Special Measure Regarding Huione Group, as a Foreign Financial Institution of Primary Money Laundering Concern

DEPARTMENT OF THE TREASURY <SUBAGY>Financial Crimes Enforcement Network</SUBAGY> <CFR>31 CFR Part 1010</CFR> <RIN>RIN 1506-AB68</RIN> <SUBJECT>Special Measure Regarding Huione Group, as a Foreign Financial Institution of Primary Money Laundering Concern</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Financial Crimes Enforcement Network (FinCEN), Treasury. <HD SOURCE="HED">ACTION:</HD> Notice of proposed rulemaking. <SUM> <HD SOURCE="HED">SUMMARY:</HD> FinCEN is issuing a notice of proposed rulemaking (NPRM), pursuant to section 311 of the USA PATRIOT Act, that proposes prohibiting the opening or maintaining of a correspondent account in the United States for, or on behalf of, Huione Group, a foreign financial institution based in Cambodia found to be of primary money laundering concern. The NPRM also would require covered financial institutions to apply special due diligence to their foreign correspondent accounts that is reasonably designed to guard against their use to process transactions involving Huione Group. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> Written comments on the notice of proposed rulemaking must be submitted on or before June 4, 2025. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> Comments must be submitted by one of the following methods: • <E T="03">Federal E-rulemaking Portal: https://www.regulations.gov.</E> Follow the instructions for submitting comments. Refer to Docket Number FINCEN-2025-0004 in the submission. • <E T="03">Mail:</E> Financial Crimes Enforcement Network, P.O. Box 39, Vienna, VA 22183. Refer to Docket Number FINCEN-2025-0004 in the submission. Please submit comments by one method only and note that comments submitted in response to this NPRM will become a matter of public record. <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> The FinCEN Resource Center at <E T="03">www.fincen.gov/contact.</E> </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">I. Statutory Provisions</HD> Section 311 of the USA PATRIOT Act (section 311), codified at 31 U.S.C. 5318A, grants the Secretary of the Treasury (Secretary) the authority to make a finding that “reasonable grounds exist for concluding” that any of the following “is of primary money laundering concern: (i) A jurisdiction outside of the United States; (ii) One or more financial institutions operating outside of the United States; (iii) One or more classes of transactions within, or involving, a jurisdiction outside of the United States; or (iv) One or more types of accounts. <SU>1</SU> <FTREF/> <FTNT> <SU>1</SU>  31 U.S.C. 5318A(a)(1). </FTNT> Upon making such a finding, the Secretary is authorized to require domestic financial institutions and domestic financial agencies to take certain “special measures.”  <SU>2</SU> <FTREF/> The five special measures set out in section 311 are safeguards that may be employed to defend the U.S. financial system from money laundering and terrorist financing risks. The Secretary may impose one or more of these special measures to protect the U.S. financial system from such threats. Through special measures one through four, the Secretary may impose additional recordkeeping, information collection, and reporting requirements on covered domestic financial institutions and domestic financial agencies—collectively, “covered financial institutions.”  <SU>3</SU> <FTREF/> Through special measure five, the Secretary may “prohibit, or impose conditions upon, the opening or maintaining in the United States of a correspondent account or payable-through account” for or on behalf of a foreign banking institution, if such correspondent account or payable-through account involves the foreign financial institution found to be of primary money laundering concern. <SU>4</SU> <FTREF/> <FTNT> <SU>2</SU>  On October 26, 2001, the President signed into law the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56 (USA PATRIOT Act). Title III of the USA PATRIOT Act amended the anti-money laundering (AML) provisions of the Bank Secrecy Act (BSA) to promote the prevention, detection, and prosecution of international money laundering and the financing of terrorism. The BSA, as amended, is the popular name for a collection of statutory authorities that FinCEN administers that is codified at 12 U.S.C. 1829b, 1951-1960 and 31 U.S.C. 5311-5314, 5316-5336, and includes other authorities reflected in notes thereto. Regulations implementing the BSA appear at 31 CFR Chapter X. </FTNT> <FTNT> <SU>3</SU>  31 U.S.C. 5318A(b)(1)-(4). The term “covered financial institution” has the same meaning as provided at 31 CFR 1010.605(e)(1); <E T="03">see infra</E> section V.A.3. </FTNT> <FTNT> <SU>4</SU>  31 U.S.C. 5318A(b)(5). </FTNT> Before making a finding that reasonable grounds exist for concluding that a financial institution