Introducing the New Foreign Bank International Cash Services Program
September 20, 2018
The Federal Reserve Bank of New York (“FRBNY”), along with the Cash Product Office (“CPO”) and the Board of Governors of the Federal Reserve System, is pleased to introduce the Foreign Bank International Cash Services (“FBICS”) program as the newest addition to the Federal Reserve’s International Cash Services (“ICS”) framework, which already includes the Extended Custodial Inventory (“ECI”) program and the Operating Circular No. 2 (“OC 2”) Letter Agreement program.1
The FBICS program is designed to permit certain foreign banks that do not have a presence in the United States to open limited-purpose master accounts on the books of the FRBNY, and to use those accounts to access Federal Reserve currency services in connection with their international banknote operations. In order to participate, foreign bank applicants must meet the FBICS program eligibility criteria and must engage, either directly or through a parent or other affiliate, in wholesale USD banknote activity in a manner that meaningfully facilitates the global distribution of USD banknotes. If a foreign bank’s parent or other affiliate operates part or all of its wholesale banknote operations, that entity must also satisfy certain program criteria.
As part of meeting the program’s eligibility requirements, applicants must demonstrate a substantial commitment to the wholesale banknote business and their future involvement in the wholesale banknote market. In addition, applicants will be subject to compliance and financial risk assessments by the FRBNY, and will be required to submit a report of an independent third-party audit, consulting or accounting firm regarding their economic sanctions and anti-money laundering programs.
Entities approved for participation in the FBICS program will enter into standardized agreements with the FRBNY setting out the terms under which they can maintain limited-purpose accounts on the books of the FRBNY and receive access to international USD currency services, including the ability to place orders for USD banknotes from the FRBNY on a same-day basis, have USD currency orders fulfilled solely with new USD banknotes (as opposed to previously circulated banknotes), and receive expedited processing of large-denomination USD banknotes deposited with the FRBNY.2
If you are a foreign bank engaged (directly or through your parent or other affiliate) in wholesaling USD banknotes and are interested in applying to the FBICS program, or if you would like more detailed information regarding this newest ICS initiative such as the eligibility criteria, the application process, or other program requirements, please click on the following program description.
If you have any questions or need additional information regarding the FBICS program or any other ICS offering, please contact the Federal Reserve Bank of New York’s Global Currency Services Department at NY.Cash.International@ny.frb.org or (201) 531-3577.
1The Federal Reserve has historically helped to meet the demand for USD banknotes abroad through two ICS program offerings: the ECI program and the OC 2 Letter Agreement program. Under the ECI program, the FRBNY contracts with commercial depository institutions (“DIs”) to maintain inventories of FRBNY-owned banknotes in the DIs’ vaults located in strategic distribution centers outside of the United States. The ECI program helps to satisfy wholesale demand for USD banknotes in multiple jurisdictions or regions and facilitates the introduction of new-design banknotes, repatriation of older-design banknotes, and the circulation of fit banknotes overseas. Separately, in accordance with the terms of the Reserve Banks’ OC 2, any DI located in the United States that engages in international currency activity is generally required to enter into a letter agreement with its Administrative Reserve Bank setting forth certain contractual requirements regarding the DI’s international currency activity (the Federal Reserve’s standardized OC 2 ICS letter agreement is available at www.FRBservices.org). Participants in the OC 2 Letter Agreement program engage in a range of international currency activity, which varies from distributing currency to or receiving currency from customers in a single jurisdiction to transacting with several retail or wholesale customers in multiple jurisdictions or regions. Both the ECI and Letter Agreement programs require participants to be eligible to hold a master account on the books of a Reserve Bank under Operating Circular No. 1.
2If a foreign bank’s parent or other affiliate operates part or all of its wholesale banknote operations, the parent or other affiliate must also be party to certain documentation that is required to be executed in connection with participation in the FBICS program.