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[Federal Register Volume 87, Number 28 (Thursday, February 10, 2022)]
[Notices]
[Pages 7919-7926]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-02885]

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DEPARTMENT OF THE TREASURY

Financial Crimes Enforcement Network

Agency Information Collection Activities; Proposed Renewal; 
Comment Request; Renewal Without Change of Prohibition on Correspondent 
Accounts for Foreign Shell Banks; Records Concerning Owners of Foreign 
Banks and Agents for Service of Legal Process

AGENCY: Financial Crimes Enforcement Network (FinCEN), Treasury.

ACTION: Notice and request for comments.

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SUMMARY: As part of its continuing effort to reduce paperwork and 
respondent burden, FinCEN invites comments on the proposed renewal, 
without change, of a currently approved information collection found in 
existing Bank Secrecy Act regulations. Specifically, the regulations 
prohibit covered financial institutions from maintaining correspondent 
accounts for or on behalf of a foreign shell bank. The regulations 
require that a covered financial institution take reasonable steps to 
ensure that any correspondent account that it maintains in the United 
States for a foreign bank is not used by the foreign bank to indirectly 
provide banking services to a foreign shell bank. The regulations also 
mandate that a covered financial institution maintaining correspondent 
accounts in the United States for foreign banks retain records in the 
United States identifying: The owners of each such foreign bank whose 
shares are not publicly traded, unless the foreign bank files a Form 
FR-Y with the Federal Reserve Board identifying the current owners of 
the foreign bank; and the name and address of a person who resides in 
the United States who is authorized to serve as each such foreign 
bank's agent for service of legal process for records regarding each 
such

[[Page 7920]]

correspondent account. Although no changes are proposed to the 
information collection, this request for comments covers a future 
expansion of the scope of the annual hourly burden and cost estimate 
associated with these regulations. This request for comments is made 
pursuant to the Paperwork Reduction Act of 1995.

DATES: Written comments are welcome, and must be received on or before 
April 11, 2022.

ADDRESSES: Comments may be submitted by any of the following methods:
     Federal E-rulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments. Refer to Docket Number 
FINCEN-2022-0003 and the specific Office of Management and Budget (OMB) 
control number 1506-0043.
     Mail: Policy Division, Financial Crimes Enforcement 
Network, P.O. Box 39, Vienna, VA 22183. Refer to Docket Number FINCEN-
2022-0003 and OMB control number 1506-0043.
    Please submit comments by one method only. Comments will be 
reviewed consistent with the Paperwork Reduction Act of 1995 and 
applicable OMB regulations and guidance. Comments submitted in response 
to this notice will become a matter of public record. Therefore, you 
should submit only information that you wish to make publicly 
available.

FOR FURTHER INFORMATION CONTACT: The FinCEN Regulatory Support Section 
at 1-800-767-2825 or electronically at [email protected].

SUPPLEMENTARY INFORMATION:

