Agency Information Collection Activities; Proposed Renewal; Comment Request; Renewal Without Change of Anti-Money Laundering Programs; Due Diligence Programs for Correspondent Accounts for Foreign Financial Institutions and for Private Banking Accounts
| Published date | 29 September 2020 |
| Citation | 85 FR 61104 |
| Record Number | 2020-21441 |
| Section | Notices |
| Court | Financial Crimes Enforcement Network,Treasury Department |
Federal Register, Volume 85 Issue 189 (Tuesday, September 29, 2020)
[Federal Register Volume 85, Number 189 (Tuesday, September 29, 2020)]
[Notices]
[Pages 61104-61110]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-21441]
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DEPARTMENT OF THE TREASURY
Financial Crimes Enforcement Network
Agency Information Collection Activities; Proposed Renewal;
Comment Request; Renewal Without Change of Anti-Money Laundering
Programs; Due Diligence Programs for Correspondent Accounts for Foreign
Financial Institutions and for Private Banking Accounts
AGENCY: Financial Crimes Enforcement Network (FinCEN), Treasury.
ACTION: Notice and request for comments.
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SUMMARY: As part of its continuing effort to reduce paperwork and
respondent burden, FinCEN invites comments on the proposed renewal,
without change, of a currently approved information collection found in
existing Bank Secrecy Act regulations. Specifically, the regulations
require banks, brokers or dealers in securities, futures commission
merchants, introducing brokers in commodities, and mutual funds to
establish due diligence programs that include risk-based, and, where
necessary, enhanced, policies, procedures, and controls reasonably
designed to detect and report money laundering conducted through or
involving, any correspondent accounts established or maintained for
foreign financial institutions. The regulations also require that these
same financial institutions establish due diligence programs that
include policies, procedures, and controls reasonably designed to
detect and report money laundering conducted through or involving any
private banking accounts established by the financial institutions. The
due diligence programs are required to be part of the financial
institutions' anti-money laundering programs. Although no changes are
proposed to the information collection itself, this request for
comments covers a future expansion of the scope of the annual hourly
burden and cost estimate associated with these regulations. This
request for comments is made pursuant to the Paperwork Reduction Act of
1995.
DATES: Written comments are welcome, and must be received on or before
November 30, 2020.
ADDRESSES: Comments may be submitted by any of the following methods:
Federal E-rulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments. Refer to Docket Number
FINCEN-2020-0012 and the specific Office of Management and Budget (OMB)
control number 1506-0046.
Mail: Policy Division, Financial Crimes Enforcement
Network, P.O. Box 39, Vienna, VA 22183. Refer to Docket Number FINCEN-
2020-0012 and OMB control number 1506-0046.
Please submit comments by one method only. Comments will also be
incorporated into FinCEN's review of existing regulations, as provided
by Treasury's 2011 Plan for Retrospective Analysis of Existing Rules.
All comments submitted in response to this notice will become a matter
of public record. Therefore, you should submit only information that
you wish to make publicly available.
FOR FURTHER INFORMATION CONTACT: The FinCEN Regulatory Support Section
at 1-800-767-2825 or electronically at [email protected].
SUPPLEMENTARY INFORMATION:
I. Statutory and Regulatory Provisions
The legislative framework generally referred to as the Bank Secrecy
Act (BSA) consists of the Currency and Financial Transactions Reporting
Act of 1970, as amended by the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001 (USA PATRIOT Act) (Pub. L. 107-56) and other
legislation. The BSA is codified at 12 U.S.C. 1829b, 12 U.S.C. 1951-
1959, 31 U.S.C. 5311-5314 and 5316-5332, and notes thereto, with
implementing regulations at 31 CFR chapter X.
The BSA authorizes the Secretary of the Treasury, inter alia, to
require financial institutions to keep records and file reports that
are determined to have a high degree of usefulness in criminal, tax,
and regulatory matters, or in the conduct of intelligence or counter-
intelligence activities to protect against international terrorism, and
to implement anti-money laundering (AML) programs and compliance
procedures.\1\ Regulations implementing the BSA appear at 31 CFR
chapter X. The authority of the Secretary to administer the BSA has
been delegated to the Director of FinCEN.\2\
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\1\ Section 358 of the USA PATRIOT Act added language expanding
the scope of the BSA to intelligence or counter-intelligence
activities to protect against international terrorism.
\2\ Treasury Order 180-01 (re-affirmed Jan. 14, 2020).
