FinCEN Al-Huda Bank Special Measure: Financial Firm Guide
Disclaimer: This post is for informational purposes only. It is NOT legal or tax advice and does not create an attorney-client relationship. Consult a qualified professional before taking any action based on this content.
Last reviewed: June 21, 2026
Honesty statement: Every date, citation, RIN, CFR reference, and figure in this post is copied verbatim from the Federal Register and eCFR as of the snapshot date. Nothing is estimated, modeled, or extrapolated. This is not legal or tax advice.
Source: Federal Register / eCFR
The Deadline: August 2, 2024
FinCEN's final rule (89 FR 55051, RIN 1506-AB65) under 31 CFR Part 1010 took effect August 2, 2024. This rule imposes a special measure designating Al-Huda Bank — a foreign financial institution based in Iraq — as a financial institution of primary money laundering concern under section 311 of the USA PATRIOT Act. For U.S. financial institutions, the rule created immediate, binding obligations that remain in effect (Federal Register).
This rule is part of a point-in-time index of 460 U.S. federal rules published June 21, 2024 – June 21, 2026 by 11 agencies governing covered industries. Section 311 actions are among the most operationally urgent compliance obligations in the U.S. anti-money laundering framework — they impose direct prohibitions and affirmative duties without grace periods once effective.
What the Rule Does
The Treasury Department's Financial Crimes Enforcement Network (FinCEN) published this final rule on July 3, 2024, finding Al-Huda Bank to be a financial institution of primary money laundering concern. Under section 311 of the USA PATRIOT Act, FinCEN has authority to designate foreign financial institutions as money laundering concerns and impose "special measures" — in this case, the most restrictive available: prohibiting correspondent account access entirely.
The rule under 31 CFR Part 1010 requires covered U.S. financial institutions to:
Prohibit opening or maintaining a correspondent account for or on behalf of Al-Huda Bank
Take reasonable steps not to process transactions through a correspondent account of any foreign banking institution in the United States if such a transaction involves Al-Huda Bank
Apply special due diligence to foreign correspondent accounts that is reasonably designed to guard against their use to process transactions involving Al-Huda Bank
Who Is Covered
"Covered U.S. financial institutions" under the rule includes the standard Bank Secrecy Act definition — banks, broker-dealers, credit unions, and other financial institutions subject to FinCEN's BSA jurisdiction. The rule does not limit its reach to large institutions.
| Institution Type | Obligation |
|---|---|
| U.S. commercial banks | Cannot open or maintain correspondent accounts for Al-Huda Bank; must screen transactions |
| Broker-dealers | Covered under BSA definition; apply special due diligence to foreign correspondents |
| Credit unions | Same prohibition and due diligence requirements |
| Money services businesses | Subject to the prohibition on processing Al-Huda Bank transactions |
| Foreign branches of U.S. banks | Must confirm no Al-Huda Bank exposure runs through correspondent relationships |
Three Distinct Obligations Under the Rule
Obligation 1: No Correspondent Account for Al-Huda Bank
The rule prohibits covered U.S. financial institutions from opening or maintaining a correspondent account for, or on behalf of, Al-Huda Bank. See the full rule at federalregister.gov. If any such account existed prior to August 2, 2024, the rule requires it to have been closed. Institutions must verify that no residual correspondent account relationship with Al-Huda Bank persists.
Obligation 2: Reasonable Steps to Block Al-Huda Bank Transactions
The rule goes beyond account prohibition. The rule requires covered institutions to take reasonable steps not to process transactions that pass through a foreign banking institution's U.S. correspondent account if those transactions involve Al-Huda Bank. This means:
Screening wire transfer instructions for Al-Huda Bank identifiers
Applying Al-Huda Bank to SWIFT/payment filtering systems
Reviewing nostro/vostro relationships for transaction chains that could pass through Al-Huda Bank intermediation
This obligation applies even where the U.S. institution has no direct relationship with Al-Huda Bank — the target is the indirect transaction flow through other foreign correspondents' U.S. accounts.
Obligation 3: Enhanced Due Diligence on Foreign Correspondent Accounts
The rule requires covered institutions to apply special due diligence to their foreign correspondent accounts that is reasonably designed to guard against their use to process transactions involving Al-Huda Bank. Under 31 CFR Part 1010, this means:
Documenting the due diligence methodology applied to each foreign correspondent relationship
Periodically re-evaluating whether foreign correspondent partners have Al-Huda Bank exposure
Maintaining records of the due diligence steps taken
Key Dates Table
| Event | Date | Source |
|---|---|---|
| Rule published in Federal Register | July 3, 2024 | 89 FR 55051 |
| Rule effective date | August 2, 2024 | 89 FR 55051 |
| Comment period | Closed prior to final rule | n/a |
Regulatory Citation Table
| Field | Value |
|---|---|
| Federal Register citation | 89 FR 55051 |
| RIN | 1506-AB65 |
| CFR | 31 CFR Part 1010 |
| Agency | Treasury Department (FinCEN) |
| Published | July 3, 2024 |
| Effective | August 2, 2024 |
| Primary source | federalregister.gov |
| eCFR | 31 CFR Part 1010 (current) |
Compliance Obligations Checklist
| Obligation | Status to Verify |
|---|---|
| Confirm no open correspondent account for Al-Huda Bank | No correspondent accounts — direct or on behalf of |
| Add Al-Huda Bank to payment screening filters | In all transaction processing systems |
| Screen transactions through third-party foreign correspondents | Reasonably designed to detect indirect Al-Huda Bank transactions |
| Apply enhanced due diligence to all foreign correspondent accounts | Documented, records maintained |
| Document due diligence methodology | Retained per BSA recordkeeping requirements |
| Periodically re-evaluate foreign correspondent relationships | Ongoing process established |
| Brief BSA compliance officer on rule obligations | Internal training and escalation path |
The "Reasonable Steps" Standard
A significant operational question for compliance teams is what "reasonable steps" means in practice for the transaction-screening obligation under this rule. The rule does not define a specific technical methodology — it uses the "reasonably designed" standard common in BSA/AML requirements. Based on the rule's text as published at 89 FR 55051, the obligation has two components:
The transaction must involve Al-Huda Bank — the screening should target transactions where Al-Huda Bank appears in the payment chain (as originator, beneficiary, or intermediary institution)
The correspondent account at issue is a foreign banking institution's U.S. correspondent account — meaning your institution is the U.S. correspondent, and a foreign bank customer is routing a transaction that touches Al-Huda Bank
Practical implementation typically involves adding Al-Huda Bank's SWIFT BIC and other institution identifiers to the institution's OFAC/sanctions screening or payment filter lists. Legal counsel should advise on the specific technical standard appropriate to the institution's size and transaction volume.