I. Statutory and Regulatory Provisions

    The legislative framework generally referred to as the Bank Secrecy 
Act (BSA) consists of the Currency and Financial Transactions Reporting 
Act of 1970, as amended by the Uniting and Strengthening America by 
Providing Appropriate Tools Required to Intercept and Obstruct 
Terrorism Act of 2001 (USA PATRIOT Act), Public Law 107-56 (October 26, 
2001), and other legislation, including most recently the Anti-Money 
Laundering Act of 2020 (AML Act).\1\ The BSA is codified at 12 U.S.C. 
1829b, 12 U.S.C. 1951-1960, 31 U.S.C. 5311-5314 and 5316-5336, and 
includes notes thereto, with implementing regulations at 31 CFR chapter 
X.
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    \1\ The AML Act was enacted as Division F, Sec. Sec.  6001-6511, 
of the William M. (Mac) Thornberry National Defense Authorization 
Act for Fiscal Year 2021, Public Law 116-283, 134 Stat 3388 (2021).
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    The BSA authorizes the Secretary of the Treasury, inter alia, to 
require financial institutions to keep records and file reports that 
are determined to have a high degree of usefulness in criminal, tax, 
and regulatory matters, or in the conduct of intelligence or counter-
intelligence activities to protect against international terrorism, and 
to implement AML programs and compliance procedures.\2\ Regulations 
implementing the BSA appear at 31 CFR chapter X. The authority of the 
Secretary to administer the BSA has been delegated to the Director of 
FinCEN.\3\
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    \2\ Section 358 of the USA PATRIOT Act added language expanding 
the scope of the BSA to intelligence or counter-intelligence 
activities to protect against international terrorism. Section 6101 
of the AML Act added language further expanding the scope of the BSA 
but did not amend these longstanding purposes.
    \3\ Treasury Order 180-01 (re-affirmed Jan. 14, 2020).
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    31 U.S.C. 5318(j) prohibits covered financial institutions \4\ from 
maintaining correspondent accounts in the United States for, or on 
behalf of, foreign banks that do not have a physical presence in any 
country. In addition, under 31 U.S.C. 5318(k), a covered financial 
institution maintaining a correspondent account in the United States 
for a foreign bank, must retain records identifying (i) the owners of 
record and the beneficial owners of the foreign bank, and (ii) the name 
and address of a person residing in the United States who is authorized 
to accept service of legal process for the foreign bank. The 
regulations implementing 31 U.S.C. 5318(j) and 31 U.S.C. 5318(k) appear 
at 31 CFR 1010.630.
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    \4\ A covered financial institution is any financial institution 
described in subparagraphs (A) through (G) of 31 U.S.C. 5312(a)(2), 
including an insured bank, as defined in section 3(h) of the Federal 
Deposit Insurance Act (12 U.S.C. 1813(h)); a commercial bank or 
trust company; a private banker; an agency or branch of a foreign 
bank in the United States; any credit union; a thrift institution; 
and a broker or dealer registered with the Securities and Exchange 
Commission (SEC) under the Securities Exchange Act of 1934 (15 
U.S.C. 78a et seq.). 31 U.S.C. 5318(j)(1).
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    31 CFR 1010.630(a)(1) prohibits covered financial institutions \5\ 
from establishing, maintaining, administering, or managing 
correspondent accounts \6\ in the United States for, or on behalf of, 
foreign shell banks.\7\ Covered financial institutions must take 
reasonable steps to ensure that any correspondent account managed by a 
covered financial institution in the United States is not being used by 
a foreign bank \8\ to indirectly provide banking services to a foreign 
shell bank.\9\
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    \5\ See 31 CFR 1010.605(e)(2) for the definition of a covered 
financial institution for purposes of 31 CFR 1010.630: (i) An 
insured bank (as defined in section 3(h) of the Federal Deposit 
Insurance Act (12 U.S.C. 1813(h))); (ii) a commercial bank or trust 
company; (iii) a private banker; (iv) an agency or branch of a 
foreign bank in the United States; (v) a credit union; (vi) a 
savings association; (vii) a corporation acting under section 25A of 
the Federal Reserve Act (12 U.S.C. 611 et seq.); and (viii) a broker 
or dealer in securities registered, or required to be registered, 
with the Securities and Exchange Commission under the Securities 
Exchange Act of 1934 (15 U.S.C. 78a, et seq.), except persons who 
register pursuant to section 15(b)(11) of the Securities Exchange 
Act of 1934.
    \6\ 31 CFR 1010.605(c). For purposes of 31 CFR 1010.630, a 
correspondent account is defined as an account established for a 
foreign bank to receive deposits from, or to make payments or other 
disbursements on behalf of, the foreign bank, or to handle other 
financial transactions related to such foreign bank.
    \7\ 31 CFR 1010.605(g). Foreign shell bank means a foreign bank 
without a physical presence in any country.
    \8\ 31 CFR 1010.100(u). A foreign bank is defined as a bank 
organized under foreign law, or an agency, branch or office located 
outside the United States of a bank. The term does not include an 
agent, agency, branch or office within the United States of a bank 
organized under foreign law.
    \9\ 31 CFR 1010.630(a)(1)(iii) clarifies that covered financial 
institutions are not prohibited from providing correspondent account 
or banking services to a regulated affiliate.
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    31 CFR 1010.630(a)(2) implements 31 U.S.C. 5318(k) and requires 
covered financial institutions that maintain correspondent accounts in 
the United States for foreign banks to retain records in the United 
States identifying: (i) The owners of each such foreign bank whose 
shares are not publicly traded,\10\ with one exception; \11\ and (ii) 
the name and street address of a person who resides in the United 
States and is authorized, and has agreed, to be an agent to accept 
service of legal process for records regarding each such account.
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    \10\ According to 31 CFR 1010.630(a)(2)(iii), publicly traded 
refers to shares that are traded on an exchange or on an organized 
over-the-counter market that is regulated by a ``foreign securities 
authority'' as defined in section 3(a)(50) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78C(a)(50)).
    \11\ According to 31 CFR 1010.630(2)(ii), a covered financial 
institution is not required to maintain records of the owner of a 
non-publicly traded foreign bank if the foreign bank is required to 
file with the Federal Reserve Board a Form FR-Y that identifies the 
current owners of the foreign bank.
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    31 CFR 1010.630(b) clarifies that a covered financial institution 
will be deemed to be in compliance with the requirements of 31 CFR 
1010.630(a) with respect to a foreign bank if the covered financial 
institution obtains, at least once every three years, a certification 
or recertification from the foreign bank. FinCEN has developed an 
optional certification form \12\ that includes a request to the foreign 
bank for the information required under 31 CFR 1010.630(a). Covered 
financial

