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U.S. Code as of:
01/19/04
Section 3105. Authority of Federal Reserve System
(a) Bank reserves
(1)(A) Except as provided in paragraph (2) of this subsection,
sections 371a, 371b, 371b-1,(!1) 374, 374a, 461, 464, and 465 of
this title shall apply to every Federal branch and Federal agency
of a foreign bank in the same manner and to the same extent as if
the Federal branch or Federal agency were a member bank as that
term is defined in section 221 of this title; but the Board either
by general or specific regulation or ruling may waive the minimum
and maximum reserve ratios prescribed under sections 461, 463, 464,
465, and 466 of this title and may prescribe any ratio, not more
than 22 per centum, for any obligation of any such Federal branch
or Federal agency that the Board may deem reasonable and
appropriate, taking into consideration the character of business
conducted by such institutions and the need to maintain vigorous
and fair competition between and among such institutions and member
banks. The Board may impose reserve requirements on Federal
branches and Federal agencies in such graduated manner as it deems
reasonable and appropriate.
(B) After consultation and in cooperation with the State bank
supervisory authorities, the Board may make applicable to any State
branch or State agency any requirement made applicable to, or which
the Board has authority to impose upon, any Federal branch or
agency under subparagraph (A) of this paragraph.
(2) A branch or agency shall be subject to this subsection only
if (A) its parent foreign bank has total worldwide consolidated
bank assets in excess of $1,000,000,000; (B) its parent foreign
bank is controlled by a foreign company which owns or controls
foreign banks that in the aggregate have total worldwide
consolidated bank assets in excess of $1,000,000,000; or (C) its
parent foreign bank is controlled by a group of foreign companies
that own or control foreign banks that in the aggregate have total
worldwide consolidated bank assets in excess of $1,000,000,000.
(b) Omitted
(c) Foreign bank examinations and reporting
(1) Examination of branches, agencies, and affiliates
(A) In general
The Board may examine each branch or agency of a foreign
bank, each commercial lending company or bank controlled by 1
or more foreign banks or 1 or more foreign companies that
control a foreign bank, and other office or affiliate of a
foreign bank conducting business in any State.
(B) Coordination of examinations
(i) In general
The Board shall coordinate examinations under this
paragraph with the Comptroller of the Currency, the Federal
Deposit Insurance Corporation, and appropriate State bank
supervisors to the extent such coordination is possible.
(ii) Simultaneous examinations
The Board may request simultaneous examinations of each
office of a foreign bank and each affiliate of such bank
operating in the United States.
(iii) Avoidance of duplication
In exercising its authority under this paragraph, the Board
shall take all reasonable measures to reduce burden and avoid
unnecessary duplication of examinations.
(C) On-site examination
Each Federal branch or agency, and each State branch or
agency, of a foreign bank shall be subject to on-site
examination by an appropriate Federal banking agency or State
bank supervisor as frequently as would a national bank or a
State bank, respectively, by the appropriate Federal banking
agency.
(D) Cost of examinations
The cost of any examination under subparagraph (A) shall be
assessed against and collected from the foreign bank or the
foreign company that controls the foreign bank, as the case may
be, only to the same extent that fees are collected by the
Board for examination of any State member bank.
(2) Reporting requirements
Each branch or agency of a foreign bank, other than a Federal
branch or agency, shall be subject to section 335 of this title
and the provision requiring the reports of condition contained in
section 324 of this title to the same extent and in the same
manner as if the branch or agency were a State member bank. In
addition to any requirements imposed under section 3102 of this
title, each Federal branch and agency shall be subject to section
248(a) of this title and to section 483 of this title to the same
extent and in the same manner as if it were a member bank.
(d) Establishment of foreign bank offices in United States
(1) Prior approval required
No foreign bank may establish a branch or an agency, or acquire
ownership or control of a commercial lending company, without the
prior approval of the Board.
