Modifications to the Statement of Policy for Section 19 of the FDIA

February 8, 2013 at 10:59 pm Leave a comment

The board of directors of the FDIC recently modified the Statement of Policy for Section 19 of the Federal Deposit Insurance Act, which prohibits a person convicted of a criminal offense involving dishonesty, breach of trust, money laundering, or who has entered into a pretrial diversion program, from participating in the affairs of a FDIC-insured institution without the FDIC’s prior written consent.  That general rule contains a so-called “de minimis” exception for infractions that result in limited jail time or a small monetary fine.  If the de-minimis factors are met, then no Section 19 application is necessary.   As revised, the “de-minimis” exception will apply if the “offense was punishable by imprisonment for a term of one year or less and/or a fine of $2,500 or less, and the individual did not serve more than three (3) days of actual jail time.”

The FDIC reminds individuals who are subject to Section 19 that they may not be affiliated with, or employed by, an insured institution while a Section 19 application is pending.  Anyone who knowingly violates Section 19 can be fined up to $1 million for each day such prohibition is violated or imprisoned for not more than five years, or both. 

The FDIC expects to receive fewer Section 19 applications under the revised standard.

The FDICs official release is linked here.

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