FINCEN Issues New Due Diligence Requirements For Anti-Money Laundering Programs

The Financial Crimes Enforcement Network ("FinCEN") recently has shown an increased assertiveness in its enforcement of anti-money laundering regulations. Both a major bank (ABN AMRO) and securities dealer (Oppenheimer & Company) were assessed penalties in the millions of dollars by FinCEN at the end of last year because of their failure to identify suspicious activities and other systematic defects with their anti-money laundering operations.

FinCEN has followed these enforcement actions with the issuance of new due diligence requirements for banks and other designated financial institutions. Specifically, on January 4, 2006, FinCEN issued its final rule mandating new due diligence procedures for: (1) correspondent accounts established or maintained for foreign financial institutions; and (2) private banking accounts established or maintained for non-U.S. persons (the "Rule"). The Rule fills out the requirements of Article 312 of the USA PATRIOT Act, which generally articulated