[Federal Register Volume 89, Number 113 (Tuesday, June 11, 2024)]
[Notices]
[Pages 49273-49277]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-12728]


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DEPARTMENT OF THE TREASURY

Financial Crimes Enforcement Network


Agency Information Collection Activities; Proposed Renewal; 
Comment Request; Renewal Without Change of Due Diligence Programs for 
Correspondent Accounts for Foreign Financial Institutions and for 
Private Banking Accounts

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

ACTION: Notice and request for comments.

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SUMMARY: As part of its continuing effort to reduce paperwork and 
respondent burden, FinCEN invites comments on the proposed renewal, 
without change, of existing information collection requirements related 
to Bank Secrecy Act regulations that require certain banks, brokers or 
dealers in securities, futures commission merchants, introducing 
brokers in commodities, and mutual funds (each a ``covered financial 
institution'') to establish and maintain due diligence programs for 
foreign financial institutions and for private banking accounts. The 
required due diligence programs include: appropriate, specific, risk-
based, and, where necessary, enhanced policies, procedures, and 
controls reasonably designed to enable the covered financial 
institution to detect and report, on an on-going basis, money 
laundering conducted through or involving any correspondent accounts 
established, maintained, administered or managed by such covered 
financial institution in the United States for a foreign financial 
institution; and policies, procedures, and controls that are reasonably 
designed to detect and report any known or suspected money laundering 
or suspicious activity conducted through or involving any private 
banking account that is established, maintained, administered, or 
managed in the United States by such covered financial institution. The 
due diligence programs are required to be part of covered financial 
institutions' anti-money laundering programs. This request for comments 
is made pursuant to the Paperwork Reduction Act of 1995 (PRA).

DATES: Written comments are welcome and must be received on or before 
August 12, 2024.

ADDRESSES: Comments may be submitted by any of the following methods:
     Federal E-rulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments. Refer to Docket Number 
FINCEN-2023-0011 and Office of Management and Budget (OMB) control 
number 1506-0046.
     Mail: Policy Division, Financial Crimes Enforcement 
Network, P.O. Box 39, Vienna, VA 22183. Refer to Docket Number FINCEN-
2023-0011 and OMB control number 1506-0046.
    Please submit comments by one method only. Comments will be 
reviewed consistent with the PRA and applicable OMB regulations and 
guidance. All comments submitted in response to this notice will become 
a matter of public record. Therefore, you should submit only 
information that you wish to make publicly available.

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

SUPPLEMENTARY INFORMATION:

I. Statutory and Regulatory Provisions

    The legislative framework generally referred to as the Bank Secrecy 
Act (BSA) consists of the Currency and Foreign Transactions Reporting 
Act of 1970, as amended by the Uniting and

[[Page 49274]]

Strengthening America by Providing Appropriate Tools Required to 
Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act) \1\ and 
other legislation, including the Anti-Money Laundering Act of 2020 (AML 
Act).\2\ The BSA is codified at 12 U.S.C. 1829b and 1951-1960 and 31 
U.S.C. 5311-5314 and 5316-5336, and notes thereto, with implementing 
regulations at 31 CFR chapter X.
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    \1\ USA PATRIOT Act, Public Law 107-56.
    \2\ The AML Act was enacted as Division F, sections 6001-6511, 
of the William M. (Mac) Thornberry National Defense Authorization 
Act for Fiscal Year 2021, Public Law 116-283, 134 Stat. 3388 (NDAA).
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    The BSA authorizes the Secretary of the Treasury (Secretary) to, 
inter alia, require financial institutions to keep records and file 
reports that are determined to have a high degree of usefulness in 
criminal, tax, or regulatory matters, risk assessments or proceedings, 
or in the conduct of intelligence or counter-intelligence activities to 
protect against terrorism, and to implement anti-money laundering/
countering the financing of terrorism (AML/CFT) programs and compliance 
procedures.\3\ The authority of the Secretary to administer the BSA has 
been delegated to the Director of FinCEN.\4\
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    \3\ Section 358 of the USA PATRIOT Act expanded the purpose of 
the BSA by including a reference to reports and records ``that have 
a high degree of usefulness in intelligence or counterintelligence 
activities to protect against international terrorism.'' See 12 
U.S.C. 1829b(a). Section 6101 of the AML Act further expanded the 
purpose of the BSA to cover such matters as preventing money 
laundering, tracking illicit funds, assessing risk, and establishing 
appropriate frameworks for information sharing. See 31 U.S.C. 5311.
    \4\ Treasury Order 180-01 (Jan. 14, 2020).
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    Section 312 of the USA PATRIOT Act added subsection (i) to 31 
U.S.C. 5318 of the BSA. Section 312 mandates that each financial 
institution that establishes, maintains, administers, or manages a 
private banking account or a correspondent account in the United States 
for non-U.S. persons establish appropriate, specific, and, where 
necessary, enhanced, due diligence policies, procedures, and controls 
that are reasonably designed to detect and report instances of money 
laundering through those accounts. The regulations implementing the due 
diligence requirements for maintaining foreign correspondent accounts 
and private banking accounts are found at 31 CFR 1010.610 and 31 CFR 
1010.620, respectively, and apply to covered financial institutions 
defined as certain banks, brokers or dealers in securities, futures 
commission merchants, introducing brokers in commodities, and mutual 
funds.\5\
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    \5\ 31 CFR 1010.605(e).
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A. 31 CFR 1010.610--Due Diligence Programs for Correspondent Accounts 
for Foreign Financial Institutions

