USA Patriot Act - 2001

Key US Legislative and Regulatory Initiatives
Applied to Transactions Internationally
USA PATRIOT Act-2001
ML Control Act - 1986
Office of Foreign Asset Control
M A Islam, CDCS, CSDG, CAMS Compliance Route


September 11, 2001

USA PAtriot Act
USA Patriot Act was signed by President George W. Bush on

October 26, 2001

USA PATRIOT Act USA PAtriot Act
P Providing
A Appropriate
U Uniting T Tools
S Strengthening
R Required
A America
I Intercept
O Obstruct
T Terrorism
Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act USA PAtriot Act
 Enacted : October 2001

 USA PATRIOT Act has implications for
 US institutions
 Non-US institutions that do business in the US
Bank Secrecy Act in 1970
Money Laundering Control Act in 1986

the world’s first law to criminalize ML

Code of Federal Regulation
USA PAtriot Act
The regulations issued under the USA PATRIOT Act by the US Treasury
Department provide detailed requirements that FI must follow to comply with the
provisions of the Act.
These regulations are compiled in 31 Code of Federal Regulation

Chapter X.
 31 CFR Chapter X - FINANCIAL CRIMES ENFORCEMENT

NETWORK, DEPARTMENT OF THE TREASURY

USA PAtriot Act
USA PATRIOT Act has 10 titles
Title I: Enhancing Domestic Security Against Terrorism
Title II: Enhanced Surveillance Procedures
Title III: International ML Abatement and Anti-Terrorist

Financing Act of 2001
Title IV: Protecting the Border
Title V: Removing Obstacles to Investigating Terrorism

Title VI: Providing for Victims of Terrorism, Public Safety Officers and Their Families
Title VII: Increased Information Sharing for Critical Infrastructure Protection
Title VIII: Strengthening the Criminal Laws Against Terrorism
Title IX: Improved Intelligence
Title X: Miscellaneous

USA PAtriot Act
The purpose of Title III
To increasing the strength of US measures to prevent, detect, and

1
prosecute international ML/TF.
To provide a national mandate for subjecting to special scrutiny

foreign jurisdictions, FI operating outside the US, and classes of
2
international transactions or types of A/C that pose particular
opportunities for criminal abuse.
To ensure that all appropriate elements of the financial services
3 industry are subject to appropriate requirements to report potential
ML tr. to proper authorities.

Q. What are the purpose of Title III (the International Money Laundering Abatement and Anti-
Terrorist Financing Act of 2001 ) of the USA PATRIOT Act ? Choose Two
To provide a national mandate for subjecting to special scrutiny on US FI and

A classes of national transactions or types of A/C that pose particular opportunities
for criminal abuse.
B To increasing the Cooperation among FIU to prevent, detect, and prosecute

international ML/TF.
C To ensure that all appropriate elements of the financial services industry

are subject to appropriate requirements to report potential ML tr. to
proper authorities.

D
E To clarify the terms of tipping off at the time of filing suspicious activities report.
Terrorist Financing Act of 2001 ) of the USA PATRIOT Act ? Choose two
A To clarify the terms of tipping off at the time of filing suspicious activities report.

C To ensure that all appropriate elements of the Law enforcement

Authorities are subject to investigate money laundering case properly.

D prosecute international ML/TF.
To provide a national mandate for subjecting to special scrutiny foreign

E jurisdictions, FI operating outside the US, and classes of international transactions
or types of A/C that pose particular opportunities for criminal abuse.
Terrorist Financing Act of 2001 ) of the USA PATRIOT Act ? Choose three
To provide a national mandate for subjecting to special scrutiny foreign

A jurisdictions, FI operating outside the US, and classes of international transactions
or types of A/C that pose particular opportunities for criminal abuse.

C To ensure that all appropriate elements of the financial services industry

are subject to appropriate requirements to report potential ML tr. to
proper authorities.

