The USA PATRIOT Act requires United States (U.S.) financial institutions to collect certain information from non-U.S. banks that hold a correspondent account.
Which two pieces of information must a non-U.S. bank provide to its U.S. correspondent to enable them to comply with this requirement? (Choose two.)
Click on the arrows to vote for the correct answer
A. B. C. D.BC
https://www.sec.gov/about/offices/ocie/amlsourcetool.htmThe USA PATRIOT Act (Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act) is a U.S. law enacted in response to the 9/11 terrorist attacks. It aims to enhance national security, prevent money laundering, and combat financing of terrorism. One of the provisions of the act requires U.S. financial institutions to collect certain information from non-U.S. banks that hold a correspondent account.
A correspondent account is an account established by a financial institution to receive deposits from, make payments on behalf of, or handle other financial transactions for another financial institution. Non-U.S. banks that hold a correspondent account with a U.S. financial institution are subject to specific reporting and information-sharing requirements.
According to the question, the two pieces of information that a non-U.S. bank must provide to its U.S. correspondent to comply with the USA PATRIOT Act requirement are:
The name and address of all beneficial owners who own 25% or more of the bank: Beneficial owners are individuals who have significant ownership or control over a legal entity, such as a bank. The USA PATRIOT Act aims to increase transparency and prevent money laundering by identifying individuals who hold substantial ownership interests in non-U.S. banks. By providing the names and addresses of beneficial owners who own 25% or more of the bank, the non-U.S. bank enables its U.S. correspondent to verify the ownership structure and comply with anti-money laundering (AML) regulations.
The name and address of a U.S. person who is authorized to receive service of legal process for the bank: This requirement ensures that there is a designated individual within the non-U.S. bank's organization who can receive legal documents, such as subpoenas or court orders, on behalf of the bank. By providing this information, the non-U.S. bank enables its U.S. correspondent to facilitate legal processes effectively when required.
Let's go through the answer choices to identify the two correct options:
A. The name and address of all shell banks the bank maintains accounts for: This option is not correct. The USA PATRIOT Act prohibits U.S. financial institutions from establishing or maintaining correspondent accounts with shell banks, which are banks with no physical presence in any country. Non-U.S. banks are not required to provide information about shell banks they maintain accounts for, but rather the beneficial owners and the authorized U.S. person.
B. The name and address of all beneficial owners who own 25% or more of the bank: This option is correct, as explained above. Non-U.S. banks must provide this information to comply with the USA PATRIOT Act.
C. Prompt notice of any suspicious activity it detects on any customer who uses the correspondent account: While reporting suspicious activity is an important aspect of AML compliance, this is not the information required by the USA PATRIOT Act in this specific context. This option is not correct for this question.
D. The name and address of a U.S. person who is authorized to receive service of legal process for the bank: This option is correct, as explained above. Non-U.S. banks must provide this information to comply with the USA PATRIOT Act.
Therefore, the correct answers are B. The name and address of all beneficial owners who own 25% or more of the bank and D. The name and address of a U.S. person who is authorized to receive service of legal process for the bank.