Annex 4: Preparing and Conducting an On-Site Examination For AML/CFT
A 4.7 Foreign Correspondent Account Recordkeeping A 4.7.1 Objective To assess the bank’s compliance with statutory and regulatory requirements with respect to correspondent accounts for foreign shell banks, foreign correspondent account recordkeeping, and programs requiring due diligence to detect and report money laundering and terrorist financing. Documents to request: • List of all foreign correspondent bank accounts, including a list of foreign financial institutions, for which the bank provides services • If applicable, documentation to show compliance regarding the prohibition of correspondent accounts with foreign shell banks6 • List of all payable-through account relationships7 with foreign financial institutions • Access to contracts or agreements with foreign financial institutions that have payable-through accounts • List of the bank’s foreign branches, and the steps the bank has taken to determine that its accounts with its branches are not used to provide services indirectly to foreign shell banks • Any notice from the national authorities to close foreign correspondent bank accounts.
A 4.7.2 Steps to Be Followed 1. Determine whether the bank engages in foreign correspondent banking. 2. If so, review the bank’s policies, procedures, and processes. At a minimum, policies, procedures, and processes should accomplish the following: ■ Prohibit dealings with foreign shell banks, and specify who is responsible for obtaining, updating, and managing information for foreign correspondent accounts ■ Identify foreign correspondent accounts ■ Evaluate the quality of information received in response to requests for information ■ Determine whether and when a suspicious activity report should be filed. ■ Maintain sufficient internal controls ■ Provide ongoing training 3. Determine whether the bank has on file current information for each foreign correspondent account, to determine whether the foreign correspondent is, or is not, a foreign shell bank 4. If the bank has foreign branches, determine whether the bank has taken reasonable steps to ensure that correspondent accounts maintained for its 213