(2) Required standards for approval
Except as provided in paragraph (6), the Board may not approve
an application under paragraph (1) unless it determines that -
(A) the foreign bank engages directly in the business of
banking outside of the United States and is subject to
comprehensive supervision or regulation on a consolidated basis
by the appropriate authorities in its home country; and
(B) the foreign bank has furnished to the Board the
information it needs to adequately assess the application.
(3) Standards for approval
In acting on any application under paragraph (1), the Board may
take into account -
(A) whether the appropriate authorities in the home country
of the foreign bank have consented to the proposed
establishment of a branch, agency or commercial lending company
in the United States by the foreign bank;
(B) the financial and managerial resources of the foreign
bank, including the bank's experience and capacity to engage in
international banking;
(C) whether the foreign bank has provided the Board with
adequate assurances that the bank will make available to the
Board such information on the operations or activities of the
foreign bank and any affiliate of the bank that the Board deems
necessary to determine and enforce compliance with this
chapter, the Bank Holding Company Act of 1956 [12 U.S.C. 1841
et seq.], and other applicable Federal law; and
(D) whether the foreign bank and the United States affiliates
of the bank are in compliance with applicable United States
law.
(4) Factor
In acting on an application under paragraph (1), the Board
shall not make the size of the foreign bank the sole determinant
factor, and may take into account the needs of the community as
well as the length of operation of the foreign bank and its
relative size in its home country. Nothing in this paragraph
shall affect the ability of the Board to order a State branch,
agency, or commercial lending company subsidiary to terminate its
activities in the United States pursuant to any standard set
forth in this chapter.
(5) Establishment of conditions
The Board may impose such conditions on its approval under this
subsection as it deems necessary.
(6) Exception
(A) In general
If the Board is unable to find, under paragraph (2), that a
foreign bank is subject to comprehensive supervision or
regulation on a consolidated basis by the appropriate
authorities in its home country, the Board may nevertheless
approve an application by such foreign bank under paragraph (1)
if -
(i) the appropriate authorities in the home country of the
foreign bank are actively working to establish arrangements
for the consolidated supervision of such bank; and
(ii) all other factors are consistent with approval.
(B) Other considerations
In deciding whether to use its discretion under subparagraph
(A), the Board shall also consider whether the foreign bank has
adopted and implements procedures to combat money laundering.
The Board may also take into account whether the home country
of the foreign bank is developing a legal regime to address
money laundering or is participating in multilateral efforts to
combat money laundering.
(C) Additional conditions
In approving an application under this paragraph, the Board,
after requesting and taking into consideration the views of the
appropriate State bank supervisor or the Comptroller of the
Currency, as the case may be, may impose such conditions or
restrictions relating to the activities or business operations
of the proposed branch, agency, or commercial lending company
subsidiary, including restrictions on sources of funding, as
are considered appropriate. The Board shall coordinate with the
appropriate State bank supervisor or the Comptroller of the
Currency, as appropriate, in the implementation of such
conditions or restrictions.
(D) Modification of conditions
Any condition or restriction imposed by the Board in
connection with the approval of an application under authority
of this paragraph may be modified or withdrawn.
(7) Time period for Board action
(A) Final action
The Board shall take final action on any application under
paragraph (1) not later than 180 days after receipt of the
application, except that the Board may extend for an additional
180 days the period within which to take final action on such
application after providing notice of, and the reasons for, the
extension to the applicant foreign bank and any appropriate
State bank supervisor or the Comptroller of the Currency, as
appropriate.
(B) Failure to submit information
The Board may deny any application if it does not receive
information requested from the applicant foreign bank or
appropriate authorities in the home country of the foreign bank
in sufficient time to permit the Board to evaluate such
information adequately within the time periods for final action
set forth in subparagraph (A).
(C) Waiver
A foreign bank may waive the applicability of this paragraph
with respect to any application under paragraph (1).
