Financial Crimes Enforcement Network; Anti-Money Laundering Programs; Special Due Diligence Programs for Certain Foreign Accounts

AGENCY:

Financial Crimes Enforcement Network, Treasury.

ACTION:

Final rule.

SUMMARY:

The Financial Crimes Enforcement Network is issuing this final rule to implement the enhanced due diligence requirements for correspondent accounts for certain foreign banks set forth in section 312 of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act), Pub. L. No. 107-56. Section 312 requires U.S. financial institutions to establish due diligence and, where necessary, enhanced due diligence, policies, procedures, and controls reasonably designed to detect and report money laundering through correspondent accounts and private banking accounts established or maintained by U.S. financial institutions for non-U.S. persons. We issued final rules implementing the due diligence requirements for correspondent accounts and the due diligence and enhanced due diligence requirements for private banking accounts for non-U.S. persons on January 4, 2006. This final rule completes the section 312 rulemaking process.

DATES:

This final rule is effective September 10, 2007.

Applicability Dates: On February 5, 2008, the enhanced due diligence provisions of this final rule will apply to correspondent accounts for certain foreign banks established on or after such date. On May 5, 2008, the enhanced due diligence provisions of this final rule will apply to correspondent accounts for certain foreign banks established before February 5, 2008. See 31 CFR 103.176(f) of this final rule.

FOR FURTHER INFORMATION CONTACT:

Regulatory Policy and Programs Division, Financial Crimes Enforcement Network, (800) 949-2732.

SUPPLEMENTARY INFORMATION

I. Background

Section 312 of the USA PATRIOT Act amended the Bank Secrecy Act to add new subsection (i) to 31 U.S.C. 5318. This provision requires each U.S. financial institution that establishes, maintains, administers, or manages a correspondent account or a private banking account in the United States for a non-U.S. person to subject such accounts to certain anti-money laundering measures. In particular, a covered financial institution must establish appropriate, specific and, where necessary, enhanced due diligence policies, procedures, and controls that are reasonably designed to enable the financial institution to detect and report instances of money laundering through these accounts.

On May 30, 2002, we published a notice of proposed rulemaking in the Federal Register, proposing to implement the requirements of section 312 in their entirety. In that proposal, we set forth a series of specific measures that covered financial institutions could, and in some instances would be required to, apply to correspondent accounts and private banking accounts established or maintained for non-U.S. persons. We received comments on that proposal raising concerns about the definitions in the proposal, the scope of the requirements contained in the proposed rule text, and the types of financial institutions that would be subject to the proposal's requirements.

To have adequate time to review the comments we received in response to the proposal, to determine the appropriate resolution of the issues raised, and to give direction to financial institutions that would be subject to section 312, we issued an interim final rule on July 23, 2002. In the interim final rule, we exercised our authority under 31 U.S.C. 5318(a)(6) to defer temporarily the application of section 312 to certain financial institutions. For those financial institutions that were not subject to the deferral, we provided interim guidance for compliance with the statute by generally describing the scope of coverage, duties, and obligations under that provision, pending issuance of a final rule.

Thereafter, on January 4, 2006, we issued final rules implementing section 312, excepting the enhanced due diligence provisions for correspondent accounts established or maintained for certain foreign banks. Also on January 4, we published a second notice of proposed rulemaking (Second Proposed Rule or proposed rule), seeking comment on a new approach to implementing the enhanced due diligence provisions of section 312 with respect to correspondent accounts established or maintained for certain statutorily designated foreign banks (“respondent banks”).

