Prohibition on US Banking with Al-Huda Bank
Summary
FinCEN is issuing this final rule to prohibit covered U.S. financial institutions from opening or maintaining a correspondent account for, or on behalf of Al-Huda Bank, a foreign financial institution based in Iraq found to be of primary money laundering concern pursuant to section 311 of the USA PATRIOT Act. The rule further requires covered U.S. financial institutions to take reasonable steps not to process transactions for the correspondent account of a foreign banking institution in the United States if such a transaction involves Al-Huda Bank. It also requires covered institutions to apply special due diligence to their foreign correspondent accounts that is reasonably designed to guard against their use to process transactions involving Al-Huda Bank.
Compliance Requirements
- #1
Prohibit covered U.S. financial institutions from opening or maintaining a correspondent account in the United States for, or on behalf of, Al-Huda Bank; Prohibit covered financial institutions from processing a transaction involving Al-Huda Bank through the United States correspondent account of a foreign banking institution; Require covered financial institutions to apply special due diligence to their foreign correspondent accounts that is reasonably designed to guard against their use to process transactions involving Al-Huda Bank; Covered financial institutions must take reasonable steps not to process transactions for the correspondent account of a foreign banking institution in the United States if such a transaction involves Al-Huda Bank
Deadline: 2024-08-02(30 days after date of publication in the Federal Register (07/03/2024))
Market Impacts
Prohibition on U.S. financial institutions from opening or maintaining correspondent accounts for Al-Huda Bank, preventing direct access to U.S. financial system; Requirement for covered U.S. financial institutions to take reasonable steps not to process transactions through foreign correspondent accounts if such transactions involve Al-Huda Bank; Central Bank of Iraq banned Al-Huda Bank from accessing the CBI dollar auction following FinCEN's NPRM, preventing participation in wire auction mechanism for USD access; Creates opportunities for other financial institutions to capture business previously handled by Al-Huda Bank, particularly in Euro and UAE dirham transactions
Validated Company Impacts
PNC FINANCIAL SERVICES GROUP, INC.
PNC Financial Services Group is a major U.S. financial institution that operates correspondent banking services and processes international transactions, directly falling under the rule's scope as a covered U.S. financial institution. The rule's requirements to prohibit correspondent accounts for Al-Huda Bank and implement special due diligence measures would directly impact PNC's international banking operations and compliance procedures. The rule's focus on correspondent banking restrictions and anti-money laundering compliance has minimal alignment with the company's disclosed risk profile, which emphasizes operational, financial derivatives, and information security risks without specific mention of correspondent banking or AML concerns. The regulatory change risk category shows some indirect relevance but lacks direct overlap with the specialized financial institution targeting in this rule.
REGIONS FINANCIAL CORP
Regions Financial Corp is a covered U.S. financial institution that maintains correspondent accounts and processes international transactions, directly falling under the rule's requirements to prohibit correspondent banking relationships with Al-Huda Bank and implement enhanced due diligence measures. The rule specifically targets correspondent banking relationships with Al-Huda Bank, which is a narrow, institution-specific prohibition rather than a broad risk category. The company's disclosed risk factors focus on general market conditions, credit losses, and operational risks, with no mention of correspondent banking, international transaction processing, or specific foreign financial institution exposure that would align with this rule's targeted scope.
RAYMOND JAMES FINANCIAL INC
Raymond James Financial operates as a covered U.S. financial institution through its banking segment, engaging in correspondent banking and international transaction processing that directly falls under this rule's jurisdiction. The company's capital markets and banking operations would be required to implement the special due diligence measures and transaction prohibitions regarding Al-Huda Bank. The rule's money laundering compliance requirements have minimal alignment with the company's disclosed risk profile, which focuses on cybersecurity, model risk, and general compliance sanctions without specific mention of anti-money laundering or correspondent banking risks. The company's compliance risk category is broad but lacks direct overlap with the specialized financial crime prevention measures mandated by this rule.