(e) Termination of foreign bank offices in United States
(1) Standards for termination
The Board, after notice and opportunity for hearing and notice
to any appropriate State bank supervisor, may order a foreign
bank that operates a State branch or agency or commercial lending
company subsidiary in the United States to terminate the
activities of such branch, agency, or subsidiary if the Board
finds that -
(A)(i) the foreign bank is not subject to comprehensive
supervision or regulation on a consolidated basis by the
appropriate authorities in its home country; and
(ii) the appropriate authorities in the home country of the
foreign bank are not making demonstrable progress in
establishing arrangements for the comprehensive supervision or
regulation of such foreign bank on a consolidated basis; or
(B)(i) there is reasonable cause to believe that such foreign
bank, or any affiliate of such foreign bank, has committed a
violation of law or engaged in an unsafe or unsound banking
practice in the United States; and
(ii) as a result of such violation or practice, the continued
operation of the foreign bank's branch, agency or commercial
lending company subsidiary in the United States would not be
consistent with the public interest or with the purposes of
this chapter, the Bank Holding Company Act of 1956 [12 U.S.C.
1841 et seq.], or the Federal Deposit Insurance Act [12 U.S.C.
1811 et seq.].
However, in making findings under this paragraph, the Board shall
not make size the sole determinant factor, and may take into
account the needs of the community as well as the length of
operation of the foreign bank and its relative size in its home
country. Nothing in this paragraph shall affect the ability of
the Board to order a State branch, agency, or commercial lending
company subsidiary to terminate its activities in the United
States pursuant to any standard set forth in this chapter.
(2) Discretion to deny hearing
The Board may issue an order under paragraph (1) without
providing for an opportunity for a hearing if the Board
determines that expeditious action is necessary in order to
protect the public interest.
(3) Effective date of termination order
An order issued under paragraph (1) shall take effect before
the end of the 120-day period beginning on the date such order is
issued unless the Board extends such period.
(4) Compliance with State and Federal law
Any foreign bank required to terminate activities conducted at
offices or subsidiaries in the United States pursuant to this
subsection shall comply with the requirements of applicable
Federal and State law with respect to procedures for the closure
or dissolution of such offices or subsidiaries.
(5) Recommendation to agency for termination of a Federal branch
or agency
The Board may transmit to the Comptroller of the Currency a
recommendation that the license of any Federal branch or Federal
agency of a foreign bank be terminated in accordance with section
3102(i) of this title if the Board has reasonable cause to
believe that such foreign bank or any affiliate of such foreign
bank has engaged in conduct for which the activities of any State
branch or agency may be terminated under paragraph (1).
(6) Enforcement of orders
(A) In general
In the case of contumacy of any office or subsidiary of the
foreign bank against which -
(i) the Board has issued an order under paragraph (1); or
(ii) the Comptroller of the Currency has issued an order
under section 3102(i) of this title,
or a refusal by such office or subsidiary to comply with such
order, the Board or the Comptroller of the Currency may invoke
the aid of the district court of the United States within the
jurisdiction of which the office or subsidiary is located.
(B) Court order
Any court referred to in subparagraph (A) may issue an order
requiring compliance with an order referred to in subparagraph
(A).
(7) Criteria relating to foreign supervision
Not later than 1 year after December 19, 1991, the Board, in
consultation with the Secretary of the Treasury, shall develop
and publish criteria to be used in evaluating the operation of
any foreign bank in the United States that the Board has
determined is not subject to comprehensive supervision or
regulation on a consolidated basis. In developing such criteria,
the Board shall allow reasonable opportunity for public review
and comment.
(f) Judicial review
(1) Jurisdiction of United States courts of appeals
Any foreign bank -
(A) whose application under subsection (d) of this section or
section 3107(a) of this title has been disapproved by the
Board;
(B) against which the Board has issued an order under
subsection (e) of this section or section 3107(b) of this
title; or
(C) against which the Comptroller of the Currency has issued
an order under section 3102(i) of this title,
may obtain a review of such order in the United States court of
appeals for any circuit in which such foreign bank operates a
branch, agency, or commercial lending company that has been
required by such order to terminate its activities, or in the
United States Court of Appeals for the District of Columbia
Circuit, by filing a petition for review in the court before the
end of the 30-day period beginning on the date the order was
issued.