As required by section 312, the enhanced due diligence measures proposed would apply to correspondent accounts maintained for a foreign bank operating under an offshore banking license, under a license issued by a country that has been designated as being non-cooperative with international anti-money laundering principles or procedures by an intergovernmental group or organization of which the United States is a member and with which designation the United States representative to the group or organization concurs, or under a license issued by a country designated by the Secretary of the Treasury (Secretary) as warranting special measures due to money laundering concerns. With respect to these accounts, we proposed that a covered financial institution would be required to conduct risk-based enhanced due diligence with regard to a correspondent account maintained for or on behalf of such a foreign bank to guard against money laundering and to report suspicious activity; to ascertain whether such a foreign bank maintains correspondent accounts for other foreign banks and, if so, to conduct appropriate due diligence; and to identify the owners of such a foreign bank if its shares are not publicly traded. This final rule adopts the risk-based enhanced due diligence rule that we proposed on January 4, 2006.

Finally, section 312(b)(1) of the USA PATRIOT Act provides that the Secretary shall issue implementing regulations under this section “in consultation with the appropriate federal functional regulators (as defined in section 509 of the Gramm-Leach-Bliley Act) of the affected financial institutions.” This final rule was developed in consultation with the staffs of the federal functional regulators.

II. Summary of Comments and Revisions

A. Comments

We received seven comment letters on the Second Proposed Rule. Commenters included U.S. banks, an association of state banking supervisors, and trade associations representing U.S. banks, foreign banks, the futures industry, investment companies, the securities industry, and the bond markets. Eleven trade associations representing covered financial institutions jointly signed one of the comment letters. In general, commenters expressed support for the risk-based approach elaborated in the Second Proposed Rule. We respond to the submitted comments in the Section-by-Section Analysis, below.

B. Revisions

This final rule is substantially similar to the Second Proposed Rule. The following revisions to the rule, which we will explain more fully in the Section-by-Section Analysis below, have been made in response to comments received on the Second Proposed Rule.

First, the provisions requiring covered financial institutions, in appropriate circumstances, to obtain and review “documentation” relating to a respondent bank's anti-money laundering program and to “consider[ ] whether such program appears to be reasonably designed to detect and prevent money laundering” have been revised to require covered financial institutions, in appropriate circumstances, to obtain and consider “information” relating to a respondent bank's anti-money laundering program in order to assess the risk of money laundering presented by the respondent bank's account.

Second, the provision requiring a covered financial institution, in certain circumstances, to take reasonable steps to assess and “minimize” money laundering risks related to the customers of their respondent banks has been revised to require a covered financial institution, in certain circumstances, to take reasonable steps to assess and “mitigate” such money laundering risks.

III. Section-by-Section Analysis

A. Section 103.176(b)—Enhanced Due Diligence for Certain Foreign Banks

Section 103.176(b) of this final rule requires a covered financial institution to establish enhanced due diligence procedures that, at a minimum, include taking reasonable steps to (1) Conduct risk-based enhanced scrutiny of correspondent accounts established or maintained for respondent banks to guard against money laundering and to identify and report suspicious transactions, (2) determine whether the subject respondent bank in turn maintains correspondent accounts for other foreign banks that enable those other foreign banks to gain access to the respondent bank's correspondent account with the covered financial institution and, if so, to take reasonable steps to obtain information to assess and mitigate the money laundering risks associated with such accounts, and (3) determine the identity of each owner of a respondent bank whose shares are not publicly traded, and the nature and extent of each owner's ownership interest.

The commenters generally expressed support for the risk-based approach of the Second Proposed Rule. One commenter suggested that the five risk factors enumerated in our rules implementing the due diligence requirements for correspondent accounts contained in section 312 should also be applied to determine the appropriate extent of enhanced due diligence.

As these five risk factors are meant to apply to all respondent banks, including those subject to the enhanced due diligence provisions of section 312, it would be appropriate to consider the five factors listed in subsection (a)(2) when assessing the risk posed by a respondent bank subject to the provisions of this final rule to help determine the level of enhanced due diligence required. The fourth risk factor in particular—the anti-money laundering regime of the jurisdiction that issued a charter or license to the foreign bank and, to the extent reasonably available, of the home jurisdiction of the foreign bank or its parent —may be especially relevant in a covered financial institution's determination of the nature and extent of the risks posed by the correspondent accounts for the foreign banks covered by this rule and the extent of the enhanced due diligence that is necessary and appropriate to mitigate these risks.

