[Federal Register Volume 76, Number 84 (Monday, May 2, 2011)]
[Proposed Rules]
[Pages 24410-24421]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-10482]


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DEPARTMENT OF THE TREASURY

Financial Crimes Enforcement Network

31 CFR Part 1060

RIN 1506-AB12


Financial Crimes Enforcement Network; Comprehensive Iran 
Sanctions, Accountability, and Divestment Act of 2010 (``CISADA'') 
Reporting Requirements Under Section 104(e)

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

ACTION: Notice of proposed rulemaking.

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SUMMARY: FinCEN, to comply with the congressional mandate to prescribe 
regulations under section 104(e) of the Comprehensive Iran Sanctions, 
Accountability, and Divestment Act of 2010 (``CISADA'') and consistent 
with its statutory mission under 31 U.S.C. 310, is proposing to issue 
regulations that would require a U.S. bank that maintains a 
correspondent account for a foreign bank to inquire of the foreign 
bank, and report to FinCEN, with respect to whether the foreign bank 
maintains a correspondent account for, or has processed one or more 
transfers of funds within the preceding 90 calendar days, other than 
through a correspondent account, related to any financial institution 
designated by the U.S. Government in connection with Iran's 
proliferation of weapons of mass destruction or delivery systems for 
weapons of mass destruction, or in connection with Iran's support for 
international terrorism. In addition, FinCEN is proposing to require a 
U.S. bank that maintains a correspondent account for a foreign bank to 
inquire of the foreign bank, and report to FinCEN, with respect to 
whether the foreign bank has processed one or more transfers of funds 
within the preceding 90 calendar days related to Iran's Islamic 
Revolutionary Guard Corps (``IRGC'') or any of its agents or affiliates 
designated by the U.S. Government. Under the proposed regulations, U.S. 
banks will only be required to report this information to FinCEN upon 
receiving a specific written request from FinCEN.

DATES: Written comments are welcome and must be received on or before 
June 1, 2011.

ADDRESSES: FinCEN: You may submit comments, identified by Regulatory 
Identification Number (RIN) 1506-AB12, by any of the following methods:
     Federal E-rulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments. Include 1506-AB12 and 
the caption ``Attention: CISADA Reporting Requirements Under Section 
104(e)'' in the submission. Refer to Docket Number FINCEN-2011-0002.
     Mail: FinCEN, P.O. Box 39, Vienna, VA 22183. Include 1506-
AB12 and the caption ``Attention: CISADA Reporting Requirements Under 
Section 104(e)'' in the body of the text. Please submit comments by one 
method only. Comments submitted in response to this notice of proposed 
rulemaking will become a matter of public record. Therefore, you should 
submit only information that you wish to make publicly available.
    Inspection of comments: Public comments received electronically or 
through the U.S. Postal Service in response to a notice and request for 
comment will be made available for public review as soon as possible on 
http://www.regulations.gov. Comments received may be physically 
inspected in the FinCEN reading room located in Vienna, Virginia. 
Reading room appointments are available weekdays (excluding holidays) 
between 10 a.m. and 3 p.m., by calling the Disclosure Officer at (703) 
905-5034 (not a toll-free call).

FOR FURTHER INFORMATION CONTACT: The FinCEN regulatory helpline at 
(800) 949-2732 and select Option 8.

SUPPLEMENTARY INFORMATION:

I. Statutory Provisions

    On July 1, 2010, the President signed CISADA \1\ into law. Section 
104(c) of CISADA requires the Secretary of the Treasury (``the 
Secretary'') to prescribe regulations to prohibit, or impose strict 
conditions on, the opening or maintaining in the United States of 
correspondent accounts and payable-through accounts for foreign 
financial institutions that the Secretary finds knowingly engage in 
sanctionable activities described in section 104(c)(2) of CISADA. The 
relevant statutory language reads as follows:
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    \1\ Public Law 111-195, 124 Stat. 1312 (2010).

    ``(c) PROHIBITIONS AND CONDITIONS WITH RESPECT TO CERTAIN 
ACCOUNTS HELD BY FOREIGN FINANCIAL INSTITUTIONS.--
    (1) IN GENERAL.--Not later than 90 days after the date of the 
enactment of this Act, the Secretary of the Treasury shall prescribe 
regulations to prohibit, or impose strict conditions on, the opening 
or maintaining in the United States of a correspondent account or a 
payable-through account by a foreign financial institution that the 
Secretary finds knowingly engages in an activity described in 
paragraph (2).
    (2) ACTIVITIES DESCRIBED.--A foreign financial institution 
engages in an activity described in this paragraph if the foreign 
financial institution--
    (A) facilitates the efforts of the Government of Iran (including 
efforts of Iran's Revolutionary Guard Corps or any of its agents or 
affiliates)--
    (i) to acquire or develop weapons of mass destruction or 
delivery systems for weapons of mass destruction; or
    (ii) to provide support for organizations designated as foreign 
terrorist organizations under section 219(a) of the Immigration and 
Nationality Act (8 U.S.C. 1189(a)) or support for acts of 
international terrorism (as defined in section 14 of the Iran 
Sanctions Act of 1996 (Pub. L. 104-172; 50 U.S.C. 1701 note));
    (B) facilitates the activities of a person subject to financial 
sanctions pursuant to United Nations Security Council Resolution 
1737 (2006), 1747 (2007), 1803 (2008), or 1929 (2010), or any other 
resolution that is agreed to by the Security Council and imposes 
sanctions with respect to Iran;
    (C) engages in money laundering to carry out an activity 
described in subparagraph (A) or (B);
    (D) facilitates efforts by the Central Bank of Iran or any other 
Iranian financial institution to carry out an activity described in 
subparagraph (A) or (B); or
    (E) facilitates a significant transaction or transactions or 
provides significant financial services for--
    (i) Iran's Revolutionary Guard Corps or any of its agents or 
affiliates whose property or interests in property are blocked 
pursuant to the International Emergency Economic Powers Act (50 
U.S.C. 1701 et seq.); or
    (ii) a financial institution whose property or interests in 
property are blocked pursuant to that Act in connection with--
    (I) Iran's proliferation of weapons of mass destruction or 
delivery systems for weapons of mass destruction; or
    (II) Iran's support for international terrorism.
    (3) PENALTIES.--The penalties provided for in subsections (b) 
and (c) of section 206 of the International Emergency Economic

[[Page 24411]]

Powers Act (50 U.S.C. 1705) shall apply to a person that violates, 
attempts to violate, conspires to violate, or causes a violation of 
regulations prescribed under paragraph (1) of this subsection to the 
same extent that such penalties apply to a person that commits an 
unlawful act described in section 206(a) of that Act.''

    On August 16, 2010, the Office of Foreign Assets Control (``OFAC') 
published the Iranian Financial Sanctions Regulations, 31 CFR Part 561 
(the ``IFSR''). Section 561.201 of the IFSR implements section 104(c) 
of CISADA. It states that the Secretary will, consistent with 
authorities under CISADA, prohibit or impose strict conditions on the 
opening or maintaining in the United States of correspondent accounts 
or payable-through accounts for a foreign financial institution that 
the Secretary finds knowingly engages in one or more of the 
sanctionable activities described in section 561.201(a) of the IFSR.
    Section 104(e) of CISADA requires the Secretary to prescribe 
regulations to establish one or more specific requirements for U.S. 
financial institutions maintaining correspondent accounts for foreign 
financial institutions, in connection with the sanctionable activities 
described in section 104(c)(2) of CISADA. The relevant statutory 
language reads as follows:

    ``(e) REQUIREMENTS FOR FINANCIAL INSTITUTIONS MAINTAINING 
ACCOUNTS FOR FOREIGN FINANCIAL INSTITUTIONS.--
    (1) IN GENERAL.--The Secretary of the Treasury shall prescribe 
regulations to require a domestic financial institution maintaining 
a correspondent account or payable-through account in the United 
States for a foreign financial institution to do one or more of the 
following:
    (A) Perform an audit of activities described in subsection 
(c)(2) that may be carried out by the foreign financial institution.
    (B) Report to the Department of the Treasury with respect to 
transactions or other financial services provided with respect to 
any such activity.
    (C) Certify, to the best of the knowledge of the domestic 
financial institution, that the foreign financial institution is not 
knowingly engaging in any such activity.
    (D) Establish due diligence policies, procedures, and controls, 
such as the due diligence policies, procedures, and controls 
described in section 5318(i) of title 31, United States Code, 
reasonably designed to detect whether the Secretary of the Treasury 
has found the foreign financial institution to knowingly engage in 
any such activity.
    (2) PENALTIES.--The penalties provided for in sections 5321(a) 
and 5322 of title 31, United States Code, shall apply to a person 
that violates a regulation prescribed under paragraph (1) of this 
subsection, in the same manner and to the same extent as such 
penalties would apply to any person that is otherwise subject to 
such section 5321(a) or 5322.''

