ICI and Other Associations Comment on "Enhanced Due Diligence" Concerning Certain Foreign Banks

Washington, DC, March 8, 2006 - A group of eleven financial trade associations, including the ICI, has submitted a joint comment letter on a rule proposal that seeks to protect against money laundering in accounts originating outside the United States.

Background
The Financial Crimes Enforcement Network (FinCEN) has proposed a rule that would require certain financial institutions, including mutual funds, to conduct "enhanced due diligence" to guard against money laundering in accounts established for certain categories of high-risk foreign banks. The proposed rule is a companion to the rule on correspondent accounts adopted in January.

ICI Position
The letter from ICI and ten other associations generally supports the risk-based approach taken in the proposed rule, but offers two recommendations to help achieve the overall objective of the rule without imposing unduly burdensome or unproductive obligations on covered financial institutions:

  • FinCEN should allow covered financial institutions to assess a foreign bank's anti-money laundering program based on the foreign bank's responses to a questionnaire designed to identify whether the program incorporates key aspects deemed essential to an effective program.
  • FinCEN should relieve covered financial institutions from the obligation to obtain lists of, and other information about, the foreign bank's customers in certain circumstances, such as in situations where accounts that by their nature do not raise a meaningful possibility of "nested bank activity."

Related Links
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