On March 10, 2015, the Treasury Department's Financial Crimes Enforcement Network (FinCEN) named Banca Privada d'Andorra (BPA) a foreign financial institution of "primary money laundering concern," a measure that will prohibit BPA from engaging in transactions with the U.S. financial system. Along with this announcement, FinCEN issued a Notice of Proposed Rulemaking which will require U.S. financial institutions to take special measures to curtail activity on BPA's correspondent accounts and monitor transactions for activity involving BPA.
In its Notice of Findings, FinCEN announced that "several officials of BPA's high-level management in Andorra have facilitated financial transactions on behalf of Third-Party Money Launderers (TPMLs) providing services for individuals and organizations involved in organized crime, corruption, smuggling, and fraud," noting that management had "close relationships" with these TPMLs. Andorra has taken over BPA in response to FinCEN's determination. In addition, Spain has now intervened in the management of BPA subsidiary Banco de Madrid.
The proposed rule seeks to prohibit covered financial institutions from establishing, maintaining, administering, or managing in the U.S. any correspondent account for or on behalf of BPA. In addition, the proposed rule would require covered financial institutions to:
- conduct special due diligence for correspondent accounts to prohibit them from engaging in transactions with BPA;
- provide notice to foreign correspondent account holders that the covered financial institutions know or have reason to know provide services to BPA that they may not provide BPA with access to the correspondent account maintained at the covered financial institution;
- implement appropriate risk-based procedures to identify transactions involving BPA; and
- where there is reason to suspect use of a correspondent account to surreptitiously process transactions involving BPA, take all appropriate steps to attempt to verify and prevent such use, including if necessary terminating the correspondent account.
FinCEN has specifically invited comments on a number of these measures. In the meantime, financial institutions should take a proactive approach in monitoring correspondent accounts for BPA-related activity. While FinCEN has not specifically stated it, accounts involved in transactions with BPA would appear on their face to raise enough suspicion to warrant filing a SAR.
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