This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

76702 

Vol. 88, No. 214 

Tuesday, November 7, 2023 

1 12 U.S.C. 1785(d)(1). 

2The NCUA has made its administrative orders 

against IAPs available in a searchable database on 

the agency’s website. See https://ncua.gov/news/ 

enforcement-actions/administrative-orders. 

3 73 FR 48399, 48401 (Aug. 19, 2008). 

4 Id. 

5The Board had not previously adopted any 

policies or regulations on section 205(d), as the 

statute at that time imposed no guidance or 

limitations on the information that the Board may 

consider, and the Board received a limited number 

of applications under section 205(d). However, due 

to an increasing number of applications requesting 

the Board’s consent under section 205(d), the Board 

believed it was appropriate to issue guidance on the 

topic. 

6Two commenters believed that a regulation was 

the more appropriate format for the guidance. One 

of the commenters who favored a regulation 

thought a regulation provided greater protection to 

a credit union that might be challenged by a 

prospective employee. Another commenter believed 

a regulation was preferable because it would help 

reinforce a credit union’s right to appeal an adverse 

decision and subject future changes to public notice 

and comment. The Board concluded that the source 

of the requirement stems from federal statute, 

namely section 205(d). Therefore, the Board 

believed that the need to comply with federal law, 

as augmented by guidance in the form of an IRPS, 

was sufficient to protect a credit union. The Board 

believed that credit union officials should be able 

to adequately understand and apply the guidance 

styled as an IRPS and that the right to request a 

hearing contained in the IRPS provided a credit 

union a sufficient right to appeal a denial of consent 

by the Board. Additionally, the Board noted that it 

would not amend its IRPS without providing the 

public notice and an opportunity to comment. For 

all these reasons, the Board believed it appropriate 

to issue the final guidance in the form of an IRPS. 

NATIONAL CREDIT UNION 

ADMINISTRATION 

12 CFR Parts 701, 741,746, 748, and 

752 

[NCUA–2023–0023] 

RIN: 3133–AF55 

Fair Hiring in Banking 

AGENCY: National Credit Union 

Administration (NCUA). 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The NCUA Board (Board) 

proposes to incorporate its ‘‘Second 

Chance’’ Interpretive Ruling and Policy 

Statement 19–1 (IRPS 19–1) and the Fair 

Hiring in Banking Act (FHBA) into its 

regulations. The Federal Credit Union 

Act prohibits, except with the Board’s 

prior written consent, any person who 

has been convicted of certain criminal 

offenses involving dishonesty or breach 

of trust (a covered offense), or who has 

entered into a pretrial diversion or 

similar program in connection with a 

prosecution for such offense (program 

entry), from participating in the conduct 

of the affairs of an insured credit union. 

DATES: Comments must be received by 

January 8, 2024. 

ADDRESSES: You may submit written 

comments, identified by RIN 3133– 

AF55, by any of the following methods 

(Please send comments by one method 

only): 

• Federal eRulemaking Portal: 

https://www.regulations.gov. The docket 

number for this proposed rule is NCUA– 

2023–0023. Follow the instructions for 

submitting comments. A plain language 

summary of the proposed rule is also 

available on the docket website. 

• Mail: Address to Melane ConyersAusbrooks, Secretary of the Board, 

National Credit Union Administration, 

1775 Duke Street, Alexandria, Virginia 

22314–3428. 

• Hand Delivery/Courier: Same as 

mailing address. 

Public inspection: You may view all 

public comments on the Federal 

eRulemaking Portal at https://

www.regulations.gov, as submitted, 

except for those we cannot post for 

technical reasons. The NCUA will not 

edit or remove any identifying or 

contact information from the public 

comments submitted. If you are unable 

to access public comments on the 

internet, you may contact the NCUA for 

alternative access by calling (703) 518– 

6540 or emailing OGCMail@ncua.gov. 

FOR FURTHER INFORMATION CONTACT: 

Rachel Ackmann, Senior Staff Attorney, 

Office of General Counsel, and Pamela 

Yu, Special Counsel to the General 

Counsel, Office of General Counsel, at 

the above address or telephone (703) 

518–6540. 

