Regulators Issue Anti-Money Laundering Guidance

Washington, DC, January 19, 2001 - The Department of the Treasury, Department of State, and the federal banking regulators issued on January 16 anti-money laundering guidance intended to enhance the scrutiny of financial transactions that may involve the proceeds of foreign official corruption.

The release focuses on transactions by senior foreign political figures and their family members and close associates, or "covered persons," particularly in connection with high dollar-value accounts or transactions. "Senior foreign political figure" is defined as a senior official in the executive, legislative, administrative, military, or judicial branches of a foreign government (whether elected or not), a senior official of a major foreign political party, or a senior executive of a foreign government-owned corporation. In addition, a "senior foreign political figure" includes any corporation, business, or other entity that has been formed by, or for the benefit of, a senior foreign political figure. "Family members" and "close associates" also are defined terms in the release.

Financial institutions are encouraged to develop and maintain "enhanced scrutiny" practices and procedures designed to detect and deter transactions that may involve the proceeds of official corruption by covered persons. When, during its normal account opening, maintenance or compliance procedures, a financial institution learns of information indicating that a particular person may be a covered person, the release states that the financial institution should exercise reasonable diligence in seeking to determine whether the person is, in fact, a covered person. If so, then the financial institution should take significant additional steps to understand the covered person’s source of wealth and anticipated account activity and apply additional oversight to the account. The release lists a number of questionable or suspicious activities that would warrant enhanced scrutiny with respect to this type of account.

The release states that the guidance it contains is not a rule or regulation and should not be interpreted as such.