According to the USA PATRIOT Act, under which condition would US financial institutions (Fls) maintain correspondent accounts for foreign shell banks?

Question

Options

• AUS Fls cannot maintain correspondent bank accounts for foreign shell banks.
• BUS Fls can open correspondent bank accounts for foreign shell banks but only in certain
• CUS Fls must undertake a rigorous, risk-based approval process to open correspondent bank
• DUS Fls must be certified by the Financial Action Task Force to maintain correspondent accounts

• A
  82% (28)
• B
  9% (3)
• C
  6% (2)
• D
  3% (1)

Explanation

According to section 313 of the USA PATRIOT Act, a covered financial institution (generally any U.S. bank or broker dealer in securities) is prohibited from establishing, maintaining, administering, or managing a correspondent account in the U.S. for, or on behalf of, a foreign shell bank. A foreign shell bank is defined as a foreign bank that does not have a physical presence in any country. The only exception to this prohibition is if the foreign shell bank is a regulated affiliate of a depository institution, credit union, or foreign bank that maintains a physical presence in the U.S. or a foreign country, respectively. In that case, the U.S. financial institution must obtain a written certification from the foreign bank that it does not provide banking services to any other foreign shell banks.

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