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#362916 - 05/24/05 01:52 PM foreign correspondent accounts
Anonymous
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What should a bank do to document that they have no foreign correspondent accounts? The bank says they don't have any, but when we ask them how they determined that they simply state "we know our correspondents." We're looking for some guidance we can give them on how to document this determination.

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#362917 - 05/24/05 03:17 PM Re: foreign correspondent accounts
WildTurkey Offline
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WildTurkey
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Down South, USA
Who are "we", in relation to "them" (the bank)? .... Are you an external advisor, ....Internal Audit?

I think that they should document every correspondent bank they have an account with - using either something such as audited financials that demonstrate that each bank is a US chartered bank, or failing that with documentation from a reliable, published, source, e.g. an entry in the Banker's Almanac.

These records would/ should then be sampled (or reviewed in entirety if there are relatively few correspondent banks) by Internal Audit and visiting regulators.
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This is my opinion; it is not legal advice, nor the view of my employer, and it may change tomorrow.

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#362918 - 05/27/05 12:42 PM Re: foreign correspondent accounts
Anonymous
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Sorry for any confusion with my original post.
"We" is Internal audit. "Them" is the bank. While performing our BSA audit we noted the bank does not have documentation to support their claim that they don't do business with foreign shell banks. We're trying to assist the bank, with the development of a documentation process. Internal audit is looking for the bank to perform a review on all correspondents that shows they are not a foreign bank and that the bank is not doing any business with a foreign shell bank. Seemed easy enough until the bank tried to write the process. I'm wondering what others do.

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#362919 - 05/27/05 12:48 PM Re: foreign correspondent accounts
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
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Posts: 21,293
Rather easy for us. We are rather certain that Wachovia and First Tennessee are not foreign shell banks. You could check charters. How are they chartered in the US?

If you want to look for banks that might not have been listed by "the bank" as correspondents, you could review wires. There is often wire activity with correspondents.
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#362920 - 05/27/05 02:15 PM Re: foreign correspondent accounts
Anonymous
Unregistered

Quote:

..."We" is Internal audit. "Them" is the bank. While performing our BSA audit we noted the bank does not have documentation to support their claim that they don't do business with foreign shell banks. We're trying to assist the bank, with the development of a documentation process. Internal audit is looking for the bank to perform a review on all correspondents that shows they are not a foreign bank and that the bank is not doing any business with a foreign shell bank.... I'm wondering what others do.




You're actually mixing a bunch of things together that don't necessarily go together. That said, the root answer to the question "How do you prove you are not doing business with a shell bank?" is really an extension of kaybee's comment on checking the charter.

Our customer due diligence files include:
* history: dates of formation, founders, related businesses
* charters with the local banking authorities (including copies of the charters or applicable licenses.)
* Summary of latest review by applicable regulator
* copies of their AML and CTF policies
* records of site visits, interviews with executives.
(I'm sure I've left something out...)

Now, on to the gray part: 'not doing business with foreign shell banks.' covers a number of relationships.

*foreign correspondent accounts
*foreign banks that are not correspondents
*foreign non-bank financial institution accounts.

The last category, actually was something I was asked for in a recent review.

Does this help, or confuse things further?

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