1. 103.176(b)(1)—Enhanced scrutiny to guard against money laundering. Section 103.176(b)(1) of the Second Proposed Rule would have required a covered financial institution to conduct risk-based enhanced scrutiny of correspondent accounts established or maintained for respondent banks to guard against money laundering and to identify and report suspicious transactions. This provision is adopted in the final rule without substantial change.

Section 103.176(b)(1)(i) and (ii) of the Second Proposed Rule would have required covered financial institutions, as part of their enhanced due diligence programs when appropriate, to obtain and review documentation related to a respondent bank's anti-money laundering program and consider whether the program appears to be reasonably designed to detect and prevent money laundering. Several commenters questioned the utility of the requirement and expressed concern about the cost of complying with it.

One commenter read the Second Proposed Rule as effectively requiring a covered financial institution to perform an audit of a respondent bank's anti-money laundering program, despite guidance in the preamble stating that an audit was not required. Another commenter similarly expressed concern that this and other provisions of the Second Proposed Rule would cause covered financial institutions to become policemen and regulators. A third commenter was concerned that this provision ultimately would be enforced as a default or mandatory requirement.

Other commenters additionally suggested that obtaining and reviewing documentation frequently would be a difficult and expensive proposition, as such documents may be written only in the native language of a respondent bank. One commenter questioned the utility of reviewing the documentation of a respondent bank's anti-money laundering program and suggested that other due diligence measures, such as reviewing and monitoring transactions conducted by the foreign bank, would be more productive. Other commenters offered that administering a questionnaire to a respondent bank about its anti-money laundering practices, when appropriate, would be more effective than a review of its anti-money laundering program documents.

In response to these comments, section 103.176(b)(1)(i) of the final rule now requires a covered financial institution, in appropriate circumstances, to obtain and consider information related to the anti-money laundering program of the respondent bank to assess the risk of money laundering presented by the respondent bank's correspondent account. This provision of the final rule is not meant to be a mandatory requirement. Rather, it is intended to be risk-based. We emphasize that whether enhanced due diligence should include a reasonable inquiry into the anti-money laundering program of a respondent bank will depend on the extent to which reviewing the anti-money laundering program of the respondent bank would be appropriate based upon the nature of the correspondent account. While covered financial institutions have discretion with respect to implementing this provision, as with other risk-based provisions of the BSA and its implementing regulations, a covered financial institution is responsible for reasonably demonstrating that it is effectively exercising that discretion on a risk-assessed basis.

We revised this due diligence provision of the Second Proposed Rule to clarify that covered financial institutions are expected neither to conduct an audit of the anti-money laundering programs of their respondent bank customers, nor to determine the extent to which the respondent bank's anti-money laundering program is “reasonably designed to detect and prevent money laundering,” which may be difficult to determine without conducting an audit. Rather, under the final rule, a covered financial institution is required to consider and assess more generally the extent to which it may be exposed to money laundering risk by the respondent bank's correspondent account. The revision also was made to reduce the burdens associated with reviewing documents, such as language barriers, as well as to provide covered financial institutions with flexibility to determine how to conduct due diligence with respect to a respondent bank's anti-money laundering efforts.

For example, a covered financial institution may, in appropriate circumstances, use a questionnaire, as several commenters suggested, to gather information related to the anti-money laundering program of a respondent bank, provided that the questionnaire and the responses thereto enable a covered financial institution to assess effectively the risk of money laundering presented by the respondent bank. In appropriate situations, such as where a covered financial institution has a sufficient transaction history with a respondent bank, a covered financial institution may also conduct a review of that transaction history to assess the money laundering risk presented by the respondent bank.

As one commenter suggested, a covered financial institution may also, in appropriate circumstances, incorporate its enhanced due diligence efforts into the certification process available under the rules implementing sections 313 and 319(b) of the USA PATRIOT Act. Incorporating a questionnaire into the certification form would not alone affect the safe harbor provided under the rules implementing sections 313 and 319(b), provided that the covered financial institution also obtains and maintains all of the information required under those rules.