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Section 312 of the USA PATRIOT Act added subsection (i) to 31
U.S.C. 5318 of the BSA. Section 312 mandates that each financial
institution that establishes, maintains, administers, or manages a
correspondent account or a private banking account in the United States
for non-U.S. persons subject such accounts to certain anti-money
laundering compliance measures. In particular, a financial institution
must establish appropriate, specific, and, where necessary, enhanced,
due diligence (EDD) or enhanced scrutiny policies, procedures, and
controls that are reasonably designed to detect and report instances of
money laundering through those accounts. The regulations implementing
the due diligence requirements for maintaining foreign correspondent
accounts and private banking accounts are found at 31 CFR 1010.610 and
31 CFR 1010.620, respectively, and apply to covered financial
institutions defined as banks, brokers or dealers in securities,
futures commission merchants, introducing brokers in commodities, and
mutual funds.\3\
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\3\ 31 CFR 1010.605(e).
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(a) 31 CFR 1010.610--Due diligence programs for correspondent
accounts for foreign financial institutions.
Under 31 CFR 1010.610(a), covered financial institutions are
required to establish due diligence policies, procedures, and controls
that include each of the following for any correspondent account
established, maintained, administered, or managed: (i) Determining
whether any such foreign correspondent account is subject to EDD; (ii)
assessing the money laundering risks presented by each such foreign
correspondent account; and (iii) applying risk-based procedures and
controls to each such foreign
[[Page 61105]]
correspondent account reasonably designed to detect and report known or
suspected money laundering activity, including a periodic review of the
correspondent account activity sufficient to determine consistency with
information obtained about the type, purpose, and anticipated activity
of the account.
Under 31 CFR 1010.610(b), covered financial institutions are
required to establish EDD policies, procedures, and controls when
establishing, maintaining, administering, or managing a correspondent
account for certain foreign banks, as defined in 31 CFR 1010.610(c).\4\
The EDD must reflect the risk assessment of the account and must
include, as appropriate: (i) Obtaining information relating to the
foreign bank's AML program; (ii) monitoring transactions to, from, or
through the correspondent account in a manner reasonably designed to
detect money laundering and suspicious activity; (iii) obtaining
information from the foreign bank about the identity of persons with
authority to direct transactions through the correspondent account if
it is a payable-through account, as well as information about the
sources and beneficial owners of funds or other assets in the payable-
through account; (iv) determining whether the foreign bank maintains
correspondent accounts for other foreign banks that use the foreign
correspondent account established or maintained by the covered
financial institution and, if so, taking reasonable steps to obtain
information relevant to assess and mitigate money laundering risks,
including, as appropriate, by obtaining the identity of the other
foreign banks; and (v) obtaining the identity of certain owners of any
such foreign bank that is not publicly traded and the nature and extent
of the ownership interest.
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\4\ The EDD procedures are required for any correspondent
account maintained for a foreign bank that operates pursuant to: (i)
An offshore banking license; (ii) a banking license issued by a
foreign country that has been designated as non-cooperative with
international anti-money laundering principles or procedures by an
intergovernmental group or organization of which the United States
is a member and with which designation the U.S. representative to
the group or organization concurs; or (iii) a banking license issued
by a foreign country that has been designated by the Secretary as
warranting special measures due to money laundering concerns.
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Under 31 CFR 1010.610(d), covered financial institutions are
required to establish special procedures when due diligence or EDD
cannot be performed, including when the covered financial should refuse
to open the account, suspend transaction activity, file a suspicious
activity report, or close the account.
(b) 31 CFR 1010.620--Due diligence programs for private banking
accounts.
Under 31 CFR 1010.620, covered financial institutions are required
to establish due diligence policies, procedures, and controls that, at
a minimum, are designed to ensure that the financial institutions take
reasonable steps to: (i) Ascertain the identify of all nominal and
beneficial owners of a private banking account; \5\ (ii) ascertain
whether any nominal or beneficial owner is a senior foreign political
figure; (iii) ascertain the source(s) of funds deposited into a private
banking account and the purpose and expected use of the account; and
(iv) review the activity of the account to ensure that it is consistent
with the information obtained about the client's source of funds and
with the stated purpose and expected use of the account, as needed to
guard against money laundering, and to report any known or suspected
money laundering or suspicious activity conducted to, from, or through
a private banking account.