    In order to comply with the congressional mandate to prescribe 
regulations under section 104(e) of CISADA, and consistent with its 
statutory mission under 31 U.S.C. 310, FinCEN is implementing section 
104(e)(1)(B) of CISADA. FinCEN took into consideration the possibility 
of implementing any one or more of the options under section 104(e)(1) 
of CISADA, and determined that implementing section 104(e)(1)(B) is the 
most useful vehicle for effecting the intent of section 104(e) at this 
time. Section 104(e)(1)(B) of CISADA authorizes the Secretary to 
prescribe regulations that require a domestic financial institution 
maintaining a correspondent account in the United States for a foreign 
financial institution to report to the Department of the Treasury 
(``Treasury'') with respect to transactions or other financial services 
provided with respect to sanctionable activities described in section 
104(c)(2) of CISADA that may be carried out by the foreign financial 
institution.
    Section 104(e)(1)(B) of CISADA authorizes Treasury to require a 
domestic financial institution maintaining a correspondent account for 
a foreign financial institution to report to Treasury with respect to 
transactions or other financial services the foreign financial 
institution may provide with respect to sanctionable activities 
described in section 104(c)(2) of CISADA. FinCEN believes that among 
the services included within the concept of ``transactions or other 
financial services provided'' by a foreign financial institution are 
correspondent accounts the foreign financial institution maintains for 
other foreign financial institutions and transfers of funds the foreign 
financial institution processes for other foreign financial 
institutions, individuals, or entities. Because a foreign financial 
institution's provision of correspondent account services and transfer 
of funds services to a financial institution designated by the U.S. 
Government in connection with Iran's proliferation of weapons of mass 
destruction or delivery systems for weapons of mass destruction, or in 
connection with Iran's support for international terrorism may be 
relevant to the sanctionable activities described under section 
104(c)(2) of CISADA, FinCEN is focusing this reporting requirement on 
the provision of information relating to such correspondent accounts 
and transfers of funds.\2\ In addition, because a foreign financial 
institution's provision of transfer of funds services to the IRGC or 
any of its agents or affiliates designated by the U.S. Government may 
also be relevant to the sanctionable activities described under section 
104(c)(2) of CISADA, FinCEN is also focusing this reporting requirement 
on the provision of information relating to such transfers of funds.\3\
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    \2\ See, e.g., CISADA subsection 104(c)(2)(E)(ii), which 
includes focus on the provision by foreign financial institutions of 
significant financial services to financial institutions that are of 
concern under CISADA.
    \3\ See, e.g., CISADA subsection 104(c)(2)(E)(i), which includes 
focus on the provision by foreign financial institutions of 
significant financial services to entities or individuals that are 
of concern under CISADA.
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    FinCEN is proposing to implement section 104(e)(1)(B) of CISADA by 
issuing regulations that would require a bank that maintains a 
correspondent account for a foreign bank to inquire of the foreign 
bank, and report to FinCEN, with respect to whether the foreign bank 
maintains a correspondent account for an Iranian-linked financial 
institution designated under the International Emergency Economic 
Powers Act (``IEEPA''); \4\ whether the foreign bank has processed one 
or more transfers of funds within the preceding 90 calendar days 
related to an Iranian-linked financial institution designated under 
IEEPA, other than through a correspondent account; and whether the 
foreign bank has processed one or more transfers of funds within the 
preceding 90 calendar days related to an IRGC-linked person designated 
under IEEPA.\5\ Specifically, if a bank receives a written request from 
FinCEN and the bank maintains a correspondent account for the foreign 
bank(s) \6\ specified in FinCEN's request, the bank will be required to 
report to FinCEN the following information:
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    \4\ See below Section III.A. for the definition of Iranian-
linked financial institution designated under IEEPA.
    \5\ See below Section III.A. for the definition of IRGC-linked 
person designated under IEEPA.
    \6\ The specific foreign banks about which FinCEN will be 
requesting information will be those foreign banks which are of 
interest to Treasury as they relate to CISADA.
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     The name of any specified foreign bank that certifies that 
it maintains a correspondent account for an Iranian-linked financial 
institution designated under IEEPA, and certain information with 
respect to such account;
     The name of any specified foreign bank that certifies that 
it has processed one or more transfers of funds within the preceding 90 
calendar days related to an Iranian-linked financial institution 
designated under IEEPA, other than

[[Page 24412]]

through a correspondent account, and certain information with respect 
to such transfers of funds;
     The name of any specified foreign bank that certifies that 
it has processed one or more transfers of funds within the preceding 90 
calendar days related to an IRGC-linked person designated under IEEPA, 
and certain information with respect to such transfers of funds;
     The name of any specified foreign bank that certifies that 
it does not maintain a correspondent account for an Iranian-linked 
financial institution designated under IEEPA, and/or it has not 
processed one or more transfers of funds within the preceding 90 
calendar days related to an Iranian-linked financial institution or an 
IRGC-linked person designated under IEEPA; and
     The name of any specified foreign bank for which the bank 
has not been able to establish to its satisfaction that the foreign 
bank does not maintain a correspondent account for an Iranian-linked 
financial institution designated under IEEPA, and/or has not processed 
one or more transfers of funds within the preceding 90 calendar days 
related to an Iranian-linked financial institution or an IRGC-linked 
person designated under IEEPA, together with the reason(s) for this, 
such as the failure of the foreign bank to respond to the inquiry by or 
a request from the bank, the failure of the foreign bank to certify its 
response, or if the bank knows, suspects, or has reason to suspect that 
the certification is incorrect.\7\
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    \7\ If a foreign bank does not respond to an inquiry made by a 
bank under this proposed rulemaking, the bank will be in compliance 
with these proposed reporting requirements so long as the bank 
reports to FinCEN that the foreign bank did not respond to the 
bank's inquiry.
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    In addition, FinCEN is proposing to require a bank to request, upon 
inquiry of a specified foreign bank, that the foreign bank agree to 
notify the bank if the foreign bank subsequently establishes a new 
correspondent account for an Iranian-linked financial institution 
designated under IEEPA at any time within 365 calendar days from the 
date of the foreign bank's initial response, and report such 
information to FinCEN.
    FinCEN is also proposing to require a bank to report to FinCEN 
instances in which the bank does not maintain a correspondent account 
for a foreign bank specified in a written request from FinCEN. This 
requirement will only apply when FinCEN specifically requests in 
writing that the bank report such information. To the extent possible 
and based on all available information, FinCEN intends to send requests 
directly to banks that FinCEN believes may maintain correspondent 
accounts with the specified foreign bank(s). The number of banks that 
receive a request may vary in each specific case, based on the 
availability of information to FinCEN and other circumstances.

II. Background Information

A. 31 CFR Part 561 Iranian Financial Sanctions Regulations--Office of 
Foreign Assets Control

    On August 16, 2010, OFAC published the IFSR, 31 CFR part 561. As 
noted above, section 561.201 of the IFSR implements section 104(c) of 
CISADA. It states that the Secretary will, consistent with authorities 
under CISADA, prohibit or impose strict conditions on the opening or 
maintaining in the United States of correspondent accounts or payable-
through accounts for a foreign financial institution that the Secretary 
finds knowingly engages in one or more of the sanctionable activities 
described in section 561.201(a) of the IFSR. The names of foreign 
financial institutions that are found by the Secretary to knowingly 
engage in such sanctionable activities, and for which U.S. financial 
institutions may not open or maintain correspondent accounts or 
payable-through accounts in the United States, will be published in the 
Federal Register and listed in appendix A to the IFSR. If the Secretary 
decides to impose strict conditions on the opening or maintaining of a 
correspondent account or a payable-through account for a foreign 
financial institution, the actual condition(s) to be imposed will be 
specified upon the identification of the foreign financial institution 
in an order or regulation published in the Federal Register.

B. Use of CISADA Reports

    The reports will be used primarily to provide Treasury with 
potentially useful information from U.S. banks regarding the nature of 
foreign bank activities that may be relevant to CISADA. Based on the 
reports, Treasury officials may decide to take immediate action under 
section 104(c) of CISADA, or, among other things, to consult with those 
foreign banks that maintain correspondent accounts with Iranian-linked 
financial institutions designated under IEEPA, that have processed one 
or more transfers of funds related to an Iranian-linked financial 
institution or an IRGC-linked person designated under IEEPA, or that 
have been unwilling to respond to inquiries from the banks at which the 
foreign banks maintain correspondent accounts. An investigation by OFAC 
into the activities of such foreign banks could result in a finding by 
the Secretary under section 104(c) of CISADA and section 561.201 of the 
IFSR. For example, when a bank reports that a foreign bank maintains a 
correspondent account for an Iranian-linked financial institution 
designated under IEEPA, or has processed one or more transfers of funds 
related to an Iranian-linked financial institution or an IRGC-linked 
person designated under IEEPA, OFAC could use the information to 
corroborate or supplement data derived from other sources and may 
request further information from the foreign bank to clarify whether 
the foreign bank is facilitating significant transactions or providing 
significant financial services for an Iranian-linked financial 
institution or an IRGC-linked person designated under IEEPA. Such 
transactions or services can be the basis for prohibiting or imposing 
strict conditions on the foreign bank's correspondent or payable-
through accounts in the United States under section 104(c) of CISADA 
and section 561.201 of the IFSR.

