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5 Shades of Bad Behavior: USA PATRIOT Act Section 311

When you hear “Section 3xx” in relation to US regulations, you know it refers to part of the USA PATRIOT Act. In this case, it refers to measures taken against countries, foreign financial institutions, types of business transactions, etc. when the Treasury decides that they pose a significant threat of money laundering activity, presumably due to past patterns of behavior.

Five “Special Measures” can be specified against these entities, 4 of which are purely information gathering and record keeping requirements. The fifth Special Measure is the financial “Death Penalty,” which involves essentially cutting off the entity from the US financial system.

FinCEN’s page says it best:

These special measures, which may be proposed and implemented by Treasury’s Financial Crimes Enforcement Network (FinCEN), range from requiring additional due diligence and special attention concerning particular account transactions among U.S. financial institutions to prohibiting the opening or maintenance of any correspondent or payable-through accounts. The following special measures can be imposed individually, jointly, in any combination and in any sequence:

  • Recordkeeping on and reporting of certain transactions;
  • Collection of information relating to beneficial ownership;
  • Collection of information relating to certain payable-through accounts;
  • Collection of information relating to certain correspondent accounts; and
  • Prohibition or conditions on the opening or maintaining of correspondent or payable-through accounts

Treasury’s finding of primary money laundering concern is effective immediately, and U.S. financial institutions should take this information into account as part of their overall risk management programs. Concurrent with the finding, FinCEN generally issues a Notice of Proposed Rule Making (NPRM) explaining which special measure(s) the Secretary proposes. This is a regulatory process and subject to public notice and comment. Certain special measures, including the first special measure, can be imposed by order prior to the finalization of the proposed regulation.

Upon review of the comments received, and in consideration of any other available information or further review, including an assessment of any subsequent remedial or ameliorative actions taken by the financial institution or jurisdiction found to be a primary money laundering concern, the Secretary can proceed with a final rule, withdraw the finding and proposed rule, or keep the matter open for further review.

In some instances, the entities of primary money laundering concern have rehabilitated their practices and implemented significant reforms to mitigate some of the risks and vulnerabilities identified as supporting the finding of primary money laundering concern. In such circumstances where the continuing risks to the U.S. financial system appeared to be diminished, Treasury has decided not to pursue a final rule implementing special measures and notice has been given to rescind the regulatory proposal. In other instances, the actions remain in force, including against the Commercial Bank of Syria, Banco Delta Asia, Myanmar Mayflower Bank, and Asia Wealth Bank.

Unfortunately, the list of entities sanctioned under Section 311 is not available publicly, although there is a list of all the rulemakings.

Also below are links to the page from the FFIEC’s (Federal Financial Institutions Examination Council) BSA (Bank Secrecy Act) Anti-Money Laundering Examination manual that relates to Section 311, and to the actual text of Section 311 of the USA PATRIOT Act.

Link:

FinCEN Rule 13 Rulemakings page
FFIEC Bank Secrecy Act Anti-Money Laundering Examination Manual Special Measures page
USA PATRIOT Act – Section 311

Categories: Sanctions Lists

eric9to5

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