[[Page 7921]]

institutions may use the certification form to obtain the necessary 
information for an initial certification and a recertification.
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    \12\ Available at https://www.fincen.gov/sites/default/files/shared/Certification%20Regarding%20Correspondent%20Accounts%20for%20Foreign%20Banks.pdf.
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    31 CFR 1010.630(c) requires a covered financial institution to 
request that a foreign bank verify or correct the information provided 
in such bank's certification or recertification, if the covered 
financial institution knows, suspects, or has reason to suspect that 
such information is incorrect or no longer accurate. Additionally, the 
covered financial institution may take other appropriate measures to 
ascertain the accuracy of the information or obtain the correct 
information.
    If a covered financial institution has not obtained a 
certification, recertification, or information needed for a 
certification or recertification within 30 calendar days after the date 
the account is established, and at least once every three years 
thereafter, the covered financial institution must close all such 
foreign bank's correspondent accounts within a commercially reasonable 
time, and must restrict the foreign bank's ability to execute any new 
transactions other than those necessary to close the account.\13\ 
Furthermore, if a covered financial institution conducting an interim 
verification pursuant to 31 CFR 1010.630(c), has not obtained 
verification of the information or corrected information within 90 
calendar days after the date of undertaking the interim verification, 
the covered financial institution must follow the same account closure 
procedures set out above.\14\
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    \13\ 31 CFR 1010.630(d)(2).
    \14\ 31 CFR 1010.630(d)(3).
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    31 CFR 1010.630(d)(4) prohibits covered financial institutions 
from: (i) Re-establishing any account closed pursuant to 31 CFR 
1010.630(d); and (ii) establishing any other correspondent account with 
the foreign bank whose account was closed, unless the foreign bank 
provides the appropriate certification or recertification. 31 CFR 
1010.630(d)(5) states that a covered financial institution will not be 
held liable for terminating a correspondent account in accordance with 
31 CFR 1010.630(d).
    31 CFR 1010.630(e) requires covered financial institutions to 
retain any original document provided by a foreign bank, and the 
original or a copy of any document otherwise relied upon by a covered 
financial institution for purposes of complying with 31 CFR 1010.630, 
for at least five years after the date that a covered financial 
institution no longer maintains any correspondent account for such 
foreign bank.

II. Paperwork Reduction Act of 1995 (PRA) \15\
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    \15\ Public Law 104-13, 44 U.S.C. 3506(c)(2)(A).
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    Title: Prohibition on correspondent accounts for foreign shell 
banks; records concerning owners of foreign banks and agents for 
service of legal process (31 CFR 1010.630).
    OMB Control Number: 1506-0043.
    Report Number: Optional form--certification regarding correspondent 
accounts for foreign banks.
    Abstract: FinCEN is issuing this notice to renew the OMB control 
number for regulations prohibiting covered financial institutions from 
maintaining correspondent accounts for foreign shell banks; and 
requiring covered financial institutions to maintain records concerning 
the owners of certain foreign banks, and agents based in the United 
States who have agreed to accept service of legal process for records 
regarding the foreign bank's correspondent accounts.
    Affected Public: Businesses or other for-profit institutions.
    Type of Review:
     Renewal without change of a currently approved information 
collection.
     Propose for review and comment a renewal of the portion of 
the PRA burden that has been subject to notice and comment in the past 
(the ``traditional annual PRA burden'').
     Propose for review and comment a future expansion of the 
scope of the PRA burden (the ``supplemental annual PRA burden'').
    Frequency: As required.
    Estimated Number of Respondents: 8,696 covered financial 
institutions maintain correspondent accounts with foreign 
banks.16 17 
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    \16\ Data are from the Federal Reserve's Structured Data for 
U.S. Banking Offices (see FRB: Structure Data for U.S. Banking 
Offices of Foreign Entities (federalreserve.gov)) and quarterly call 
report bank data (specifically, Schedule RC-E: Deposit liabilities, 
line 5: liabilities of banks in foreign countries) from the 
Financial Institution Retrieval Data System (FINDRS). Using these 
two sources, FinCEN determines that as of Q3 2021, approximately 
5,164 banking organizations (national and state banks, trusts, 
thrifts and savings and loans, branches and agencies of foreign 
banking organizations, representative offices, Edge Act 
corporations, and agreement corporations) will be affected by this 
rule on any given year. Specifically, we determine that there are 
approximately: 190 Branches and agencies of foreign banks; 115 
representative offices, Edge Act corporations, and agreement 
corporations; and 4,859 U.S. banks (national and state chartered, 
trusts, savings and loans, thrifts) that report values for deposit 
liabilities of banks in foreign countries. Deposit liabilities in a 
foreign country is an indication that a bank maintains at least one 
correspondent account with a foreign financial institution.
    \17\ According to the Securities and Exchange Commission (SEC), 
as of March 31, 2021, there were 3,532 brokers or dealers in 
securities registered with the SEC. FinCEN conservatively estimates 
that each of these brokers or dealers in securities maintain at 
least one correspondent account with a foreign financial 
institution.
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    Estimated Recordkeeping Burden:
    In Part 1, FinCEN proposes for review and comment a renewal of the 
estimate of the traditional annual PRA hourly burden, which includes a 
scope and methodology similar to that used in the past, with the 
incorporation of a more robust cost estimate. The scope and methodology 
used in the past was limited to estimating the time necessary for a 
covered financial institution to: (i) Obtain a certification form from 
a foreign bank; (ii) obtain a recertification form from a foreign bank; 
and (iii) maintain records provided by a foreign bank for the 
certification or recertification. In Part 2, FinCEN proposes for review 
and comment a methodology to estimate the hourly burden and the cost of 
a future estimate of a supplemental annual PRA burden that includes the 
burden and cost of (i) conducting due diligence on correspondent 
accounts to determine if an interim verification is warranted; (ii) 
conducting an interim verification; and (iii) determining if closing a 
correspondent account is warranted. Finally, in Part 3, FinCEN solicits 
input from the public about: (a) The accuracy of the estimate of the 
traditional annual PRA burden; (b) the additional steps proposed to be 
included in the future supplemental annual PRA burden; (c) the 
criteria, metrics, and most appropriate questions FinCEN should 
consider when researching the information to estimate the future 
traditional and supplemental annual PRA burden, according to the 
methodology proposed; and (d) any other comments about the regulations 
and the current and proposed future hourly burden and cost estimates of 
these requirements.