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\5\ Private banking account means an account (or any combination
of accounts) maintained at a covered financial institution that: (i)
Requires a minimum aggregate deposit of funds or other assets of not
less than $1,000,000; (ii) is established on behalf of or for the
benefit of one or more non-U.S. persons who are direct or beneficial
owners of the account; and (iii) is assigned to, or is administered
or managed by, in whole or in part, an officer, employee, or agent
of a covered financial institution acting as a liaison between the
covered financial institution and the direct or beneficial owner of
the account. 31 CFR 1010.605(m).
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Under 31 CFR 1010.620(c), in the case of a private banking account
for which a senior foreign political figure is a nominal or beneficial
owner, covered financial institutions are required to conduct enhanced
scrutiny of the account that is reasonably designed to detect and
report transactions that may involve the proceeds of foreign
corruption.\6\
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\6\ See 31 CFR 1010.620(c)(2) for the definition of the term
``proceeds of foreign corruption.''
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Under 31 CFR 1010.620(d), covered financial institutions are
required to establish special procedures when appropriate due diligence
cannot be performed, including when the covered financial institution
should refuse to open the account, suspend transaction activity, file a
suspicious activity report, or close the account.
II. Paperwork Reduction Act of 1995 (PRA) \7\
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\7\ Public Law 104-13, 44 U.S.C. 3506(c)(2)(A).
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Title: Due diligence programs for correspondent accounts for
foreign financial institutions and private banking accounts (31 CFR
1010.610 and 31 CFR 1010.620).
OMB Control Number: 1506-0046.
Report Number: Not applicable.
Abstract: FinCEN is issuing this notice to renew the OMB control
number for the due diligence programs for correspondent accounts for
foreign financial institutions and for private banking accounts.
Affected Public: Businesses or other for-profit institutions, and
non-profit institutions.
Type of Review:
Renewal without change of a currently approved information
collection.
Propose for review and comment a renewal of the portion of
the PRA burden that has been subject to notice and comment in the past
(the ``traditional annual PRA burden'').
Propose for review and comment a future expansion of the
scope of the PRA burden (the ``supplemental annual PRA burden'').
Frequency: As required.
Estimated Number of Respondents: 16,938 financial institutions.\8\
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\8\ Table 1 below sets forth a breakdown of the types of
financial institutions covered by this notice.
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Estimated Recordkeeping Burden:
In Part 1 of this notice, FinCEN describes the breakdown of the
estimated number of financial institutions, by type. In Part 2, FinCEN
proposes for review and comment a renewal of the estimate of the
traditional annual PRA hourly burden, which includes a scope and
methodology similar to that used in the past, with the incorporation of
a more robust cost estimate. The scope and methodology used in the past
was limited to maintaining and updating the due diligence programs as
part of the AML programs. In Part 3, FinCEN proposes for review and
comment a methodology to estimate the hourly burden and the cost of a
future estimate of a supplemental annual PRA burden that includes the
burden and cost of maintaining records related to the regulatory
requirements to conduct due diligence and EDD for foreign correspondent
accounts, and to conduct due diligence and enhanced scrutiny for
private banking accounts. Finally, in Part 4, FinCEN solicits input
from the public about: (a) The accuracy of the estimate of the
traditional annual PRA burden; (b) the method proposed for the
calculation of the future supplemental annual PRA burden; (c) the
criteria, metrics, and most appropriate questions FinCEN should
consider when researching the information to estimate
[[Page 61106]]
the future traditional and supplemental annual PRA burden, according to
the methodology proposed; and (d) any other comments about the
regulations and the current and proposed future hourly burden and cost
estimates of these requirements.
Part 1. Breakdown of the Financial Institutions Covered By This Notice
The breakdown of financial institutions, by type, covered By this
notice is reflected in Table 1 below:
Table 1--Breakdown of Financial Institutions Covered By This Notice, by
Type of Financial Institution
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Number of
Type of financial institution financial
institutions
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Banks................................................... \9\ 10,542
Brokers or dealers in securities........................ \10\ 3,640
Futures commission merchants............................ \11\ 61
Introducing brokers in commodities...................... \12\ 1,104
Mutual funds............................................ \13\ 1,591
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Total number of financial institutions.............. 16,938
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Part 2. Traditional Annual PRA Burden and Cost
Due to the practical challenges of obtaining the total number of
correspondent accounts maintained by covered financial institutions for
foreign financial institutions subject to regular due diligence
requirements, the number of correspondent accounts maintained for
foreign banks subject to EDD requirements, and the number of private
banking accounts, the scope of the traditional annual PRA burden was
limited to the annual burden of (a) maintaining and updating a due
diligence programs as part of the AML program, and (b) securing
approval of the program by an appropriate level of senior management.
