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  • FDIC finalizes policy statement on bank employment standards

    Agency Rule-Making & Guidance

    On July 24, the FDIC issued a final rule, which formalizes the agency’s Federal Deposit Insurance Act (FDI Act) Section 19 policy statement covering individuals seeking to work in the banking industry who have been convicted of certain crimes. In general, Section 19 of the FDI Act prohibits, without the prior written consent of the FDIC, any person who has been convicted of any criminal offense involving dishonesty, breach of trust, or money laundering—or who has entered into a pretrial diversion or similar program in connection with such an offense—from participating in the banking industry. In August 2018, the FDIC updated the statement of policy to, among other things, expand the criteria of de minimis offenses for which the FDIC will not require the filing of an application (covered by InfoBytes here), and in November 2019, the FDIC issued the proposed rule to finalize the policy statement (covered by InfoBytes here).

    The final rule, among other things, (i) exempts all individuals whose covered offenses have been expunged; (ii) expands the scope of the de minimis exception for certain qualifying offenses involving the use of false or fake identification, as well as for small-dollar, simple theft offenses; (iii) eliminates waiting periods for applicants who have had only one qualifying covered offense; and (iv) allows a person with two de minimis offenses to qualify for the de minimis exception, and decreases the waiting period for two such offenses to three years (or 18 months for those who were 21 or younger at the time of the offense).

    Agency Rule-Making & Guidance FDIC FDI Act Section 19

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  • FDIC seeks to codify policy statement on bank employment standards

    Agency Rule-Making & Guidance

    On November 19, the FDIC issued a proposed rule, which would formalize the agency’s Federal Deposit Insurance Act (FDI Act) Section 19 policy statement covering individuals seeking to work in the banking industry who have been convicted of certain crimes. In general, Section 19 of the FDI Act prohibits, without the prior written consent of the FDIC, any person who has been convicted of any criminal offense involving dishonesty, breach of trust, or money laundering—or who has entered into a pretrial diversion or similar program in connection with such an offense—from participating in the banking industry. As previously covered by InfoBytes, in August 2018, the FDIC updated the statement of policy to expand the criteria of de minimis offenses for which the FDIC will not require the filing of an application and (i) clarify when an expungement is considered complete for Section 19 purposes; (ii) recognize that convictions set aside based on procedural or substantive error should not be considered convictions under Section 19; and (iii) adjust the definition of “jail time” to not include “those on probation or parole who may be restricted to a particular jurisdiction.”

    The proposal not only seeks to codify the policy statement but requests public comment on all aspects of the policy. According to Chairman McWilliams, the FDIC is particularly interested in “whether and how the FDIC should expand the criteria for what constitutes a de minimis offense.” Comments are due 60 days after publication in the Federal Register.

    Agency Rule-Making & Guidance FDIC FDI Act Section 19

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  • FDIC issues updated Section 19 policy statement

    Federal Issues

    On August 3, the FDIC published in the Federal Register an updated statement of policy pursuant to Section 19 of the Federal Deposit Insurance Act (FDI Act) concerning participation in banking of a person convicted of a crime of dishonesty, breach of trust, money laundering or who has entered a pretrial diversion program in connection with the prosecution of such offenses. In addition to technical and clarifying changes, the final policy statement expands the criteria of de minimis offenses for which the FDIC will not require the filing of an application, and in response to comments received on the January proposal, (i) clarifies when an expungement is considered complete for Section 19 purposes; (ii) clearly recognizes that convictions set aside based on procedural or substantive error should not be considered convictions under Section 19; and (iii) adjusts the definition of “jail time” to not include “those on probation or parole who may be restricted to a particular jurisdiction.”

    Federal Issues FDIC FDI Act Section 19 Federal Register

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