*EPF502 11/23/2001
Text: U.S. Issues Guidance on New Anti-Money Laundering Laws
(New measures target use of shell banks to launder money) (500)

The U.S. Treasury has issued guidelines to help banks comply with two anti-money laundering provisions of the USA PATRIOT Act that becomes effective on December 25.

The law was passed in the wake of the September 11 terrorist attacks against the United States, and aims to combat terrorism on a number of fronts, including terrorists' use of international financial networks to fund their activities.

Under the law, banking institutions in the United States may no longer directly provide correspondent accounts to foreign shell banks. The law also requires banks to take steps to avoid using correspondent accounts to provide banking services indirectly to such shell banks, the Treasury Department said in a November 20 news release.

Correspondent accounts allow foreign banks to use U.S. banking services, and thus give their clients direct access to the U.S. financial system. Following is the text of the news release:

(begin text)

U.S. DEPARTMENT OF THE TREASURY
FROM THE OFFICE OF PUBLIC AFFAIRS

FOR IMMEDIATE RELEASE
November 20, 2001

Treasury Announces Interim Guidance on Compliance with the USA PATRIOT Act

The Treasury Department today announced interim guidance for banking institutions on how they may comply with two anti-money laundering provisions of the USA PATRIOT Act that become effective on December 25, 2001.

Beginning on that date, banking institutions in the United States will be prohibited from providing correspondent accounts directly to foreign shell banks and will be required to take steps to avoid using correspondent accounts to provide banking services indirectly to such shell banks. In addition, banking institutions will be required to keep records of the owners of foreign banks to which they provide correspondent accounts and the foreign banks' agents for service of legal process.

After consultation with the federal financial regulators, the Secretary of the Treasury is publishing in the Federal Register a model certification that U.S. banking institutions may choose to use as an interim means to assist them in meeting their obligations related to dealing with foreign shell banks under 31 U.S.C. 5318(j) and recordkeeping under 31 U.S.C. 5318(k).

It is the expectation of the Department of the Treasury that banking financial institutions will accord priority to meeting their compliance obligations in connection with foreign banks for which they maintain correspondent deposit accounts or their equivalents.

The interim guidance will remain in effect until superseded by regulation or subsequent guidance.

The Treasury Department intends to issue expeditiously a proposed rule that would also prohibit broker-dealers from maintaining accounts with foreign shell banks and from using accounts to provide banking services indirectly to such shell banks. Treasury also intends to propose a rule requiring broker-dealers to keep records of the owners of foreign banks to which they provide accounts and the foreign banks' agents for service of legal process.

A link to the interim guidance can be found on the Treasury Department's web site www.treas.gov/press/

(end text)

(Distributed by the Office of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

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