§ 3105. — Authority of Federal Reserve System.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 12USC3105]
TITLE 12--BANKS AND BANKING
CHAPTER 32--FOREIGN BANK PARTICIPATION IN DOMESTIC MARKETS
Sec. 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.
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\1\ See References in Text note below.
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(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.
(Pub. L. 95-369, Sec. 7, Sept. 17, 1978, 92 Stat. 620; Pub. L. 102-242,
title II, Secs. 202(a), 203(a), 214(b), Dec. 19, 1991, 105 Stat. 2286,
2291, 2304; Pub. L. 102-550, title XV, Sec. 1507, title XVI,
Sec. 1604(a)(1), (2), (12), (13), Oct. 28, 1992, 106 Stat. 4056, 4081-
4083; Pub. L. 103-328, title I, Sec. 107(e)(1), Sept. 29, 1994, 108
Stat. 2360; Pub. L. 104-208, div. A, title II, Sec. 2214, Sept. 30,
1996, 110 Stat. 3009-411.)
References in Text
Section 371b-1 of this title, referred to in subsec. (a)(1)(A), was
repealed by Pub. L. 96-221, title V, Sec. 529, Mar. 31, 1980, 94 Stat.
168, subject to a savings provision.
Sections 461, 463, 464, 465, and 466 of this title, referred to in
subsec. (a)(1)(A), was in the original ``section 19 of the Federal
Reserve Act.'' Provisions of section 19 relating to minimum and maximum
reserve ratios are classified to the cited sections. For complete
classification of section 19 to the Code, see References in Text note
set out under section 461 of this title.
For definition of ``this chapter'', referred to in subsecs.
(d)(3)(C), (4) and (e)(1), see References in Text note set out under
section 3101 of this title.
The Bank Holding Company Act of 1956, referred to in subsecs.
(d)(3)(C) and (e)(1)(B)(ii), is act May 9, 1956, ch. 240, 70 Stat. 133,
as amended, which is classified principally to chapter 17 (Sec. 1841 et
seq.) of this title. For complete classification of this Act to the
Code, see Short Title note set out under section 1841 of this title and
Tables.
The Federal Deposit Insurance Act, referred to in subsec.
(e)(1)(B)(ii), is act Sept. 21, 1950, ch. 967, Sec. 2, 64 Stat. 873, as
amended, which is classified generally to chapter 16 (Sec. 1811 et seq.)
of this title. For complete classification of this Act to the Code, see
Short Title note set out under section 1811 of this title and Tables.
Codification
Section is comprised of section 7 of Pub. L. 95-369. Subsec. (b) of
section 7 of Pub. L. 95-369 amended section 347d of this title.
Amendments
1996--Subsec. (c). Pub. L. 104-208, Sec. 2214(a)(1), inserted
heading.
Subsec. (c)(1)(B)(iii). Pub. L. 104-208, Sec. 2214(a)(2), added cl.
(iii).
Subsec. (c)(1)(C). Pub. L. 104-208, Sec. 2214(a)(3), added subpar.
(C) and struck out heading and text of former subpar. (C). Text read as
follows: ``Each branch or agency of a foreign bank shall be examined at
least once during each 12-month period (beginning on the date the most
recent examination of such branch or agency ended) in an on-site
examination.''
Subsec. (c)(1)(D). Pub. L. 104-208, Sec. 2214(a)(4), inserted ``,
only to the same extent that fees are collected by the Board for
examination of any State member bank'' before period at end.
Subsec. (d)(2). Pub. L. 104-208, Sec. 2214(b)(1), substituted
``Except as provided in paragraph (6), the Board'' for ``The Board''.
Subsec. (d)(5). Pub. L. 104-208, Sec. 2214(b)(2), substituted ``The
Board'' for ``Consistent with the standards for approval in paragraph
(2), the Board''.
Subsec. (d)(6), (7). Pub. L. 104-208, Sec. 2214(b)(3), added pars.
(6) and (7).
Subsec. (e)(1)(A). Pub. L. 104-208, Sec. 2214(c), designated
existing provisions as cl. (i), substituted ``and'' for ``or'' at end,
and added cl. (ii).
1994--Subsec. (k). Pub. L. 103-328 added subsec. (k).