SUPPLEMENTARY INFORMATION: 

I. Background 

Section 205(d) of the Federal Credit 

Union Act (Section 205(d)) 

Prior to December 23, 2022, section 

205(d)(1) of the Federal Credit Union 

Act (FCU Act) provided that, except 

with the prior written consent of the 

Board, a person who has been convicted 

of any criminal offense involving 

dishonesty or breach of trust, or has 

agreed to enter into a pretrial diversion 

or similar program in connection with a 

prosecution for such offense, may not: 

• Become, or continue as, an 

institution-affiliated party (IAP) with 

respect to any insured credit union; or 

• Otherwise participate, directly or 

indirectly, in the conduct of the affairs 

of any insured credit union.1

Section 205(d)(1)(B) further provides 

that an insured credit union may not 

allow any person described above to 

participate in the conduct of the affairs 

of the credit union without Board 

consent. Section 205(d)(2) restricts the 

Board from approving a consent 

application related to a person 

convicted of certain crimes enumerated 

in Title 18 of the United States Code for 

10 years, absent a motion by the Board 

and approval by the sentencing court. 

Finally, section 205(d)(3) states that 

‘‘whoever knowingly violates’’ section 

(d)(1)(A) or (d)(1)(B) commits a felony, 

punishable by up to 5 years in prison or 

a fine of up to $1,000,000 a day, or both. 

Section 205(d) prohibitions have existed 

in some form since 1970, and since then 

federally insured credit unions have 

been required to make a diligent inquiry 

as to whether prospective employees or 

IAPs 2 are subject to a section 205(d) 

prohibition.3

In 2008, the Board adopted 

Interpretive Rule and Policy Statement 

08–1 (IRPS 08–1) to provide direction 

and guidance to federally insured credit 

unions and those persons who may be 

affected by section 205(d).4 The Board 

specifically sought comments as to 

whether the format of the guidance as 

an IRPS was appropriate or whether a 

regulation would be more suitable.5 The 

Board received some comments 

supporting guidance in the form of an 

IRPS and others supporting a regulation, 

but ultimately chose to issue the 

guidance through an IRPS.6

IRPS 08–1 outlined the actions 

prohibited under the FCU Act and the 

procedures for applying the Board’s 

consent on a case-by-case basis. 

Recognizing that certain offenses are so 

minor and dated that they would not 

presently pose a substantial risk to the 

insured credit union, IRPS 08–1 

excluded certain de minimis offenses 

that met specified requirements and 

juvenile offenses from the need to 


khammond on DSKJM1Z7X2PROD with PROPOSALS
Federal Register / Vol. 88, No. 214 / Tuesday, November 7, 2023 / Proposed Rules 76703 

7 84 FR 65907 (Dec. 2, 2019). 

8Public Law 117–263 (Dec. 23, 2022). 

9 12 U.S.C. 1829(a). 

10See 84 FR 68353 (Dec. 16, 2019). 

11 Id.; 85 FR 51312 (Aug. 20, 2020) (FDIC 2020 

final rule). 

12 12 U.S.C. 1785(d)(5)(I), and 12 U.S.C. 

1829(f)(9). 

13The NCUA is issuing a proposed rule to codify 

its policy regarding section 205(d) consent 

applications due to the FDIC’s recent codification 

of its similar section 19 Statement of Policy. The 

NCUA believes codifying IRPS 19–1 will provide 

for greater transparency as to its application, 

provide greater certainty as to the NCUA’s 

application process, and help both credit unions 

and individuals who may be affected by section 

205(d) to understand its impact and potentially seek 

relief from its provisions. 

request consent from the Board. In 

effect, the IRPS gave automatic consent 

for these offenses without requiring a 

consent application or any notice. 

