(a) Definitions. For purposes of this section, the following terms have the following meanings.
(1) Al-Huda Bank. The term “Al-Huda Bank” means all subsidiaries, branches, and offices of Al-Huda Bank operating as a bank in any jurisdiction.
(2) Correspondent account. The term “correspondent account” has the same meaning as provided in § 1010.605(c)(1)(ii).
(3) Covered financial institution. The term “covered financial institution” has the same meaning as provided in § 1010.605(e)(1).
(4) Foreign banking institution. The term “foreign banking institution” means a bank organized under foreign law, or an agency, branch, or office located outside the United States of a bank. The term does not include an agent, agency, branch, or office within the United States of a bank organized under foreign law.
(5) Subsidiary. The term “subsidiary” means a company of which more than 50 percent of the voting stock or analogous equity interest is owned by another company.
(b) Prohibition on accounts and due diligence requirements for covered financial institutions. (1) Prohibition on opening or maintaining correspondent accounts for Al-Huda Bank. A covered financial institution shall not open or maintain in the United States a correspondent account for, or on behalf of, Al-Huda Bank.
(2) Prohibition on processing transactions involving Al-Huda Bank. A covered financial institution shall take reasonable steps not to process a transaction for the correspondent account in the United States of a foreign banking institution if such a transaction involves Al-Huda Bank.
(3) Special due diligence of correspondent accounts to prohibit transactions. (i) A covered financial institution shall apply special due diligence to its foreign correspondent accounts that is reasonably designed to guard against their use to process transactions involving Al-Huda Bank. At a minimum, that special due diligence must include:
(A) Notifying those foreign correspondent account holders that the covered financial institution knows or has reason to believe provide services to Al-Huda Bank that such correspondents may not provide Al-Huda Bank with access to the correspondent account maintained at the covered financial institution; and
(B) Taking reasonable steps to identify any use of its foreign correspondent accounts by Al-Huda Bank, to the extent that such use can be determined from transactional records maintained in the covered financial institution’s normal course of business.
(ii) A covered financial institution shall take a risk-based approach when deciding what, if any, other due diligence measures it reasonably must adopt to guard against the use of its foreign correspondent accounts to process transactions involving Al-Huda Bank.
(iii) A covered financial institution that knows or has reason to believe that a foreign bank’s correspondent account has been or is being used to process transactions involving Al-Huda Bank shall take all appropriate steps to further investigate and prevent such access, including the notification of its correspondent account holder under paragraph (b)(3)(i)(A) of this section and, where necessary, termination of the correspondent account.
(4) Recordkeeping and reporting. (i) A covered financial institution is required to document its compliance with the notification requirement set forth in paragraph (b)(3)(i)(A) of this section.
(ii) Nothing in paragraph (b) of this section shall require a covered financial institution to report any information not otherwise required to be reported by law or regulation.
This section added effective 8/2/2024 (89 FR 55051, 7/3/2024)