The Financial Crimes Enforcement Network (“FinCEN”) and the federal banking agencies, the FRB, FDIC, OTS, OCC and NCUA (collectively with FinCEN, the “Agencies”) issued a joint advisory (the “Advisory”) concerning the Agencies’ expectations as to how financial institutions (“FIs”) will manage the risks associated with accepting accounts from foreign embassies, consulates and missions (collectively, “Foreign Missions”). The Advisory supplements, but does not supersede, the Agencies’ June 2004 “Guidance on Accepting Accounts from Foreign Governments, Foreign Embassies and Foreign Political Figures.”
The Advisory stresses that FIs should assess and understand the risks associated with a relationship with a specific Foreign Mission and its accounts, and should monitor and take steps to mitigate the risks identified. The Agencies emphasize that FIs may provide services to Foreign Missions as long as the FIs remain in compliance with the Bank Secrecy Act (“BSA”).
The Advisory states that FIs should assign a risk rating to a Foreign Mission account that reflects the specific characteristics of the account and, in mitigating the risks, may take steps such as:
- Entering into a written agreement with the Foreign Mission that defines the terms of the use of the account, “setting forth available services, acceptable transactions and access limitations;”
- Offering limited purpose accounts (e.g., payroll, rent and utilities, routine maintenance accounts), which are generally considered to pose a lower BSA compliance risk;
Diligent account monitoring of compliance with the terms of account limitations and the terms of any servicing agreements;
Educating Foreign Mission customers on the requirements of the BSA and other related U.S. banking laws and regulations.
Finally, the Agencies state that they will not require an FI to close or refuse an account or relationship with a Foreign Mission “except in extraordinary circumstances (for example, when violations of law are identified that warrant an administrative enforcement action).”