§ 590.316 U.S. financial institution.
The term U.S. financial institution means any U.S. entity (including its foreign branches) that is engaged in the business of accepting deposits, making, granting, transferring, holding, or brokering loans or other extensions of credit, or purchasing or selling foreign exchange, securities, commodity futures or options, or procuring purchasers and sellers thereof, as principal or agent. It includes depository institutions, banks, savings banks, trust companies, securities brokers and dealers, futures and options brokers and dealers, forward contract and foreign exchange merchants, securities and commodities exchanges, clearing corporations, investment companies, employee benefit plans, and U.S. holding companies, U.S. affiliates, or U.S. subsidiaries of any of the foregoing. This term includes those branches, offices, and agencies of foreign financial institutions that are located in the United States, but not such institutions’ foreign branches, offices, or agencies.
1) This is the boilerplate definition of "U.S. financial institution" found in almost all sanctions regulations, except that versions published and/or amended in 2017 and thereafter include the construction "or brokering loans or other extensions of credit," as opposed to the old version that read "or brokering loans or credits." OFAC does not define "loans or other extensions of credit" in those updated provisions but the construction is a defined term in the SySR, ITSR and NKSR (see 510.316) and includes activities such as "purchases of a loan made by another person." It is possible that this addition would expand the substantive scope of the definition of the term "U.S. financial institution" in a way that would have an impact on, among other provisions, the reporting obligations of 501.604 (Reports by U.S. financial institutions on rejected funds transfers). One should expect OFAC to interpret this provision as it would the updated version.
2) While the definition of "financial institution" in a few irregular programs (e.g. the HFSR and FTOSR) explicitly includes insurance companies, insurance companies are not explicitly included within the scope of this provision.
3) The scope of this definition does not appear to have been the subject of any interpretive guidance.
4) This definitional provision is particularly important as it relates to obligations pursuant to the RPPR, the scope of some of which depends on whether a given entity meets the definition of “U.S. financial institution,” or “a banking institution, domestic bank, United States depository institution, financial institution, or U.S. financial institution,” depending on the sanctions program at issue. See 501.603 and 501.604.
* Query: is an entity a "U.S. financial institution" even it is an "affiliate" of a "U.S. financial institution," and therefore a "U.S. financial institution" itself, even if it is not engaged in the financial-related activities described in the definition of "U.S. financial institution"? Presumably not, otherwise all subsidiaries of entities like GE are “U.S. financial institutions” because they are “affiliates” of, i.e. under common control with, entities like GE capital.