D
E To clarify the terms of tipping off at the time of filing suspicious activities report.
USA PAtriot Act
Title III : International Money Laundering Abatement and

Anti-Terrorist Financing Act of 2001
From Section 301 To Section 377

Title III : International Money Laundering Abatement and
Anti-Terrorist Financing Act of 2001 USA PAtriot Act
Section 311 Special Measures for Primary Money Laundering Concern
Section 312 Special Due Diligence for Correspondent and Private Banking A/cs.
Section 313 Prohibition on U.S. Correspondent Accounts with Foreign Shell Banks
Section 314 Cooperative Efforts to Deter Money Laundering

a. FI – Regulatory Agencies- Law Enforcement
b. FI to FI
Section 319 Forfeiture of Funds in U.S. Interbank Accounts
a. Forfeiture
b. Records
Q. What does section 313 of the USA Patriot Act cover?
A The ability to designate a foreign jurisdiction, a foreign financial

institution, a type of international transaction, or a type of
account as a specific concern to be addressed by US banks
B Making correspondent account records available within 120 hours
C Due diligence for non-US private bank customers
D Prohibiting correspondent accounts for shell banks

Q. Which is the section of USA Patriot Act 2001 provides ability to a
financial institutions to share information with another financial
institutions?
A Section 311
B Section 319 (b)
C Section 314 (b)
D Section 314 (a)

Q. Which is the section of USA Patriot Act 2001 cover
Measures for Primary Money Laundering Concerns?
Special
A Section 312
B Section 314 (a)
C Section 319 (b)
D Section 311

A The ability to designate a foreign jurisdiction, a foreign financial

institution, a type of international transaction, or a type of
account as a specific concern to be addressed by US banks
CC Due diligence for non-US private bank customers
D Prohibiting correspondent accounts for shell banks

Q. Which is the section of USA Patriot Act – 2001 cover “records relating
to Correspondent Accounts for Foreign Banks” ?
A Section 312
B Section 319 (a)
C Section 319 (b)
D Section 311

Q. Which is the section of USA Patriot Act – 2001 cover “Cooperation
among Financial Institutions, Regulatory Authorities and Law
Enforcement Authorities ” ?
A Section 314(b)
B Section 319 (a)
C Section 314 (a)
D Section 311

Q. Which are the sections of USA Patriot Act 2001 address the
requirement of Foreign Bank Certificate for Correspondent account ?
Choose Two
A Section 312
B Section 313
C Section 319 (a)
D Section 319 (b)
E Section 314 (b)

Section 311 Special Measures for Primary ML Concerns
(PMLC)
USA PAtriot Act
Primary Money Laundering Concerns

Tr a/c
Special Measures for PMLC
Process for PMLC
Special Measures vs OFAC : sanction

Section 311
USA PAtriot Act
Primary Money Laundering Concerns
311 section provides the US Treasury Department with the authority to apply
graduated, proportionate measures against
Foreign jurisdiction
Foreign FI
Tr a/c Type of international transaction
Type of account
that the Treasury Secretary determines to be a “PMLC.”

Section 311
Primary Money Laundering Concerns USA PAtriot Act
By designating a country or a FI as a PMLC,.
US government can force US banks to halt many

of their financial dealings with the designee.

Section 311
Special Measures for PMLC
USA PAtriot Act
Once identified, the Treasury Department can require US FI to follow

any or all of the following five special measures:
First Measure Keep records and/or file reports on certain financial transactions
 A description of the transactions

 the identities and addresses of the participants in the trans.
 the identities of the BO of the funds involved
Second Measure Obtain information on the BO of any account opened or maintained

in the US by a foreign person or a foreign person’s representative.

Section 311 Special Measures for Primary ML Concerns
USA PAtriot Act
Once identified, the Treasury Department can require US FI to follow

any or all of the following five special measures:
Third Measure Identify and obtain information about customers who are
permitted to use, or whose transactions are routed through, a
foreign bank’s PTA.
Fourth Measure
Identify and obtain information about customers permitted to
use, or whose transactions are routed through, a foreign
bank’s “correspondent” account
Fifth Measure Close certain PTA or correspondent A/C.

Section 311
USA PAtriot Act
▓ To ensure that all relevant factors are considered,
Treasury Secretary
must consult with
Secretary of State Attorney General

and
before designating a PMLC

.
Section 311
Special Measures vs OFAC : sanction USA PAtriot Act
Section 311 actions are distinct from designations brought by Treasury’s OFAC
which are applied more broadly and can also trigger asset freezing obligations
Versus
Special Measures OFAC : sanctions
▓ In general, there are no blocking ▓ OFAC Sanctions Programs invoke

provisions, only recordkeeping and stronger measures to reject and block
reporting requirements or termination of the property (asset freezing) and
a correspondent banking relationship. interests of designees.
▓ FinCEN : Collect & Disseminate ▓ OFAC : Administrate & Enforce

Section 311
What are some examples of recordkeeping and reporting

requirements under the First Measure?
Are Special Measures orders similar to sanctions administered

by the Office of Foreign Assets Control (OFAC)?