III. Section-By-Section Analysis

A. General (Sec.  1060.300(a))

    FinCEN proposes to add 31 CFR 1060.300(a). This section would add a 
requirement that upon receiving a written request from FinCEN, a bank 
that maintains a correspondent account for a specified foreign bank 
shall inquire of the foreign bank and report to FinCEN within 30 days, 
to the best of the knowledge of the bank, with respect to any 
correspondent account maintained by such foreign bank for an Iranian-
linked financial institution designated under IEEPA, any transfer of 
funds related to an Iranian-linked financial institution designated 
under IEEPA processed by such foreign bank within the preceding 90 
calendar days, other than through a correspondent account, and any 
transfer of funds related to an IRGC-linked person designated under 
IEEPA processed by such foreign bank within the preceding 90 calendar 
days.
Definitions
Bank
    For the purpose of this proposed rulemaking the term ``bank'' is 
defined in 31 CFR Sec.  1010.100(d). A bank includes each agent, 
agency, branch, or office within the United States of persons doing 
business in one or more of the following capacities: commercial banks 
or trust companies, private banks, savings and loan associations, 
national banks, thrift institutions, credit unions,

[[Page 24413]]

other organizations chartered under banking laws and supervised by 
banking supervisors of any State, and banks organized under foreign 
law.
    FinCEN and Treasury have determined that limiting the reporting 
requirement in this proposed rulemaking to banks will provide useful 
information as it relates to CISADA, while limiting the obligations of 
the financial industry. Although there are other financial institutions 
that could fall within the scope of this rule in light of the breadth 
of the definition of financial institution in CISADA and the breadth of 
the definition of correspondent account, this rule focuses on those 
financial institutions deemed to provide the services most 
traditionally associated with correspondent banking. FinCEN and 
Treasury may consider expanding this reporting requirement to other 
types of financial institutions that maintain correspondent accounts 
with foreign financial institutions if we determine that information 
will be useful for Treasury's implementation of CISADA. FinCEN requests 
comment as to whether this rulemaking should be expanded to include 
other types of financial institutions, such as those financial 
institutions included in FinCEN's definition of ``covered financial 
institution.'' \8\
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    \8\ See 31 CFR 1010.605(e) (defining a ``covered financial 
institution'' as any one of a number of specific U.S. financial 
institutions, including banks, broker-dealers, futures commission 
merchants, and mutual funds).
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Correspondent Account
    For the purpose of this proposed rulemaking the term 
``correspondent account'' is defined in 31 CFR 1010.605(c)(1)(ii) and 
means 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.\9\ Although there is a reference in section 104(e) of 
CISADA to payable-through accounts, as FinCEN is incorporating this 
requirement into its regulations, such payable-through accounts are 
subsumed within the definition of a correspondent account at 31 CFR 
1010.610(b)(1)(iii)(B).\10\
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    \9\ This definition of correspondent account is consistent with 
the proposed rule's focus on U.S. banks' correspondent account 
relationships with foreign banks.
    \10\ 31 CFR 1010.610(b)(1)(iii)(B) states ``* * * a payable-
through account means a correspondent account maintained by a 
covered financial institution for a foreign bank by means of which 
the foreign bank permits its customers to engage, either directly or 
through a subaccount, in banking activities usual in connection with 
the business of banking in the United States.''
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Processed One or More Transfers of Funds
    FinCEN is using the general phrase ``processed one or more 
transfers of funds.'' This terminology is meant to address 
circumstances through which transfers of funds are made without 
requiring a correspondent account, specifically including circumstances 
in which financial institutions are part of a common payments or 
clearing mechanism that provides for transfers of funds among 
participants without requiring bilateral correspondent account 
relationships. FinCEN requests comment as to whether this terminology 
should be further clarified, and if so, how and what terms should be 
used in the alternative.
Foreign Bank
    For the purpose of this proposed rulemaking the term ``foreign 
bank'' is defined in 31 CFR 1010.100(u) and means 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.
    FinCEN and Treasury have determined that limiting the reporting 
requirement in this proposed rulemaking to information pertaining to 
the activities of foreign banks will provide useful information as it 
relates to CISADA, while limiting the obligations of the financial 
industry. Although there are other foreign financial institutions that 
maintain correspondent accounts with U.S. financial institutions that 
could provide useful information with respect to CISADA-relevant 
activities, this rule focuses on those foreign financial institutions 
deemed to receive the services most traditionally associated with 
correspondent banking. FinCEN and Treasury may consider expanding this 
reporting requirement to include reports to FinCEN with respect to 
other types of foreign financial institutions serviced by U.S. 
financial institutions if we determine that such information will be 
useful for Treasury's implementation of CISADA. FinCEN requests comment 
as to whether this rulemaking should be expanded to include other types 
of foreign financial institutions, such as those included in FinCEN's 
definition of ``foreign financial institution,'' \11\ or OFAC's 
definition of ``foreign financial institution'' \12\ in the IFSR.
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    \11\ See 31 CFR 1010.605(f).
    \12\ See 31 CFR 561.308.
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Iranian-Linked Financial Institution Designated Under IEEPA
    For the purpose of this proposed rulemaking the term ``Iranian-
linked financial institution designated under IEEPA'' means a financial 
institution designated by the United States Government pursuant to 
IEEPA (or listed in an annex to an Executive order issued pursuant to 
such Act) in connection with Iran's proliferation of weapons of mass 
destruction or delivery systems for weapons of mass destruction, or in 
connection with Iran's support for international terrorism.\13\
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    \13\ See CISADA subsection 104(c)(2)(E)(ii).
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IRGC-Linked Person Designated Under IEEPA
    For the purpose of this proposed rulemaking the term ``IRGC-linked 
person designated under IEEPA'' means Iran's Islamic Revolutionary 
Guard Corps or any of its agents or affiliates designated by the United 
States Government pursuant to IEEPA (or listed in an annex to an 
Executive order issued pursuant to such Act).\14\
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    \14\ See CISADA subsection 104(c)(2)(E)(i).
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    The names of persons whose property and interests in property are 
blocked pursuant to IEEPA are published on OFAC's Specially Designated 
Nationals and Blocked Persons List (``SDN List''). Iranian-linked 
financial institutions designated under IEEPA are those whose property 
and interests in property are blocked pursuant to 31 CFR part 544 or 31 
CFR part 594 in connection with Iran's proliferation of weapons of mass 
destruction or delivery systems for weapons of mass destruction or 
Iran's support for international terrorism and are identified by 
``[IFSR]'' tags located at the end of their entries on the SDN List 
(e.g., [NPWMD][IFSR] or [SDGT][IFSR]). IRGC-linked persons designated 
under IEEPA are those whose property and interests in property are 
blocked pursuant to one or more parts of 31 CFR Chapter V and are 
identified by ``[IRGC]'' tags located at the end of their entries on 
the SDN List (e.g., [NPWD][IRGC] or [SDGT][IRGC]). OFAC's electronic 
SDN List can be found at the following URL: http://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/default.aspx. The following 
financial institutions meet the criteria of Iranian-linked financial 
institutions designated under IEEPA ([IFSR] tags), and the following 
persons meet the criteria of IRGC-linked persons designated under IEEPA 
([IRGC] tags): http://www.treasury.gov/resource-center/sanctions/Programs/Documents/irgc_ifsr.pdf. These listings are part of the SDN 
List,

[[Page 24414]]

administered by OFAC. Please note that OFAC's SDN List is dynamic and 
should be reviewed regularly for the most current information regarding 
Iranian-linked financial institutions designated under IEEPA and IRGC-
linked persons designated under IEEPA.