(2) Scope of judicial review
Section 706 of title 5 (other than paragraph (2)(F) of such
section) shall apply with respect to any review under paragraph
(1).
(g) Consultation with State bank supervisor
The Board shall request and consider any views of the appropriate
State bank supervisor with respect to any application or action
under subsection (d) or (e) of this section.
(h) Limitations on powers of State branches and agencies
(1) In general
After the end of the 1-year period beginning on December 19,
1991, a State branch or State agency may not engage in any type
of activity that is not permissible for a Federal branch unless -
(A) the Board has determined that such activity is consistent
with sound banking practice; and
(B) in the case of an insured branch, the Federal Deposit
Insurance Corporation has determined that the activity would
pose no significant risk to the deposit insurance fund.
(2) Single borrower lending limit
A State branch or State agency shall be subject to the same
limitations with respect to loans made to a single borrower as
are applicable to a Federal branch or Federal agency under
section 3102(b) of this title.
(3) Other authority not affected
This section does not limit the authority of the Board or any
State supervisory authority to impose more stringent
restrictions.
(i) Proceedings related to conviction for money laundering offenses
(1) Notice of intention to issue order
If the Board finds or receives written notice from the Attorney
General that -
(A) any foreign bank which operates a State agency, a State
branch which is not an insured branch, or a State commercial
lending company subsidiary;
(B) any State agency;
(C) any State branch which is not an insured branch; or
(D) any State commercial lending subsidiary,
has been found guilty of any money laundering offense, the Board
shall issue a notice to the agency, branch, or subsidiary of the
Board's intention to commence a termination proceeding under
subsection (e) of this section.
(2) Definitions
For purposes of this subsection -
(A) Insured branch
The term "insured branch" has the meaning given such term in
section 3(s) of the Federal Deposit Insurance Act [12 U.S.C.
1813(s)].
(B) Money laundering offense defined
The term "money laundering offense" means any criminal
offense under section 1956 or 1957 of title 18 or under section
5322 of title 31.
(j) Study on equivalence of foreign bank capital
Not later than 180 days after December 19, 1991, the Board and
the Secretary of the Treasury shall jointly submit to the Committee
on Banking, Housing, and Urban Affairs of the Senate and the
Committee on Banking, Finance and Urban Affairs of the House of
Representatives a report -
(1) analyzing the capital standards contained in the framework
for measurement of capital adequacy established by the
Supervisory Committee of the Bank for International Settlements,
foreign regulatory capital standards that apply to foreign banks
conducting banking operations in the United States, and the
relationship of the Basle and foreign standards to risk-based
capital and leverage requirements for United States banks; and
(2) establishing guidelines for the adjustments to be used by
the Board in converting data on the capital of such foreign banks
to the equivalent risk-based capital and leverage requirements
for United States banks for purposes of determining whether a
foreign bank's capital level is equivalent to that imposed on
United States banks for purposes of determinations under this
section and sections 3 and 4 of the Bank Holding Company Act of
1956 [12 U.S.C. 1842, 1843].
An update shall be prepared annually explaining any changes in the
analysis under paragraph (1) and resulting changes in the
guidelines pursuant to paragraph (2).
(k) Management of shell branches
(1) Transactions prohibited
A branch or agency of a foreign bank shall not manage, through
an office of the foreign bank which is located outside the United
States and is managed or controlled by such branch or agency, any
type of activity that a bank organized under the laws of the
United States, any State, or the District of Columbia is not
permitted to manage at any branch or subsidiary of such bank
which is located outside the United States.
(2) Regulations
Any regulations promulgated to carry out this section -
(A) shall be promulgated in accordance with section 3108 of
this title; and
(B) shall be uniform, to the extent practicable.
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