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\9\ According to the Federal Deposit Insurance Corporation
(FDIC) there were 5,103 FDIC-insured banks as of March 31, 2020.
According to the Federal Reserve Board (FRB), there were 203 other
entities supervised by the FRB, as of June 16, 2020, that fall
within the definition of bank (20 Edge Act institutions, 15
agreement corporations, and 168 foreign banking organizations).
According to the National Credit Union Administration there were
5,236 federally regulated credit unions as of December 31, 2019.
\10\ According to the Securities and Exchange Commission (SEC),
there were 3,640 brokers or dealers in securities registered with
the SEC, as of March 31, 2020.
\11\ According to the Commodities and Futures Trading Commission
(CFTC), there were 61 futures commission merchants registered with
the CFTC, as of March 31, 2020.
\12\ According to the CFTC, there were 1,104 introducing brokers
in commodities registered with the CFTC as of March 31, 2020.
\13\ According to the SEC, there were approximately 1,591 mutual
funds in 2017, based on forms filed with the SEC. The SEC provided
the estimate to FinCEN for the last renewal of OMB control number
1506-0033, 83 FR 46012 (Sept. 11, 2018). FinCEN was unable to obtain
a more recent estimate.
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FinCEN continues estimating the annual hourly burden of maintaining
and updating the due diligence program for foreign correspondent
accounts and private banking accounts at two hours per covered
financial institution. This estimate covers the burden of (i)
maintaining and updating the due diligence program to take into
consideration any regulatory changes and any potential modifications
required by changes in the types of foreign correspondent accounts or
private banking accounts maintained, or by changes in the operations or
organizational structure of the foreign financial institutions for
which a covered financial institution maintains accounts, as well as
changes to the organizational structure of private banking accounts
(one hour), and (ii) presenting the updated due diligence program to
the appropriate level of senior management of the financial institution
for approval (one hour).
FinCEN's estimate of the traditional annual PRA burden, therefore,
is 33,876 hours, as detailed in Table 2 below:
Table 2--Burden Associated With Updating and Maintaining the Due Diligence Program and Obtaining Senior Management Approval of the Program
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Number of Time per financial institution Total burden hours per step
financial ----------------------------------------------------------------------------------- Grand total
Type of financial institution institutions burden hours
(see Table 1) Maintenance Approval Maintenance Approval
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Banks................................ 10,542 1 hour.................. 1 hour................. 10,542 10,542 21,084
Brokers or dealers in securities..... 3,640 1 hour.................. 1 hour................. 3,640 3,640 7,280
Futures commission merchants......... 61 1 hour.................. 1 hour................. 61 61 122
Introducing brokers in commodities... 1,104 1 hour.................. 1 hour................. 1,104 1,104 2,208
Mutual funds......................... 1,591 1 hour.................. 1 hour................. 1,591 1,591 3,182
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Total burden hours............... 16,938 16,938 33,876
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To calculate the hourly costs of the burden estimate, FinCEN
identified four roles and corresponding staff positions involved in
maintaining, updating, and obtaining senior management approval of the
due diligence program: (i) Board of directors or senior management of
the financial institution; (ii) general supervision (providing process
oversight); (iii) direct supervision (reviewing operational-level work
and cross-checking all or a sample of the work product against
supporting documentation); and (iv) clerical work (engaging in research
and administrative review, and recordkeeping).
FinCEN calculated the fully-loaded hourly wage for each of these
four roles by using the median wage estimated by the U.S. Bureau of
Labor Statistics (BLS),\14\ and computing an additional benefits cost
as follows:
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\14\ The U.S. Bureau of Labor Statistics, Occupational
Employment Statistics-National, May 2019, available at https://www.bls.gov/oes/tables.htm. The most recent data from the BLS
corresponds to May 2019. For the benefits component of total
compensation, see U.S. Bureau of Labor Statistics, Employer's Cost
per Employee Compensation as of December 2019, available at https://www.bls.gov/news.release/ecec.nr0.htm. The ratio between benefits
and wages for financial activities is $15.95 (hourly benefits)/
$32.05 (hourly wages) = 0.50. The benefit factor is 1 plus the
benefit/wages ratio, or 1.50. Multiplying each hourly wage by the
benefit factor produces the fully-loaded hourly wage per position.