B. Duty To Inquire (Sec.  1060.300(b))

    This section describes a bank's duty to inquire of a specified 
foreign bank for which the bank maintains a correspondent account, as 
to whether such foreign bank maintains a correspondent account for an 
Iranian-linked financial institution designated under IEEPA, and/or has 
processed one or more transfers of funds within the preceding 90 
calendar days related to an Iranian-linked financial institution or an 
IRGC-linked person designated under IEEPA. Upon receiving a written 
request from FinCEN, a bank that maintains a correspondent account for 
a specified foreign bank shall inquire of such foreign bank for the 
purpose of having such foreign bank certify: whether it maintains a 
correspondent account for an Iranian-linked financial institution 
designated under IEEPA; whether it has processed one or more transfers 
of funds within the preceding 90 calendar days related to an Iranian-
linked financial institution designated under IEEPA, other than through 
a correspondent account; and whether it has processed one or more 
transfers of funds within the preceding 90 calendar days related to an 
IRGC-linked person designated under IEEPA. In addition, when the bank 
makes its inquiry, the bank shall request that the foreign bank agree 
to notify the bank if the foreign bank subsequently establishes a new 
correspondent account for an Iranian-linked financial institution 
designated under IEEPA at any time within 365 calendar days from the 
date of the foreign bank's initial response.
    To assist a bank in obtaining the required information from a 
specified foreign bank, FinCEN is proposing a model certification 
format for a bank to provide to a specified foreign bank when the bank 
makes its inquiry regarding whether the specified foreign bank 
maintains a correspondent account for an Iranian-linked financial 
institution designated under IEEPA, and/or has processed one or more 
transfers of funds within the preceding 90 calendar days related to an 
Iranian-linked financial institution or an IRGC-linked person 
designated under IEEPA. This proposed model certification will not 
appear in the Code of Federal Regulations; however, it is included at 
Appendix A to this Federal Register notice. In addition, FinCEN will 
use its website to make this proposed model certification available to 
the public. FinCEN requests comment as to the effectiveness of the 
proposed model certification.
    The proposed model certification includes language identifying the 
purpose for which the bank is requesting information from the foreign 
bank. As proposed, the model certification will include the following 
language: ``The information contained in this Certification is sought 
for purposes of Section 104(e) of the Comprehensive Iran Sanctions, 
Accountability, and Divestment Act of 2010 (``CISADA'') (Public Law 
111-195). This Certification will be used to provide the Department of 
the Treasury with information regarding the nature of foreign bank 
activities that may be relevant to CISADA.'' In addition, the model 
certification will define foreign bank, bank, correspondent account, 
Iranian-linked financial institution designated under IEEPA, and IRGC-
linked person designated under IEEPA in accordance with the proposed 
rule.
    In the certification, a foreign bank that maintains a correspondent 
account with a bank is asked to certify to the bank either that (1) it 
does not maintain a correspondent account(s) for an Iranian-linked 
financial institution designated under IEEPA; or (2) it maintains a 
correspondent account(s) for an Iranian-linked financial institution 
designated under IEEPA. If a foreign bank certifies that it maintains a 
correspondent account(s) for an Iranian-linked financial institution 
designated under IEEPA, it is asked to report the following related 
information for each such correspondent account: the name of the 
Iranian-linked financial institution designated under IEEPA, the full 
name(s) on the correspondent account and the correspondent account 
number(s), applicable information regarding whether the correspondent 
account has been blocked or otherwise restricted, other applicable 
identifying information for the correspondent account, and the 
approximate value in United States Dollars (``USD'') of transactions 
processed through the correspondent account within the preceding 90 
calendar days.
    In the certification, a foreign bank that maintains a correspondent 
account with a bank is also asked to certify to the bank either that 
(1) it has not processed one or more transfers of funds within the 
preceding 90 calendar days related to an Iranian-linked financial 
institution designated under IEEPA, other than through a correspondent 
account; or (2) it has processed one or more transfers of funds within 
the preceding 90 calendar days related to an Iranian-linked financial 
institution designated under IEEPA, other than through a correspondent 
account. If a foreign bank certifies that it has processed one or more 
transfers of funds within the preceding 90 calendar days related to an 
Iranian-linked financial institution designated under IEEPA, other than 
through a correspondent account, it is asked to report the following 
related information for each Iranian-linked financial institution 
designated under IEEPA: the name of the Iranian-linked financial 
institution designated under IEEPA, the identity of the system or means 
by which the transfer(s) of funds was processed, the full name on the 
account(s) and the account number(s), if applicable, other applicable 
identifying information for the transfer(s) of funds, and the 
approximate value in USD of such transfer(s) of funds processed within 
the preceding 90 calendar days.
    In the certification, a foreign bank that maintains a correspondent 
account with a bank is also asked to certify to the bank either that 
(1) it has not processed one or more transfers of funds within the 
preceding 90 calendar days related to an IRGC-linked person designated 
under IEEPA; or (2) it has processed one or more transfers of funds 
within the preceding 90 calendar days related to an IRGC-linked person 
designated under IEEPA. If a foreign bank certifies that it has 
processed one or more transfers of funds within the preceding 90 
calendar days related to an IRGC-linked person designated under IEEPA, 
it is asked to report the following related information for each IRGC-
linked person designated under IEEPA: the name of the IRGC-linked 
person designated under IEEPA, the identity of the system or means by 
which the transfer(s) of funds was processed, the full name on the 
account(s) and the account number(s), if applicable, other applicable 
identifying information for the transfer(s) of funds, and the 
approximate value in USD of such transfer(s) of funds processed within 
the preceding 90 calendar days.
    As part of the certification, the foreign bank is asked to agree to 
notify, in writing, the bank at which it maintains a correspondent 
account if the foreign bank establishes a new correspondent account for 
an Iranian-linked financial institution designated under IEEPA at any 
time within 365 calendar days from the date of the foreign bank's 
response. The certification form sets forth the expectation that the 
notification shall be due to the bank within 30 calendar days of such 
change. If a bank does not utilize the proposed model certification, 
the bank will need to request separately that the foreign bank provide 
such

[[Page 24415]]

information with respect to the establishment of a new correspondent 
account for an Iranian-linked financial institution designated under 
IEEPA.

C. Filing Procedures (Sec.  1060.300(c))

What To File (Sec.  1060.300(c)(1))
    This section describes the filing procedures a bank shall follow to 
report to FinCEN information required by this proposed rulemaking. Upon 
receiving a written request from FinCEN, a bank is required to report 
to FinCEN, in such format and manner as may be prescribed by FinCEN, 
the following information for any specified foreign bank:
     The name of any specified foreign bank, for which the bank 
maintains a correspondent account, that certifies that it maintains a 
correspondent account for an Iranian-linked financial institution 
designated under IEEPA, together with the name of the Iranian-linked 
financial institution designated under IEEPA, the full name(s) on the 
correspondent account and the correspondent account number(s), 
applicable information regarding whether the correspondent account has 
been blocked or otherwise restricted, other applicable identifying 
information for the correspondent account, and the approximate value in 
USD of transactions processed through the correspondent account within 
the preceding 90 calendar days;
     The name of any specified foreign bank, for which the bank 
maintains a correspondent account, that certifies that it has processed 
one or more transfers of funds within the preceding 90 calendar days 
related to an Iranian-linked financial institution designated under 
IEEPA, other than through a correspondent account, together with the 
name of the Iranian-linked financial institution designated under 
IEEPA, the identity of the system or means by which such transfer(s) of 
funds was processed, the full name on the account(s) and the account 
number(s), if applicable, other applicable identifying information for 
such transfer(s) of funds, and the approximate value in USD of such 
transfer(s) of funds processed within the preceding 90 calendar days;
     The name of any specified foreign bank, for which the bank 
maintains a correspondent account, that certifies that it has processed 
one or more transfers of funds within the preceding 90 calendar days 
related to an IRGC-linked person designated under IEEPA, together with 
the name of the IRGC-linked person designated under IEEPA, the identity 
of the system or means by which such transfer(s) of funds was 
processed, the full name on the account(s) and the account number(s), 
if applicable, other applicable identifying information for such 
transfer(s) of funds, and the approximate value in USD of such 
transfer(s) of funds processed within the preceding 90 calendar days;
     The name of any specified foreign bank, for which the bank 
maintains a correspondent account, that certifies that it does not 
maintain a correspondent account for an Iranian-linked financial 
institution designated under IEEPA, that certifies that it has not 
processed one or more transfers of funds within the preceding 90 
calendar days related to an Iranian-linked financial institution 
designated under IEEPA, other than through a correspondent account, 
and/or that certifies that it has not processed one or more transfers 
of funds within the preceding 90 calendar days related to an IRGC-
linked person designated under IEEPA;
     The name of any specified foreign bank, for which the bank 
maintains a correspondent account, about which the bank has not been 
able to establish to its satisfaction that the foreign bank does not 
maintain a correspondent account for an Iranian-linked financial 
institution designated under IEEPA, has not processed one or more 
transfers of funds within the preceding 90 calendar days related to an 
Iranian-linked financial institution designated under IEEPA, other than 
through a correspondent account, and/or has not processed one or more 
transfers of funds within the preceding 90 calendar days related to an 
IRGC-linked person designated under IEEPA, together with the reason(s) 
for this, such as the failure of the foreign bank to respond to the 
inquiry by or a request from the bank, the failure of the foreign bank 
to certify its response, or if the bank knows, suspects, or has reason 
to suspect that the certification is incorrect;
     The name of any specified foreign bank, for which the bank 
maintains a correspondent account, that notifies the bank that it has 
established a new correspondent account for an Iranian-linked financial 
institution designated under IEEPA at any time within 365 calendar days 
from the date of the foreign bank's initial response, together with the 
name of the Iranian-linked financial institution designated under 
IEEPA, the full name(s) on the correspondent account and the 
correspondent account number(s), applicable information regarding 
whether the correspondent account has been blocked or otherwise 
restricted, and other applicable identifying information for the 
correspondent account; and
     If applicable, confirmation that the bank does not 
maintain a correspondent account for the specified foreign bank(s), but 
only in instances in which FinCEN specifically requests that the bank 
report such information.
    If a bank utilizes the proposed model certification to inquire of a 
specified foreign bank, the bank can submit the certification from the 
specified foreign bank to FinCEN in order to comply with this proposed 
reporting requirement. If a bank does not utilize the proposed model 
certification to inquire of a specified foreign bank, the bank can 
report to FinCEN, in such format and manner as may be prescribed by 
FinCEN, the information required by this proposed rulemaking. If a 
specified foreign bank, for which the bank maintains a correspondent 
account, does not adequately respond to the bank's inquiry, the bank 
can report to FinCEN, in such format and manner as may be prescribed by 
FinCEN, the name of the foreign bank for which the bank has not been 
able to establish to its satisfaction that the foreign bank does not 
maintain a correspondent account for an Iranian-linked financial 
institution designated under IEEPA, has not processed one or more 
transfers of funds within the preceding 90 calendar days related to an 
Iranian-linked financial institution designated under IEEPA, other than 
through a correspondent account, and/or has not processed one or more 
transfers of funds within the preceding 90 calendar days related to an 
IRGC-linked person designated under IEEPA, together with the reason(s) 
for this, such as the failure of the foreign bank to respond to the 
inquiry by or a request from the bank, the failure of the foreign bank 
to certify its response, or if the bank knows, suspects, or has reason 
to suspect that the certification is incorrect.
    If a bank receives a notification from a specified foreign bank 
regarding the establishment of a new correspondent account for an 
Iranian-linked financial institution designated under IEEPA, the bank 
shall report to FinCEN, in such format and manner as may be prescribed 
by FinCEN, the information required by this proposed rulemaking, 
including the name of the specified foreign bank, the name of the 
Iranian-linked financial institution designated under IEEPA for which 
the specified foreign bank has established a new correspondent account, 
the full name(s) on the correspondent account and the correspondent 
account number(s), applicable information regarding whether the 
correspondent account has been blocked or otherwise restricted, and 
other applicable identifying

