Money Laundering, Terrorism and Financial Institutions - USA Patriot Act Monitor

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4/04/2006 PATRIOT FinCEN Extends Applicability Date for Correspondent and Private Banking Account Due Diligence Programs

The March issue of the Monitor analyzed final rules requiring “covered” financial institutions to establish due diligence procedures for correspondent accounts and private banking accounts maintained for non-U.S. persons.  The rules were to apply to new accounts opened on or after April 4, 2006.  Responding to industry pressure, FinCEN has extended the applicability date to July 5, 2006.  Letters objecting to the short applicability date came from the Investment Company Institute, the Securities Industry Association, the Futures Industry Association, and the Clearing House Association, all of which argued that it would be difficult for their members to design, develop, test, and implement procedures, forms, and systems under the new rules by April 4. FinCEN emphasized that it did not anticipate granting any further extensions for compliance.  October 2 remains the deadline for previously opened correspondent and private banking accounts, but previously opened accounts are now those established before July 5, 2006.  

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