A final, modified “statement of policy” by the federal bank deposit agency on prohibitions and removals of individuals from engagement with a federally insured bank has gone into effect, the agency announced Monday in a letter to banks.
According to a Financial Institution Letter (FIL-42-2018) issued Monday by the Federal Deposit Insurance Corp. (FDIC), the final “statement of policy” (SOP) became applicable July 18. It concerns participation in banking of a person convicted of a crime of dishonesty or breach of trust or money laundering, or who has entered a pretrial diversion or similar program in connection with the prosecution for such offense.
A proposal was issued in January to replace the current SOP, which has been in place since 1998.
The modified SOP concerns section 19 of the Federal Deposit Insurance Act (FDIA). That section prohibits, without the prior written consent of the FDIC, “a person convicted of any criminal offense involving dishonesty or breach of trust or money laundering (covered offenses), or who has agreed to enter into a pretrial diversion or similar program in connection with a prosecution for such offense, from becoming or continuing as an institution-affiliated party (IAP), owning or controlling, directly or indirectly an insured depository institution (insured institution), or otherwise participating, directly or indirectly, in the conduct of the affairs of the insured institution.”
The law also forbids an insured institution from permitting such a person to “engage in any conduct or to continue any relationship prohibited by Section 19.”
The section provides a criminal penalty for the knowing violation of its provisions of a fine of not more than $1 million for each day of the violation or imprisonment for not more than five years.