[[Page 24416]]

information for the correspondent account.
    If a bank receives a written request from FinCEN regarding a 
specified foreign bank, for which the bank does not maintain a 
correspondent account, and FinCEN has specifically requested that the 
bank report instances in which the bank does not maintain a 
correspondent account for such specified foreign bank, the bank shall 
report this information to FinCEN, in such format and manner as may be 
prescribed by FinCEN.
When To File (Sec.  1060.300(c)(2))
    A bank is required to report the information required by this 
proposed rulemaking to FinCEN within 30 days of the date of the written 
request from FinCEN. If a bank receives notification from a foreign 
bank that the foreign bank has established a new correspondent account 
for an Iranian-linked financial institution designated under IEEPA, the 
bank is required to report the information required by this proposed 
rulemaking within 10 days of receiving that notification. FinCEN 
requests comment as to whether these proposed timeframes are 
appropriate.

D. Record Retention (Sec.  1060.300(d))

    This section describes the recordkeeping requirements applicable to 
this proposed rulemaking. A bank shall maintain for a period of five 
years a copy of any report filed and the original or any business 
record equivalent of any supporting documentation for a report, 
including a foreign bank certification or other responses to an inquiry 
under this proposed rulemaking.

E. No Other Action Required (Sec.  1060.300(e))

    Paragraph (e) states that ``[n]othing in this section shall be 
construed to require a bank to take any action, or to decline to take 
any action, other than the requirements identified in this section, 
with respect to an account established for, or a transaction engaged in 
with, a foreign bank. However, nothing in this section relieves a bank 
of any other applicable regulatory obligation.'' While this paragraph 
clarifies that the section does not require a bank to take any steps 
with respect to the foreign bank other than those relating to the 
collection of information outlined in this section, it also clarifies 
that this section does not preclude a bank from taking any other 
action, including restricting or terminating a correspondent account 
relationship with a foreign bank, or filing a suspicious activity 
report, based on the bank's risk-based assessment of the facts and bank 
policy.

IV. Executive Order 12866

    Executive Orders 13563 and 12866 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. This rule has been designated a ``significant regulatory 
action'' although not economically significant, under section 3(f) of 
Executive Order 12866. Accordingly, the rule has been reviewed by the 
Office of Management and Budget.

V. Unfunded Mandates Reform Act of 1995 Statement

    Section 202 of the Unfunded Mandates Reform Act of 1995 (``Unfunded 
Mandates Act''), Public Law 104-4 (March 22, 1995), requires that an 
agency prepare a budgetary impact statement before promulgating a rule 
that may result in expenditure by State, local, and Tribal governments, 
in the aggregate, or by the private sector, of $100 million or more in 
any one year. If a budgetary impact statement is required, section 205 
of the Unfunded Mandates Act also requires an agency to identify and 
consider a reasonable number of regulatory alternatives before 
promulgating a rule. FinCEN has determined that it is not required to 
prepare a written statement under section 202.

VI. Regulatory Flexibility Act

    Pursuant to the Regulatory Flexibility Act (``RFA'') (5 U.S.C. 601 
et seq.), FinCEN certifies that this proposed regulation would not have 
a significant economic impact on a substantial number of small 
entities. The proposed rule would apply to banks that maintain 
correspondent accounts with foreign banks. As previously stated in our 
final rules implementing section 312,\15\ 313,\16\ and 319(b) \17\ of 
the Uniting and Strengthening America by Providing Appropriate Tools 
Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 
107-56, most banks that maintain correspondent accounts with foreign 
banks tend to be large banks. We expect that small banks will be less 
likely to maintain correspondent accounts with foreign banks. In most 
cases, small banks utilize their domestic correspondent accounts with 
large banks to conduct transactions with foreign banks. Accordingly, a 
regulatory flexibility analysis is not required. FinCEN invites 
comments on the impact of this proposal on small entities.
---------------------------------------------------------------------------

    \15\ Anti-Money Laundering Programs; Special Due Diligence 
Programs for Certain Foreign Accounts, 71 FR 496 (Jan. 4, 2006).
    \16\ Anti-Money Laundering Requirements--Correspondent Accounts 
for Foreign Shell Banks; Recordkeeping and Termination of 
Correspondent Accounts for Foreign Banks, 67 FR 60562 (Sept. 26, 
2002).
    \17\ Id.
---------------------------------------------------------------------------

VII. Paperwork Reduction Act

    The collection of information contained in this proposed rule is 
being submitted to the Office of Management and Budget for review in 
accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
3507(d)). Under the Paperwork Reduction Act, an agency may not conduct 
or sponsor, and an individual is not required to respond to, a 
collection of information unless it displays a valid OMB control 
number. Comments on the information collection should be sent to the 
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 
[email protected] with a copy to the Financial Crimes 
Enforcement Network by mail or as part of the comments through the 
Internet. Comments are welcome and must be received by July 1, 2011.
Reporting Requirements Under Section 104(e) of CISADA
    The collection of information in this proposal is in 31 CFR 
1060.300. The information may be transmitted to one or more departments 
or agencies of the United States of America for the purpose of 
fulfilling such departments' and agencies' governmental functions. The 
collection of information is mandatory. FinCEN is proposing to issue 
regulations that would require a bank to report to FinCEN, upon 
request, certain information regarding certain foreign banks specified 
by FinCEN.
    Description of Affected Financial Institutions: Banks as defined in 
31 CFR 1010.100(d).
    Estimated Number of Affected Financial Institutions: 350 banks.
    FinCEN estimates that approximately 350 banks maintain 
correspondent accounts with foreign banks.\18\

[[Page 24417]]

However, FinCEN estimates that on average only around five percent of 
banks that maintain correspondent accounts with foreign banks will have 
an account with the specific foreign bank about which FinCEN is 
requesting information. This smaller proportion of actual affected 
financial institutions in each case of a request is based on the fact 
that foreign banks generally only hold a limited number of 
correspondent account relationships with separate U.S. banks. For this 
reason, the estimated number of financial institutions that may 
maintain a correspondent account with a specific foreign bank 
identified in any one request from FinCEN will be in the range of 18 
banks. In order to further reduce the number of affected financial 
institutions, when possible, FinCEN will rely on information available 
to Treasury to help limit the number of banks requested to provide 
information with respect to the foreign banks that are the subject of 
specific requests. In turn, FinCEN intends to send requests directly to 
banks that FinCEN, based on all available information, believes 
maintain correspondent accounts with the specified foreign bank(s). The 
number of banks that receive a request may vary in each specific case, 
based on the availability of information to FinCEN and other 
circumstances.
---------------------------------------------------------------------------

    \18\ 177 banks reported a balance due as of September 30, 2010 
in either line item 3.a. or 3.b. of Schedule RC-A--Cash and Balances 
Due From Depository Institutions on the Consolidated Reports of 
Condition and Income for a Bank with Domestic and Foreign Offices--
FFIEC 031, or on the Consolidated Reports of Condition and Income 
for a Bank with Domestic Offices Only--FFIEC 041. Line item 3.a. 
represents balances due from foreign branches of other U.S. banks 
and line item 3.b. represents balances due from other banks in 
foreign countries and foreign central banks. As of September 30, 
2010, 7,020 banks, regulated by either the Board of Governors of the 
Federal Reserve System, the Federal Deposit Insurance Corporation, 
or the Office of the Comptroller of the Currency, filed either FFIEC 
031 or FFIEC 041. 177 of those 7,020 banks reported a balance due 
for a correspondent account with a foreign bank. These numbers do 
not include agents, agencies, branches, or offices within the U.S. 
of a bank organized under foreign law, which are also included 
within the definition of bank for purposes of this proposed 
rulemaking. According to the Federal Reserve Board Structure Data 
for U.S. Banking Offices of Foreign Entities, there are 
approximately 214 U.S. Offices of Foreign Banking Organizations, as 
of September 30, 2010. See http://www.federalreserve.gov/releases/iba/201009/bycntry.htm. Of those 214 U.S. Offices of Foreign Banking 
Organizations, approximately 43 only operate in the U.S. as 
representative offices. See http://www.federalreserve.gov/releases/iba/201009/bytype.htm. Representative offices do not maintain 
correspondent accounts. For this reason, FinCEN is conservatively 
estimating that it is likely the remaining 171 U.S Offices of 
Foreign Banking Organizations do maintain some form of correspondent 
account with a foreign bank. This results in a total estimate of 348 
U.S banks and foreign banks operating in the U.S. that maintain a 
correspondent account with a foreign bank.
---------------------------------------------------------------------------