In 2019, the Board rescinded IRPS 08– 

1 and issued IRPS 19–1, a revised and 

updated IRPS to reduce regulatory 

burden (also known as the Second 

Chance IRPS).7 IRPS 19–1 amended 

IRPS 08–1 to expand the definition of de 

minimis offenses to reduce the scope 

and number of offenses that would 

require submission of a consent 

application to the Board. Specifically, 

the IRPS did not require a consent 

application for convictions involving 

insufficient funds checks of moderate 

aggregate value, small-dollar simple 

theft, false identification, simple drug 

possession, and isolated minor offenses 

committed by covered persons as young 

adults. The Board recognized that many 

Americans faced hiring barriers due to 

a criminal record, a great number of 

whom are not violent or career 

criminals, but rather people who made 

poor choices early in life who have 

since paid their debt to society. The 

Board found that offering second 

chances to those who are truly penitent 

was consistent with our nation’s shared 

values of forgiveness and redemption. In 

keeping with this spirit of clemency, the 

Board expanded career opportunities for 

those who had demonstrated remorse 

and responsibility for past indiscretions 

and who wished to set forth on a path 

to productive living. 

On December 23, 2022, Congress 

passed the National Defense 

Authorization Act for Fiscal Year 2023 

(NDAA), which amended section 

205(d).8 The NDAA included the 

FHBA—which became immediately 

effective on December 23, 2022. The 

FHBA amends section 205(d) to expand 

employment opportunities for those 

with a previous minor or older criminal 

offense, among other provisions. 

Generally, the amendments codify a 

number of elements already contained 

in the NCUA’s current policy regarding 

section 205(d) but also extend greater 

relief than what is currently available to 

certain individuals with prior 

convictions seeking employment with 

an insured credit union, particularly 

individuals with older convictions, 

expunged convictions, or prior 

convictions for a misdemeanor, any 

drug-related possession offense, or 

certain designated ‘‘lesser offenses.’’ 

The FHBA also clarifies several 

definitions and the procedures for 

processing a consent application. The 

specific provisions of the FHBA are 

discussed in detail later in this 

preamble. 

Section 19 of the Federal Deposit 

Insurance Act 

Section 19 of the Federal Deposit 

Insurance Act (FDI Act) (section 19) 

contains a prohibition provision similar 

to section 205(d) of the FCU Act.9

Before 2020, the Federal Deposit 

Insurance Corporation (FDIC) provided 

the public with guidance relating to 

section 19 and the FDIC’s application 

thereof through a Statement of Policy 

similar to the NCUA’s IRPS 19–1.10

Similar to the NCUA’s IRPS, the FDIC’s 

Statement of Policy, among other things, 

instituted a set of criteria to provide for 

blanket approval of certain low-risk 

crimes and for persons convicted of 

such de minimis crimes to forgo filing 

a section 19 consent application. 

In 2020, the FDIC revised and 

incorporated its then existing Statement 

of Policy into its regulations to, among 

other purposes, provide for greater 

transparency as to its section 19 

application, provide greater certainty as 

to the FDIC’s application process, and to 

assist both insured depository 

institutions and individuals who may be 

affected by section 19 with 

understanding its impact and 

potentially seek relief from its 

provisions.11

In December 2022, the FHBA made 

amendments to section 19 that are 

comparable to the amendments made in 

section 205(d). The FDIC proposed to 

implement these changes through a 

notice-and-comment rulemaking in 

October 2023. 

Coordination With the FDIC 

In the past, the NCUA has drawn 

extensively on the FDIC’s guidance 

related to section 19 due to the FDIC’s 

greater experience processing section 19 

consent applications. Further, in the 

Board’s view it is beneficial to both 

insured financial institutions and 

covered individuals for the NCUA’s 

section 205(d) related requirements to 

be consistent, to the extent possible, 

with the FDIC’s section 19 

requirements. Consistent guidelines 

between the two agencies with respect 

to these parallel statutory provisions 

help streamline the consent application 

process, particularly for those 

individuals seeking consent from both 

the NCUA and the FDIC to allow for 

potential employment at federally 

insured financial institutions. The 

FHBA formalizes the expectation that 

the agencies implement these 

comparable statutory provisions 

similarly and requires the NCUA and 

the FDIC to consult and coordinate to 

promote consistent procedures, where 

appropriate.12 The Board finds that 

adopting similar definitions, 

terminology, and procedures in all 

aspects of this proposed rule will 

promote consistent implementation of 

consent applications because even those 

provisions that fall outside the scope of 

consent applications are likely to affect 

how the agency administers those 

applications. Staffs of the NCUA and the 

FDIC have consulted and coordinated 

on this proposed rulemaking as directed 

by the FHBA. 

