Today, the FDIC solemnly recognizes the one-year anniversary of the
Attack on America and remembers those who lost their lives on that
terrible day.
This issue of FYI summarizes the progress that has been made
over the past 12 months in the financial war on terrorism. The FDIC is
proud to work closely with the Office of Homeland Security (OHS), the
Department of the Treasury, and our fellow state and federal financial
regulators to stem the flow of terrorist funds, provide technical
assistance to foreign governments, and safeguard the nation's critical
banking and finance infrastructure.
Stemming the Flow of Terrorist Funds
The FDIC is participating on several Treasury
Department working groups to implement provisions of Title III of the USA
PATRIOT Act signed into law by
President Bush on October 26, 2001. The Act expands the U.S. anti-money
laundering umbrella to industries not previously subject to this type of
regulation. It also marks the first time the United States has taken its
money laundering regulations offshore – applying recordkeeping and
monitoring requirements to the foreign branches of U.S. banks and foreign
institutions operating in the U.S.
The Act calls for enhanced due-diligence procedures in U.S. banks for
private banking accounts opened for foreign individuals and correspondent
accounts opened for foreign banks. The rule specifically requires that
these procedures be designed to detect and report money laundering and
other illegal activities.
A number of important provisions of the Act
that involve the FDIC are currently being implemented, as detailed below
in Appendix 1.
In
addition, the FDIC began working with the other federal financial
institution regulators and the Federal Bureau of Investigation in
October 2001 to establish a system to facilitate cooperation with law
enforcement authorities in their ongoing investigation of terrorist
activities. The Financial
Crimes Enforcement Network (FinCEN) is
working to consolidate, streamline and secure communications between
FDIC-insured institutions and government regulatory and law enforcement
bodies. FinCEN is mandated to establish these systems by the USA PATRIOT
Act, and is working with the FDIC and the other regulators to complete the
project.
Providing Technical Assistance to Foreign Governments
The FDIC has long provided foreign technical assistance to help
developing countries construct and maintain sound banking systems. Strong
governance in foreign banks contributes to the stability of foreign
economies which enhances trade opportunities for United States companies;
limits the risks of contagion to this country from the failure of foreign
banks; and reduces opportunities for money laundering supporting
corruption, criminal activities and terrorism.
The FDIC is actively participating in working groups and technical
assistance missions sponsored by the State and Treasury Departments to
assess vulnerabilities to terrorist financing activity worldwide, and to
develop and implement plans to assist foreign governments in their efforts
in this regard. Last year the FDIC participated in 10 technical missions
to countries in Asia, Eastern Europe and Latin America.
The FDIC has also participated in a number of
meetings with the Financial
Action Task Force (FATF), including a
special FATF Money Laundering plenary held in Washington, D.C. in October
2001. This plenary developed a set of anti-terrorist funding
recommendations that would be used as standards by the international
community when assessing a country’s vulnerabilities to terrorist
funding and the adequacy of the measures it has in place to curtail such
activity.
In addition, through participation on the Basel
Committee the FDIC has been involved
in the decision-making process that led to the approval and issuance of a
number of international guidelines on money laundering and terrorism.
Safeguarding the Nation’s Critical Banking and Finance
Infrastructures
The FDIC works with the OHS and the
Office of Cyberspace Security through the
Finance
and Banking Information Infrastructure Committee (FBIIC)
on efforts to improve the reliability and security of the financial
industry’s infrastructure.
The Treasury Department has been named as the primary coordinating body
for critical infrastructure initiatives of the financial services industry
and, as such, chairs the FBIIC.
The FBIIC is undertaking several initiatives aimed at protecting the
critical infrastructure of the banking and finance sectors, all of which
have FDIC participation. See
Appendix
2 for details on FBIIC initiatives.
In addition, the FDIC participates on the Emergency Supervision
Communications Group of the Federal Financial Institutions Examination
Council (FFIEC). This interagency group is a subcommittee of the FFIEC’s
Supervision Task Force that is charged with developing FFIEC Supervisory
Emergency Communication Protocols that focus on maintaining our
supervisory responsibilities in times of emergency.
In a September 9, 2002 speech at the Institute of International Bankers’
annual membership luncheon in New York, NY, FDIC Chairman Don Powell
discussed how the terrorist attacks of September 11, 2001 have affected
the banking industry in the last year. The text of Chairman Powell’s
remarks is available at