ASSOCIATED BANC-CORP
Associated Banc-Corp operates as a U.S. financial institution with correspondent banking relationships and international transaction processing capabilities, directly falling under the rule's coverage as a covered U.S. financial institution. The company's corporate and commercial specialty segment specifically serves financial institutions, indicating direct exposure to correspondent account requirements and transaction processing prohibitions involving Al-Huda Bank. The rule specifically targets money laundering risks in correspondent banking relationships with Al-Huda Bank, which does not align with any of the company's disclosed risk factors. The company's risks focus on capital adequacy, credit losses, dividends, and economic sensitivity, none of which relate to anti-money laundering compliance or correspondent banking restrictions.
AMERICAN EXPRESS CO
American Express operates as a covered U.S. financial institution through its AENB depository institution subsidiary and engages in correspondent banking relationships as part of its global payments network. The company's international card services and global merchant network involve processing cross-border transactions that would fall under the rule's prohibition on processing transactions involving Al-Huda Bank. The rule specifically targets correspondent banking relationships with Al-Huda Bank, which is a narrow, institution-specific prohibition rather than a broad regulatory requirement affecting general financial operations. The company's risk factors focus on macroeconomic, competitive, and technological challenges without mentioning correspondent banking, money laundering, or specific foreign financial institution exposure.
BANK OF AMERICA CORP /DE/
Bank of America is a major U.S. financial institution that operates correspondent banking services and processes international transactions, directly falling under the rule's scope as a covered U.S. financial institution. The rule's requirements to prohibit correspondent accounts for Al-Huda Bank and implement special due diligence measures would directly impact Bank of America's international banking operations and compliance procedures. The rule focuses specifically on correspondent banking restrictions and money laundering concerns related to Al-Huda Bank, which does not align with any of the company's disclosed risk factors. The company's risks are primarily financial reporting, accounting compliance, and asset valuation issues, none of which relate to correspondent banking relationships or anti-money laundering requirements.
HUNTINGTON BANCSHARES INC /MD/
Huntington Bancshares operates as a covered U.S. financial institution that maintains correspondent accounts and processes international transactions, directly falling under the rule's requirements to prohibit correspondent banking with Al-Huda Bank and implement enhanced due diligence measures. The rule specifically targets correspondent banking relationships with Al-Huda Bank, which does not align with any of the company's disclosed risk factors. The company's risks focus on credit losses, interest rates, loan quality, and goodwill impairment, none of which relate to correspondent banking prohibitions or anti-money laundering requirements.
BANCFIRST CORP /OK/
BancFirst Corporation operates as a commercial bank, making it a covered U.S. financial institution directly subject to this rule's requirements. The company engages in correspondent banking and international transactions that would require compliance with the prohibition on maintaining accounts for Al-Huda Bank and implementing special due diligence measures. The rule specifically targets correspondent banking relationships with Al-Huda Bank, which does not align with any of the company's disclosed risk factors. While the company has regulatory risks including Patriot Act and OFAC compliance, these are general financial crimes compliance risks rather than specific prohibitions against a particular foreign bank.
BOK FINANCIAL CORP
BOK Financial operates as a covered U.S. financial institution offering correspondent banking services, treasury management, and international transaction processing, which directly fall under the rule's requirements to prohibit correspondent accounts for Al-Huda Bank and implement special due diligence measures. The rule's focus on correspondent banking restrictions and anti-money laundering compliance has minimal alignment with BOK Financial's disclosed risk factors. While the company identifies regulatory compliance risks generally, none specifically address correspondent banking relationships, anti-money laundering controls, or international transaction processing that would be directly impacted by this Al-Huda Bank prohibition.
CITIZENS FINANCIAL GROUP INC/RI
Citizens Financial Group operates as a covered U.S. financial institution that maintains correspondent accounts and processes international transactions, directly falling under the rule's jurisdiction requiring prohibition of correspondent accounts for Al-Huda Bank and enhanced due diligence measures. The rule specifically targets correspondent banking relationships with Al-Huda Bank, which is a narrow, institution-specific prohibition rather than a broad regulatory requirement affecting general financial operations. The company's disclosed risk factors focus on general regulatory supervision and business strategy execution without mentioning correspondent banking, money laundering concerns, or specific institution prohibitions, indicating minimal direct risk alignment.
