PATRIOT Act Rule Finalized, New Proposal

WASHINGTON-Treasury’s Financial Crimes Enforcement Network (FinCEN) issued final and proposed rules last week concerning section 312 of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act. The final rule implements requirements of the law that establish due diligence policies, procedures, and controls reasonably designed to detect and report money laundering through correspondent accounts and private banking accounts that U.S. financial institutions establish or maintain for non-U.S. persons. The key difference is the final rule does not defer the application of the requirements for particular financial institutions. This rule supersedes the previous interim final rule issued in July 2002. Credit unions will have 90 days after the publication in the Federal Register (expected Jan. 1, 2006) to establish and apply the due diligence requirements to “new” correspondent and private banking accounts and 270 days for existing accounts. Initially, FinCEN had requested comment on all of section 312 in one proposed rulemaking. However, because the issues raised during the initial comment period became so complex, the agency determined that another notice of proposed rulemaking was appropriate for the enhanced due diligence provisions pertaining to correspondent accounts maintained for certain foreign banks. The proposal, to be published in the Federal Register Jan. 1, 2006, has a 60-day public comment period.