Part 1. Traditional Annual PRA Burden and Cost

    There are practical challenges to determining the total number of 
covered financial institutions that maintain correspondent accounts for 
foreign banks, as well as estimating the total number of correspondent 
accounts for foreign banks that each of those covered financial 
institutions maintains. In addition, there are practical challenges in 
estimating how many covered financial institutions need to obtain 
certification or recertification forms from foreign banks annually, 
along with estimating how often covered financial

[[Page 7922]]

institutions need to conduct interim verifications for foreign banks 
for which they suspect the current information is no longer correct. 
Further, FinCEN cannot estimate how frequently covered financial 
institutions need to determine if correspondent account closure is 
necessary. Because of these challenges, in the past FinCEN has 
generally estimated the number of covered financial institutions that 
maintain correspondent accounts for foreign banks, and limited the 
burden estimate to the annual burden on covered financial institutions 
to obtain certification forms and recertification forms, and maintain 
records of the forms and any supporting documentation provided by 
foreign banks.\18\
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    \18\ When FinCEN renewed OMB control number 1506-0043 in 2018 it 
estimated that there were 2,000 coved financial institutions with 
correspondent accounts for 9,000 foreign banks. See 83 FR 42555, 
Aug. 22, 2018.
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    FinCEN estimates that the annual hourly burden for a covered 
financial institution to obtain and maintain an initial certification 
form from a foreign bank for which it maintains a correspondent account 
is 15 hours. This estimate covers the burden to a covered financial 
institution to: (i) Obtain assurances from the foreign bank that it is 
not providing banking services, directly or indirectly, to a foreign 
shell bank; (ii) obtain ownership information from the foreign bank, if 
necessary; (iii) obtain the name of an agent based in the United States 
who has agreed to accept service of legal process for records regarding 
such correspondent account; (iv) review all documentation submitted by 
the foreign bank; and (v) maintain records of all documentation 
associated with the certification process for the foreign bank.\19\ As 
noted above, FinCEN maintains an optional certification form that a 
covered financial institution can send to a foreign bank to obtain all 
of the information noted directly above, as required under 31 CFR 
1010.630(a).
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    \19\ The estimated annual recordkeeping burden associated with 
certification and recertification, which requires that a covered 
financial institution maintain such records for five years after a 
foreign bank's correspondent account is closed, is incorporated 
within the estimates for both certification and recertification.
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    FinCEN estimates the annual hourly burden for a covered financial 
institution to obtain and maintain a recertification form from a 
foreign bank for which it maintains a correspondent account is also 15 
hours. FinCEN believes the hourly burden estimate for a recertification 
is the same as for a certification because the covered financial 
institution can use the same certification form to reconfirm all of the 
information required in the initial certification.\20\
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    \20\ When FinCEN renewed OMB control number 1506-0043 in 2018 
the estimate included an annual estimate of the following three 
items: (i) 20 hours to complete a certification for a foreign bank; 
(ii) 5 hours to complete a recertification for a foreign bank; and 
(iii) 9 hours to maintain records on the foreign bank's 
certification/recertification. In this notice, FinCEN has revised 
its estimate to incorporate the recordkeeping component of the 
burden estimate within the certification and recertification 
process. FinCEN also has revised its assessment of the time 
necessary to conduct a recertification, as the process is identical 
to a certification. For those reasons, FinCEN is estimating the 
burden for a certification and corresponding recordkeeping is 15 
hours; and the burden for a recertification and corresponding 
recordkeeping is also 15 hours.
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    As noted above, a covered financial intuition is required to obtain 
an initial certification and recertification every three years from 
each foreign bank for which it maintains a correspondent account. 
FinCEN estimates that there are approximately 8,696 covered financial 
institutions that maintain at least one correspondent account for a 
foreign bank. FinCEN is using this number to approximate the number of 
certifications and recertifications covered financial institutions need 
to conduct annually.
    FinCEN does not have a way to determine the total number of 
correspondent accounts each covered financial institution maintains for 
foreign banks. In addition, there are practical challenges in 
estimating how often a covered financial institution needs to obtain 
certification or recertification forms from foreign banks annually, 
because certifications are only required when a new correspondent 
account is opened and recertifications are only required every three 
years. For those reasons, FinCEN estimates that each covered financial 
institution will conduct one certification and one recertification 
annually, for two of the foreign banks for which it maintains 
correspondent accounts. FinCEN recognizes that some covered financial 
institutions may only maintain a few correspondent accounts for foreign 
banks, while other covered financial institutions may maintain multiple 
correspondent accounts for foreign banks.
    FinCEN's estimate of the traditional annual PRA burden, therefore, 
is 260,880 hours, as detailed in Table 1 below:

        Table 1--Hourly Burden for Each Covered Financial Institution To Obtain One Certification and One
                   Recertification Annually, Along With the Corresponding Recordkeeping Burden
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 Estimated number  Hourly burden to obtain and record a     Total burden hours for covered
   of  covered        certification or recertification     financial  institutions to obtain      Grand total
    financial                per foreign bank                and record certification  and       annual burden
institutions with --------------------------------------       recertification annually        hours for covered
    one or more                                         --------------------------------------     financial
  correspondent    Certification and   Recertification                                          institutions to
   accounts for       recordkeeping   and recordkeeping  Certification and   Recertification     comply with 31
  foreign banks        (in hours)         (in hours)        recordkeeping   and recordkeeping     CFR 1010.630
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          8,696                 15                 15            130,440            130,440            260,880
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    To calculate the hourly costs of the burden estimate, FinCEN 
identified six roles and corresponding staff positions involved in 
obtaining, reviewing, and maintaining certification and recertification 
forms from foreign banks: (i) General oversight (providing institution-
level process approval); (ii) general supervision (providing process 
oversight); (iii) direct supervision (reviewing operational-level work 
and cross-checking all or a sample of the work product against 
supporting documentation); (iv) clerical work (engaging in research and 
administrative review, and recordkeeping); (v) legal compliance 
(ensuring the certification/recertification documents are in legal 
compliance); and (vi) computer support (ensuring certification/
recertification documents can be properly stored and retrieved 
electronically if desired).
    FinCEN calculated the fully-loaded hourly wage for each of these 
six roles by using the mean wage estimated by the U.S. Bureau of Labor 
Statistics

[[Page 7923]]

(BLS),\21\ and computing an additional benefits cost as follows:
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    \21\ The U.S. Bureau of Labor Statistics, May 2020 OEWS National 
Industry-Specific Occupational Employment and Wage Estimates 
(bls.gov). The most recent data from the BLS corresponds to May 
2021. For the benefits component of total compensation, see U.S. 
Bureau of Labor Statistics, ``Table 9. Private industry workers, by 
major occupational group: employer costs per hour worked for 
employee compensation and costs as a percentage of total 
compensation'', available at Employer Costs for Employee 
Compensation Historical Tables--June 2021 (bls.gov). The ratio 
between benefits and wages for private industry workers is $10.83 
(hourly benefits)/$25.80 (hourly wages) = 0.42, as of March 2021. 
The benefit factor is 1 plus the benefit/wages ratio, or 1.42. 
Multiplying each hourly wage by the benefit factor produces the 
fully-loaded hourly wage per position.
    \22\ For each occupation, FinCEN took the average of reported 
mean hourly wage across 9 affected financial industries (as measured 
at the most granular NAICS code available, whether at the 2, 3, 4 or 
5 digit NAICS code; see the BLS May 2020 OEWS National Industry-
Specific Occupational Employment and Wage Estimates (bls.gov)).
    \23\ General oversight may include board of directors/trustees 
approval.
    \24\ Chief executive officer is the highest paid category in the 
BLS Occupational Employment Statistics. For that reason, FinCEN is 
conservatively estimating the highest wage rate available for its 
cost analysis.

  Table 2--Fully-Loaded Hourly Wage by Role and BLS Job Position for All Financial Institutions Covered By This
                                                     Notice
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                                                                    Mean hourly                    Fully-loaded
             Role                  BLS--code        BLS--name        wage \22\    Benefit factor    hourly wage
----------------------------------------------------------------------------------------------------------------
General oversight \23\........         11-1010  Chief Executive          $107.12            1.42         $152.11
                                                 \24\.
General supervision...........         11-3031  Financial                  74.59            1.42          105.92
                                                 Manager.
Direct supervision............         13-1041  Compliance                 35.81            1.42           50.85
                                                 Officer.
Clerical work (research,               43-3099  Financial Clerk.           23.27            1.42           33.04
 review, and recordkeeping).
Legal compliance..............         23-1010  Lawyers and                85.66            1.42          121.64
                                                 Judicial Law
                                                 Clerks.
Computer support..............         11-3021  Computer and               77.77            1.42          110.43
                                                 Information
                                                 Systems
                                                 Managers.
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    FinCEN estimates that, in general and on average,\25\ each role 
would spend different amounts of time on each portion of the 
traditional annual PRA burden, as follows:
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    \25\ By ``in general,'' FinCEN means without regard to outliers 
(e.g., financial institutions that maintain correspondent accounts 
for foreign banks with complexities that are uncommonly higher or 
lower than those of the population at large). By ``on average,'' 
FinCEN means the mean of the distribution of each subset of the 
population.