COMERICA INC /NEW/
Comerica is a major U.S. financial institution that operates correspondent banking services and processes international transactions, directly falling under the rule's scope as a covered U.S. financial institution. The company's commercial banking operations and foreign exchange activities would require compliance with the prohibition on maintaining correspondent accounts for Al-Huda Bank and implementing special due diligence measures. The rule focuses exclusively on anti-money laundering compliance and correspondent banking restrictions targeting a specific Iraqi financial institution, while the company's only disclosed risk factor is cybersecurity threats with no mention of financial services operations, regulatory compliance, or international banking exposure. There is no meaningful overlap between the rule's money laundering prevention requirements and the company's cybersecurity risk profile.
FIRST HORIZON CORP
First Horizon Corp operates as a regional bank providing correspondent banking services to foreign financial institutions, directly falling under the rule's scope as a covered U.S. financial institution. The company's international banking operations and correspondent account relationships would require compliance with the prohibition on maintaining accounts for Al-Huda Bank and implementing special due diligence measures. The rule's focus on correspondent banking restrictions and anti-money laundering compliance has minimal alignment with the company's disclosed risk factors, which center on net interest margin compression, deposit competition, and mortgage demand decline rather than correspondent banking or international transaction risks. The single regulatory compliance risk mentioned is generic and doesn't specifically address correspondent banking or anti-money laundering concerns that this rule targets.
INTERNATIONAL BANCSHARES CORP
International Bancshares Corp operates as a bank holding company with subsidiary banks providing commercial and retail banking services, making it a covered U.S. financial institution directly subject to this rule's requirements. The company engages in correspondent banking and international financial transactions that would require compliance with the prohibition on maintaining accounts for Al-Huda Bank and implementing special due diligence measures. The rule's focus on correspondent banking restrictions and anti-money laundering compliance has minimal alignment with the company's disclosed risk factors, which center on loan loss allowances, competition, liquidity access, real estate values, and dividend constraints. While the company identifies one regulatory compliance risk generally, it does not specifically address correspondent banking, international transactions, or money laundering concerns that this rule targets.
JPMORGAN CHASE & CO
JPMorgan Chase operates as a major U.S. financial institution with extensive correspondent banking relationships and international transaction processing capabilities, directly falling under the rule's definition of covered U.S. financial institutions. The company's commercial and investment banking segment specifically handles correspondent accounts and cross-border transactions that would be subject to the prohibition on maintaining accounts for Al-Huda Bank and the due diligence requirements. The rule specifically targets money laundering risks in correspondent banking relationships with Al-Huda Bank, which does not align with any of the company's disclosed risk factors focused on fair value accounting, consolidation of VIEs, and general accounting standards compliance. The company's risk profile shows minimal regulatory compliance risks (28 total) but none related to anti-money laundering, correspondent banking, or international financial transactions.
KEYCORP /NEW/
KeyCorp operates as a U.S. bank holding company providing correspondent banking services, directly falling under the definition of 'covered U.S. financial institutions' targeted by this rule. The company's core banking operations would be required to implement the prohibitions on correspondent accounts and enhanced due diligence measures for Al-Huda Bank transactions. The rule specifically targets money laundering risks through correspondent banking relationships with Al-Huda Bank, which does not align with any of the company's disclosed risk factors focused on cybersecurity, third-party service providers, and general regulatory compliance. The company's risk profile shows no mention of correspondent banking, international financial transactions, or money laundering concerns that would be directly impacted by this specialized financial regulation.
M&T BANK CORP
M&T Bank Corp is a covered U.S. financial institution that maintains correspondent accounts and processes international transactions, directly falling under all compliance requirements of this rule prohibiting correspondent banking relationships with Al-Huda Bank and requiring enhanced due diligence measures. The rule's focus on correspondent banking restrictions and anti-money laundering compliance has minimal alignment with the company's disclosed risk factors, which emphasize interest rates, economic conditions, and general regulatory changes without specific mention of correspondent banking or AML risks. The single regulatory compliance risk identified is too broad to indicate meaningful overlap with this specialized financial prohibition rule.