[[Page 61107]]
Table 3--Fully-Loaded Hourly Wage by Role and BLS Job Position for All Financial Institutions Covered By This
Notice
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Fully-
Role BLS-code BLS-name Median Benefit loaded
hourly wage factor hourly wage
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Board of directors/senior management 11-1010 Chief Executive........ $88.68 1.50 * $133.00
General supervision................. 11-3031 Financial Manager...... 62.45 1.50 93.68
Direct supervision.................. 13-1041 Compliance Officer..... 33.20 1.50 49.80
Clerical work (research, review, and 43-3099 Financial Clerk........ 20.40 1.50 30.60
recordkeeping).
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(*) $133.02 rounded to $133.00.
FinCEN estimates that, in general and on average,\15\ each role
would spend different amounts of time on each portion of the
traditional annual PRA burden, as follows:
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\15\ By ``in general,'' FinCEN means without regard to outliers
(e.g., financial institutions with foreign correspondent account
relationships with complexities that are uncommonly higher or lower
than those of the population at large). By ``on average,'' FinCEN
means the mean of the distribution of each subset of the population.
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For annually maintaining and updating the due diligence program,
the cost of each hour of burden would be (i) one burden hour at $133.00
(representing the cost of board of directors or senior management
review and approval), and (ii) one hour at $48.00 representing the
actual update of the content of the program broken down by each role as
shown in Table 4 below:
Table 4--Weighted Average Hourly Cost of Maintaining and Updating the Due Diligence Program
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General supervision Direct supervision Clerical work Weighted
---------------------------------------------------------------------------------------------------------------------------------------- average hourly
% Time Hourly cost % Time Hourly cost % Time Hourly cost cost
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10%............................................... $9.37 60% $29.88 30% $9.18 $48.00
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$48.43 rounded to $48.00
The total estimated cost of the traditional annual PRA burden is
$3,065,778, as reflected in Table 5 below:
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\16\ See Table 2.
\17\ See Table 4.
\18\ See Table 2.
\19\ See Table 3.
Table 5--Total Cost of Traditional Annual PRA Burden
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Steps Hourly burden Hourly cost Total cost
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Maintaining and updating the program (divided between the roles \16\ 16,938 \17\ $48.00 $813,024
listed in Table 4).............................................
Board of directors/senior management approval of the program.... \18\ 16,938 \19\ 133.00 2,252,754
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Total cost.................................................. 3,065,778
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Part 3. Supplemental Annual PRA Burden
In the future, FinCEN intends to add a supplemental annual PRA
burden calculation that will include the estimated hourly burden and
cost to maintain records to document compliance with the due diligence
and EDD procedures for foreign correspondent accounts, and due
diligence procedures and enhanced scrutiny requirements for private
banking accounts.
(a) Due diligence procedures for foreign correspondent accounts.
As noted in Section I above, for all correspondent accounts
established or maintained for foreign financial institutions, covered
financial institutions are required to establish due diligence
policies, procedures, and controls that include: (i) Determining
whether each account is subject to EDD; (ii) assessing the money
laundering risks presented by each account; and (iii) applying risk-
based procedures and controls to each account that are reasonably
designed to detect and report known or suspected money laundering
activity, including a periodic review of the account activity
sufficient to determine consistency with information obtained about the
type, purpose, and anticipated activity of the account.
(b) EDD procedures for certain foreign bank accounts.
As noted in Section I above, covered financial institutions are
required to establish EDD policies, procedures, and controls when
establishing, maintaining, administering, or managing a correspondent
account for certain foreign banks, as defined in 31 CFR 1010.610(c).
The enhanced scrutiny must reflect the risk assessment of the account
and must include, as appropriate: (i) Obtaining information relating to
the AML program of the foreign bank; (ii) monitoring transactions to,
from, or through the correspondent account in a manner reasonably
designed to detect money laundering and suspicious activity; (iii)
obtaining information from the foreign bank about the identity of
persons with authority to direct transactions through the correspondent
accounts if they are payable-through accounts, as well as information
about the sources and beneficial owners of funds or other assets in the
payable-through accounts; (iv) determining whether the foreign bank
maintains correspondent accounts for other foreign banks that use the
foreign correspondent account established or maintained by the covered
financial institution and, if so,
[[Page 61108]]
taking reasonable steps to obtain information relevant to assess and
mitigate money laundering risks, including, as appropriate, by
obtaining the identity of the other foreign banks; and (v) obtaining
the identity of certain owners of any such foreign bank that is not
publicly traded and the nature and extent of the ownership interest.