Additionally, in developing this 

proposed rule, NCUA staff has 

consulted with staffs at the Board of 

Governors of the Federal Reserve Board 

and the Office of the Comptroller of the 

Currency. 

II. The Proposed Rule 

Section-by-Section Analysis 

The Board is now issuing a proposed 

rule to codify IRPS 19–1, along with 

significant changes that are consistent 

with the FHBA amendments to section 

205(d) and the FDIC’s comparable 

implementing regulations.13 The 

proposed rule would address, among 

other topics, the individuals and types 

of offenses covered by section 205(d), as 

well as the NCUA’s procedures for 

reviewing a consent application. The 

proposed rule would add new part 752 

to Chapter VII of Title 12 of the U.S. 

Code of Federal Regulations. A sectionby-section analysis of the proposed rule 

follows. 

1. Section 752.1—What is section 205(d) 

of the FCU Act? 

This section sets out the scope of 

proposed new part 752. Paragraph (a) 

would generally describe the 

requirements of section 205(d). 

Paragraph (b) would set out insured 

credit unions’ obligations under section 

205(d), including that insured credit 

unions would be required to make a 

reasonable inquiry regarding an 

applicant’s history to ensure that a 


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76704 Federal Register / Vol. 88, No. 214 / Tuesday, November 7, 2023 / Proposed Rules 

14The Board notes that the approach to criminal 

offenses mandated by the statute and rulemaking 

would not have an impact on other processes 

related to criminal convictions. For example, the 

NCUA may consider a more expansive scope of 

convictions related to controlled substances under 

section 212 of the Federal Credit Union Act in 

disapproving directors, committee members, and 

senior executive officers of troubled or newly 

chartered insured credit unions. See 12 CFR 701.14 

for the NCUA’s implementation of this provision, 

also addressed elsewhere in this proposed rule. 

person who is subject to the prohibition 

provision of section 205(d) is not hired 

or permitted to participate in the 

conduct of credit unions’ affairs without 

the written consent of the NCUA. 

Paragraph (b) also would set out that 

insured credit unions would be 

permitted to make conditional offers of 

employment to prospective applicants. 

Paragraph (c) would address the need 

for a consent application and establishes 

the standard for an application’s 

approval. The NCUA would evaluate a 

consent application to determine if a 

person is fit to participate in the 

conduct of the affairs of an insured 

credit union without posing a risk to its 

safety and soundness or impairing 

public confidence in that credit union. 

The burden is upon the applicant to 

establish that the application warrants 

approval. Section 752.1 includes no 

substantive changes as compared to 

IRPS 19–1. 

2. Section 752.2—Who is covered by 

section 205(d)? 

This section identifies who is covered 

by section 205(d). Paragraph (a) would 

state that IAPs, as defined by 12 U.S.C. 

1786(r), would be covered. Similar to 

IRPS 19–1, volunteer and de facto 

employees would be deemed covered 

under section 205(d) as well. 

Whether other persons who are not 

IAPs, such as certain independent 

contractors, are covered depends upon 

their degree of influence or control over 

the management or affairs of an insured 

credit union. Those who exercise major 

policymaking functions of an insured 

credit union are deemed to be covered 

by section 205(d). The proposed rule 

includes less detail than IRPS 19–1 

regarding how the NCUA would 

determine whether a person participates 

in the conduct of the affairs of an 

insured credit union. For example, the 

proposed rule would not state that the 

NCUA would analyze each individual’s 

conduct on a case-by-case basis and 

make a determination or that agency 

and court decisions will provide the 

guide as to what standards will be 

applied. The Board does not intend any 

substantive changes by these omissions. 

