[Federal Register Volume 85, Number 154 (Monday, August 10, 2020)]
[Rules and Regulations]
[Pages 48104-48105]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-17144]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF THE TREASURY

Financial Crimes Enforcement Network

31 CFR Part 1010


Financial Crimes Enforcement Network; Withdrawal of the Notice of 
Finding Involving Banco Delta Asia SARL (BDA)

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

ACTION: Withdrawal of finding.

-----------------------------------------------------------------------

SUMMARY: This document withdraws FinCEN's finding that BDA is a 
financial institution of primary money laundering concern, which was 
issued pursuant to Section 311 of the USA PATRIOT Act (Section 311). 
Subsequent to the issuance of this withdrawal, FinCEN will reassess 
whether BDA is presently a financial institution of primary money 
laundering concern and additional rulemaking is warranted. Elsewhere in 
this issue of the Federal Register, FinCEN is publishing a repeal of 
the related rulemaking, published March 19, 2007, imposing the fifth 
special measure against BDA.

DATES: As of August 10, 2020, the Notice of Finding, published 
September 20, 2005, at 70 FR 55214, is withdrawn.

FOR FURTHER INFORMATION CONTACT: The FinCEN Resource Center at 
[email protected].

I. Statutory Background

    On October 26, 2001, the President signed into law the Uniting and 
Strengthening America by Providing Appropriate Tools Required to 
Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56 (USA 
PATRIOT Act). Title III of the USA PATRIOT Act amends the anti-money 
laundering provisions of the Bank Secrecy Act (BSA), codified at 12 
U.S.C. 1829b, 12 U.S.C. 1951-1959, and 31 U.S.C. 5311-5314, 5316-5332, 
to promote the prevention, detection, and prosecution of international 
money laundering and the financing of terrorism. Regulations 
implementing the BSA appear at 31 CFR chapter X. The authority of the

[[Page 48105]]

Secretary of the Treasury to administer the BSA and its implementing 
regulations has been delegated to the Director of FinCEN.
    Section 311 of the USA PATRIOT Act grants the Secretary the 
authority, upon finding that reasonable grounds exist for concluding 
that a foreign jurisdiction, foreign financial institution, class of 
transactions, or type of account is of ``primary money laundering 
concern,'' to require domestic financial institutions and financial 
agencies to take certain ``special measures'' to address the primary 
money laundering concern. The five special measures enumerated under 
Section 311 are prophylactic safeguards that defend the U.S. financial 
system from money laundering and terrorist financing. FinCEN may impose 
one or more of these special measures in order to protect the U.S. 
financial system from these threats. To that end, special measures one 
through four, codified at 31 U.S.C. 5318A(b)(1)-(b)(4), impose 
additional recordkeeping, information collection, and information 
reporting requirements on covered U.S. financial institutions. The 
fifth special measure, codified at 31 U.S.C. 5318A(b)(5), allows the 
Secretary to prohibit or impose conditions on the opening or 
maintaining of correspondent or payable-through accounts by covered 
U.S. financial institutions for or on behalf of a foreign banking 
institution.
    Taken as a whole, Section 311 provides the Secretary with a range 
of options that can be adapted to target specific money laundering and 
terrorist financing concerns most effectively. These options provide 
the authority to bring additional and necessary pressure on those 
jurisdictions and institutions that pose money-laundering threats and 
the ability to take steps to protect the U.S. financial system. Through 
the imposition of various special measures, FinCEN can: Gain more 
information about the concerned jurisdictions, financial institutions, 
transactions, and accounts; monitor more effectively the respective 
jurisdictions, financial institutions, transactions, and accounts; and, 
ultimately, protect U.S. financial institutions from involvement with 
jurisdictions, financial institutions, transactions, or accounts that 
pose a money laundering concern.

