The recently published section 312 of the US Patriot Act is likely to prompt US banks to reassess their relationships with small and mid-siz...

The recently published section 312 of the US Patriot Act is likely to prompt US banks to reassess their relationships with small and mid-sized Latin American banks, according to Florida’s International Bankers Association.

Pat Roth, FIBA’s executive director told local press that she was worried about how the higher cost of section 312 and other regulations would make US financial institutions cut the number of correspondent banks in Latin America. There could be cut to as few as “10, or 20 from 60,” she said.

Section 312 was part of the original Patriot Act passed by the US Congress in October 2001. However, the final regulations to implement Section 312, covering private banking and correspondent banking, were only published in December 2005.

The new regulations also requires securities broker-dealers, futures commission merchants and introducing brokers in commodities to comply with the same anti-money laundering provisions of the Patriot Act as banks.