Q. What does designing a country as being of “prime money
laundering concern” allow the U.S. government to do?
A Obtain transactional information from U.S.-owned subsidiary

banks located outside the U.S.
B Close some or all correspondent or payable-through accounts.
C Ensure the inclusion of that country onto FATF’s Non-

Cooperative Country and Territory list.
Ensure the inclusion of that country into the office of Foreign

D
Asset Control country sanctions programs.

Q. A European Union (EU) bank has a correspondent banking relationship with a
U.S. bank. Under USA PATRIOT Act Section 311, the U.S. government has enacted
special measures against a designated entity that has a payable-through account
with the EU bank. Which of the following actions might the U.S. bank be required to
take regarding the EU bank's services for the designated entity?
A Ensure the designated entity's confidential information is not shared

with other entities.
B Obtain additional information about customers permitted to use this

account.
C Verify that the EU bank serves the designated entity.
D Perform enhanced due diligence on the EU bank.

A Prohibiting correspondent accounts for shell banks
C Due diligence for non-US private bank customers
D
D The ability to designate a foreign jurisdiction, a foreign financial
institution, a type of international transaction, or a type of account
as a specific concern to be addressed by US banks

Section 312 Correspondent Account and Private Banking Account
USA PAtriot Act
The rule apply to US
 Banks,
 Credit unions,
 Thrift institutions,
 Trust banks,
 Broker- dealers,
 Futures commission merchants
 Introducing brokers in commodities
 Mutual funds
 US-based agencies and branches of foreign banks.

USA PAtriot Act
Foreign FI covered by the rule include
▪ Foreign banks,
▪ Foreign branches of US banks,
▪ Foreign businesses that considered broker-dealers,
▪ Futures commission merchants,
▪ Introducing brokers in commodities,
▪ Mutual funds if they operate in the US,
▪ Money transmitters or exchangers in a foreign country.

USA PAtriot Act
Correspondent Account
Private Banking Account

USA PAtriot Act
 Requires due diligence
 In certain situations, EDD for
 Foreign correspondent A/C
 Private banking for non-US persons

Section 312 Correspondent Account
USA PAtriot Act
Due diligence program for Correspondent Banking
Due diligence program – Essential Component
EDD – When apply ?
EDD – What apply ?

USA PAtriot Act
Due diligence program
Must be “appropriate, specific and risk-based,” Include enhanced

(when necessary) policies, procedures and controls reasonably
designed to identify and report suspected ML in a correspondent
account maintained in the US
This due diligence program must also be included in the institution’s

AML program.

USA PAtriot Act
Due diligence program must address three measures:
1 Determining whether EDD is necessary.
2 Assessing the ML risk presented by the correspondent account
3 Applying risk-based procedures and controls reasonably designed

to detect and report suspected ML.
1. .

USA PAtriot Act
EDD must be applied to the a/c established for a foreign bank

operating under:
1 An offshore banking license.
2
A license issued by a foreign country designated as non-
cooperative by an international organization, with which
designation the Treasury Secretary agrees.
3 A license issued by a foreign country that has been
designated by the US Secretary of the Treasury as
warranting special measures pursuant to Section 311 of the
USA PATRIOT Act

USA PAtriot Act
EDD that must be implemented in these situations includes:
Conducting enhanced scrutiny for possible ML and suspicious

1
transactions, including
A Foreign Bank’s AML program
B Monitoring transactions on correspondent account
C Obtain information : Payable-through account

USA PAtriot Act
EDD that must be implemented in these situations includes:
2 Determining nesting/downstream banking and taking reasonable

steps to assess and mitigate the ML risks associated with such A/C
3 Determining, for any such foreign bank whose shares are not
publicly traded,
 Identity of each of the owners of the foreign bank with the

Declaration power to vote 10 percent or more of any class of
of securities of the bank,
Ownership
 Nature and extent of the ownership interest of each such
owner.
Section 312
Q. Which types of accounts are subject to the enhanced

correspondent account due diligence requirements outlined in
Section 312?
Q. What are the enhanced due diligence (EDD) requirements for

correspondent accounts outlined in Section 312?