Instead, the proposed rule includes 

more streamlined language regarding 

persons who participate in the conduct 

of the affairs of an insured credit union, 

consistent with the FDIC’s comparable 

part 303. The NCUA intends to publish 

guidance that further clarifies its intent 

about other persons who are not IAPs. 

The guidance would include language 

similar to IRPS 19–1. 

The proposed rule would also state 

directors and officers of affiliates, or 

joint ventures of an insured credit 

union, would be covered if they 

participate in the conduct of affairs of 

the insured credit union or are in a 

position to influence or control the 

management or affairs of the insured 

credit union. IRPS 19–1 does not 

specifically state these persons would 

be covered if they participate in the 

conduct of affairs of the insured credit 

union; however, this is not a policy 

change because these persons would 

have been covered under the IRPS if 

they participated in the conduct of 

affairs of the credit union. 

Paragraph (b) would define the term 

‘‘person’’ for the purposes of section 

205(d) as an individual only and not a 

legal entity. 

3. Section 752.3—Which offenses 

qualify as ‘‘Covered Offenses’’ under 

section 205(d)? 

This section addresses what 

constitutes a covered offense under 

section 205(d).14 Paragraph (a) would 

state that a conviction or program entry 

must have been for a criminal offense 

involving dishonesty or breach of trust. 

The paragraph would define criminal 

offenses involving dishonesty and 

breach of trust. The FHBA defines 

‘‘criminal offense involving dishonesty’’ 

as ‘‘an offense under which an 

individual, directly or indirectly, cheats 

or defrauds or wrongfully takes property 

belonging to another in violation of a 

criminal statute.’’ The FHBA further 

provides that the term includes an 

offense that federal, state, or local law 

defines as dishonest or for which 

dishonesty is an element of the offense. 

However, the term does not include a 

misdemeanor criminal offense 

committed more than 1 year before the 

date on which an individual files a 

consent application, excluding any 

period of incarceration, or an offense 

involving the possession of controlled 

substances. 

The FHBA does not define breach of 

trust. Under the proposed rule, breach 

of trust would mean a wrongful act, use, 

misappropriation, or omission with 

respect to any property or fund that has 

been committed to a person in a 

fiduciary or official capacity, or the 

misuse of one’s official or fiduciary 

position to engage in a wrongful act, 

use, misappropriation, or omission. This 

definition is identical to the definition 

in IRPS 19–1. 

As discussed previously, the FHBA 

excludes from the scope of such 

offenses ‘‘an offense involving the 

possession of controlled substances.’’ 

The Board interprets this phrase 

concerning controlled substances to 

exclude from the scope of the 

prohibition, at a minimum, criminal 

offenses involving the simple 

possession of controlled substances and 

possession with intent to distribute a 

controlled substance. This exclusion 

may also apply to other drug-related 

offenses depending on the statutory 

elements of the offenses or court 

determinations that the statutory 

provisions of the offenses involve 

dishonesty or breach of trust, as noted 

in paragraph (b) of proposed § 752.3. 

The Board notes that in processing other 

applications, such as change in official 

or senior executive officer in credit 

unions that are newly chartered or are 

in troubled condition, the NCUA may 

still consider excluded offenses as 

appropriate. For example, an offense 

that is not covered under section 205(d) 

may bear on an individual’s 

competence, experience, character, or 

integrity under 12 U.S.C. 1790a and 12 

CFR 701.14. 

Potential applicants may contact their 

appropriate NCUA Regional Office or 

the Office of National Examinations and 

Supervision (ONES) if they have 

questions about whether their offenses 

are covered under section 205(d). 

This language marks a shift from IRPS 

19–1, which requires consent 

applications for certain simple 

misdemeanor drug possession offenses. 

