![13304 Federal Register / Vol. 80, No. 49 / Friday, March 13, 2015 / Proposed Rules
TABLE E–1—FILTER LENS SHADE DEPARTMENT OF THE TREASURY I. Statutory Provisions
NUMBERS FOR PROTECTION On October 26, 2001, the President
AGAINST RADIANT ENERGY—Contin- Financial Crimes Enforcement Network signed into law the Uniting and
ued Strengthening America by Providing
31 CFR Part 1010 Appropriate Tools Required to Intercept
Shade and Obstruct Terrorism Act of 2001 (the
Welding operation RIN 1506–AB30
No. ‘‘USA PATRIOT Act’’), Public Law 107–
Imposition of Special Measure against 56. Title III of the USA PATRIOT Act
Shielded metal-arc welding 3⁄16-, 12. amends the anti-money laundering
7⁄32-, 1⁄4-inch diameter electrodes. Banca Privada d’Andorra as a
5⁄16-, 3⁄8-inch diameter electrodes .... Financial Institution of Primary Money provisions of the Bank Secrecy Act
14.
Laundering Concern (‘‘BSA’’), codified at 12 U.S.C. 1829b, 12
Atomic hydrogen welding ................. 10–14.
U.S.C. 1951–1959, and 31 U.S.C. 5311–
Carbon-arc welding .......................... 14.
AGENCY: Financial Crimes Enforcement 5314, 5316–5332, to promote the
Soldering .......................................... 2.
Network (‘‘FinCEN’’), Treasury. prevention, detection, and prosecution
Torch brazing ................................... 3 or 4.
ACTION: Notice of proposed rulemaking. of international money laundering and
Light cutting, up to 1 inch ................ 3 or 4.
the financing of terrorism. Regulations
Medium cutting, 1 inch to 6 inches .. 4 or 5.
Heavy cutting, over 6 inches ........... 5 or 6.
SUMMARY: In a finding, notice of which implementing the BSA appear at 31 CFR
Gas welding (light), up to 1⁄8-inch .... 4 or 5.
is published elsewhere in this issue of Chapter X. The authority of the
Gas welding (medium), 1⁄8-inch to 5 or 6.
the Federal Register (‘‘Notice of Secretary of the Treasury (the
1⁄2-inch. Finding’’), the Director of FinCEN found ‘‘Secretary’’) to administer the BSA and
Gas welding (heavy), over 1⁄2-inch .. 6 or 8. that Banca Privada d’Andorra (‘‘BPA’’) its implementing regulations has been
is a financial institution operating delegated to the Director of FinCEN.
outside of the United States that is of Section 311 of the USA PATRIOT Act
(2) Laser protection. (i) Employees primary money laundering concern. (‘‘Section 311’’), codified at 31 U.S.C.
whose occupation or assignment FinCEN is issuing this notice of 5318A, grants the Director of FinCEN
requires exposure to laser beams shall proposed rulemaking (‘‘NPRM’’) to the authority, upon finding that
be furnished suitable laser safety goggles propose the imposition of a special reasonable grounds exist for concluding
which will protect for the specific measure against BPA. that a foreign jurisdiction, institution,
wavelength of the laser and be of optical DATES: Written comments on this NPRM class of transaction, or type of account
density (O.D.) adequate for the energy must be submitted on or before May 12, is of ‘‘primary money laundering
involved. Table E–2 lists the maximum 2015. concern,’’ to require domestic financial
power or energy density for which institutions and financial agencies to
ADDRESSES: You may submit comments,
adequate protection is afforded by take certain ‘‘special measures’’ to
identified by 1506–AB30, by any of the
glasses of optical densities from 5 address the primary money laundering
following methods:
through 8. concern.
