The FDIC modified and restated, effective December 18, 2012, its Statement of Policy for Section 19 of the Federal Deposit Insurance Act (the “Statement”). Section 19 of the Federal Deposit Insurance Act prohibits an FDIC-insured bank, without the prior written consent of the FDIC, from allowing an individual who has been convicted of, or who has agreed to a pre-trial diversion program for, any criminal offense involving dishonesty, breach of trust or money laundering from participating in the conduct of the bank’s affairs, becoming affiliated with the bank or owning or controlling the bank.
The Statement, even prior to its December 18, 2012 modifications, provided that certain criminal offenses would be considered de minimis and not require the FDIC’s prior written waiver. To be considered de minimis, an offense would have to meet all four of the criteria described below. Only the fourth criterion listed below was modified as of December 18, 2012.
- There is only one condition or program entry of record for a covered offense;
- The conviction or program was entered at least five years prior to the date an application for an FDIC written waiver would otherwise be required;
- The offense did not involve an insured depository institution or insured credit union; and
- 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 served three (3) days or less of actual jail time. (Prior to December 18, 2012, the de minimis standard was more difficult to meet because the offense had to be punishable by less than one year imprisonment and/or a fine of less than $1,000 and the individual could not have served time in prison.) The FDIC stated that it has eased this de minimis criterion because the changes pose no significant additional risk to insured depository institutions, maintain the integrity of Section 19 of the Federal Deposit Insurance Act, and appear just and reasonable.