1505-0243_Supporting Statement_AUG2012

Supporting Statement

Iranian Financial Sanctions Regulations Report on Closure by U.S. Financial Institutions

of Correspondent Accounts and Payable-Through Accounts

OMB Control No. 1505-0243

A. JustificatioN

1. Circumstances Making the Collection of Information Necessary.

This application is submitted to extend the information collection authority pertaining to the Iranian Financial Sanctions Regulations set forth in 31 C.F.R. Part 561 (“the Regulations”). The Regulations implement, inter alia, Section 104 of the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (“CISADA”) (22 U.S.C. 8513) and Section 1245(d) of the National Defense Authorization Act for Fiscal Year 2012 (“NDAA”) (22 U.S.C. 8513a(d)). Pursuant to CISADA and the NDAA, as implemented by the Regulations, the Office of Foreign Assets Control (“OFAC”) will prohibit or impose strict conditions on the opening and/or maintaining in the United States of a correspondent account or a payable-through account by a foreign financial institution determined to have knowingly engaged in or facilitated certain sanctionable conduct. OFAC will add the names of any foreign financial institutions subject to these sanctions, together with the applicable prohibitions and/or conditions, to the List of Foreign Financial Institutions Subject to Part 561 (the “Part 561 List”).

Section 561.504(b) of the Regulations requires a U.S. financial institution that maintained a correspondent account or a payable-through account for a foreign financial institution for which the maintaining of such an account has been prohibited to file a report with OFAC that provides full details on the closing of each such account within 30 days of the closure of the account. The report must include complete information on all transactions processed or executed in winding down and closing the account. This information is required by OFAC to monitor compliance with regulatory requirements regarding the closure of correspondent accounts and payable-through accounts maintained by a U.S. financial institution for a foreign financial institution when the maintaining of such accounts for a foreign financial institution has been prohibited pursuant to the Regulations.

2. Purpose and Use of the Information Collection.

Section 561.504(b) specifies that a U.S. financial institution that maintained a correspondent account or payable-through account for a foreign financial institution whose name is added to the Part 561 List on OFAC’s Web site (www.treasury.gov/ofac) as subject to a prohibition on the maintaining of such accounts must file a report with OFAC that provides full details on the closing of each such account within 30 days of the closure of the account. This collection of information assists in verifying that U.S. financial institutions are complying with prohibitions on maintaining correspondent accounts or payable-through accounts for foreign financial institutions named on the Part 561 List. The reports will be reviewed by the U.S. Department of the Treasury and may be used for compliance and enforcement purposes by the agency.

3. Consideration Given to Information Technology.

OFAC anticipates that the information will generally be reported by letter. However, as a general matter, information collected from U.S. financial institutions is increasingly submitted by automated, electronic, and computerized means. U.S. financial institutions may elect to submit the information by email.

4. Duplication of Information.

The information collection is not duplicative of information otherwise available to OFAC. The information that OFAC requires pertains to accounts at U.S. financial institutions and is not available other than through a specific report. Each individual report is based upon a new, one-time action to close one or more correspondent accounts or payable-through accounts for foreign financial institutions named on the Part 561 List. Thus, there is no duplication of records.

5. Reducing the Burden on Small Entities.

There is no undue burden on small business. OFAC does not anticipate that any U.S. financial institution required to report under the Regulations would be considered a small business or other small entity, as correspondent accounts tend to be maintained by larger financial institutions. However, should a small business or other small entity be required to report, the requirement is not expected to be onerous.

6. Consequences of Not Conducting Collection.

If the collection is not conducted and the reports not filed, there possibly could be circumvention of sanctions that have been imposed against foreign financial institutions pursuant to CISADA and the NDAA.

Generally, the information could not be collected less frequently unless it was not collected at all. The reports are submitted only when a U.S. financial institution closes one or more correspondent accounts or payable-through accounts for foreign financial institutions named on the Part 561 List. To collect the information less frequently would result in incomplete records of closed correspondent and payable-through accounts, prevent OFAC from tracking and ensuring compliance with the Regulations, and potentially lower the chances of pursuing appropriate potential enforcement actions.

7. Special Circumstances.

It is the policy of OFAC to protect the confidentiality of information in appropriate cases consistent with applicable law pursuant to the exemptions from disclosure provided under the Freedom of Information Act and the Privacy Act. There are no other special circumstances. The collection of information is conducted in a manner consistent with the guidelines in 5 CFR 1320.6.

8. Consultations with Persons Outside the Agency.

A copy of the Federal Register notice of June 26, 2012, soliciting comments can be found at 77 FR 38141. OFAC received no public comments.

9. Payment or Gift.

Not applicable.

10. Confidentiality.

No assurances of confidentiality are given to persons who furnish information to OFAC unless specifically indicated in advance. It is the policy of OFAC to protect the confidentiality of information in appropriate cases consistent with applicable law pursuant to the exemptions from disclosure provided under the Freedom of Information Act and the Privacy Act.

11. Questions of a Sensitive Nature.

No questions of a sensitive nature are involved.

12. Burden of Information Collection.

The likely respondents and recordkeepers affected by the new collection of information in section 561.504(b) are U.S. financial institutions operating correspondent accounts or payable-through accounts for foreign financial institutions. Because this collection of information is a report that must be filed when OFAC adds the name of a foreign financial institution to the Part 561 List, and because the listing of a foreign financial institution on the Part 561 List is a discretionary OFAC action based on the foreign financial institution’s conduct, OFAC cannot predict the number of respondents for the section 561.504(b) reporting requirement at this time. From the date this reporting requirement was added to the Regulations (February 27, 2012) through August 13, 2012, OFAC added the names of two foreign financial institutions to the Part 561 List, though the number of respondents to this collection remains zero. For future submissions, OFAC will continue to report retrospectively on the number of respondents during the previous reporting period.

The estimated average reporting/recordkeeping burden is 2 hours per response.

13. Annual Cost to Respondents.

There are no capital/start-up or ongoing operation/maintenance costs associated with this collection.

14. Cost to the Federal Government.

Not applicable.

15. Reason for Change.

There are no changes to the information collection since the last OMB approval.

16. Tabulation of Results, Schedule, Analysis Plans.

Not applicable.

17. Display of OMB Approval Date.

Not applicable.

18. Exceptions to Certification for Paperwork Reduction Act Submission.

There are no exceptions to the certification statement.