outside of the United States (or other jurisdiction, account, or class of transactions) is of primary money laundering concern, the Secretary is required to consult with both the Secretary of State and the Attorney General. <SU>5</SU> <FTREF/> In addition, in making a finding that reasonable grounds exist for concluding that a financial institution outside of the United States is of primary money laundering concern, the Secretary is required to consider such information as the Secretary determines to be relevant, including the following potentially relevant institutional factors: <FTNT> <SU>5</SU>  31 U.S.C. 5318A(c)(1). </FTNT> • The extent to which such a financial institution is used to facilitate or promote money laundering in or through a jurisdiction outside the United States, including any money laundering activity by organized criminal groups, international terrorists, or entities involved in the proliferation of weapons of mass destruction (WMD) or missiles. • The extent to which such a financial institution is used for legitimate business purposes in the jurisdiction; and • The extent to which such action is sufficient to ensure, with respect to transactions involving the jurisdiction and institutions operating in the jurisdiction, that the purposes of section 311 continue to be fulfilled, and to guard against international money laundering and other financial crimes. <SU>6</SU> <FTREF/> <FTNT> <SU>6</SU>  31 U.S.C. 5318A(c)(2)(B)(i)-(iii). In addition, in the case of a finding relating to a particular jurisdiction, section 311 sets out certain “jurisdictional factors” that the Secretary may consider, which are not relevant here. <E T="03">See</E> 31 U.S.C. 5318A(c)(2)(A)(i)-(vii). </FTNT> In selecting one or more special measures, the Secretary “shall consult with the Chairman of the Board of Governors of the Federal Reserve System, any other appropriate Federal banking agency (as defined in section 3 of the Federal Deposit Insurance Act), the Secretary of State, the Securities and Exchange Commission, the Commodity Futures Trading Commission, the National Credit Union Administration Board, and in the sole discretion of the Secretary, such other agencies and interested parties as the Secretary may find appropriate.”  <SU>7</SU> <FTREF/> When imposing special measure five, the Secretary must do so “in consultation with the Secretary of State, the Attorney General, and the Chairman of the Board of Governors of the Federal Reserve System.”  <SU>8</SU> <FTREF/> In addition, the Secretary is required to consider the following factors: <FTNT> <SU>7</SU>  31 U.S.C. 5318A(a)(4)(A). </FTNT> <FTNT> <SU>8</SU>  31 U.S.C. 5318A(b)(5). </FTNT> • Whether similar action has been or is being taken by other nations or multilateral groups; • Whether the imposition of any particular special measure would create a significant competitive disadvantage, including any undue cost or burden associated with compliance, for financial institutions organized or licensed in the United States; • The extent to which the action or the timing of the action would have a significant adverse systemic impact on the international payment, clearance, and settlement system, or on legitimate business activities involving the particular jurisdiction, institution, class of transactions, or type of account; and • The effect of the action on United States national security and foreign policy. <SU>9</SU> <FTREF/> <FTNT> <SU>9</SU>  31 U.S.C. 5318A(a)(4)(B)(i)-(iv). </FTNT> The authority of the Secretary to administer the Bank Secrecy Act (BSA) and its implementing regulations, including the authority under section 311 to make such a finding and to impose special measures, has been delegated to FinCEN. <SU>10</SU> <FTREF/> <FTNT> <SU>10</SU>  Pursuant to Treasury Order 180-01 (Jan. 14, 2020), the authority of the Secretary to administer the BSA, including, but not limited to, 31 U.S.C. 5318A, has been delegated to the Director of FinCEN. </FTNT> <HD SOURCE="HD1">II. Summary of NPRM</HD> Huione Group  <SU>11</SU> <FTREF/> is a financial services conglomerate based in Phnom Penh, Cambodia. <SU>12</SU> <FTREF/> Huione Group's website is registered  <SU>13</SU> <FTREF/> to an individual with a listed location of Phnom Penh, Cambodia, but Huione Group, the parent entity of the conglomerate, does not appear to be registered as a business in any jurisdiction, though it was originally incorporated in Hong Kong in 2018 as Huione Group Limited. <SU>14</SU> <FTREF/> While several of Huione Group's subsidiaries are registered outside of Cambodia, their operations are principally carried out in Cambodia. <FTNT> <SU>11</SU>  As will be discussed in greater detail in section III, Huione Group is the parent company of the following subsidiaries: Huione Crypto, Haowang Guarantee, and H ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 126k characters. 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