    Under 31 CFR 1010.610(a), covered financial institutions are 
required to establish due diligence policies, procedures, and controls 
that include each of the following for any correspondent account 
established, maintained, administered, or managed in the United States 
for a foreign financial institution: (i) determining whether any such 
correspondent account is subject to enhanced due diligence (EDD) 
requirements specified in 31 CFR 1010.610(b); (ii) assessing the money 
laundering risks presented by each such correspondent account based on 
a consideration of all relevant factors; \6\ and (iii) applying risk-
based procedures and controls to each such correspondent account 
reasonably designed to detect and report known or suspected money 
laundering activity, including a periodic review of the correspondent 
account activity sufficient to determine consistency with information 
obtained about the type, purpose, and anticipated activity of the 
account.
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    \6\ Relevant factors include, as appropriate: (i) the nature of 
the foreign financial institution's business and the markets it 
serves; (ii) the type, purpose, and anticipated activity of such 
correspondent account; (iii) the nature and duration of the covered 
financial institution's relationship with the foreign financial 
institution (and any of its affiliates); (iv) the AML and 
supervisory regime of the jurisdiction that issued the charter or 
license to the foreign financial institution, and, to the extent 
that information regarding such jurisdiction is reasonably 
available, of the jurisdiction in which any company that is an owner 
of the foreign financial institution is incorporated or chartered; 
and (v) information known or reasonably available to the covered 
financial institution about the foreign financial institution's AML 
record. 31 CFR 1010.610(a)(2).
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    Under 31 CFR 1010.610(b), covered financial institutions are 
required to establish EDD policies, procedures, and controls when 
establishing, maintaining, administering, or managing a correspondent 
account in the United States for certain foreign banks, as described in 
31 CFR 1010.610(c).\7\ The EDD shall include procedures designed to 
ensure that the covered financial institution, at a minimum, takes 
reasonable steps to:
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    \7\ The EDD procedures are required for any correspondent 
account maintained for a foreign bank that operates pursuant to: (i) 
an offshore banking license; (ii) a banking license issued by a 
foreign country that has been designated as non-cooperative with 
international AML principles or procedures by an intergovernmental 
group or organization of which the United States is a member and 
with which designation the U.S. representative to the group or 
organization concurs; or (iii) a banking license issued by a foreign 
country that has been designated by the Secretary as warranting 
special measures due to money laundering concerns. 31 CFR 
1010.610(c).
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    (1) Conduct enhanced scrutiny of such correspondent account to 
guard against money laundering and to identify and report any 
suspicious transactions in accordance with applicable law and 
regulation. This enhanced scrutiny shall reflect the risk assessment of 
the account and shall include, as appropriate: (i) obtaining and 
considering information relating to the foreign bank's AML program to 
assess the risk of money laundering presented by the foreign bank's 
correspondent account; (ii) monitoring transactions to, from, or 
through the correspondent account in a manner reasonably designed to 
detect money laundering and suspicious activity; (iii) if it is a 
payable-through account, obtaining information from the foreign bank 
about the identity of persons with authority to direct transactions 
through the correspondent account, as well as information about the 
sources and beneficial owners of funds or other assets in the payable-
through account; \8\
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    \8\ See 31 CFR 1010.610(b)(1)(iii)(B).
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    (2) Determine whether the foreign bank for which the correspondent 
account is established or maintained in turn maintains correspondent 
accounts for other foreign banks that use the foreign correspondent 
account established or maintained by the covered financial institution 
and, if so, take reasonable steps to obtain information relevant to 
assess and mitigate money laundering risks associated with the foreign 
bank's correspondent accounts for other foreign banks, including, as 
appropriate, the identity of those foreign banks; and
    (3) Determine, for any correspondent account established or 
maintained for a foreign bank whose shares are not publicly traded,\9\ 
the identity of each owner \10\ of the foreign bank and the nature and 
extent of each owner's ownership interest.
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    \9\ The term ``publicly traded'' is defined at 31 CFR 
1010.610(b)(3)(ii)(B).
    \10\ The term ``owner'' is defined at 31 CFR 
1010.610(b)(3)(ii)(A).
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    Under 31 CFR 1010.610(d), covered financial institutions are 
required to establish special procedures when due diligence or EDD 
cannot be performed, including when the covered financial institution 
should refuse to open the account, suspend transaction activity, file a 
suspicious activity report, or close the account.