We caution, however, that the certifications are subject to renewal only every three years. Waiting until the next certification is required before obtaining information about the respondent bank's anti-money laundering program may not be reasonable for purposes of complying with the enhanced due diligence provisions of section 312. We also remind covered financial institutions incorporating a questionnaire into their certifications that doing so will not extend the section 313 and 319(b) safe harbor to this final rule.

Finally, one commenter asked whether a covered financial institution would be required to formulate additional due diligence measures for its accounts for foreign banks that are subject of this final rule if the covered financial institution applies the equivalent of enhanced due diligence required in this final rule to all of its correspondent accounts for foreign financial institutions. If a covered financial institution applies both the due diligence program for foreign correspondent accounts and the enhanced due diligence requirements of this final rule to all of its correspondent accounts for foreign financial institutions, then the covered financial institution would not be required to formulate additional due diligence measures for the correspondent accounts it establishes and maintains for foreign banks that are the subjects of this final rule.

Section 103.176(b)(1)(iii) of the Second Proposed Rule would have required covered financial institutions to monitor transactions to, from, or through a respondent bank in a manner that is reasonably designed to detect money laundering and suspicious activity. In the preamble to the Second Proposed Rule, we emphasized that monitoring is an important aspect of enhanced due diligence. This monitoring may be conducted manually or electronically, may be done on an individual account basis or by product activity, and should reflect the risk assessment conducted by the covered financial institution on each respondent bank subject of the enhanced due diligence provisions. Section 103.176(b)(1)(iii) has been incorporated into the final rule without change, and has been re-designated as Section 103.176(b)(1)(ii).

Section 103.176(b)(1)(iv) of the Second Proposed Rule would have required covered financial institutions to obtain information from the foreign bank about the identity of any person with authority to direct transactions through any correspondent account that is a payable-through account, and the sources and beneficial owners of funds or other assets in the payable-through account. This provision has been incorporated into the final rule without change, and has been re-designated as Section 103.176(b)(1)(iii).

2. 103.176(b)(2)—Foreign bank customers. Section 103.176(b)(2) of the Second Proposed Rule would have required a covered financial institution to determine whether a respondent bank in turn maintains correspondent accounts for other foreign banks that enable those other foreign banks to gain access to the respondent bank's account with the covered financial institution. If such a situation exists, the Second Proposed Rule would have required the covered financial institution to take reasonable steps to assess and minimize the potential money laundering risk posed by the respondent bank's accounts for those other foreign banks.

Commenters were concerned about the extent to which they would be expected to obtain lists of foreign bank customers from their respondent banks, for the purposes of complying with section 103.176(b)(2). One commenter, for example, stated that it may not be possible to obtain a list of the foreign bank customers of respondent banks due to strict privacy laws in some countries. Two commenters suggested that there are situations where it is unlikely, due to the nature of the correspondent account, that funds transfers will be conducted through the account, and therefore the covered financial institution should not be required to obtain lists of, or other information about, foreign bank customers of their respondent banks.

As a general rule, we do not expect that a covered financial institution will request and obtain lists of foreign bank customers from their respondent banks. We do expect, however, that covered financial institutions, based upon their risk assessment of a respondent bank and as part of their enhanced due diligence efforts, will make appropriate inquiries about such factors as the nature of the foreign bank customers the respondent bank serves (if any) and the extent to which transactions for any such foreign bank customer may be conducted through the respondent bank's correspondent account. The covered financial institution also could consult bank reference guides, and monitor or otherwise assess transaction activity to the extent it may contain foreign bank customer information.

There may be circumstances, such as in the highest risk situations, where it may be necessary and appropriate to request and obtain the identity of a respondent bank's foreign bank customers directly from the respondent bank. If obtaining such information in appropriate circumstances is not possible—including by monitoring account activity—the covered financial institution should determine, pursuant to section 103.176(d) of this final rule, how to proceed in light of the particular circumstances.

