Friday, December 9, 2011


Twenty eight members of the Florida Senate have co-introduced a bill* that will require Florida banks who have relationships with foreign financial institutions to maintain procedures that will determine if the foreign banks are facilitating Iran's banned WMD programmes. Local banks will further be required to annually certify that their foreign correspondents are clean, otherwise stiff civil fines will be imposed.

Here's the text of the official summary:

" Financial institutions; Requiring a financial institution that is chartered in this state and that maintains certain accounts with a foreign financial institution to establish due diligence policies, procedures, and controls reasonably designed to detect whether the foreign financial institution engages in certain activities facilitating the development of weapons of mass destruction by the Government of Iran, provides support for certain foreign terrorist organizations, or participates in other related activities; requiring the Office of Financial Regulation to to adopt rules establishing minimum standards for the due diligence policies, procedures, procedures and controls; requiring the Office of the Chief Financial Officer to make the annual report available to the public on its website; authorizing the Office of Financial Regulation to impose a civil penalty against a financial institution that fails to make the annual certification required by the act,"

The Florida House, the other chamber of the state legislature has a similar bill pending***.

If and when it becomes law, Florida banks with correspondent relationships with foreign banks will be expected to check, and then certify, that the foreign institutions are not facilitating sanctioned Iranian programmes. If this sounds to you like the "knowable" requirement of the Federal Iran sanctions law, you
understand the ramifications for Florida banks, and foreign banks with US-chartered subsidiaries. Things are about to get much more difficult for compliance officers.
*Senate Bill 792
***House Bill 613

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