NORTHERN TRUST CORP
Northern Trust Corp operates as a major U.S. financial institution with extensive correspondent banking relationships and international transaction processing capabilities, directly falling under the rule's definition of covered U.S. financial institutions. The company's global custody, fund administration, and cross-border payment services would require compliance with the prohibition on maintaining correspondent accounts for Al-Huda Bank and implementing enhanced due diligence measures. The rule specifically targets U.S. financial institutions with correspondent banking relationships involving Al-Huda Bank, while the company operates in the technology sector with no financial services operations or correspondent banking activities. There is no overlap between the company's risk factors and the specialized money laundering concerns addressed by this rule.
STIFEL FINANCIAL CORP
Stifel Financial Corp operates as a covered U.S. financial institution with banking and broker-dealer subsidiaries that maintain correspondent accounts and process international transactions, directly falling under the rule's jurisdiction requiring prohibition of correspondent accounts for Al-Huda Bank and enhanced due diligence on foreign transactions. The rule specifically targets correspondent banking relationships with Al-Huda Bank, which does not align with any of the company's disclosed risk factors. The company's regulatory compliance risks are generic and not specific to anti-money laundering or correspondent banking prohibitions, resulting in minimal relevance.
SIMMONS FIRST NATIONAL CORP
Simmons First National Corp is a U.S. financial institution engaged in banking services, making it a covered financial institution directly subject to this rule's requirements. The company's core banking operations involve correspondent accounts and transaction processing, which are explicitly regulated by this special measure targeting Al-Huda Bank. The rule focuses specifically on anti-money laundering compliance and correspondent banking restrictions targeting a single Iraqi bank, while the company's disclosed risk factors center on financial reporting accuracy, credit losses, goodwill impairment, and tax compliance with no mention of AML, correspondent banking, or international transaction risks. There is minimal overlap as the company's regulatory compliance risk relates to tax law interpretation rather than financial crime prevention.
TEXAS CAPITAL BANCSHARES INC/TX
Texas Capital Bancshares operates as a U.S. financial institution with correspondent banking relationships and international transaction processing capabilities, directly falling under the rule's scope as a covered U.S. financial institution that must implement prohibitions and due diligence measures regarding Al-Huda Bank. The rule specifically targets correspondent banking relationships with Al-Huda Bank, which is a narrow regulatory compliance risk that does not align with the company's disclosed risk factors. The company's single regulatory compliance risk is generic and not specific to anti-money laundering or correspondent banking prohibitions, indicating minimal relevance.
WESTERN ALLIANCE BANCORPORATION
Western Alliance Bancorporation is a U.S. financial institution that operates correspondent banking services and processes international transactions, directly falling under the rule's jurisdiction as a covered U.S. financial institution. The company's deposit services and cross-border payment processing operations would be significantly affected by the prohibition on maintaining correspondent accounts for Al-Huda Bank and the requirement to implement special due diligence measures. The rule focuses on anti-money laundering compliance and correspondent banking restrictions, which does not align with the company's disclosed risk factors centered on CRE market exposure, charge-offs, FDIC assessments, and CECL transition. The only potential indirect connection is through regulatory compliance risks, but the specific AML requirements are not mentioned in the company's risk profile.
WINTRUST FINANCIAL CORP
Wintrust Financial Corp operates as a U.S. financial institution offering correspondent banking services, which directly falls under the rule's scope requiring covered U.S. financial institutions to prohibit correspondent accounts for Al-Huda Bank and implement special due diligence measures. The rule focuses specifically on anti-money laundering compliance and correspondent banking restrictions targeting a single Iraqi bank, which does not align with the company's disclosed risk factors of interest rate fluctuations, asset-liability mismatches, and inflation impacts. The company's risk profile shows no mention of regulatory compliance, money laundering, or correspondent banking risks that would be directly affected by this specialized financial prohibition.
ZIONS BANCORPORATION, NATIONAL ASSOCIATION /UT/
Zions Bancorporation is a covered U.S. financial institution that maintains correspondent accounts and processes international transactions, directly falling under the rule's requirements to prohibit correspondent banking relationships with Al-Huda Bank and implement enhanced due diligence measures. The rule focuses specifically on correspondent banking restrictions and money laundering concerns related to Al-Huda Bank, which does not align with any of the company's disclosed risk factors. The company's risks center on credit quality, cybersecurity, operational disruptions, talent retention, and counterparty concentration - none of which directly relate to correspondent banking prohibitions or anti-money laundering compliance requirements.