One commenter expressed concern that covered financial institutions may be held responsible, according to the provisions of section 103.176(b)(2), for monitoring and reporting suspicious activity of the foreign bank customers of their respondent banks. The obligation to monitor for and report suspicious activity arises from the rules implementing 31 U.S.C. 5318(g). Under those rules, covered financial institutions must report suspicious activity involving any of their accounts to the extent they know, suspect, or have reason to suspect a violation of law or regulation, including suspicious activity attempted or conducted by, at, or through correspondent accounts they establish or maintain for respondent banks. Such activity may involve the respondent bank's foreign bank customers.

One commenter was concerned by the level of due diligence that may be required by the use of the word “minimize” in section 103.176(b)(2) of the Second Proposed Rule and suggested replacing with the word mitigate. Accordingly, in this final rule, we have revised the relevant clause to require a covered financial institution to “take reasonable steps to obtain information relevant to assess and mitigate money laundering risks associated with the foreign bank's correspondent accounts for other foreign banks” as the commenter suggested.

Finally, commenters sought clarification as to whether section 103.176(b)(2) is risk-based. The first part of this sub-paragraph requires a covered financial institution to take reasonable steps to “[d]etermine whether the foreign bank for which the correspondent account is established or maintained in turn maintains correspondent accounts for other foreign banks that use the foreign correspondent account established or maintained by the covered financial institution.” Making that initial determination is not dependent on the risks associated with a particular respondent bank.

However, once a covered financial institution has taken reasonable steps to make such a determination, it may “take reasonable steps to obtain information relevant to assess and mitigate money laundering risks associated with the foreign bank's correspondent accounts for other foreign banks, including, as appropriate, the identity of those foreign banks,” as section 103.176(b)(2) provides and the authorizing statute contemplates. A covered financial institution may take a risk-based approach when determining what steps to gather due diligence information are appropriate.

3. 103.176(b)(3)—Identification of the owners of foreign banks. Section 103.176(b)(3) of the Second Proposed Rule would require a covered financial institution to take reasonable steps to identify the owners of a respondent bank if the respondent bank's shares are not publicly traded. The section defined an owner as “any person who directly or indirectly owns, controls, or has the power to vote 10 percent or more of any class of securities” of the respondent bank.

One commenter suggested that we increase the proposed 10% threshold for identifying the interest of the owners of respondent banks to 25% for banks that are considered to represent a relatively low level of money laundering risk. Other commenters requested clarification that the provisions of subsection (b)(3) are risk-based.

After consideration, we adopted the proposed threshold into the final rule without change. The final rule covers three specific and relatively small categories of foreign banks that have been designated by statute. We believe that tiered ownership thresholds would undermine the benefit of identifying the owners of high-risk respondent banks while not appreciably reducing the burden of identifying such owners. Accordingly, we have not adopted a risk-based approach to section 103.176(b)(3).

B. Section 103.176(c)—Foreign Banks Subject to Enhanced Due Diligence

Section 103.176(c) of the Second Proposed Rule set forth the types of foreign banks for which enhanced due diligence would be required, as provided by section 312 of the USA PATRIOT Act. The enhanced due diligence provisions would apply to foreign banks operating under (1) An offshore banking license; (2) a license issued by a country designated as being non-cooperative with international anti-money laundering principles or procedures by an intergovernmental group or organization of which the United States is a member and with which designation the United States representative to the group or organization concurs; or (3) a license issued by a country designated by the Secretary as warranting special measures due to money laundering concerns. The final rule adopts this provision without change.

One commenter suggested that we reinstate the proposed exception from the enhanced due diligence requirements of section 312 for an offshore bank that “has been found, or is chartered in a jurisdiction where one or more foreign banks have been found, by the Board of Governors of the Federal Reserve System under the Bank Holding Company Act or the International Banking Act, to be subject to comprehensive supervision or regulation on a consolidated basis by the relevant supervisors in that jurisdiction.” After consideration, we did not include such an exception in this final rule.