    Estimated Average Annual Burden Hours Per Affected Financial 
Institution: Fewer than 31 hours per bank
    FinCEN estimates that while there may be a series of requests to 
U.S. banks at the outset of implementing this regulation, subsequent 
requests will be infrequent. The scope of any request may be with 
respect to one foreign bank or a number of foreign banks (for example, 
a number of foreign banks operating in the same jurisdiction). FinCEN 
believes that regardless of the number of requests transmitted, such 
requests will pertain to 50 foreign banks or fewer in any given year.
Financial Institutions That Maintain a Correspondent Account for a 
Specified Foreign Bank
    A bank will only be required to comply with the requirements of 
this proposed rulemaking if the bank receives a written request from 
FinCEN. As noted above, FinCEN estimates that on average fewer than 
five percent of the banks that maintain correspondent accounts with 
foreign banks, i.e., fewer than 18 banks, will maintain correspondent 
accounts with the specific foreign bank about which FinCEN is 
requesting information. If FinCEN makes requests with respect to fewer 
than 50 foreign banks per year and fewer than 18 banks are required to 
respond, per request, with regard to a correspondent account they 
maintain with a specified foreign bank, there will be fewer than 900 
CISADA-related reports per year.
    Each time a bank receives a request from FinCEN regarding a 
specific foreign bank for which it maintains a correspondent account, 
it will incur a reporting burden associated with section 1060.300(b) 
(inquiry); a reporting burden associated with section 1060.300(c) 
(reporting); and a recordkeeping burden associated with section 
1060.300(d) (record retention).
    The estimated average reporting burden associated with section 
1060.300(b) for one request from FinCEN is one hour per responding U.S. 
bank with respect to each specific foreign bank about which FinCEN is 
requesting information. The estimated average reporting burden 
associated with section 1060.300(c) for one request from FinCEN is one 
hour per bank. The estimated average recordkeeping burden associated 
with section 1060.300(d) for one request from FinCEN is one hour per 
bank. This results in a total estimated average burden of three hours 
per bank with respect to each foreign bank about which FinCEN is 
requesting information. In the unlikely scenario in which the same bank 
were required to respond to FinCEN with respect to each foreign bank 
about which FinCEN is seeking information in any given year, the 
estimated annual burden hours would be 150. It is more likely that a 
particular U.S. bank will only have to respond to FinCEN queries in 
more limited situations and the average time spent per bank will be 
much less. FinCEN believes that even with respect to the banks that are 
most active in the provision of correspondent accounts to foreign 
banks, they are likely to be required to respond to FinCEN with respect 
to one fifth of the foreign banks about which FinCEN is seeking 
information, which corresponds to roughly 30 burden hours per year 
based on the above calculations.
Financial Institutions That Do Not Maintain a Correspondent Account for 
a Specified Foreign Bank
    In certain instances FinCEN may request that if a bank receives a 
written request from FinCEN regarding a specified foreign bank, and the 
bank does not maintain a correspondent account for such specified 
foreign bank, the bank report this information to FinCEN. As noted 
above, FinCEN intends to send requests to banks that FinCEN is aware 
have a correspondent account with a specified foreign bank as often as 
possible. In instances in which FinCEN is not aware of which banks 
maintain a correspondent account for a specified foreign bank, FinCEN 
may send requests to those banks FinCEN believes might have a 
correspondent account with a specified foreign bank.
    In instances in which FinCEN is sending a request to a small number 
of banks that FinCEN believes might have a correspondent account with a 
specified foreign bank, FinCEN may request, in the written request sent 
to those banks, that the banks that do not have an account with the 
specified foreign bank report such information to FinCEN. FinCEN 
believes that we will rarely be sending a request to a large number of 
banks that we are not certain have an account with the specified 
foreign bank for which we are requesting information. In those rare 
cases, FinCEN would most likely not ask those banks to report if they 
do not maintain a correspondent account with such foreign bank.
    FinCEN believes that the estimated average reporting burden for a 
bank to report to FinCEN that it does not maintain a correspondent 
account for the foreign bank specified in a request from FinCEN will 
only be 30 minutes per request. FinCEN also estimates that across the 
50 requests FinCEN anticipates making annually, on average only two to 
five banks will receive a

[[Page 24418]]

request from FinCEN regarding a foreign bank for which they do not 
maintain a correspondent account, and for which FinCEN requests that 
they report such information. This means that no more than 250 banks 
will be required to report that they do not maintain a correspondent 
account with a foreign bank specified in a request from FinCEN in any 
given year. This also means that no more than 125 estimated annual 
burden hours will be expended each year. FinCEN also estimates that no 
single bank will receive a request from FinCEN more than two times per 
year regarding a specified foreign bank for which it does not maintain 
a correspondent account, and for which FinCEN requests that it report 
such information. This corresponds to roughly one estimated average 
annual burden hour per bank.
    Estimated Total Annual Burden: 2,825 total annual burden hours.
    Fewer than 900 CISADA-related reports anticipated each year 
(provided by a varying number of banks) multiplied by three burden 
hours per report. (2,700 total annual burden hours). Fewer than 250 
reports from banks that do not maintain a correspondent account with a 
specified foreign bank (provided by a varying number of banks) 
multiplied by 30 minutes of burden per report. (125 total annual burden 
hours).
Request for Comments Regarding the Paperwork Reduction Act Analysis
    FinCEN is seeking comments on these estimates. Comments are 
specifically requested concerning:
     Whether the proposed collection of information is 
necessary for the proper performance of the functions of FinCEN and 
other components of Treasury, including whether the information will 
have practical utility;
     The accuracy of the estimated burden associated with the 
proposed collection of information;
     How the quality, utility, and clarity of the information 
to be collected may be enhanced; and
     How the burden of complying with the proposed collection 
of information may be minimized, including through the application of 
automated collection techniques or other forms of information 
technology.

VIII. Request for Comments

    FinCEN invites comments on any and all aspects of this proposal.
    FinCEN specifically invites comment on requests above, as well as 
the following:
    Effects of the Rule on Foreign Correspondent Account Relationships: 
FinCEN is also seeking comments regarding the impact of this 
information collection on banks' correspondent account relationships 
with foreign banks.
    Minimum Dollar Threshold for Reporting on Transfers of Funds 
Related to an Iranian-Linked Financial Institution Designated Under 
IEEPA or an IRGC-Linked Person Designated Under IEEPA: FinCEN is also 
seeking comments regarding whether setting a minimum dollar threshold 
for a foreign bank to be required to report on transfers of funds 
processed within the preceding 90 calendar days related to an Iranian-
linked financial institution designated under IEEPA or related to an 
IRGC-linked person designated under IEEPA would lessen the reporting 
obligations, while still providing useful information. FinCEN seeks 
comments regarding what that minimum dollar threshold should be.

List of Subjects in 31 CFR Part 1060

    Banks, Banking, Counter-terrorism, Foreign banking, Reporting and 
recordkeeping requirements, Terrorism.

Authority and Issuance

    For the reasons set forth above, part 1060 is added to read as 
follows:

PART 1060--PROVISIONS RELATING TO THE COMPREHENSIVE IRAN SANCTIONS, 
ACCOUNTABILITY, AND DIVESTMENT ACT OF 2010

Sec.
1060.100 [Reserved]
1060.200 [Reserved]
1060.300 Reporting obligations on foreign bank relationships with 
Iranian-linked financial institutions designated under IEEPA and 
IRGC-linked persons designated under IEEPA.
1060.400 [Reserved]
1060.500 [Reserved]
1060.600 [Reserved]
1060.700 [Reserved]
1060.800 Penalties.

    Authority: Pub. L. 111-195, 124 Stat. 1312.


Sec.  1060.100  [Reserved]


Sec.  1060.200  [Reserved]


Sec.  1060.300  Reporting obligations on foreign bank relationships 
with Iranian-linked financial institutions designated under IEEPA and 
IRGC-linked persons designated under IEEPA.

    (a) General.
    (1) Upon receiving a written request from FinCEN, a bank (as 
defined in 31 CFR 1010.100(d)) that maintains a correspondent account 
(as defined in 31 CFR 1010.605(c)(1)(ii)) for a specified foreign bank 
(as defined in 31 CFR 1010.100(u)) shall inquire of the foreign bank, 
and report to FinCEN, to the best of the knowledge of the bank, with 
respect to any correspondent account maintained by such foreign bank 
for an Iranian-linked financial institution designated under IEEPA; any 
transfer of funds related to an Iranian-linked financial institution 
designated under IEEPA processed by such foreign bank within the 
preceding 90 calendar days, other than through a correspondent account; 
and any transfer of funds related to an IRGC-linked person designated 
under IEEPA processed by such foreign bank within the preceding 90 
calendar days.
    (2) For the purposes of this section, an ``Iranian-linked financial 
institution designated under IEEPA'' means a financial institution 
designated by the United States Government pursuant to the 
International Emergency Economic Powers Act (or listed in an annex to 
an Executive order issued pursuant to such Act) in connection with 
Iran's proliferation of weapons of mass destruction or delivery systems 
for weapons of mass destruction, or in connection with Iran's support 
for international terrorism. For the purposes of this section, an 
``IRGC-linked person designated under IEEPA'' means Iran's Islamic 
Revolutionary Guard Corps or any of its agents or affiliates designated 
by the United States Government pursuant to the International Emergency 
Economic Powers Act (or listed in an annex to an Executive order issued 
pursuant to such Act).