(c) Due diligence procedures for private banking accounts.
As noted in Section I above, covered financial institutions are
required to establish due diligence policies, procedures, and controls
that, at a minimum, are designed to ensure that the financial
institutions take reasonable steps to: (i) Ascertain the identity of
all nominal and beneficial owners of a private banking account; (ii)
ascertain whether any nominal or beneficial owner is a senior foreign
political figure; (iii) ascertain the source(s) of funds deposited into
a private banking account and the purpose and expected use of the
account; and (iv) review the activity of the account to ensure that it
is consistent with the information obtained about the client's source
of funds and with the stated purpose and expected use of the account,
as needed to guard against money laundering, and to report any known or
suspected money laundering or suspicious activity conducted to, from,
or through a private banking account.
(d) Enhanced scrutiny for private banking accounts.
As noted in Section I above, in the case of a private banking
account for which a senior foreign political figure is a nominal or
beneficial owner, covered financial institutions are required to
conduct enhanced scrutiny that is reasonably designed to detect and
report transactions involving the account that may involve the proceeds
of foreign corruption.
FinCEN does not have the necessary information to provide a
tentative estimate for these supplemental PRA hourly burdens and costs
within the current notice. In addition, FinCEN does not have all the
necessary information to precisely estimate the traditional annual PRA
burden. For that reason, FinCEN is relying on estimates used in prior
renewals of this OMB control number and the applicable regulations.
FinCEN further recognizes that after receiving public comments as a
result of this notice, future traditional annual PRA hourly burden and
cost estimates may vary significantly. FinCEN intends to conduct more
granular studies of the actions included in the proposed scope of the
supplemental annual PRA burden in the near future, to arrive at more
precise estimates of net BSA hourly burden and cost.\20\ The data
obtained in these studies also may result in a significant variation of
the estimated traditional annual PRA burden.
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\20\ Net hourly burden and cost are the burden and cost a
financial institution incurs to comply with requirements that are
unique to the BSA, and that do not support any other business
purpose or regulatory obligation of the financial institution.
Burden for purposes of the PRA does not include the time and
financial resources needed to comply with an information collection,
if the time and resources are for things a business (or other
person) does in the ordinary course of its activities if the agency
demonstrates that the reporting activities needed to comply are
usual and customary. 5 CFR 1320.3(b)(2). For example, depending on
the nature of the correspondent account or private banking account,
a financial institution may be collecting and maintaining some of
the same information on the foreign financial institution
correspondent account holder or the private banking account holder
that is required by the regulatory requirements under 31 CFR
1010.610 and 31 CFR 1010.620, respectively, in order to satisfy
other obligations including (i) protecting the financial institution
from fraud against itself or its customers, (ii) complying with
other non-BSA regulatory requirements such as those imposed by the
specific Federal functional regulator, or (iii) improving the
financial institution's marketing efforts, or the credit analysis of
any lending facilities granted to the foreign financial institution.
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Estimated Recordkeeping Burden: The average estimated annual PRA
burden, measured in hours per respondent, is two hours (one burden hour
to annually maintain and update the due diligence program, and one hour
to annually obtain senior management approval of the due diligence
program).
Estimated Number of Respondents: 16,938, as set out in Table 1.
Estimated Total Annual Responses: 16,938 revised due diligence
programs for foreign correspondent accounts and private banking
accounts annually; and 16,938 due diligences programs for foreign
correspondent accounts and private banking accounts approved by senior
management annually, as set out in Table 2.
Estimated Total Annual Recordkeeping Burden: The estimated total
annual PRA burden is 33,876 hours, as set out in Table 2.
Estimated Total Annual Recordkeeping Cost: The estimated total
annual PRA cost is $3,065,778, as set out in Table 5.
An Agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless the collection of
information displays a valid OMB control number. Records required to be
retained under the BSA must be retained for five years.
Part 4. Request for Comments
(a) Specific request for comments on the traditional annual PRA
hourly burden and cost.
FinCEN invites comments on any aspect of the traditional annual PRA
burden, as set out in Part 2 of this notice. In particular, FinCEN
seeks comments on the adequacy of: (i) FinCEN's assumptions underlying
its estimate of the burden; (ii) the estimated number of hours required
by each portion of the burden; and (iii) the organizational levels of
the financial institution engaged in each portion of the burden, their
estimated hourly remuneration, and the estimated proportion of
participation by each role. FinCEN encourages commenters to include any
publicly available sources for alternative estimates or methodologies.
