Banking Association Calls for Guidance on New Sanctions Recordkeeping Timelines
Banks need more guidance from the Office of Foreign Assets Control to comply with the agency’s new timeline for new sanctions-related recordkeeping requirements, which were extended from five years to 10 years (see 2503190003), the American Bankers Association said.
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In a May 30 letter to OFAC, the association said “it has become increasingly clear that additional implementation guidance would help clarify” the agency’s new recordkeeping expectations, partly because the change “deviates from, and is longer than, existing bank recordkeeping requirements, practices, and record retention schedules.”
This could cause complications for banks, the association said, noting that banks already keep a “significant number of records” for shorter amounts of time to comply with Bank Secrecy Act reporting rules and other regulatory requirements. In some cases, those rules limit recordkeeping to five years.
“When OFAC’s requirement matched other regulatory requirements, banks did not need to specifically conclude that various retained records were also being kept for sanctions compliance purposes,” the letter said. “Those determinations will now be necessary.”
The associations specifically pointed to the Financial Crimes Enforcement Network’s customer due diligence rule requirements, which require banks to retain records of the beneficial ownership information of their legal entity customers for five years. “The entire corpus of beneficial ownership records necessary to comply with the CDD rule is retained within the bank’s holdings for a five-year period,” it said. “Prior to OFAC’s new rule, it was unnecessary and duplicative for a bank to assess whether there were ever instances when retaining a subset of those already-retained beneficial ownership information records was also desirable or appropriate for sanctions compliance purposes.”
New OFAC guidance could help banks, their sanctions compliance employees, examiners, regulators and others better understand what’s captured by the new 10-year requirements, the association said. It added that it believes blocked property reports, transactions authorized by a general license and other similar transactions now need to be kept for 10 years, but transaction data, logs or records that don’t involve “either a true match” with a sanctioned party or compliance with an OFAC program don’t have to be kept for 10 years.
Guidance would help establish “clear recordkeeping and compliance expectations, to allow banks to better enforce economic and trade sanctions,” the association said.
Treasury didn’t comment.
The association added: “Banks continue to retain their ability to make their own reasonable assessments as to what meets the criteria for recordkeeping. It remains at the discretion of each bank to maintain additional records, if any, that the bank may determine would be consistent with its risk-based approach to sanctions compliance.”