We believe that the risk-based provisions of the final rule are better suited to addressing the various risk profiles of respondent banks subject to enhanced due diligence than the proposed exception. Thus, when dealing with an offshore booking location of a bank located in a country with a strong anti-money laundering regime, for example, a covered financial institution ordinarily will not be required to conduct enhanced due diligence to the same degree as it would with a stand-alone offshore bank.

One commenter was concerned that a covered financial institution may be cited for a violation of this final rule if it failed to subject an account established or maintained for a high-risk foreign bank to the enhanced due diligence requirements of the rule even when the foreign bank was not in one of the three designated categories of banks subject to enhanced due diligence. However, section 103.176(b) is expressly limited to the foreign banks enumerated at section 103.176(c). With respect to high-risk foreign banks not enumerated in section 103.176(c), a failure to apply appropriate due diligence to a correspondent account maintained for such a foreign bank would constitute a violation of the general due diligence provisions of the correspondent account rule, but not the enhanced due diligence provisions of this final rule.

C. Section 103.176(d)—Special Procedures

According to the provisions of proposed section 103.176(d), a covered financial institution would be required to establish special procedures for circumstances in which appropriate due diligence or enhanced due diligence cannot be performed with respect to a correspondent account. We received no comments on this provision of the Second Proposed Rule. It has been adopted in this final rule without change.

D. Section 103.176(e) and (f)—Applicability Rules

This final rule revises section 103.176(e) and adds new section (f) to reflect the applicability dates of the obligations under this section. The Second Proposed Rule did not address the issue of applicability dates. We are mindful, however, of the obligations that will result from the statutory requirement that enhanced due diligence apply to all correspondent accounts maintained for certain foreign banks, regardless of when the accounts were opened. Effective 180 days after the date of publication of this final rule, the requirements of this final rule will apply to correspondent accounts opened on or after that date. Effective 270 days after the date of publication of this final rule, the rule's requirements will apply to all correspondent accounts opened prior to the date that is 180 days after the date of publication of this final rule.

Section 103.176(f)(2) contains a special implementation rule for banks. This special implementation rule requires banks that have been subject to the provisions of our interim final rule to continue to comply with the existing enhanced due diligence requirements for correspondent accounts of section 312 until the effective dates described in section 103.176(f)(1) are triggered.

Section 103.176(f)(3) contains a special implementation rule for all other covered financial institutions. This section provides that securities broker-dealers, futures commission merchants, introducing brokers, mutual funds, and trust banks or trust companies that have a federal regulator are not required to comply with the enhanced due diligence provisions until the effective dates described in section 103.176(f)(1) are triggered.

E. Section 103.176(g)—Exemptions

New section 103.176(g) restates and conforms the exemption for certain financial institutions from the due diligence and enhanced due diligence requirements of section 103.176.

IV. Regulatory Flexibility Act

We certified that the January 4, 2006 proposed rule would not have a significant economic impact on a substantial number of small entities. We made this certification because the proposed rule would provide guidance concerning certain mandated enhanced due diligence requirements in section 312 of the Act, and because the financial institutions that would be covered by the rule tend to be larger institutions.

One commenter expressed concern that the final rule will make it prohibitive for smaller institutions to engage in the foreign correspondent banking business. However, this final rule does not impose significant new burdens on covered financial institutions of any size. Since at least 2002, the depository institutions covered by this rule have been subject to an interim final rule containing substantially similar enhanced due diligence requirements. Other covered financial institutions have been required to establish and maintain anti-money laundering programs reasonably designed, among other things, to prevent money laundering through correspondent accounts generally.

Because the terms of the interim rule and the final rule are substantially similar, and because the single comment does not provide evidence of any significant economic impact created by the interim or final rule, we believe that the final rule will not have a significant economic impact on a substantial number of small businesses. We also note that even if, as the comment asserts, the rule made foreign correspondent banking prohibitive for small entities, this would establish neither that a substantial number of small entities engage in foreign correspondent banking, nor that any that do derive significant revenue from such business.