1992--Subsec. (e)(6)(A). Pub. L. 102-550, Sec. 1604(a)(1)(A),
substituted ``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'' for ``against which the
Board or, in the case of an order issued under section 3102(i) of this
title, the Comptroller of the Currency has issued an order under
paragraph (1) or a refusal by such office or subsidiary''.
Subsec. (e)(6)(B). Pub. L. 102-550, Sec. 1604(a)(1)(B), substituted
``order referred to in subparagraph (A)'' for ``order issued under
paragraph (1)''.
Subsec. (e)(7). Pub. L. 102-550, Sec. 1604(a)(2), substituted
``public'' for ``publc''.
Subsec. (i). Pub. L. 102-550, Sec. 1507, added subsec. (i).
Subsec. (j). Pub. L. 102-550, Sec. 1604(a)(12), made technical
amendment to directory language of Pub. L. 102-242, Sec. 214(b). See
1991 Amendment note below.
Subsec. (j)(1). Pub. L. 102-550, Sec. 1604(a)(13), substituted
``Supervisory Committee'' for ``Supervisory committee''.
1991--Subsec. (c). Pub. L. 102-242, Sec. 203(a), added par. (1),
inserted heading for par. (2), and struck out former par. (1) which read
as follows: ``The Board may make examinations of each branch or agency
of a foreign bank, and of each commercial lending company or bank
controlled by one or more foreign banks or by one or more foreign
companies that control a foreign bank, the cost of which shall be
assessed against and paid by such foreign bank or company, as the case
may be. The Board shall, insofar as possible, use the reports of
examinations made by the Comptroller, the Federal Deposit Insurance
Corporation, or the appropriate State bank supervisory authority for the
purposes of this subsection.''
Subsecs. (d) to (h). Pub. L. 102-242, Sec. 202(a), added subsecs.
(d) to (h) and struck out former subsec. (d) which read as follows: ``On
or before two years after September 17, 1978, the Board after
consultation with the appropriate State bank supervisory authorities
shall report to the Committee on Banking, Finance and Urban Affairs of
the United States House of Representatives and the Committee on Banking,
Housing, and Urban Affairs of the United States Senate its
recommendations with respect to the implementation of this chapter,
including any recommended requirements such as limitations on loans to
affiliates or capital adequacy requirements which should be imposed on
foreign banks to carry out the purposes of this chapter. Not later than
one hundred and eighty days after September 17, 1978, the Board shall
report to such Committees the steps which have been taken to consult and
cooperate with State bank supervisory authorities as required by
subsection (a)(1)(B) of this section.''
Subsec. (j). Pub. L. 102-242, Sec. 214(b), as amended by Pub. L.
102-550, Sec. 1604(a)(12), added subsec. (j).
Change of Name
Committee on Banking, Finance and Urban Affairs of House of
Representatives treated as referring to Committee on Banking and
Financial Services of House of Representatives by section 1(a) of Pub.
L. 104-14, set out as a note preceding section 21 of Title 2, The
Congress. Committee on Banking and Financial Services of House of
Representatives abolished and replaced by Committee on Financial
Services of House of Representatives, and jurisdiction over matters
relating to securities and exchanges and insurance generally transferred
from Committee on Energy and Commerce of House of Representatives by
House Resolution No. 5, One Hundred Seventh Congress, Jan. 3, 2001.
Effective Date of 1994 Amendment
Section 107(e)(2) of Pub. L. 103-328 provided that: ``The amendment
made by paragraph (1) [amending this section] shall become effective at
the end of the 180-day period beginning on the date of enactment of this
Act [Sept. 29, 1994].''
Effective Date of 1992 Amendment
Amendment by section 1604(a)(1), (2), (12), (13) of Pub. L. 102-550
effective as if included in the Federal Deposit Insurance Corporation
Improvement Act of 1991, Pub. L. 102-242, as of Dec. 19, 1991, see
section 1609(a) of Pub. L. 102-550, set out as a note under section 191
of this title.
Moratorium on Examination Fees Under This Chapter
Section 115(a) of Pub. L. 103-328 provided that: ``Section
7(c)(1)(D) of the International Banking Act of 1978 [12 U.S.C.
3105(c)(1)(D)] shall not apply with respect to any examination under
section 7(c)(1)(A) of such Act which begins before or during the 3-year
period beginning on July 25, 1994.''
Section Referred to in Other Sections
This section is referred to in sections 347d, 372, 461, 1813, 1820,
3102, 3103, 3107 of this title.