(b) Specific request for comments on the proposed criteria for
determining the scope of a supplemental annual PRA hourly burden and
cost estimate.
FinCEN invites comments on any aspect of the criteria for a future
estimate of the supplemental annual PRA burden, as set out in Part 3 of
this notice.
(c) Specific request for comments on the appropriate criteria,
methodology, and questionnaire required to obtain information to more
precisely estimate the supplemental annual PRA hourly burden and cost.
FinCEN invites comments on the most appropriate and comprehensive
means to question financial institutions about the annual hourly burden
and cost attributable solely to the recordkeeping necessary to comply
with the due diligence and EDD requirements for foreign correspondent
accounts, and due diligence procedures and enhanced scrutiny
requirements for private banking accounts (i.e., the hourly burden and
cost of complying with the recordkeeping requirements imposed
exclusively by the BSA, which are not used to satisfy contractual
obligations, other regulatory requirements, or business purposes of the
financial institution).
The supplemental annual PRA hourly burden and cost estimate of the
recordkeeping necessary to comply with the due diligence and EDD
requirements for foreign correspondent accounts, and due diligence and
enhanced scrutiny for private banking accounts must take into
consideration only the effort involved in obtaining those data elements
that are used exclusively for complying with requirements under 31 CFR
1010.610 and 31 CFR 1010.620, respectively. Given the complexity in
determining what portion of the effort to include in the estimate,
FinCEN seeks comments from the public regarding any questions we should
consider posing in future notices, in addition to the specific
questions for comment outlined directly below. Also, due to the evident
[[Page 61109]]
difficulty involved in estimating the number of correspondent accounts
maintained for foreign financial institutions, the number of
correspondent accounts maintained for foreign banks for which EDD is
required, the number of private banking accounts, and the number of
private banking accounts for which a senior foreign political figure is
a nominal or beneficial owner and therefore subject to enhanced
scrutiny, FinCEN welcomes any suggestions as to how to derive these
estimates by using publicly available financial information.
(d) Specific questions for comment associated with the due
diligence and EDD procedures for foreign correspondent accounts:
(1) Due diligence procedures.
On average, how many correspondent accounts does your
financial institution maintain for foreign financial institutions that
require due diligence?
Does your financial institution maintain foreign
correspondent accounts for banks that require EDD?
On average, how many correspondent accounts does your
financial institution maintain for foreign banks that require EDD?
Does your financial institution have a process to track
foreign correspondent accounts for reasons other than to comply with
the BSA requirements?
On average, during the on-boarding process, how long does
it take your financial institution to conduct the research necessary to
determine if a correspondent account requires due diligence or EDD?
Does your financial institution have a review and approval
process involving senior management regarding the determination to
conduct due diligence versus EDD? On average, how long does the review
process take and how many approvals are necessary?
On average, how long does it take your financial
institution to conduct the research and document an initial risk
assessment of a correspondent account?
Does your financial institution have a review and approval
process involving senior management to evaluate the conclusions reached
in the original risk assessment? On average, how long does the review
process take and how many approvals are necessary?
On average, how frequently does your financial institution
conduct periodic reviews of each correspondent account?
On average, how long does it take your financial
institution to conduct and document the periodic review of a
correspondent account?
Does your financial institution have a review and approval
process involving senior management to evaluate the conclusions reached
in the periodic review of a correspondent account? On average, how long
does the review process take and how many approvals are necessary?
(2) EDD procedures.
On average, how long does it take your financial
institution to conduct research and document an initial risk assessment
of a correspondent account that requires EDD?
Does your financial institution have a review and approval
process involving senior management to evaluate the conclusions reached
in the original risk assessment? On average, how long does the review
process take and how many approvals are necessary?
On average, how long does it take your financial
institution to obtain a foreign bank's AML program when a correspondent
account requires EDD? Does your financial institution conduct a review
of each applicable AML program?
On average, how often does your financial institution
conduct and document review of transaction activity through a
correspondent account?
On average, how long does it take your financial
institution to conduct and document review of transaction activity
through a correspondent account?
Does your financial institution have a review and approval
process involving senior management to evaluate the conclusions reached
as a result of a transaction activity review on a particular
correspondent account? On average, how long does the review process
take and how many layers of management review are there?
On average, how long does it take your financial
institution to obtain information from a foreign bank about the
identity of persons with authority to direct transactions through the
correspondent account if it is a payable-through account, as well as
information about the sources and beneficial owners of funds or other
assets in the payable-through account?
