Loan participations are excluded from the definition of a "customer" under the Final CIP Rule. Following that line of thinking I am operating under the assumption that a if a Bank partakes in a participation with an FFI and is not the lead bank, the relationship would not meet the definition of a foriegn correspondent account.

I have a call into FinCEN's Compliance Hotline, but I was wondering how other FI's would/are handling situations like this?

Thanks.

In the past as an OCC bank they were not considered a foreign correspondent account, however we were expected to do the same CDD/EDD on them including the Patriot act notice and the Wolfsburg.

We do the PAC and Wolfsburg Questionnaire as well Ed. However, there are other requirements as detailed by the risk assessment of FFI's verbiage in the exam manual. That's really what I'm focused on.

Enhanced Due Diligence

31 CFR 1010.610(b) requires banks to establish risk-based EDD policies, procedures, and controls when establishing, maintaining, administering, or managing a correspondent account in the United States for certain foreign banks (as identified in 31 CFR 1010.610(c) operating under any one or more of the following:
•An offshore banking license.125
•A banking license issued by a foreign country that has been designated as noncooperative with international AML principles or procedures by an intergovernmental group or organization of which the United States is a member, and with which designation the United States representative to the group or organization concurs.126
•A banking license issued by a foreign country that has been designated by the Secretary of the Treasury as warranting special measures due to money laundering concerns.

this was just part of regular EDD on banks in general

•Determine, for any such foreign bank whose shares are not publicly traded, the identity of each of the owners of the foreign bank, and the nature and extent of the ownership interest of each such owner.127
•Conduct enhanced scrutiny of such account to guard against money laundering and to identify and report any suspicious transactions in accordance with applicable laws and regulations. This enhanced scrutiny is to reflect the risk assessment of the account and shall include, as appropriate: ◦Obtaining and considering information relating to the foreign bank’s anti-money laundering program to assess the risk of money laundering presented by the foreign bank’s correspondent account.
â—¦Monitoring transactions to, from, or through the correspondent account in a manner reasonably designed to detect money laundering and suspicious activity.
â—¦Obtaining information from the foreign bank about the identity of any person with authority to direct transactions through any correspondent account that is a payable through account, and the sources and the beneficial owner of funds or other assets in the payable through account.

•Determine whether the foreign bank for which the correspondent account is maintained in turn maintains correspondent accounts for other foreign banks that use the foreign bank’s correspondent account and, if so, take reasonable steps to obtain information relevant to assess and mitigate money laundering risks associated with the foreign bank’s correspondent accounts for other foreign banks, including, as appropriate, the identity of those foreign banks.


We only dealt with publically traded FFI

Ed - Thanks for the reply. Do you do business with any foreign banks operating under an offshore banking license?

our parent bank but that is all a prior bank Had a small number but usually (not always) dealt with a US Sub (see Deutche bank, HSBC)