Note to Paragraph (a)(2)

     Section 104(c) of the Comprehensive Iran Sanctions, 
Accountability, and Divestment Act of 2010 (``CISADA''), Public Law 
111-195, 124 Stat. 1312, provides the Secretary of the Treasury with 
authority to prohibit, or impose strict conditions on, the opening or 
maintaining in the United States of a correspondent account or a 
payable-through account by a foreign financial institution that the 
Secretary finds knowingly engages in certain specified activities. 
Those specified activities include facilitating a significant 
transaction or transactions or providing significant financial services 
for a financial institution whose property or interests in property are 
blocked pursuant to the International Emergency Economic Powers Act (50 
U.S.C. 1701 et seq.) in connection with Iran's proliferation of weapons 
of mass destruction or delivery systems for weapons of mass 
destruction, or in connection with Iran's support for international 
terrorism, or for Iran's Islamic Revolutionary Guard Corps or any of 
its agents or affiliates whose

[[Page 24419]]

property or interests in property are blocked pursuant to that Act.
    (b) Duty to inquire.
    Upon receiving a written request from FinCEN, a bank that maintains 
a correspondent account for a specified foreign bank shall inquire of 
such foreign bank for the purpose of having such foreign bank certify: 
whether it maintains a correspondent account for an Iranian-linked 
financial institution designated under IEEPA; whether it has processed 
one or more transfers of funds within the preceding 90 calendar days 
related to an Iranian-linked financial institution designated under 
IEEPA, other than through a correspondent account; and whether it has 
processed one or more transfers of funds within the preceding 90 
calendar days related to an IRGC-linked person designated under IEEPA. 
Upon such inquiry, a bank shall request that the foreign bank agree to 
notify the bank if the foreign bank subsequently establishes a new 
correspondent account for an Iranian-linked financial institution 
designated under IEEPA at any time within 365 calendar days from the 
date of the foreign bank's initial response.
    (c) Filing Procedures.
    (1) What to file. Upon receiving a written request from FinCEN, a 
bank shall report to FinCEN, in such format and manner as may be 
prescribed by FinCEN, the following information for any specified 
foreign bank:
    (i) The name of any specified foreign bank, for which the bank 
maintains a correspondent account, that certifies that it maintains a 
correspondent account for an Iranian-linked financial institution 
designated under IEEPA, and the following related information:
    (A) The name of the Iranian-linked financial institution designated 
under IEEPA;
    (B) The full name(s) on the correspondent account and the 
correspondent account number(s);
    (C) Applicable information regarding whether the correspondent 
account has been blocked or otherwise restricted;
    (D) Other applicable identifying information for the correspondent 
account; and
    (E) The approximate value in U.S. dollars of transactions processed 
through the correspondent account within the preceding 90 calendar 
days;
    (ii) The name of any specified foreign bank, for which the bank 
maintains a correspondent account, that certifies that it has processed 
one or more transfers of funds within the preceding 90 calendar days 
related to an Iranian-linked financial institution designated under 
IEEPA, other than through a correspondent account, and the following 
related information:
    (A) The name of the Iranian-linked financial institution designated 
under IEEPA;
    (B) The identity of the system or means by which such transfer(s) 
of funds was processed;
    (C) The full name on the account(s) and the account number(s), if 
applicable;
    (D) Other applicable identifying information for such transfer(s) 
of funds; and
    (E) The approximate value in U.S. dollars of such transfer(s) of 
funds processed within the preceding 90 calendar days;
    (iii) The name of any specified foreign bank, for which the bank 
maintains a correspondent account, that certifies that it has processed 
one or more transfers of funds within the preceding 90 calendar days 
related to an IRGC-linked person designated under IEEPA, and the 
following related information:
    (A) The name of the IRGC-linked person designated under IEEPA;
    (B) The identity of the system or means by which such transfer(s) 
of funds was processed;
    (C) The full name on the account(s) and the account number(s), if 
applicable;
    (D) Other applicable identifying information for such transfer(s) 
of funds; and
    (E) The approximate value in U.S. dollars of such transfer(s) of 
funds processed within the preceding 90 calendar days;
    (iv) The name of any specified foreign bank, for which the bank 
maintains a correspondent account, that certifies that it does not 
maintain a correspondent account for an Iranian-linked financial 
institution designated under IEEPA, that certifies that it has not 
processed one or more transfers of funds within the preceding 90 
calendar days related to an Iranian-linked financial institution 
designated under IEEPA, other than through a correspondent account, 
and/or that certifies that it has not processed one or more transfers 
of funds within the preceding 90 calendar days related to an IRGC-
linked person designated under IEEPA;
    (v) The name of any specified foreign bank, for which the bank 
maintains a correspondent account, about which the bank has not been 
able to establish to its satisfaction that the foreign bank does not 
maintain a correspondent account for an Iranian-linked financial 
institution designated under IEEPA, has not processed one or more 
transfers of funds within the preceding 90 calendar days related to an 
Iranian-linked financial institution designated under IEEPA, other than 
through a correspondent account, and/or has not processed one or more 
transfers of funds within the preceding 90 calendar days related to an 
IRGC-linked person designated under IEEPA, together with the reason(s) 
for this, such as the failure of the foreign bank to respond to the 
inquiry by or a request from the bank, the failure of the foreign bank 
to certify its response, or if the bank knows, suspects, or has reason 
to suspect that the certification is incorrect;
    (vi) The name of any specified foreign bank, for which the bank 
maintains a correspondent account, that notifies the bank that it has 
established a new correspondent account for an Iranian-linked financial 
institution designated under IEEPA at any time within 365 calendar days 
from the date of the foreign bank's initial response, and the following 
related information:
    (A) The name of the Iranian-linked financial institution designated 
under IEEPA;
    (B) The full name(s) on the correspondent account and the 
correspondent account number(s);
    (C) Applicable information regarding whether the correspondent 
account has been blocked or otherwise restricted; and
    (D) Other applicable identifying information for the correspondent 
account; and
    (vii) If applicable, confirmation that the bank does not maintain a 
correspondent account for the specified foreign bank(s), but only in 
instances in which FinCEN specifically requests that the bank report 
such information.
    (2) When to file. (i) A bank shall report to FinCEN within 30 days 
of the date of the request from FinCEN. (ii) Reports based on 
subsequent notifications received from a foreign bank regarding the 
establishment of a new correspondent account for an Iranian-linked 
financial institution designated under IEEPA shall be due within 10 
days of receipt of the notification.
    (d) Retention of records. A bank shall maintain for a period of 
five years a copy of any report filed and the original or any business 
record equivalent of any supporting documentation for a report, 
including a foreign bank certification or other responses to an inquiry 
under this section.
    (e) No other action required. Nothing in this section shall be 
construed to require a bank to take any action, or to decline to take 
any action, other than the requirements identified in this section, 
with respect to an account

[[Page 24420]]

established for, or a transaction engaged in with, a foreign bank. 
However, nothing in this section relieves a bank of any other 
applicable regulatory obligation.


Sec.  1060.400  [Reserved]


Sec.  1060.500  [Reserved]


Sec.  1060.600  [Reserved]


Sec.  1060.700  [Reserved]


Sec.  1060.800  Penalties.

    A person violating any requirement under this part is subject to 
the penalties provided for in sections 5321(a) and 5322 of title 31, 
United States Code, in the same manner and to the same extent as such 
penalties would apply to any person that is otherwise subject to such 
section 5321(a) or 5322.

    Dated: April 26, 2011.
James H. Freis, Jr.,
Director, Financial Crimes Enforcement Network.

    Note: This appendix will not appear in the Code of Federal 
Regulations; however, FinCEN will use its Web site to make this 
proposed model certification available to the public.