  Table 3--Weighted Average Hourly Cost of Foreign Bank Certifications/
                   Recertifications and Recordkeeeping
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                  Role                        % Time        Hourly cost
------------------------------------------------------------------------
General Oversight.......................           16.67          $25.35
General Supervision.....................           16.67           17.65
Direct Supervision......................           16.67            8.48
Clerical Work...........................           16.67            5.51
Legal Compliance........................           16.67           20.27
Computer Support........................           16.67           18.41
                                         -------------------------------
    Equal Weighted Average Hourly Cost..  ..............         * 95.67
------------------------------------------------------------------------
\*\ $95.67 rounded to $96.00.

    The total estimated cost of the traditional annual PRA burden is 
$25,044,480, as reflected in Table 4 below:

                              Table 4--Total Cost of Traditional Annual PRA Burden
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                              Steps                                Hourly burden    Hourly cost     Total cost
----------------------------------------------------------------------------------------------------------------
Time taken for covered financial institutions to obtain             \26\ 130,440     \27\ $96.00     $12,522,240
 certification requirements from foreign banks, including
 recordkeeping. (divided between the roles listed in Table 2)...
Time taken for covered financial institutions to obtain             \28\ 130,440      \29\ 96.00      12,522,240
 recertification requirements from foreign banks, including
 recordkeeping. (divided between the roles listed in Table 2)...
                                                                 -----------------------------------------------
    Total cost..................................................  ..............  ..............      25,044,480
----------------------------------------------------------------------------------------------------------------

Part 2. Supplemental Annual PRA Burden
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    \26\ See Table 1.
    \27\ See Table 3.
    \28\ See Table 1.
    \29\ See Table 3.

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[[Page 7924]]

