On Tuesday, 11 October, 2011, Section 104(e) of the Comprehensive Iran Sanctions, Accountability, and Divestment Act, or CISADA, becomes effective, according to the Final Rule published in the Federal Register* online yesterday.
Upon receipt of an Information Request from FinCEN, a US bank must enquire of specific foreign banks are are correspondents of the US bank, to determine:
(1) Whether the foreign bank has a correspondent account for any Iranian-linked financial institution designated under the IEEPA**.
(2) Whether the foreign bank has processed one or more funds transfers, within the past 90 days, directly or indirectly, for a designated IEEPA Iranian-linked financial institution, other than through a correspondent account.
(3) Whether the foreign bank has processed one or more funds transfers, within the past 90 days, directly or indirectly, for the Islamic Revolutionary Guard Corps (IRGC), or any agents or affiliates that are IEPPA-designated.
It is also noteworthy to remember that CISADA Regulations prohibit US banks to open or maintain a correspondent account, or payable-through account, for a foreign bank found to knowingly facilitate significant transactions, or to provide significant financial services for Iranian-linked financial institutions, or designated IRGC affiliates.
If I was a compliance officer at a US-based international bank whose clients trade with the Middle East, I would be already creating CISADA-compliant files, by collecting the information, from my correspondent banks, in advance; be prepared.
*Vol. 76, No.196, at 62607-62625.
**International Emergency Economic Powers Act. 50 USA §§1701-1707.