Section 311 in Context
Section 311 of the USA PATRIOT Act (codified at 31 U.S.C. § 5318A) gives FinCEN authority to designate foreign jurisdictions, institutions, or transactions as "primary money laundering concerns." The Al-Huda Bank action uses the "special measure" authority at the individual foreign institution level.
FinCEN's finding that Al-Huda Bank is a primary money laundering concern was made pursuant to the statutory criteria in section 311. The rule does not describe the underlying basis for the finding beyond what appears in the rule text — financial institutions should consult the full Federal Register notice for the agency's complete analysis.
Related compliance reading: For broader beneficial ownership and financial services reporting requirements, see our companion post on beneficial ownership reporting revision and financial services compliance. For financial firms navigating multiple securities-layer obligations, see Regulation S-P for financial services. For firms whose lending operations intersect with anti-money laundering controls, see Equal Credit Opportunity Act compliance for financial services.
Operationalizing Compliance at Scale
For financial institutions managing large volumes of wire transfers or maintaining correspondent relationships across multiple foreign jurisdictions, manual review of each transaction for Al-Huda Bank exposure is impractical. The "reasonable steps" standard contemplates an automated, systematic approach.
US Tech Automations builds workflow automation for financial compliance operations — including automated screening logic, exception flagging, and due diligence documentation workflows. Financial operations teams tracking correspondent account reviews, ongoing due diligence schedules, and BSA recordkeeping obligations can reduce manual labor through AI-driven finance and accounting automation. A US Tech Automations workflow can route each required filing to the right reviewer, monitor the effective-date deadline, and capture an evidence trail of every due diligence step taken so the documentation exists when an examiner asks. The volume of regulatory obligations across 460 federal rules from 11 agencies in the two-year window makes systematic tracking essential for compliance teams.
FAQ
When did the Al-Huda Bank special measure take effect?
The rule is effective August 2, 2024. It was published July 3, 2024 in the Federal Register at 89 FR 55051.
What is the RIN for the Al-Huda Bank rule?
The RIN is 1506-AB65, as published in the Federal Register.
What CFR part governs this rule?
The rule is codified under 31 CFR Part 1010. The current text is available at https://www.ecfr.gov/current/title-31/part-1010.
Does my institution need to do anything if we never had a relationship with Al-Huda Bank?
Yes. The rule's third obligation requires special due diligence on all foreign correspondent accounts to guard against their use to process Al-Huda Bank transactions — even if your institution has no direct relationship. The rule requires covered institutions to take reasonable steps to detect and block indirect transaction flows involving Al-Huda Bank that might pass through third-party foreign correspondents' U.S. accounts.
What happens if a transaction involving Al-Huda Bank passes through my institution inadvertently?
The rule requires "reasonable steps" — not a guarantee of zero exposure. The legal question of what constitutes adequate reasonable steps is a compliance and legal determination specific to each institution. Consult a qualified BSA/AML attorney.
Where can I find the full text of the rule?
The full text is available at https://www.federalregister.gov/documents/2024/07/03/2024-14415/imposition-of-special-measure-regarding-al-huda-bank-as-a-financial-institution-of-primary-money.
Which agency issued this rule?
The rule was issued by the Treasury Department through its Financial Crimes Enforcement Network (FinCEN).
Key Takeaways
FinCEN's final rule (89 FR 55051, RIN 1506-AB65) under 31 CFR Part 1010 is effective August 2, 2024 (Federal Register). For financial institutions, the three operative obligations are:
No correspondent accounts — U.S. financial institutions may not open or maintain a correspondent account for Al-Huda Bank or on its behalf
Transaction screening — institutions must take reasonable steps not to process any transaction involving Al-Huda Bank through a foreign banking institution's U.S. correspondent account
Enhanced due diligence — all foreign correspondent accounts must be subject to special due diligence reasonably designed to guard against use to process Al-Huda Bank transactions
Because this rule is already in effect and creates ongoing obligations, institutions that have not yet completed the required account review, transaction screening configuration, and due diligence documentation should do so with the assistance of qualified BSA/AML counsel.
Source: Federal Register / eCFR. Published July 3, 2024. Effective August 2, 2024. RIN 1506-AB65. Full rule text.
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