    In the future, FinCEN intends to add a supplemental annual PRA 
burden calculation that will include the estimated hourly burden and 
cost to a covered financial institution to: (i) Conduct due diligence 
over correspondent accounts maintained for foreign banks to determine 
if an interim verification is warranted; (ii) conduct an interim 
verification; and (iii) determine if closing a correspondent account is 
warranted.
    As noted in Section I above, if a covered financial institution 
knows, suspects, or has reason to suspect that any information provided 
by a foreign bank in its certification or recertification is incorrect 
or no longer accurate, the covered financial institution must request 
that the foreign bank verify or correct the information. Additionally, 
the covered financial institution may take other appropriate measures 
to ascertain the accuracy of the information or obtain the correct 
information.
    As also noted in Section I above, if a covered financial 
institution has not obtained a certification, recertification, or 
documentation of the information necessary for the certification or 
recertification within 30 calendar days after the date the account is 
established, and at least once every three years thereafter, the 
covered financial institution must close all correspondent accounts 
with such foreign bank within a commercially reasonable time, and 
restrict the foreign bank from engaging in transactions, other than 
transactions necessary to close the account. Additionally, if a covered 
financial institution needs to conduct an interim verification and has 
not obtained, from the foreign bank or otherwise, verification of the 
information or corrected information within 90 calendar days after the 
date of undertaking the interim verification, the covered financial 
institution must follow the same account closure procedures.
    On September 29, 2020, FinCEN issued a notice and request for 
comment on the proposed renewal without change of the due diligence 
programs for correspondent accounts for foreign financial institutions 
and for private bank accounts.\30\ That notice included renewing the 
OMB control number associated with 31 CFR 1010.610 (due diligence 
programs for foreign financial institutions),\31\ and outlined a future 
supplemental annual PRA burden calculation to include the estimated 
hourly burden and cost to maintain records and document compliance with 
the due diligence procedures and enhanced due diligence (EDD) 
procedures for foreign correspondent accounts.
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    \30\ See 85 FR 61104, Sept. 29, 2020.
    \31\ OMB control number 1506-0046.
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    Under 31 CFR 1010.610(a), covered financial institutions are 
required to establish due diligence policies, procedures, and controls 
that include each of the following for any correspondent account 
established, maintained, administered, or managed: (i) Determining 
whether any such foreign correspondent account is subject to EDD; (ii) 
assessing the money laundering risks presented by each such foreign 
correspondent account; and (iii) applying risk-based procedures and 
controls to each such foreign correspondent account reasonably designed 
to detect and report known or suspected money laundering activity, 
including a periodic review of the correspondent account activity 
sufficient to determine consistency with information obtained about the 
type, purpose, and anticipated activity of the account.
    FinCEN believes that in the process of complying with 31 CFR 
1010.610(a), covered financial institutions would identify instances in 
which an interim verification is warranted, as a result of receiving 
identifying information about a foreign bank for which the covered 
financial institution maintains a correspondent account that is no 
longer correct or accurate. Further FinCEN believes that the due 
diligence being conducted to comply with 31 CFR 1010.610(a) would be 
coordinated with the identification of foreign banks that have not 
provided the required certification, recertification, or interim 
verification within the required timeframes, resulting in the closure 
of correspondent accounts with such foreign banks consistent with 31 
CFR 1010.610(d).
    FinCEN assesses that the provisions of 31 CFR 1010.630 are in large 
part conducted in connection with the due diligence and EDD covered 
financial institutions conduct on foreign correspondent accounts as 
required by 31 CFR 1010.610. In future supplemental annual PRA burden 
estimates for 31 CFR 1010.610 and 31 CFR 1010.630, FinCEN will consider 
whether the burden estimates for these two regulatory requirements 
should be linked and estimated together.
    FinCEN does not have the necessary information to provide a 
tentative estimate for these supplemental PRA hourly burdens and costs 
within the current notice. In addition, FinCEN does not have all the 
necessary information to precisely estimate the traditional annual PRA 
burden. For that reason, FinCEN is relying to some extent on estimates 
used in prior renewals of this OMB control number and the applicable 
regulations. FinCEN further recognizes that after receiving public 
comments as a result of this notice, future traditional annual PRA 
hourly burden and cost estimates may vary significantly. FinCEN intends 
to conduct more granular studies of the actions included in the 
proposed scope of the supplemental annual PRA burden in the near 
future, to arrive at more precise estimates of net BSA hourly burden 
and cost.\32\ The data obtained in these studies also may result in a 
significant variation of the estimated traditional annual PRA burden.
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    \32\ Net hourly burden and cost are the burden and cost a 
financial institution incurs to comply with requirements that are 
unique to the BSA, and that do not support any other business 
purpose or regulatory obligation of the financial institution. 
Burden for purposes of the PRA does not include the time and 
financial resources needed to comply with an information collection, 
if the time and resources are for things a business (or other 
person) does in the ordinary course of its activities if the agency 
demonstrates that the reporting activities needed to comply are 
usual and customary. 5 CFR 1320.3(b)(2). For example, depending on 
the nature of the correspondent account, a covered financial 
institution may be collecting and maintaining some of the same 
information on the foreign bank correspondent account holder as is 
required by 31 CFR 1010.630, in order to satisfy other obligations 
including: (i) Protecting the financial institution from fraud 
against itself or its customers; (ii) complying with other non-BSA 
regulatory requirements such as those imposed by the specific 
Federal functional regulator; or (iii) improving the financial 
institution's marketing efforts, or the credit analysis of any 
lending facilities granted to the foreign bank.
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    Estimated Recordkeeping Burden: The average estimated annual PRA 
burden, measured in hours per correspondent account maintained by a 
covered financial institution for a foreign bank, is 15 hours per 
account for the purpose of fulfilling the covered financial 
institution's initial certification and corresponding recordkeeping 
obligations, and 15 hours per account for the purpose of fulfilling the 
covered financial institution's recertification and recordkeeping 
requirements every three years.
    Estimated Number of Respondents/Responses: 8,696 covered financial 
institutions maintain correspondent accounts for foreign banks.
    Estimated Total Annual Recordkeeping Burden: The estimated

[[Page 7925]]

total annual PRA burden is 260,880 hours, as set out in Table 1.
    Estimated Total Annual Recordkeeping Cost: The estimated total 
annual PRA cost is $25,044,480, as set out in Table 4.
    An Agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless the collection of 
information displays a valid OMB control number. Records required to be 
retained under the BSA must be retained for five years.