[[Page 49275]]

B. 31 CFR 1010.620--Due Diligence Programs for Private Banking Accounts

    Under 31 CFR 1010.620, covered financial institutions are required 
to establish due diligence policies, procedures, and controls that, at 
a minimum, are designed to ensure that the covered financial 
institutions take reasonable steps to: (i) ascertain the identity of 
all nominal and beneficial owners of a private banking account; \11\ 
(ii) ascertain whether any nominal or beneficial owner is a senior 
foreign political figure; (iii) ascertain the source(s) of funds 
deposited into a private banking account and the purpose and expected 
use of the account; and (iv) review the activity of the account to 
ensure that it is consistent with the information obtained about the 
client's source of funds and with the stated purpose and expected use 
of the account, as needed to guard against money laundering, and to 
report in accordance with applicable law and regulation, any known or 
suspected money laundering or suspicious activity conducted to, from, 
or through a private banking account.
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    \11\ Private banking account means an account (or any 
combination of accounts) maintained at a covered financial 
institution that: (i) requires a minimum aggregate deposit of funds 
or other assets of not less than $1,000,000; (ii) is established on 
behalf of or for the benefit of one or more non-U.S. persons who are 
direct or beneficial owners of the account; and (iii) is assigned 
to, or is administered or managed by, in whole or in part, an 
officer, employee, or agent of a covered financial institution 
acting as a liaison between the covered financial institution and 
the direct or beneficial owner of the account. 31 CFR 1010.605(m).
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    Under 31 CFR 1010.620(c), in the case of a private banking account 
for which a senior foreign political figure is a nominal or beneficial 
owner, covered financial institutions are required to conduct enhanced 
scrutiny of the account that is reasonably designed to detect and 
report transactions that may involve the proceeds of foreign 
corruption.\12\
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    \12\ See 31 CFR 1010.620(c)(2) for the definition of the term 
``proceeds of foreign corruption.''
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    Under 31 CFR 1010.620(d), covered financial institutions are 
required to establish special procedures when appropriate due diligence 
cannot be performed, including when the covered financial institution 
should refuse to open the account, suspend transaction activity, file a 
suspicious activity report, or close the account.

II. Paperwork Reduction Act of 1995 13
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    \13\ Public Law 104-13, 44 U.S.C. 3506(c)(2)(A).
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    Title: Due diligence programs for correspondent accounts for 
foreign financial institutions and private banking accounts (31 CFR 
1010.610 and 31 CFR 1010.620).
    OMB Control Number: 1506-0046.
    Form Number: Not applicable.
    Abstract: FinCEN is issuing this notice to renew the OMB control 
number for the regulations that require covered financial institutions 
to establish and maintain due diligence programs for correspondent 
accounts for foreign financial institutions and for private banking 
accounts.
    Affected Public: Businesses or other for-profit institutions, and 
non-profit institutions.
    Type of Review: Renewal without change of a currently approved 
information collection.
    Frequency: As required.
    Estimated Number of Respondents: 16,232 financial institutions.\14\
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    \14\ Table 1 below breaks down the types of financial 
institutions covered by this notice.
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    Estimated Recordkeeping Burden:
    In Part 1 of this notice, FinCEN describes the distribution of the 
estimated number of covered financial institutions, by type. In Part 2, 
FinCEN proposes for review and comment a renewal of the calculation of 
the annual PRA burden that includes a scope and methodology similar to 
that used in the 2020 notice to renew this information collection.\15\
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    \15\ See FinCEN, Agency Information Collection Activities; 
Proposed Renewal; Comment Request; Renewal Without Change of Anti-
Money Laundering Programs; Due Diligence Programs for Correspondent 
Accounts for Foreign Financial Institutions and for Private Banking 
Accounts, 85 FR 61104 (Sept. 29, 2020).
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Part 1. Distribution of the Financial Institutions Covered by This 
Notice
    The distribution of financial institutions, by type, covered by 
this notice is reflected in table 1 below:

     Table 1--Financial Institutions Covered by This Notice, by Type
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                      Type of institution                         Count
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Banks with a Federal functional regulator (FFR) \a\............    9,800
Banks lacking an FFR \b\.......................................      600
Brokers or dealers in securities \c\...........................    3,478
Mutual funds \d\...............................................    1,400
Futures commission merchants and introducing brokers in              954
 commodities \e\...............................................
                                                                --------
    Total......................................................   16,232
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\a\ This estimate is based on call report data, as publicly available
  for download at the end of June 2023, from the Federal Financial
  Institutions Examination Council (FFIEC) for certain types of banks,
  savings associations, thrifts, trust companies (https://cdr.ffiec.gov/public/pws/downloadbulkdata.aspx) and from the NCUA for credit unions
  (https://www.ncua.gov/analysis/credit-union-corporate-call-report-data data).
\b\ This estimate of active entries as of year-end 2023 incorporates
  data from both public and non-public sources, including: Call Reports;
  various State banking/financial institution regulators' websites and
  directories; the Federal Reserve Board of Governors' Master Account
  and Services database (https://federalreserve.gov/paymentsystems/master-account-and services-database-exisiting-access.htm); and data
  from the OCIF (Oficina del Comisionado de Instituciones Financieras);
  and was derived in consultation with staff from the Internal Revenue
  Service's Small Business/Self-Employed Division.
\c\ Estimate based on December 2023 file downloaded from data maintained
  by the U.S. Securities and Exchange Commission's (SEC). SEC, Company
  Information About Active Broker-Dealers available at https://www.sec.gov/help/foiadocsbdfoia (accessed on Feb. 28, 2024).
\d\ This estimate of the number of active mutual funds as of year-end
  2023 is based on Form N-CEN filings received by the SEC through
  January 20, 2023, as represented by data downloaded from SEC Open
  Data. SEC, Open Data, available at https://www.sec.gov/dera/data/form-ncen-data-sets (accessed Feb. 29, 2024).
\e\ The number of futures commissions merchants as of December 31, 2023,
  was obtained from data available through the Commodity Futures Trading
  Commission (CFTC). CFTC, Financial Data for Futures Commission
  Merchants, available at https://www.cftc.gov/MarketReports/financialfcmdata/index.htm (accessed Mar. 1, 2024). To prevent double
  counting in burden estimates, 35 covered financial institutions that
  are also affected entities as broker-dealers were removed from the
  count; the count of introducing brokers in commodities as of year-end
  2023 was provided by the CFTC.

    In connection with a variety of initiatives FinCEN is undertaking 
to implement the AML Act, FinCEN intends to conduct, in the future, 
additional assessments of the PRA burden associated with BSA 
requirements.
Part 2. Annual PRA Burden and Cost
    The scope of the annual PRA burden and cost estimates in this 
renewal is limited to maintaining and updating the due diligence 
programs as part of current AML program requirements for covered 
financial institutions. Due to the practical challenges of obtaining 
the total number of correspondent accounts maintained by covered 
financial

[[Page 49276]]

institutions for foreign financial institutions subject to general due 
diligence requirements, the number of correspondent accounts maintained 
for foreign banks subject to EDD requirements, and the number of 
private banking accounts, the scope of the annual PRA burden is limited 
to the annual burden of (i) maintaining and updating a due diligence 
program as part of the AML program for foreign correspondent accounts 
and private banking accounts, and (ii) securing approval of the program 
by an appropriate level of senior management.
    FinCEN continues estimating the annual hourly burden of maintaining 
and updating the due diligence program for foreign correspondent 
accounts and private banking accounts at two hours per covered 
financial institution. This estimate covers the burden of (i) 
maintaining and updating the due diligence program to take into 
consideration any regulatory changes and any potential modifications 
required by changes in the types of foreign correspondent accounts or 
private banking accounts maintained, or by changes in the operations or 
organizational structure of the foreign financial institutions for 
which a covered financial institution maintains accounts, as well as 
changes to the organizational structure of private banking accounts 
(one hour), and (ii) presenting the updated due diligence program to 
the appropriate level of senior management of the financial institution 
for approval (one hour).
    FinCEN's estimate of the annual PRA burden, therefore, is 32,464 
hours, as detailed in table 2 below:

     Table 2--Burden Associated With Updating and Maintaining the Due Diligence Program and Obtaining Senior
                                       Management Approval of the Program
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                                 Number of         Time per financial       Aggregate burden hours per
      Type of financial          financial        institution (hours)                  step               Total
         institution           institutions  ----------------------------------------------------------  burden
                               (see table 1)    Maintenance     Approval     Maintenance     Approval     hours
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Banks with an FFR...........           9,800               1            1           9,800        9,800    19,600
Banks without an FFR........             600               1            1             600          600     1,200
Brokers or dealers in                  3,478               1            1           3,478        3,478     6,956
 securities.................
Mutual funds................           1,400               1            1           1,400        1,400     2,800
Futures commission merchants             954               1            1             954          954     1,908
 and introducing brokers in
 commodities................
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    Total Burden Hours......  ..............  ..............  ...........          16,232       16,232    32,464
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    FinCEN is utilizing the same fully-loaded composite hourly wage 
rate of $106.30 utilized in the notice of proposed rulemaking (NPRM) 
entitled Customer Identification Programs for Registered Investment 
Advisers and Exempt Reporting Companies, which was published on May 21, 
2024.\16\
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    \16\ See FinCEN and SEC, NPRM Customer Identification Programs 
for Registered Investment Advisers and Exempt Reporting Advisers, 89 
FR 44571 (May 21, 2024). Specifically, as set out on 89 FR 44590, 
table 1, footnote 1, the wage rate applied here is a general 
composite hourly wage ($74.86), scaled by a private-sector benefits 
factor of 1.42 ($106.30 = $74.86 x 1.42), that incorporates the mean 
wage data (available for download at https://www.bls.gov/oes/tables.htm, ``May 2022--National industry-specific and by 
ownership'') associated with the six occupational codes (11-1010: 
Chief Executives; 11-3021: Computer and Information Systems 
Managers; 11-3031: Financial Managers; 13-1041: Compliance Officers; 
23-1010: Lawyers and Judicial Law Clerks; 43-3099: Financial Clerks, 
All Other) for each of the nine groupings of NAICS industry codes 
that FinCEN determined are most directly comparable to its eleven 
categories of covered financial institutions as delineated in 31 CFR 
parts 1020 to 1030. The benefit factor is 1 plus the benefit/wages 
ratio, where as of Dec. 2023, Total Benefits = 29.6 and Wages and 
salaries = 70.4 (29.6/70.4 = 0.42) based on the private industry 
workers series data downloaded from https://www.bls.gov/web/ecec/ecec-private-dataset.xlsx, accessed Mar. 22, 2024.
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    The total estimated cost of the annual PRA burden is $3,450,923.20, 
as reflected in table 3 below:

                                  Table 3--Total Cost of the Annual PRA Burden
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                            Steps                               Hourly burden    Hourly cost       Total cost
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Maintaining and updating the program.........................          16,232         $106.30      $1,725,461.60
Board of directors/senior management approval of the program.          16,232          106.30       1,725,461.60
                                                              --------------------------------------------------
    Total Cost...............................................  ..............  ..............       3,450,923.20
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    Estimated Recordkeeping Burden: The average estimated annual PRA 
burden, measured in hours per respondent, is two hours (one burden hour 
to annually maintain and update the due diligence program, and one hour 
to annually obtain senior management approval of the due diligence 
program).
    Estimated Number of Respondents: 16,232, as set out in table 1.
    Estimated Total Annual Responses: 16,232 revised due diligence 
programs for foreign correspondent accounts and private banking 
accounts annually; and 16,232 due diligences programs for foreign 
correspondent accounts and private banking accounts approved by senior 
management each year, as set out in table 2.
    Estimated Total Annual Recordkeeping Burden: The estimated total 
annual PRA burden is 32,464 hours, as set out in table 2.
    Estimated Total Annual Recordkeeping Cost: The estimated total 
annual PRA cost is $3,450,923.20, as set out in table 3.
    An Agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless the collection of 
information displays a valid OMB control number. Records required to be 
retained under the BSA must be retained for five years.

[[Page 49277]]

    Request for Comments: Comments submitted in response to this notice 
will be summarized and/or included in the request for OMB approval. All 
comments will become a matter of public record. Comments are invited 
on: (i) whether the collection of information is necessary for the 
proper performance of the functions of the agency, including whether 
the information shall have practical utility; (ii) the accuracy of the 
agency's estimate of the burden of the collection of information; (iii) 
ways to enhance the quality, utility, and clarity of the information to 
be collected; (iv) ways to minimize the burden of the collection of 
information on respondents, including through the use of automated 
collection techniques or other forms of information technology; and (v) 
estimates of capital or start-up costs and costs of operation, 
maintenance, and purchase of services to provide information.

Andrea M. Gacki,
Director, Financial Crimes Enforcement Network.
[FR Doc. 2024-12728 Filed 6-10-24; 8:45 am]
BILLING CODE 4810-02-P