Q. The vice president of the foreign correspondent banking department at a
large United States bank has been notified that a foreign bank with an
offshore License wants to open a correspondent account. Which things
must the vice president acquire under the USA PATRIOT Act? Choose Two
A A list of all the customers of the correspondent bank
B A list of the types of businesses served by the correspondent bank
C Information relating to the foreign bank's AML Program
D The identity of 10% Customers of the correspondent bank,

unless it is publicly traded
E Determining the nesting relationship

Q. The vice president of the foreign correspondent banking department at a
large United States bank has been notified that a foreign bank with an
offshore License wants to open a correspondent account. Which things must
the vice president acquire under the USA PATRIOT Act? Choose three
A A list of all the customers of the correspondent bank
B A list of the types of businesses served by the correspondent bank
C Information relating to the foreign bank's AML Program
D The identity of 10% owner of the correspondent bank, unless it is

publicly traded
E Determining the downstream banking relationship

Q. AS per USA Patriot ACT, Pursuant to the implementing regulation, enhanced due
diligence procedures must be applied to a correspondent account established for a
foreign bank operating under: choose three
A A Respondent Bank who doing business with shell bank
B An offshore banking license.
A license issued by a foreign country designated as non-cooperative by an

C international organization, with which designation the Treasury Secretary
agrees
D An Bank who under the sanction of Office of Foreign Asset Control
A license issued by a foreign country that has been designated by the US

E Secretary of the Treasury as warranting special measures pursuant to
Section 311 of the USA PATRIOT Act.

Q. The USA PATRIOT Act requires United States (U.S.) financial institutions to
collect certain information from non-U.S. banks that hold a correspondent
account. Which two pieces of information must a non-U.S. bank provide to its
U.S. correspondent to enable them to comply with this requirement? (Choose
two.)
A The name and address of all shell banks the bank maintains
accounts for
The name and address of all beneficial owners who own 25% or
B more of the bank
Prompt notice of any suspicious activity it detects on any customer
C
who uses the correspondent account
D The name and address of a person who is authorized to receive

service of legal process for the bank

Q. Which of the following is the most difficult regulatory challenge facing a
foreign financial institution with a correspondent banking relationship in
the U.S.?
A FATF Guidance on Terrorist Financing
B Basel Due Diligence Principles for Banks
C USA Patriot Act.
D UN Security Council Resolution on Correspondent Banking.

Key US Legislative and Regulatory Initiatives
Applied to Transactions Internationally
ML Control Act - 1986
Office of Foreign Asset Control

Section 312 Private Banking Account
USA PAtriot Act
Definition : Private Banking account
Due diligence program – Essential Component
Enhanced scrutiny- Senior foreign political figure

USA PAtriot Act
USA PAtriot Act

Under the rule, a private banking account is defined as:
a An account with a minimum aggregate deposit of $1 million,
b For one or more non-US persons
c Which is assigned to a bank employee acting as a liaison with

the non-US person.
, CSDG, CAMS
M A Islam, CDCS, Compliance Route
USA PAtriot Act
Must maintain a due diligence program for private banking A/C

USA PAtriot Act
US institutions must take reasonable steps for covered private

banking A/C :
1 Ascertain the identity of all nominal and BO of the A/C.
2 Ascertain whether any such owner is a “senior foreign political figure.”
3 Ascertain the source of the funds in the account and the purpose
and expected use of the account.
4 Monitor the account to ensure the activity in the account is

consistent with the information provided as to the source of funds
and the purpose and expected use of the account, as needed to
guard against ML and to report any suspected ML or suspicious
activity.
Compliance Route
USA PAtriot Act
Enhanced scrutiny -Senior foreign political figure
▓ In ascertaining whether an account owner is a “senior foreign

political figure,” includes immediate family members and persons
who are “widely and publicly known” to be close associates.
▓ An institution that maintains A/C for these individuals must conduct

“enhanced scrutiny” that is reasonably designed to detect if the
funds “may involve the proceeds of foreign corruption,”

Section 312
Q. What are the due diligence requirements for private banking

accounts outlined in Section 312?
Q. What does the term “private banking account” mean for Section 312
purposes?
Q. What are the enhanced due diligence (EDD) requirements for private
banking accounts outlined in Section 312?

Q. As per USA PATRIOT ACT, which of the following accounts may be
termed as private banking account? An account with a minimum
aggregate deposit of
A USD 10.00 thousand
B USD 1.00 million
C USD 10.00 million
D USD 1.00 billion

Q. Which of the following persons is not a senior foreign political figure
as per section 312 of USA PATRIOT Act?
A A former senior military official of a foreign government
B A supreme court judge of a foreign government
C A senior official of a major foreign political party
A senior executive of a foreign privately owned commercial

D
enterprise.