Moreover, we have incorporated flexibility into this final rule, particularly by shifting from the prescriptive approach to compliance proposed in the First Proposed Rule to the risk-based approach adopted in this final rule. This flexibility will permit each covered financial institution to tailor its enhanced due diligence program for statutorily designated foreign banks to fit its size and the risks of its customer base.

For these reasons, it is hereby certified, pursuant to the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), that this final rule will not have a significant economic impact on a substantial number of small businesses.

V. Executive Order 12866

This final rule is not a “significant regulatory action” as defined in Executive Order 12866. Accordingly, a regulatory assessment is not required.

VI. Paperwork Reduction Act

The collection of information contained in this final rule has been approved by the Office of Management and Budget in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)), and was assigned Office of Management and Budget Control Number 1506-0046. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid control number assigned by the Office of Management and Budget.

The only requirements in the final rule that are subject to the Paperwork Reduction Act are set forth in 31 CFR 103.176(b)(1)(i), 103.176(b)(1)(iii)(A), and 103.176(b)(3), requiring covered financial institutions to obtain information relating to certain foreign banks' anti-money laundering programs, when appropriate, to obtain information from such foreign banks about the identity of any person with authority to direct transactions through a correspondent account that is a payable-through account and the sources and beneficial owner of funds or other assets in the payable-through account, when appropriate, and to obtain the identity of certain owners of any such foreign bank that is privately owned and the nature and extent of the ownership interest. The estimated annual average burden associated with this collection of information was one hour per recordkeeper. We estimated that there would be 28,163 recordkeepers, for a total of 28,163 annual burden hours. We received two comments on this burden estimate.

One commenter argued that the burden would “number into the hundreds of hours, at a minimum.” The number of burden hours set forth under the Paperwork Reduction Act is designed to be an average, however, and includes recordkeepers subject to the provisions of this final rule that may not maintain correspondent accounts for statutorily designated foreign banks. Moreover, the number of burden hours pertains only to the collection of information when appropriate, and not to the review of the information.

Another commenter suggested that the number of burden hours may be two hours per year instead of one hour. We accept that estimate and, accordingly, have adjusted our final estimate of burden hours to two hours per recordkeeper.

Comments concerning the accuracy of this recordkeeping burden estimate and suggestions for reducing this burden should be sent (preferably by fax (202-395-6974)) to Desk Officer for the Department of the Treasury, Office of Information and Regulatory Affairs, Office of Management and Budget, Paperwork Reduction Project (1506), Washington, DC 20503 (or by the internet to ahunt@omb.eop.gov), with a copy by regular mail to Financial Crimes Enforcement Network, P.O. Box 39, Vienna, VA 22183, “ATTN: Regulation Identifier Number 1506-AA29” or by electronic mail to regcomments@fincen.treas.gov with the caption “ATTN: Regulatory Information Number 1506-AA29” in the body of the text.

List of Subjects in 31 CFR Part 103

• Banks
• Banking
• Brokers
• Counter-money laundering
• Counter-terrorism
• Currency
• Foreign banking
• Reporting and recordkeeping requirements

Authority and Issuance

For the reasons set forth above, we are amending subpart I of 31 CFR Part 103 as follows:

PART 103—FINANCIAL RECORDKEEPING AND REPORTING OF CURRENCY AND FOREIGN TRANSACTIONS

1. The authority citation for part 103 continues to read as follows:

Authority: 12 U.S.C. 1829b and 1951-1959; 31 U.S.C. 5311-5314 and 5316-5332; title III, secs. 311, 312, 313, 314, 319, 326, 352, Pub. L. 107-56, 115 Stat. 307.

2. In subpart I, amend § 103.176 by adding paragraphs (b) and (c), revising paragraphs (d) and (e), and adding paragraphs (f) and (g) to read as follows: