The Board of Governors of the Federal Reserve System is issuing this SR letter to advise banking organizations under its supervision that the U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) has imposed special measures against Banco Delta Asia SARL, Macau, Special Administrative Region, China (Banco Delta Asia). These measures create obligations for U.S. banking organizations with regard to this institution.
On March 14, 2007, FinCEN issued a final rule that imposes special measures under section 311 of the USA PATRIOT Act (31 U.S.C. 5318A)1 against Banco Delta Asia. These special measures apply only to Banco Delta Asia and its branches, offices, and subsidiaries operating in Macau or in any other jurisdiction. They do not apply to its parent company, Delta Asia Group (Holdings) Ltd., or any of the parent company's other subsidiaries. The final rule specifically identifies eight branches operating in Macau; five offices, including a representative office in Tokyo; and two wholly owned subsidiaries, Delta Asia Credit Limited and Delta Asia Insurance Limited. This final rule is effective April 18, 2007; it can be found at (http://www.fincen.gov/reg_section311.html).
The final rule prohibits all covered financial institutions2 from opening or maintaining a correspondent account in the United States for, or on behalf of, Banco Delta Asia or its branches, offices, and subsidiaries. Covered financial institutions are also required to apply special due diligence to their correspondent accounts for foreign banks that is reasonably designed to guard against the indirect use of such accounts by Banco Delta Asia.
At a minimum, special due diligence under the final rule must include two elements:
The final rule states that a covered financial institution must take a risk-based approach based on factors such as the type of services offered by, and the geographic locations of, its correspondent account holders when deciding what, if any, additional due diligence measures it should adopt to guard against the indirect use of its correspondent accounts by Banco Delta Asia. Pursuant to the final rule, a covered financial institution that obtains knowledge that a correspondent account is being used by a foreign bank to provide indirect access to Banco Delta Asia must take all appropriate steps to prevent such indirect access, including, when necessary, terminating the correspondent account.
Reserve Banks are asked to distribute this SR letter to domestic and foreign banking organizations supervised by the Federal Reserve as well as to supervisory and examination staff. For questions regarding these special measures, please contact Suzanne Williams, Manager, BSA/AML Risk (202) 452-3513.