II. Administrative Background

    On September 20, 2005 (70 FR 55214), FinCEN published a finding in 
the Federal Register that reasonable grounds existed to conclude that 
BDA was a foreign financial institution of primary money laundering 
concern (Notice of Finding).\1\ Simultaneous with publication of the 
Notice of Finding, FinCEN published a Notice of Proposed Rulemaking 
proposing the imposition of the fifth special measure against BDA.\2\ 
On March 19, 2007 (72 FR 12730), FinCEN published a final rule in the 
Federal Register imposing the fifth special measure against BDA, 
codified at 31 CFR 103.193 (subsequently renumbered as 31 CFR 1010.655) 
(Final Rule).\3\
---------------------------------------------------------------------------

    \1\ 70 FR 55214 (Sept. 20, 2005).
    \2\ Id. at 55217.
    \3\ 72 FR 12731 (Mar. 19, 2007).
---------------------------------------------------------------------------

    Shortly after FinCEN concluded its rulemaking proceedings, in April 
2007, BDA submitted a petition requesting the immediate rescission of 
the Final Rule. The following month, Stanley Au and Delta Asia Group 
(Holdings) Ltd., the owners of BDA, filed a separate petition for 
rescission of the Final Rule. FinCEN denied both petitions on September 
21, 2007. On November 16, 2010, BDA again petitioned FinCEN to repeal 
the Final Rule. As part of an ongoing dialogue between FinCEN and BDA 
from 2012 through 2019, BDA agreed to arrange for two independent 
reviews of the bank, the results of which were subsequently shared with 
FinCEN.
    By letter dated September 26, 2019, FinCEN ultimately denied BDA's 
November 2010 petition, providing BDA a memorandum thoroughly 
explaining its decision. In its denial, FinCEN discussed the results of 
the independent reviews of BDA and identified the limitations in these 
reviews. FinCEN acknowledged that BDA had taken steps to address some 
of the deficiencies highlighted in the Notice of Finding and Final 
Rule, but concluded that BDA had failed to correct other significant 
deficiencies. FinCEN ultimately determined that BDA's AML compliance 
efforts remained inadequate to address the risks identified in the 
Notice of Finding and Final Rule.
    In addition to petitioning FinCEN to withdraw the Final Rule, BDA 
filed suit on March 14, 2013, in the United States District Court for 
the District of Columbia challenging the Notice of Finding and the 
Final Rule. This litigation was stayed for many years so that the 
dialogue described above could continue. Both FinCEN and BDA have since 
agreed that there are advantages to FinCEN's revisiting the Final Rule 
and to settling this litigation. This course of action allows BDA to 
submit any remaining additional comments and permits FinCEN to take 
stock of the present circumstances and, if appropriate, to avail itself 
of the informal rulemaking process (providing the public with an 
opportunity for notice and comment, in contrast to action on a 
petition) if it decides to take further action. As part of this 
settlement, FinCEN has agreed to reassess whether BDA is presently a 
financial institution of primary money laundering concern. BDA will be 
permitted to submit comments to FinCEN regarding the September 26, 2019 
petition denial prior to FinCEN's engaging in any additional Section 
311 rulemaking involving BDA.
    In the event that FinCEN determines that the imposition of any 
special measures may be warranted, it will undertake a new rulemaking 
effort (including the publication of a new notice of proposed 
rulemaking). Any such proposed rule will allow for 30 days of comment, 
and as part of the rulemaking proceeding, FinCEN will make available 
for comment the unclassified, non-protected material relied upon by 
FinCEN in connection with any such rulemaking. If FinCEN determines 
that a final rule is appropriate, FinCEN will publish such a final rule 
60 days following the close of the comment period. If the extent of 
submitted comments requires additional time, or if COVID-19-related 
issues hinder the agency's ability to satisfy the proposed timeframes, 
FinCEN will so announce in the Federal Register.

III. Withdrawal of the Notice of Finding

    For the reasons set forth above, FinCEN hereby withdraws the Notice 
of Finding that BDA is of primary money laundering concern published on 
September 20, 2005.

Michael Mosier,
Deputy Director, Financial Crimes Enforcement Network.
[FR Doc. 2020-17144 Filed 8-7-20; 8:45 am]
BILLING CODE 4810-02-P