On average, how many individuals have the authority to
direct transactions through a correspondent account?
Does your financial institution have a way of identifying
if a new person is permitted to conduct transaction activity through a
correspondent account, so that your financial institution can obtain
the proper information?
Does your financial institution have a review and approval
process involving senior management to evaluate information obtained on
persons with authority to direct transactions through a correspondent
account?
Does your financial institution maintain correspondent
accounts for foreign banks that permit other foreign banks to use the
correspondent account maintained with your financial institution?
On average, how many correspondent accounts does your
financial institution maintain for foreign banks that permit other
foreign banks to access the correspondent account?
Does your financial institution have a way of determining
if a foreign bank permits another foreign bank to access the
correspondent account maintained with your financial institution?
On average, how long does it take your financial
institution to obtain information from a foreign bank about other
foreign banks with access to the correspondent account maintained with
your financial institution?
What additional information does your financial
institution obtain to assess and mitigate risk as it relates to other
foreign banks permitted to access the correspondent account you
maintain with a foreign bank?
Does your financial institution have a review and approval
process involving senior management to evaluate applicable information
on other foreign banks with access a correspondent account you maintain
with a foreign bank? On average, how long does the review process take
and how many approvals are necessary?
On average, how many non-publicly traded foreign banks
does your financial institution maintain correspondent accounts for?
On average, how long does it take your financial
institution to obtain the identity of owners of a non-publicly traded
foreign bank and obtain applicable information on the nature and extent
of the ownership interest?
Does your financial institution have a review and approval
process involving senior management to evaluate applicable information
on a non-publicly traded foreign bank? On average, how long does the
review process take and how many approvals are necessary?
(e) Specific questions for comment associated with the due
diligence and enhanced scrutiny for private banking accounts:
(1) Due diligence procedures.
On average, how many private banking accounts does your
financial institution maintain that requires due diligence?
Does your financial institution maintain private banking
accounts for
[[Page 61110]]
which a senior foreign political figure is a nominal or beneficial
owner?
On average, how many private banking accounts does your
financial institution maintain for which a senior foreign political
figure is a nominal or beneficial owner?
Does your financial institution have a process to track
private banking accounts for reasons other than to comply with the BSA
requirements?
On average, during the on-boarding process, how long does
it take your financial institution to conduct the research necessary to
determine if a private banking account requires enhanced scrutiny
because a senior foreign political figure is a nominal or beneficial
owner?
On average, how long does it take your financial
institution to conduct the research and/or obtain documents to
ascertain the identity of all nominal and beneficial owners of a
private banking account?
On average, how long does it take your financial
institution to research, obtain, and document the source of funds
deposited into a private banking account and the purpose and expected
use of the account?
On average, how frequently does your financial institution
conduct periodic reviews of each private banking account?
On average, how long does it take your financial
institution to conduct and document the periodic review of a private
banking account?
Does your financial institution have a review and approval
process involving senior management to evaluate the conclusions reached
in the periodic review of a private banking account? On average, how
long does the review process take and how many approvals are necessary?
(2) Enhanced scrutiny for senior foreign political figures.
On average, how long does it take your financial
institution to conduct enhanced scrutiny of a private banking account
for which a senior foreign political figure is a nominal or beneficial
owner?
On average, how often does your financial institution
conduct enhanced scrutiny of such private banking account?
Does your financial institution have a review and approval
process involving senior management to evaluate the conclusions reached
as a result of conducting enhanced scrutiny on such a private banking
account? On average, how long does the review process take and how many
approvals are necessary?
(f) General request for comments.
Comments submitted in response to this notice will be summarized
and/or included in the request for OMB approval. All comments will
become a matter of public record. Comments are invited on: (i) Whether
the collection of information is necessary for the proper performance
of the functions of the agency, including whether the information shall
have practical utility; (ii) the accuracy of the agency's estimate of
the burden of the collection of information; (iii) ways to enhance the
quality, utility, and clarity of the information to be collected; (iv)
ways to minimize the burden of the collection of information on
respondents, including through the use of automated collection
techniques or other forms of information technology; and (v) estimates
of capital or start-up costs and costs of operation, maintenance, and
purchase of services to provide information.
Michael Mosier,
Deputy Director, Financial Crimes Enforcement Network.
[FR Doc. 2020-21441 Filed 9-28-20; 8:45 am]
BILLING CODE 4810-02-P
