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Supervision and Regulation News

August 20, 2007

SR 07-14: Institutions Invited to Participate in Exercise to Test Pandemic Crisis Readiness 
The Board of Governors recently issued SR 07-14, which invites financial institutions to participate in a U.S Treasury Department sponsored industry-wide business continuity exercise to test the financial sector's ability to respond to a pandemic like crisis, such as an influenza pandemic. This no-cost, voluntary exercise is scheduled to begin Sept. 24, 2007, and conclude on Oct.10, 2007. Institutions must register to participate by Aug. 31, 2007, through The Financial Banking Information Infrastructure Committee (FBIIC) and the Financial Services Sector Coordinating Council (FSSCC)'spandemic flu exercise website.

SR 07-13: FTC Request for Comments on the Use of SSNs Within the Private Sector 
SR 07-13 announces that the Federal Trade Commission (FTC) is requesting comment on the use of Social Security Numbers (SSNs) in the financial services industry, and within the private sector more generally, in response to recommendations established by the President's Task Force on Identity Theft. Supervised institutions are under no obligation to provide comments; participation is voluntary. Comments must be received on or before Sept. 5, 2007.

FinCEN Issues Final Rule for Section 312 of USA PATRIOT ACT 
The Financial Crimes Enforcement Network issued a final rule on Aug. 8, setting out the due diligence requirements that must be followed to assess the risks of some foreign banking relationships under Section 312 of the USA PATRIOT Act. The rule applies to the accounts of three specific and relatively small categories of foreign banks, including those with an offshore banking license and certain high-risk banks subject to well-recognized international or U.S. Treasury Department determinations. The rules require U.S. financial institutions to identify the owners of these foreign banks if their shares are not publicly traded, and also ascertain whether such foreign banks provide correspondent accounts to other foreign banks and therefore provide them with access to the U.S. financial system. In making their risk assessments, financial institutions should consider, among other factors, the nature of the foreign banks' business, reasonably available information on the foreign banks' anti-money laundering record, and information on the nature of the foreign supervisory regulations under which the bank is operating. After the rule is published in the Federal Register, it will take effect in 180 days for new accounts opened by U.S. financial institutions and 270 days for existing accounts.

Regulators Seek Comments on Proposed Subprime Mortgage Lending Illustrations of Consumer Info 
In a press release, the federal financial regulators issued proposed illustrations of consumer information for certain adjustable-rate mortgage (ARM) products described in the agencies' Statement on Subprime Mortgage Lending, effective July 10, 2007. The agencies seek public comment on all aspects of the proposed illustrations. Comments are due 60 days after publication in the Federal Register.