US Financial Institutions Ordered To Sever Ties With Offshore Shell Banks
As part of its tough new
crackdown on money laundering, the US Treasury Department has ordered banks
and securities firms to sever all ties with foreign 'shell banks', which it
considers are highly vulnerable to money laundering practices. 'Shell' banks are foreign
banks based in regions with strict banking secrecy laws which maintain no physical
presence in any country, and the new regulations regarding correspondent accounts
with such entities will being the US into line with most other industrialised
countries. The Treasury has announced
that the new rules, which come into force from December 25th 2001, are intended
to provide a 'comprehensive approach', by covering securities brokers as well
as banks in the US, and will 'maintain parity in treatment between accounts
provided to foreign banks by banks and broker-dealers.' The new legislation will
also require foreign banks which maintain US accounts to make records available
to US criminal investigators, even if the material in question is held outside
the United States.
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