Appendix A

Certification for Purposes of Section 104(e) of the Comprehensive Iran 
Sanctions, Accountability, and Divestment Act of 2010 and 31 CFR 
1060.300

[OMB Control Number xxxx-xxxx]

    The information contained in this Certification is sought for 
purposes of Section 104(e) of the Comprehensive Iran Sanctions, 
Accountability, and Divestment Act of 2010 (``CISADA'') (Public Law 
111-195). This Certification will be used to provide the Department 
of the Treasury with information regarding the nature of foreign 
bank activities that may be relevant to CISADA.
    This Certification may be completed by a foreign bank that 
maintains a correspondent account with a U.S. bank (see definitions 
below). An entity that is not a foreign bank is not required to 
complete this Certification.
    A Foreign Bank is a bank organized under foreign law, or an 
agency, branch, or office located outside the United States of a 
bank (see definition at 31 CFR 1010.100(u)). A Bank includes each 
agent, agency, branch, or office within the United States of persons 
doing business in one or more of the following capacities: 
commercial banks or trust companies, private banks, savings and loan 
associations, national banks, thrift institutions, credit unions, 
other organizations chartered under banking laws and supervised by 
banking supervisors of any State, and banks organized under foreign 
law (see definition at 31 CFR 1010.100(d)).
    A Correspondent Account for a foreign bank is 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 
(see definition at 31 CFR Sec.  1010.605(c)(1)(ii)).
    An Iranian-Linked Financial Institution Designated Under IEEPA 
is a financial institution designated by the United States 
Government pursuant to the International Emergency Economic Powers 
Act (``IEEPA'') (or listed in an annex to an Executive order issued 
pursuant to such Act) in connection with Iran's proliferation of 
weapons of mass destruction or delivery systems for weapons of mass 
destruction, or in connection with Iran's support for international 
terrorism. Iranian-Linked Financial Institutions Designated Under 
IEEPA are identified by ``[IFSR]'' tags located at the end of their 
entries on the Specially Designated Nationals and Blocked Persons 
List (``SDN List'') (e.g., [NPWMD][IFSR] or [SDGT][IFSR]). The 
Office of Foreign Assets Control's (``OFAC'') electronic SDN List 
can be found at the following URL: http://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/default.aspx. The following 
financial institutions meet the criteria of Iranian-Linked Financial 
Institutions Designated Under IEEPA ([IFSR] tags): http://www.treasury.gov/resource-center/sanctions/Programs/Documents/irgc_ifsr.pdf. These listings are part of the SDN List, administered by 
OFAC. Please note that OFAC's SDN List is dynamic and should be 
reviewed regularly for the most current information regarding 
Iranian-Linked Financial Institutions Designated Under IEEPA.
    An IRGC-Linked Person Designated Under IEEPA is Iran's Islamic 
Revolutionary Guard Corps or any of its agents or affiliates 
designated by the United States Government pursuant to IEEPA (or 
listed in an annex to an Executive order issued pursuant to such 
Act). IRGC-Linked Persons Designated Under IEEPA are identified by 
``[IRGC]'' tags located at the end of their entries on the SDN List 
(e.g., [NPWMD][IRGC] or [SDGT][IRGC]). OFAC's electronic SDN List 
can be found at the following URL: http://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/default.aspx. The following persons 
meet the criteria of IRGC-Linked Persons Designated Under IEEPA 
([IRGC] tags): http://www.treasury.gov/resource-center/sanctions/Programs/Documents/irgc_ifsr.pdf. These listings are part of the 
SDN List, administered by OFAC. Please note that OFAC's SDN List is 
dynamic and should be reviewed regularly for the most current 
information regarding IRGC-Linked Persons Designated Under IEEPA.
    A. The undersigned financial institution, -------------------- 
(``Foreign Bank'') hereby certifies as follows:
    B. Correspondent Account maintained for an Iranian-Linked 
Financial Institution Designated Under IEEPA: Check box to certify.
    [squ] Foreign Bank hereby certifies that it does not maintain a 
correspondent account(s) for an Iranian-Linked Financial Institution 
Designated Under IEEPA.
    [squ] Foreign Bank hereby certifies that it does maintain a 
correspondent account(s) for an Iranian-Linked Financial Institution 
Designated Under IEEPA. (If this box has been selected please fill 
out the below information for each correspondent account maintained 
for an Iranian-Linked Financial Institution Designated Under IEEPA).

----------------------------------------------------------------------------------------------------------------
                                                                                               Approximate Value
                                                             Applicable                         in U.S. Dollars
  Iranian-Linked                                            Information      Other Applicable     (``USD'') of
    Financial       Full Name(s) on                      regarding whether     Identifying        Transactions
   Institution       Correspondent      Correspondent    the Correspondent   Information for   Processed through
 Designated Under       Account       Account Number(s)   Account has been  the Correspondent  the Correspondent
      IEEPA                                                  Blocked or          Account         Account Within
                                                             Otherwise                            Preceding 90
                                                             Restricted                          Calendar Days
----------------------------------------------------------------------------------------------------------------
1                  .................  .................  .................  .................  .................
2                  .................  .................  .................  .................  .................
3                  .................  .................  .................  .................  .................
4                  .................  .................  .................  .................  .................
5                  .................  .................  .................  .................  .................
----------------------------------------------------------------------------------------------------------------
(Add more rows as needed.)

    C. Processed one or more transfers of funds related to an 
Iranian-Linked Financial Institution Designated Under IEEPA other 
than through a correspondent account: Check box to certify.
    [square] Foreign Bank hereby certifies that it has not processed 
one or more transfers of funds within the preceding 90 calendar days 
related to an Iranian-Linked Financial Institution Designated Under 
IEEPA, other than through a correspondent account detailed above.
    [square] Foreign Bank hereby certifies that it has processed one 
or more transfers of funds within the preceding 90 calendar days

[[Page 24421]]

related to an Iranian-Linked Financial Institution Designated Under 
IEEPA, other than through a correspondent account detailed above. 
(If this box has been selected please fill out the below information 
for each Iranian-Linked Financial Institution Designated Under 
IEEPA).

----------------------------------------------------------------------------------------------------------------
                                                                                               Approximate Value
                                                                                                   in USD of
                                                                                                 Transfer(s) of
  Iranian-Linked    Identify System                                          Other Applicable   Funds Processed
    Financial      or Means by Which     Full Name on    Account Number(s)     Identifying        (other than
   Institution       Transfer(s) of     Account(s) (if    (if applicable)    Information for       through a
 Designated Under      Funds Was         applicable)                         the Transfer(s)     Correspondent
      IEEPA            Processed                                                 of Funds       Account) Within
                                                                                                  Preceding 90
                                                                                                 Calendar Days
----------------------------------------------------------------------------------------------------------------
1                  .................  .................  .................  .................  .................
2                  .................  .................  .................  .................  .................
3                  .................  .................  .................  .................  .................
4                  .................  .................  .................  .................  .................
5                  .................  .................  .................  .................  .................
----------------------------------------------------------------------------------------------------------------
(Add more rows as needed.)

    D. Processed one or more transfers of funds related to an IRGC-
Linked Person Designated Under IEEPA: Check box to certify.
    [square] Foreign Bank hereby certifies that it has not processed 
one or more transfers of funds within the preceding 90 calendar days 
related to an IRGC-Linked Person Designated Under IEEPA.
    [square] Foreign Bank hereby certifies that it has processed one 
or more transfers of funds within the preceding 90 calendar days 
related to an IRGC-Linked Person Designated Under IEEPA. (If this 
box has been selected please fill out the below information for each 
IRGC-Linked Person Designated Under IEEPA).

----------------------------------------------------------------------------------------------------------------
                                                                                               Approximate Value
                    Identify System                                          Other Applicable      in USD of
   IRGC-Linked     or Means by Which     Full Name on    Account Number(s)     Identifying       Transfer(s) of
Person Designated    Transfer(s) of     Account(s) (if    (if applicable)    Information for    Funds Processed
   Under IEEPA         Funds Was         applicable)                         the Transfer(s)    Within Preceding
                       Processed                                                 of Funds       90 Calendar Days
----------------------------------------------------------------------------------------------------------------
1                  .................  .................  .................  .................  .................
2                  .................  .................  .................  .................  .................
3                  .................  .................  .................  .................  .................
4                  .................  .................  .................  .................  .................
5                  .................  .................  .................  .................  .................
----------------------------------------------------------------------------------------------------------------
(Add more rows as needed.)

    E. General
    Foreign Bank hereby agrees to notify in writing the Bank if 
Foreign Bank establishes a new Correspondent Account for an Iranian-
Linked Financial Institution Designated Under IEEPA at any time 
within 365 calendar days from the date of this response. Foreign 
Bank agrees to provide such notification within 30 calendar days of 
such change.
    Foreign Bank understands that the Bank will provide a copy of 
this Certification to the U.S. Department of the Treasury. Foreign 
Bank further understands that the statements contained in this 
Certification may be transmitted to one or more departments or 
agencies of the United States of America for the purpose of 
fulfilling such departments' and agencies' governmental functions.
    I, -------------------- (name of signatory), certify that I have 
read and understand this Certification, that the statements made in 
this Certification are complete and correct, and that I am 
authorized to execute this Certification on behalf of Foreign Bank.

[Name of Foreign Bank]-------------------------------------------------

[Signature]------------------------------------------------------------

[Printed Name]---------------------------------------------------------

[Title]----------------------------------------------------------------

Executed on this ------------------ day of --------------, 20----.
To be completed by the Bank: ------------

    I, -------------------- (name of signatory), have read and 
understand this Certification; the statements made in this 
Certification are complete and correct, to the best of the knowledge 
of the Bank; and the Bank does not know, suspect, or have reason to 
suspect that the Certification made by Foreign Bank is incorrect. I 
am authorized to submit this document on behalf of the Bank.
[Name of Bank]---------------------------------------------------------

[Signature]------------------------------------------------------------

[Printed Name]---------------------------------------------------------

[Title]----------------------------------------------------------------

Submitted on this ------------------ day of ----------, 20----.

[FR Doc. 2011-10482 Filed 4-29-11; 8:45 am]
BILLING CODE 4810-35-P