Part 3--Request for Comments

    (a) Specific request for comments on the traditional annual PRA 
hourly burden and cost.
    FinCEN invites comments on any aspect of the traditional annual PRA 
burden, as set out in Part 1 of this notice. In particular, FinCEN 
seeks comments on the adequacy of: (i) FinCEN's assumptions underlying 
its estimate of the burden; (ii) the estimated number of hours required 
by each portion of the burden; and (iii) the organizational levels of 
the covered financial institution engaged in each portion of the 
burden, their estimated hourly remuneration, and the estimated 
proportion of participation by each role. FinCEN encourages commenters 
to include any publicly available sources for alternative estimates or 
methodologies.
    (b) Specific request for comments on the proposed criteria for 
determining the scope of a supplemental annual PRA hourly burden and 
cost estimate.
    FinCEN invites comments on any aspect of the criteria for a future 
estimate of the supplemental annual PRA burden, as set out in Part 2 of 
this notice.
    (c) Specific request for comments on the appropriate criteria and 
methodology required to obtain information to more precisely estimate 
the supplemental annual PRA hourly burden and cost.
    FinCEN invites comments on the most appropriate and comprehensive 
way to ask covered financial institutions about the annual hourly 
burden and cost attributable solely to: (i) Conducting due diligence 
over correspondent accounts maintained for foreign banks to determine 
if an interim verification is warranted; (ii) conducting an interim 
verification; and (iii) determining if closing a correspondent account 
is warranted.
    The supplemental annual PRA hourly burden and cost estimate of the 
recordkeeping necessary to comply with identifying and conducting 
interim verifications, and identifying and closing correspondent 
accounts, as appropriate, must take into consideration only the effort 
involved in obtaining those data elements that are used exclusively for 
complying with requirements under 31 CFR 1010.630. Given the complexity 
of determining what portion of the effort to include in the estimate, 
FinCEN seeks comments from the public regarding any questions we should 
consider posing in future notices, in addition to the specific 
questions for comment outlined directly below. Also, due to the evident 
difficulty involved in estimating: (i) The total number of covered 
financial institutions that maintain correspondent accounts for foreign 
banks; (ii) the number of such correspondent accounts per covered 
financial institution; and (iii) the frequency of certifications, 
recertifications, interim verifications, and account closures per 
covered financial institution, FinCEN welcomes any suggestions as to 
how to derive these estimates by using publicly available information.
    (d) Specific questions for comment associated with certification 
and recertification of foreign banks' records:

 Correspondent Accounts for Foreign Banks

     On average, how many correspondent accounts does your 
financial institution maintain for foreign banks?
     Is compliance with 31 CFR 1010.630 conducted in 
conjunction with your financial institution's overall due diligence 
over correspondent accounts for foreign financial institutions, as 
required by 31 CFR 1010.610?
     On average, of the correspondent accounts maintained by 
your financial institution for foreign banks, how many are not publicly 
traded or do not file a Form FR-Y7 with the Federal Reserve?
     What steps does your financial institution take to 
ascertain whether a foreign bank is publicly traded or has filed a Form 
FR-7?
     Does your financial institution have a process to track 
correspondent accounts for foreign banks for reasons other than to 
comply with the BSA requirements?

 Certification and Recertification Procedures

     Does your financial institution obtain an initial 
certification during customer onboarding of a foreign bank?
     Does your financial institution open a correspondent 
account for a foreign bank, if it fails to provide the information 
required as part of the initial certification form at the time of 
onboarding?
     Does your financial institution track when foreign banks 
are required to recertify?
     Does your financial institution require foreign banks to 
certify or recertify as part of the periodic review or EDD process, as 
required under 31 CFR 1010.610?
     At what point prior to the due date of the recertification 
does your financial institution request recertification from a foreign 
bank?
     Does your financial institution obtain recertification 
more often than every three years?
     Does your financial institution use the sample 
certification form provided by FinCEN, or does your financial 
institution use a bespoke form or other method to obtain a statement of 
certification?
     On average, how long does it take your financial 
institution to obtain certification or recertification from a foreign 
bank for which you maintain a correspondent account?
     On average, how long does it take your financial 
institution to review the information provided by a foreign bank as 
part of its certification or recertification?
     Does senior management play a role in reviewing the 
information that your financial institution obtains from foreign 
bank(s) as part of certification or recertification?

 Interim Verification

     If your financial institution has reason to suspect that 
the information provided by a foreign bank in its certification or 
recertification is incorrect, what steps are taken by your financial 
institution to obtain the correct information?
     If it is determined by your financial institution that the 
information obtained for a foreign bank during the certification or 
recertification is incorrect, is senior management notified?
     What steps are taken by the financial institution with 
respect to the foreign bank's correspondent account if the correct 
information cannot be obtained?
     On average, on an annual basis, how many interim 
verifications does your financial institution need to conduct, because 
it suspects a foreign bank's current certification information is no 
longer correct? How long does the process take?

 Account Closure

     Are there instances where a foreign bank wishes to 
reestablish a correspondent banking relationship with your financial 
institution after the foreign bank's account was closed due to a 
failure to certify or recertify?

[[Page 7926]]

     Does your financial institution have a review and approval 
process involving senior management to close a foreign bank's 
correspondent account if it fails to certify or recertify?
    (e) General request for comments.
    Comments submitted in response to this notice will be summarized 
and/or included in the request for OMB approval. All comments will 
become a matter of public record. Comments are invited on: (i) Whether 
the collection of information is necessary for the proper performance 
of the functions of the agency, including whether the information shall 
have practical utility; (ii) the accuracy of the agency's estimate of 
the burden of the collection of information; (iii) ways to enhance the 
quality, utility, and clarity of the information to be collected; (iv) 
ways to minimize the burden of the collection of information on 
respondents, including through the use of automated collection 
techniques or other forms of information technology; and (v) estimates 
of capital or start-up costs and costs of operation, maintenance, and 
purchase of services to provide information.

Himamauli Das,
Acting Director, Financial Crimes Enforcement Network.
[FR Doc. 2022-02885 Filed 2-9-22; 8:45 am]
BILLING CODE P
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