Prohibition on
Section 313 Correspondent A/C for foreign shell banks USA PAtriot Act
Shell Bank
Prohibits US banks and securities brokers and dealers from

maintaining correspondent A/C for foreign, unregulated shell
banks that have no physical presence anywhere.

Prohibition on
Section 313 Correspondent A/C for foreign shell banks
USA PAtriot Act
The term “physical presence” is defined as
A place of business that is maintained by a foreign bank located at a

fixed address (as opposed to solely an electronic address) where It
is authorized to conduct banking activities.
Employs one or more individuals on a full-time basis at that location
Maintains operating records at that location
Is subject to inspection by the banking authority which licensed it

at that location

Brick & Mortal Location
Shell Bank
Full Time Employees

Record Keeping
Shell Bank
Inspection By Authority

Prohibition on
USA PAtriot Act
The term “shell bank” does not include a bank that is a

regulated affiliate of a bank that maintains a physical
presence.
The section also requires FI to take reasonable steps to ensure

that foreign banks with correspondent A/C do not themselves
permit access to such A/C by foreign shell banks.
Banks and securities brokers are permitted to

use a certification form to comply with the rule.

Prohibition on
USA PAtriot Act
Foreign banks to certify through the Form
They are not themselves shell banks
They do not permit shell banks access to the US

correspondent a/c through a nested correspondent
relationship
Duration?
 At least once every three years

Section 313
Q. What does the term “physical presence” mean for Section 313 purposes?
Q. What are the requirements imposed on financial institutions outlined in Section 313?
Q. Are there exceptions to the requirements outlined in Section 313?
Q. What does the term “nested relationship” mean for Section 313 purposes?
Q. How do Section 313 requirements for foreign shell banks correspond to FATF R.?

Q. Under requirements for correspondent accounts in the USA PATRIOT
Act, the word "certification" refers to a written representation by a:
A Federal receiver certifying that he is not the beneficial

owner of the correspondent account.
Respondent bank, certifying that they do not do business with

B
politically exposed persons.
C Correspondent bank, certifying that they do not open

correspondent accounts for alternative remittance companies.

D
shell banks.

Q. Which of the following is considered a shell bank as defined by the USA
PATRIOT Act?
A A bank incorporated in an offshore jurisdiction without a physical

presence
An Internet bank operating in the U.S. providing services

B
worldwide.
C A local bank with offices in a non-cooperative jurisdiction which is

subject to minimal regulatory supervision.
A bank run by a foreign holding company with offices and staff in

D
an offshore jurisdiction.

Q. As per USA Patriot Act, to have a physical presence, an institution must
A Maintain operational records and be subject to regulatory

supervision.
Have physical location, a local agent and be subject to
B
regulatory supervision.
C Have a location, Maintain operational records, at least one full

time employee and be subject to regulatory supervision at that
location.
Be affiliated with a unregulated bank, maintain business
D
records and be subject to regulatory supervision.

Q. Which three of the following statements are included in Section 313 of
the PATRIOT Act definition of “Physical Presence” in respect of Shell
Banks?
AA A fixed address.
BB Employ at least one full time employee.
C The majority of the board of directors must be local residents.
DD Keep banking records at the fixed address.
E Doing business upon complying internal policy.

USA PAtriot Act
Sections 314 (A) Cooperation among Financial Institutions, Regulatory

Authorities and Law Enforcement Authorities
Section 314 (B) Cooperation among Financial Institutions
Help “law enforcement identifies, disrupt, and prevent terrorist acts and ML
activities by encouraging further cooperation among law enforcement, regulators,
and FI to share information regarding those suspected of being involved in
terrorism or ML.”

USA PAtriot Act
Sections 314 (A)
Cooperation among Financial Institutions, Regulatory

Authorities and Law Enforcement Authorities
To obtain information from a FI
To obtain documents from a FI

USA PAtriot Act
To obtain information from a FI
FinCEN’s regulations under Section 314(a) enable US federal, state,

local, and foreign (European Union) law enforcement agencies, through
FinCEN, to reach out to more than 44,000 points of contact at more than
22,000 FI to locate A/C and transactions of persons that may be involved
in terrorism or ML.