• Federal E-rulemaking Portal:
http://www.regulations.gov. Follow the II. Imposition of a Special Measure
TABLE E–2—SELECTING LASER instructions for submitting comments. Against BPA as a Financial Institution
SAFETY GLASS Include 1506–AB30 in the submission. of Primary Money Laundering Concern
• Mail: The Financial Crimes
Attenuation A. Special Measure
Intensity, CW Enforcement Network, P.O. Box 39,
maximum power Vienna, VA 22183. Include 1506–AB30 As noticed elsewhere in this issue of
Optical
density density Attenuation in the body of the text. Please submit the Federal Register, on March 6, 2015,
(watts/cm2) factor the Director of FinCEN found that BPA
(O.D.) comments by one method only.
• Comments submitted in response to is a financial institution operating
10¥2 ........................ 5 105 this NPRM will become a matter of outside the United States that is of
10¥1 ........................ 6 106 public record. Therefore, you should primary money laundering concern
1.0 ........................... 7 107 submit only information that you wish (‘‘Finding’’). Based upon that Finding,
10.0 ......................... 8 108 to make publicly available. the Director of FinCEN is authorized to
Inspection of comments: Public impose one or more special measures.
Output levels falling between lines in comments received electronically or Following the consideration of all
this table shall require the higher optical through the U.S. Postal Service sent in factors relevant to the Finding and to
density. response to a notice and request for selecting the special measure proposed
comment will be made available for in this NPRM, the Director of FinCEN
(ii) All protective goggles shall bear a proposes to impose the special measure
label identifying the following data: public review on http://
www.regulations.gov. Comments authorized by section 5318A(b)(5) (the
(A) The laser wavelengths for which received may be physically inspected in ‘‘fifth special measure’’). In connection
use is intended; the FinCEN reading room located in with this action, FinCEN consulted with
(B) The optical density of those Vienna, Virginia. Reading room representatives of the Federal functional
wavelengths; appointments are available weekdays regulators, the Department of Justice,
(excluding holidays) between 10 a.m. and the Department of State, among
(C) The visible light transmission.
tkelley on DSK3SPTVN1PROD with PROPOSALS
and 3 p.m., by calling the Disclosure others.
[FR Doc. 2015–05521 Filed 3–12–15; 8:45 am] Officer at (703) 905–5034 (not a toll-free B. Discussion of Section 311 Factors
BILLING CODE 4510–26–P call).
In determining which special
FOR FURTHER INFORMATION CONTACT: The
measures to implement to address the
FinCEN Resource Center at (800) 767– primary money laundering concern,
2825. FinCEN considered the following
SUPPLEMENTARY INFORMATION: factors.
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![Federal Register / Vol. 80, No. 49 / Friday, March 13, 2015 / Proposed Rules 13307
know, provide services to BPA, that less than $500,000,000 in assets and are considered to be small entities for
such correspondents may not process considered small entities.5 Of the purposes of the RFA.9 The CFTC’s
any transaction involving BPA through estimated 7,000 credit unions, 94 determination in this regard was based,
the correspondent account maintained percent have less than $500,000,000 in in part, upon the obligation of registered
at the covered financial institution. assets.6 FCMs to meet the capital requirements
Broker-dealers are defined in 31 CFR established by the CFTC.
IV. Request for Comments 1010.100(h) as those broker-dealers For purposes of the RFA, an
FinCEN invites comments on all required to register with the Securities introducing broker-commodities dealer
aspects of the proposal to impose the and Exchange Commission (‘‘SEC’’). is considered small if it has less than
fifth special measure against BPA and Because FinCEN and the SEC regulate $35,500,000 in gross receipts
specifically invites comments on the substantially the same population, for annually.10 Based on information
following matters: the purposes of the RFA, FinCEN relies provided by the National Futures
1. The impact of the proposed special on the SEC’s definition of small Association (‘‘NFA’’), 95 percent of
measure upon legitimate transactions business as previously submitted to the introducing brokers-commodities
using BPA involving, in particular, U.S. Small Business Administration dealers have less than $35.5 million in
persons and entities; foreign persons, (‘‘SBA’’). The SEC has defined the term Adjusted Net Capital and are considered
entities, and governments; and ‘‘small entity’’ to mean a broker or to be small entities.
multilateral organizations doing dealer that: ‘‘(1) had total capital (net Mutual funds are defined in 31 CFR
legitimate business. worth plus subordinated liabilities) of 1010.100(gg) as those investment
2. The form and scope of the notice less than $500,000 on the date in the companies that are open-end investment
to certain correspondent account prior fiscal year as of which its audited companies that are registered or are
holders that would be required under financial statements, were prepared required to register with the SEC.
the rule; pursuant to Rule 17a–5(d) or, if not Because FinCEN and the SEC regulate
3. The appropriate scope of the required to file such statements, a substantially the same population, for
proposed requirement for a covered broker or dealer that had total capital the purposes of the RFA, FinCEN relies
financial institution to take reasonable (net worth plus subordinated debt) of on the SEC’s definition of small
steps to identify any use of its less than $500,000 on the last business business as previously submitted to the
correspondent accounts to process day of the preceding fiscal year (or in SBA. The SEC has defined the term
transactions involving BPA; and the time that it has been in business if ‘‘small entity’’ under the Investment
4. The appropriate steps a covered shorter); and (2) is not affiliated with Company Act to mean ‘‘an investment
financial institution should take once it any person (other than a natural person) company that, together with other
identifies use of one of its that is not a small business or small investment companies in the same
correspondent accounts to process organization as defined in this group of related investment companies,
transactions involving BPA. release.’’ 7 Based on SEC estimates, 17 has net assets of $50 million or less as
percent of broker-dealers are classified of the end of its most recent fiscal
V. Regulatory Flexibility Act as ‘‘small’’ entities for purposes of the year.’’ 11 Based on SEC estimates, 7
When an agency issues a rulemaking RFA.8 percent of mutual funds are classified as
proposal, the Regulatory Flexibility Act Futures commission merchants ‘‘small entities’’ for purposes of the RFA
(‘‘RFA’’) requires the agency to ‘‘prepare (‘‘FCMs’’) are defined in 31 CFR under this definition.12
and make available for public comment 1010.100(x) as those FCMs that are As noted above, 80 percent of banks,
an initial regulatory flexibility analysis’’ registered or required to be registered as 94 percent of credit unions, 17 percent
that will ‘‘describe the impact of the a FCM with the Commodity Futures of broker-dealers, 95 percent of
proposed rule on small entities.’’ (5 Trading Commission (‘‘CFTC’’) under introducing brokers-commodities, zero
U.S.C. 603(a)). Section 605 of the RFA the Commodity Exchange Act (‘‘CEA’’), FCMs, and 7 percent of mutual funds
allows an agency to certify a rule, in lieu except persons who register pursuant to are small entities. The limited number
of preparing an analysis, if the proposed section 4f(a)(2) of the CEA, 7 U.S.C. of foreign banking institutions with
rulemaking is not expected to have a 6f(a)(2). Because FinCEN and the CFTC which BPA maintains or will maintain
significant economic impact on a regulate substantially the same accounts will likely limit the number of
substantial number of small entities. population, for the purposes of the RFA, affected covered financial institutions to
FinCEN relies on the CFTC’s definition the largest U.S. banks, which actively
A. Proposal To Prohibit Covered of small business as previously
Financial Institutions From Opening or engage in international transactions.
submitted to the SBA. In the CFTC’s Thus, the prohibition on maintaining
Maintaining Correspondent Accounts ‘‘Policy Statement and Establishment of
With Certain Foreign Banks Under the correspondent accounts for foreign
Definitions of ‘Small Entities’ for banking institutions that engage in
Fifth Special Measure Purposes of the Regulatory Flexibility transactions involving BPA under the
1. Estimate of the Number of Small Act,’’ the CFTC concluded that fifth special measure would not impact
Entities to Whom the Proposed Fifth registered FCMs should not be a substantial number of small entities.
Special Measure Will Apply 5 Federal Deposit Insurance Corporation, Find an 2. Description of the Projected Reporting
For purposes of the RFA, both banks Institution, http://www2.fdic.gov/idasp/main.asp; and Recordkeeping Requirements of the
and credit unions are considered small select Size or Performance: Total Assets, type Equal Fifth Special Measure
or less than $: ‘‘500000’’ and select Find.
entities if they have less than
tkelley on DSK3SPTVN1PROD with PROPOSALS
6 National Credit Union Administration, Credit The proposed fifth special measure
$500,000,000 in assets.4 Of the Union Data, http://webapps.ncua.gov/customquery/ would require covered financial
estimated 7,000 banks, 80 percent have ; select Search Fields: Total Assets, select Operator:
Less than or equal to, type Field Values:
institutions to provide a notification
4 Table of Small Business Size Standards ‘‘500000000’’ and select Go.
7 17 CFR 240.0–10(c). 9 47 FR 18618, 18619 (Apr. 30, 1982).
Matched to North American Industry Classification
10 SBA Size Standards at 28.
System Codes, Small Business Administration Size 8 76 FR 37572, 37602 (June 27, 2011) (the SEC
11 17 CFR 270.0–10.
Standards (SBA Jan. 22, 2014) [hereinafter SBA Size estimates 871 small broker-dealers of the 5,063 total
Standards]. registered broker-dealers). 12 78 FR 23637, 23658 (April 19, 2013).
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![Federal Register / Vol. 80, No. 49 / Friday, March 13, 2015 / Proposed Rules 13309
their use to process transactions DEPARTMENT OF HOMELAND Collins, Program Manager, Docket
involving Banca Privada d’Andorra. At SECURITY Operations, telephone (202) 366–9826.
a minimum, that special due diligence SUPPLEMENTARY INFORMATION:
must include: Coast Guard
(A) Notifying those foreign Table of Acronyms
33 CFR Part 165
correspondent account holders that the DHS Department of Homeland Security
covered financial institution knows or [Docket Number USCG–2014–1044] FR Federal Register
has reason to know provide services to NPRM Notice of Proposed Rulemaking
Banca Privada d’Andorra that such RIN 1625–AA00
A. Public Participation and Request for
correspondents may not provide Banca Safety Zone; Shore (Belt) Parkway Comments
Privada d’Andorra with access to the Bridge Construction, Mill Basin;
correspondent account maintained at Brooklyn, NY We encourage you to participate in
the covered financial institution; and this rulemaking by submitting
(B) Taking reasonable steps to identify AGENCY: Coast Guard, DHS. comments and related materials. All
any use of its foreign correspondent ACTION: Notice of proposed rulemaking. comments received will be posted
accounts by Banca Privada d’Andorra, without change to http://
SUMMARY: The Coast Guard proposes to www.regulations.gov and will include
to the extent that such use can be establish a safety zone on the navigable
determined from transactional records any personal information you have
waters of Mill Basin surrounding the provided.
maintained in the covered financial Belt Parkway Bridge. In response to a
institution’s normal course of business. planned Belt Parkway Bridge 1. Submitting Comments
(ii) A covered financial institution construction project, this rule would
allow the Coast Guard to prohibit all If you submit a comment, please
shall take a risk-based approach when
vessel traffic through the safety zone include the docket number for this
deciding what, if any, other due
during bridge replacement operations, rulemaking, indicate the specific section
diligence measures it reasonably must
both planned and unforeseen, that could of this document to which each
adopt to guard against the use of its
pose an imminent hazard to persons and comment applies, and provide a reason
foreign correspondent accounts to for each suggestion or recommendation.
process transactions involving Banca vessels operating in the area. This rule
is necessary to provide for the safety of You may submit your comments and
Privada d’Andorra. material online at http://
life in the vicinity of the construction of
(iii) A covered financial institution the Belt Parkway Bridge. www.regulations.gov, or by fax, mail, or
that obtains knowledge that a foreign hand delivery, but please use only one
DATES: Comments and related material
correspondent account may be being of these means. If you submit a
must be received by the Coast Guard on
used to process transactions involving comment online, it will be considered
or before May 12, 2015.
Banca Privada d’Andorra shall take all received by the Coast Guard when you
Requests for public meetings must be
appropriate steps to further investigate received by the Coast Guard on or before successfully transmit the comment. If
and prevent such access, including the April 3, 2015. you fax, hand deliver, or mail your
notification of its correspondent account comment, it will be considered as
ADDRESSES: You may submit comments
holder under paragraph (b)(2)(i)(A) and, having been received by the Coast
identified by docket number using any Guard when it is received at the Docket
where necessary, termination of the one of the following methods:
correspondent account. Management Facility. We recommend
(1) Federal eRulemaking Portal: that you include your name and a
(3) Recordkeeping and reporting. (i) A http://www.regulations.gov. mailing address, an email address, or a
covered financial institution is required (2) Fax: (202) 493–2251. telephone number in the body of your
to document its compliance with the (3) Mail or Delivery: Docket document so that we can contact you if
notice requirement set forth in Management Facility (M–30), U.S.
we have questions regarding your
paragraph (b)(2)(i)(A) of this section. Department of Transportation, West
submission.
Building Ground Floor, Room W12–140,
(ii) Nothing in this paragraph (b) shall To submit your comment online, go to
1200 New Jersey Avenue SE.,
require a covered financial institution to http://www.regulations.gov, type the
Washington, DC 20590–0001. Deliveries
report any information not otherwise docket number [USCG–2014–1044] in
accepted between 9 a.m. and 5 p.m.,
required to be reported by law or Monday through Friday, except federal the ‘‘SEARCH’’ box and click
regulation. holidays. The telephone number is ‘‘SEARCH.’’ Click on ‘‘Submit a
Dated: March 6, 2015. (202)366–9329. Comment’’ on the line associated with
Jennifer Shasky Calvery, See the ‘‘Public Participation and this rulemaking.
Financial Crimes Enforcement Network. Request for Comments’’ portion of the If you submit your comments by mail
SUPPLEMENTARY INFORMATION section or hand delivery, submit them in an
[FR Doc. 2015–05724 Filed 3–12–15; 8:45 am]
below for further instructions on unbound format, no larger than 81⁄2 by
BILLING CODE 4810–2–P
submitting comments. To avoid 11 inches, suitable for copying and
duplication, please use only one of electronic filing. If you submit
these three methods.
tkelley on DSK3SPTVN1PROD with PROPOSALS
comments by mail and would like to
FOR FURTHER INFORMATION CONTACT: If know that they reached the Facility,
you have questions on this rule, contact please enclose a stamped, self-addressed
LT Hannah Eko, Coast Guard Sector postcard or envelope. We will consider
New York; telephone (718) 354–4114, or all comments and material received
email hannah.o.eko@uscg.mil. If you during the comment period and may
have questions on viewing or submitting change the rule based on your
material to the docket, call Cheryl comments.
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Document Created: 2015-12-18 11:42:00
Document Modified: 2015-12-18 11:42:00
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Proposed Rules | |
| Action | Notice of proposed rulemaking. | |
| Dates | Written comments on this NPRM must be submitted on or before May 12, 2015. | |
| Contact | The FinCEN Resource Center at (800) 767-2825. | |
| FR Citation | 80 FR 13304 | |
| RIN Number | 1506-AB30 | |
| CFR Associated | Administrative Practice and Procedure; Banks and Banking; Brokers; Counter-Money Laundering; Counter-Terrorism and Foreign Banking |
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