Circular
Proposal to Amend Regulation K
June 6, 2003
Circular No. 11518

To All Depository Institutions and Others Concerned in the Second Federal Reserve District:

In a press release, the Federal Reserve Board announced that it was seeking public comment on a proposal to amend Regulation K. The amendment would require Edge and Agreement corporations and U.S. branches, agencies and other offices of foreign banks supervised by the Board to establish and maintain procedures reasonably designed to ensure and monitor compliance with the Bank Secrecy Act and related regulations.

Comments should be submitted to the Board by June 30, 2003.

The Bank Secrecy Act generally requires a financial institution doing business in the United States to keep records and make reports that have a high degree of usefulness in criminal, tax, or regulatory proceedings.

The Board’s proposal is designed to be consistent with regulations recently issued by the Department of the Treasury under section 352 of the USA PATRIOT Act, which requires all financial institutions to maintain effective anti-money-laundering programs. The Board believes that the proposed regulation will not impose any material administrative burden for affected institutions because, in supervising these institutions to ensure safety and soundness, the Board has consistently expected such entities to maintain programs to ensure compliance with all applicable provisions of the Bank Secrecy Act.

The Board’s notice of Proposed Rulemaking is attached.

Questions on this matter may be directed at this Bank to Robert Otero, Examining Officer, Legal and Compliance Risk Department.