USA PAtriot Act
US federal, state, local, and

foreign (European Union) law
enforcement agencies
Request
A/C and transactions of persons that
may be involved in ML/TF
FinCEN
FI

USA PAtriot Act
To obtain documents from a FI
 To obtain documents from a FI that has reported a match of a

subject, a law enforcement agency must meet the legal
standards that apply to the particular investigative tool that it
chooses to use to obtain the documents.

USA PAtriot Act
Section 314 (B)

Cooperation among Financial Institutions
Provides FI with the ability to share information with one another, under a safe
harbor that offers protections from liability, in order to better identify and report
potential ML or terrorist activities.
314(b) information sharing is a voluntary program.
Entities that may participate in 314(b) include US FI subject to an AML program

requirement under FinCEN regulations and any association of such FI.

Section 314
Q. How does Section 314 correspond to FATF Recommendations?
Q. Should financial institutions automatically file a SAR on a positive

314(a) match?

Section 314
Is 314(a) information sharing an acceptable substitute for complying with

a subpoena ?
Section 314(a) provides lead information only. It is not a substitute for a subpoena
or other legal process. To obtain documents from a financial institution that has a
reported match, a law enforcement agency must meet the legal standards that
apply to the particular investigative tool it chose to use to obtain the documents.

Section 314
Should financial institutions automatically file a SAR on a positive 314(a)

match?
FinCEN strongly discourages financial institutions from using the results of a

314(a) search as the sole factor in reaching a decision to file a SAR unless the
request specifically states otherwise. A 314(a) match may serve to initiate an
investigation; however, the decision to file a Suspicious Activity Report (SAR)
should be based on the institution’s investigation of the activity involved.

USA PAtriot Act
Section 314 (B)

Cooperation among Financial Institutions
This currently includes the following types of US FIs:
1. Banks
2. Casinos and card clubs
3. Money services businesses
4. Brokers or dealers in securities
5. Mutual funds
6. Insurance companies
7. Futures commission merchants
8. Dealers in precious metals, precious stones, or jewels
9. Operators of credit card systems
10.Loan or finance companies

USA PAtriot Act
Section 319
Section 319(a):
Forfeiture from US Correspondent Account
Section 319(b) :
Records relating to Correspondent A/C for Foreign Banks

Section 319(a):
Section 319 Forfeiture from US Correspondent Account
USA PAtriot Act
In situations where funds have been deposited with a foreign bank
this section permits the US government to seize funds in the

same amount from a correspondent bank account in the US
that has been opened and maintained for the foreign bank.
The US government is not required to trace the funds, as they are deemed
to have been deposited into the correspondent account.
However, the owner of the funds may contest the seizure order.

Section 319(a):
USA PAtriot Act
Q Can foreign financial institutions contest the forfeiture of funds in

interbank accounts?
 Only the owner of the funds deposited into the account may
contest the forfeiture.

Section 319(a):
USA PAtriot Act
How does Section 319(a) correspond to FATF Recommendations?
Recommendation 4 – Confiscation and Provisional Measures
Recommendation 6 – Targeted Financial Sanctions Related to Terrorism and TF
Recommendation 7 – Targeted Financial Sanctions Related to Proliferation
Recommendation 38 – Mutual Legal Assistance: Freezing and Confiscation

Section 319(b) :
Section 319 Records relating to Correspondent A/C for Foreign Banks
USA PAtriot Act
120-Hour Rule
Foreign Bank Records
Registered agent
Foreign Bank Certifications

Section 319(b) :
Records relating to Correspondent A/C for Foreign Banks
USA PATRIOT Act
120-Hour Rule
Allows the appropriate federal banking agency to require a FI to produce

within 120 hours (five days) records / information related to
the institution’s AML compliance
a customer of the institution
Any account maintained in US by the FI
Weekends and holidays are included in the time frame

Section 319(b) :
USA PAtriot Act
Q. If a request for information about a respondent covered under the

120-Hour Rule is received at 5:00 p.m. on Friday, when must the
financial institution respond?
A by 5 a.m. the following Tuesday
B by 5 a.m. the following Wednesday
C by 5 p.m. the following Tuesday
D by 5 p.m. the following Wednesday

Section 319(b) :
USA PAtriot Act
Foreign Bank Records
The section allows the Secretary of Treasury/the Attorney General to subpoena

records of a foreign Bank that maintains a correspondent account in the US.
The subpoena can request any records relating to the

account, including records located outside the US.
 If the foreign bank fails to comply with or fails to contest the subpoena,
the Secretary or the Attorney General can order the US FI to close

the correspondent account within 10 days of receipt of such order.
Section 319(b) :
USA PAtriot Act
Registered Agent
The section requires foreign banks to designate a

registered agent in the US to accept service of
subpoenas (legal process) pursuant to this section.

Section 319(b) :
USA PAtriot Act
Also refer
 USA PATRIOT Act Certification
US banks and securities brokers and dealers that maintain correspondent

A/C for foreign banks must keep the following records :
The identity of the 25 % owners of the foreign bank
Unless it is publicly traded.
The name of the correspondent bank’s registered agent in the U.S

Section 319(b) :
USA PAtriot Act
This information is generally collected on the certification form

used to comply with Section 313
This information must be updated at least every 3 years or more

frequently, if the information is no longer correct.

Section 319
Q What will happen if a foreign bank does not comply with the information
request?
Q What recordkeeping requirements does Section 319(b) impose on
financial institutions?
Q Are U.S. financial institutions required to obtain foreign bank

certifications for their foreign affiliates?
Q Do certifications have to be obtained from each branch, agency and

subsidiary of a foreign respondent?

Section 319
Q Is ownership information required for all foreign respondents?
Q How often must a foreign respondent update its foreign bank certification?
Q What is required of a foreign respondent if facts and circumstances (e.g., change in

ownership) have changed since the last certification?
Q Does the receipt of the foreign bank certification meet the due diligence requirements
outlined in Section 312?

Q. A foreign bank operating under an offshore license wants to open a
correspondent account with a United States (U.S.) bank. The foreign bank
plans to provide payable through account services to some of its customers.
What must the foreign bank provide to the U.S. bank under the USA
PATRIOT Act?
A A list of politically exposed persons who are owners of the
correspondent bank
B A list of account holders at the financial institution who will
use the payable through account
C The person in the United States who can receive service of
legal process for the correspondent bank
D A list of anti-money laundering training records for the
financial institution employees monitoring payable through
account transactions
Q. What type of records do the recordkeeping requirements of section 319 of the
Patriot Act require U. S. banks to collect and maintain records of in the U.S.
for each non-U.S. bank with which it maintains a correspondent relationship?
Beneficial ownership and any Politically Exposed Person (PEPs) in

A
the management chain
B Ownership and agent for service of legal process
C Name of attorney and name of all shell bank clients
D Copy of AML policies and annual reports

Q. What are three potential issues for foreign financial institutions maintaining
correspondent accounts with U.S. banks under the Patriot Act? Choose 3 answers
A Cancellation of correspondent banking relationships
B Forfeiture of funds in a U.S. interbank account.
C Permission of correspondent accounts for shell banks
D U.S. residents maintaining private banking accounts
Determining nesting and taking reasonable steps to mitigate the

E
ML risks

Q. What are the requirements of United States financial institutions when
conducting business with an international institution as a result of the USA
PATRIOT Act? Choose two
A Performing enhanced due diligence on shell banks
B If Funds have been deposited with a foreign bank, the US

government to seize total balance of a correspondent bank
account in the US.
C Complying with Special Measures issued under the USA PATRIOT Act
EDD procedures must be applied to a correspondent account

D
established for a foreign Offshore bank
E Foreign banks to certify at least once every five years that they are
not themselves shell banks.
Q. Under requirements for correspondent accounts in the USA PATRIOT
Act, the word "certification" refers to a written representation by a:
Federal receiver" certifying that he is not the beneficial owner of

A
the correspondent account.
B Respondent bank, certifying that they do not do business with

politically exposed persons.
C
banks who have no physical presence.
Correspondent bank, certifying that they do not open
D
correspondent accounts for alternative remittance companies.

Q. Which aspect of the USA PATRIOT Act impacts foreign financial
institutions?
A Expanding sanctions requirements to a financial

institution's foreign branches
Expanding the anti-money laundering program
B
requirements to all foreign financial institutions
Providing authority to impose special measures on

C
institutions that are of primary money-laundering concern.
D Requiring enhanced due diligence for foreign shell banks

Q. The USA PATRIOT Act requires United States (U.S.) financial institutions to
collect certain information from non-U.S. banks that hold a correspondent
account. Which of the information must a non-U.S. bank provide to its U.S.
correspondent to enable them to comply with this requirement?
A The name and address of all shell banks the bank maintains
accounts for
B The name and address of all beneficial owners who own 5% or

more of the bank
C Prompt notice of any suspicious activity it detects on any

customer who uses the correspondent account
D The name and address of a person who is authorized to receive

service of legal process for the bank

Q. A foreign bank operating under an offshore license wants to open a correspondent account
with a United States (U.S.) bank. The foreign bank plans to provide payable through
account services to some of its customers.
What must the foreign bank provide to the U.S. bank under the USA PATRIOT Act?
A A list of politically exposed persons who are owners of the correspondent bank
A list of account holders at the financial institution who will use the payable
B
through account
C The person in the United States who can receive service of legal process for the
correspondent bank
D A list of anti-money laundering training records for the financial institution

employees monitoring payable through account transactions

Q. What are three potential issues for foreign financial institutions
maintaining correspondent accounts with U.S. banks under the Patriot
Act? Choose 3 answers
A Visits to the correspondent banking client’s business
B Forfeiture of funds in a U.S. interbank account
C Prohibition of correspondent accounts for shell banks
D U.S. residents maintaining private banking accounts
E Cancellation of correspondent banking relationships

Q. What type of records do the recordkeeping requirements of section 319 of the Patriot
Act re quire U.S. banks to collect and maintain records of in the U.S. for each non-
U.S. bank with which it maintains a correspondent relationship?
A Beneficial ownership and any Politically Exposed Person (PEPs) in the

management chain
B Ownership and agent for service of legal process
C Name of attorney and name of all shell bank clients
D Copy of AML policies and annual reports

Muhammad Ashraful Islam
CDCS CSDG CAMS MBA

USA Patriot Act - 2001

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USA Patriot Act - 2001

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Key US Legislative and Regulatory Initiatives

Applied to Transactions Internationally

USA PATRIOT Act-2001

ML Control Act - 1986

Office of Foreign Asset Control

M A Islam, CDCS, CSDG, CAMS Compliance Route

M A Islam, CDCS, CSDG, CAMS Compliance Route

M A Islam, CDCS, CSDG, CAMS Compliance Route

USA Patriot Act was signed by President George W. Bush on

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 Enacted : October 2001

 Non-US institutions that do business in the US

Bank Secrecy Act in 1970

Money Laundering Control Act in 1986

M A Islam, CDCS, CSDG, CAMS Compliance Route

These regulations are compiled in 31 Code of Federal Regulation

 31 CFR Chapter X - FINANCIAL CRIMES ENFORCEMENT

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Title II: Enhanced Surveillance Procedures

Title III: International ML Abatement and Anti-Terrorist

Title V: Removing Obstacles to Investigating Terrorism

Title VII: Increased Information Sharing for Critical Infrastructure Protection

Title VIII: Strengthening the Criminal Laws Against Terrorism

Title IX: Improved Intelligence

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To increasing the strength of US measures to prevent, detect, and

To provide a national mandate for subjecting to special scrutiny

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To provide a national mandate for subjecting to special scrutiny on US FI and

B To increasing the Cooperation among FIU to prevent, detect, and prosecute

C To ensure that all appropriate elements of the financial services industry

To increasing the strength of US measures to prevent, detect, and

B To increasing the Cooperation among FIU to prevent, detect, and prosecute

C To ensure that all appropriate elements of the Law enforcement

To increasing the strength of US measures to prevent, detect, and

To provide a national mandate for subjecting to special scrutiny foreign

To provide a national mandate for subjecting to special scrutiny foreign

B To increasing the Cooperation among FIU to prevent, detect, and prosecute

C To ensure that all appropriate elements of the financial services industry

To increasing the strength of US measures to prevent, detect, and

Title III : International Money Laundering Abatement and

From Section 301 To Section 377

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Section 311 Special Measures for Primary Money Laundering Concern

Section 314 Cooperative Efforts to Deter Money Laundering

A The ability to designate a foreign jurisdiction, a foreign financial

B Making correspondent account records available within 120 hours

C Due diligence for non-US private bank customers

D Prohibiting correspondent accounts for shell banks

M A Islam, CDCS, CSDG, CAMS Compliance Route

B Section 319 (b)

C Section 314 (b)

D Section 314 (a)

M A Islam, CDCS, CSDG, CAMS Compliance Route

B Section 314 (a)

C Section 319 (b)

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A The ability to designate a foreign jurisdiction, a foreign financial

B Making correspondent account records available within 120 hours

CC Due diligence for non-US private bank customers

D Prohibiting correspondent accounts for shell banks

M A Islam, CDCS, CSDG, CAMS Compliance Route