Under IRPS 19–1, a consent application 

for a simple misdemeanor drug 

possession offense is required except if 

the conviction or program entry was 

classified as a misdemeanor at the time 

of conviction or program entry, the 

person had no other conviction or 

program entry described in section 

205(d), and it had been 5 years since the 

conviction or program entry (or 30 

months in the case of a person 21 years 

or younger at the time of the conviction 

or program entry), and the conviction 

did not involve the illegal distribution 

(including an intent to distribute), sale, 

trafficking, or manufacture of a 

controlled substance or other related 

offense. The Board believes that the 

proposed revision is consistent with the 

text and purposes of the FHBA, would 

align the Board’s interpretation of 

section 205(d) as to offenses involving 

controlled substances more closely with 

other federal banking regulators, and 

would continue to recognize that a drugVerDate Sep<11>2014 16:01 Nov 06, 2023 Jkt 262001 PO 00000 Frm 00003 Fmt 4702 Sfmt 4702 E:\FR\FM\07NOP1.SGM 07NOP1

khammond on DSKJM1Z7X2PROD with PROPOSALS
Federal Register / Vol. 88, No. 214 / Tuesday, November 7, 2023 / Proposed Rules 76705 

15See House Rpt. No. 117–314 (May 10, 2022), 

available at https://www.congress.gov/ 

congressional-report/117th-congress/house-report/ 

314/1. 

16 12 U.S.C. 1790a. 

17See 12 U.S.C. 1785(d)(4)(A). 

18Note that these exceptions do not apply to the 

offenses described under 12 U.S.C. 1785(d)(2). 

19 12 U.S.C. 1785(d)(4)(A)(ii). 20 12 U.S.C. 1785(d)(4)(B)(ii). 

related offense could potentially involve 

dishonesty or breach of trust.15 The 

Board also notes that this proposed 

provision would not affect its ability to 

consider drug-related offenses as they 

pertain to the suitability of an 

individual under other statutory 

provisions, including section 212 of the 

FCU Act.16

Paragraph (b) would require that, to 

determine if the criminal offense is one 

of dishonesty or breach of trust, the 

NCUA would look to the statutory 

elements of the criminal offense or to 

court decisions in the relevant 

jurisdiction that have interpreted these 

statutory elements. This policy is 

similar to IRPS 19–1. 

Paragraph (c) would include new 

language reflecting the FHBA’s 

exclusion of certain older offenses from 

the scope of section 205(d).17 The FHBA 

provides that individuals are not subject 

to a prohibition under section 205(d) if 

they committed a covered offense and it 

has been 7 years or more since the 

offense occurred; or if the individual 

was incarcerated with respect to the 

offense, it has been 5 years or more 

since the individual was released from 

incarceration; or the individual 

committed the offense when they were 

21 years of age or younger, and it has 

been more than 30 months since the 

sentencing occurred.18

The Board considers the phrases 

‘‘offense committed’’—noted 

previously—and ‘‘offense occurred’’ to 

be substantially similar. Accordingly, 

the Board interprets the term ‘‘offense 

occurred’’ to mean the ‘‘last date of the 

underlying misconduct.’’ In instances 

with multiple offenses, ‘‘offense 

occurred’’ means the last date of any of 

the underlying offenses. 

Paragraph (c) would track the FHBA’s 

language concerning offenses committed 

by individuals 21 years of age or 

younger. The FHBA states that, for 

individuals who committed an offense 

when the individual was 21 years of age 

or younger, section 205(d) shall not 

apply to the offense if it has been more 

than 30 months since the sentencing 

occurred.19 The Board interprets 

‘‘sentencing occurred’’ to mean the date 

on which a court imposed the sentence, 

not the date on which all conditions of 

sentencing were completed. Moreover, 

paragraph (c) notes that its exclusions— 

which are derived from the FHBA—do 

not apply to the enumerated offenses 

described under 12 U.S.C. 1785(d)(2). 

The FHBA also excludes designated 

lesser offenses, including the use of fake 

identification, shoplifting, trespass, fare 

evasion, driving with an expired license 

or tag (and such other low-risk offenses 

as the NCUA may designate), if 1 year 

or more has passed since the applicable 

conviction or program entry. Paragraph 

(d) would exclude these ‘‘designated 

lesser offenses’’ to reflect the revised 

statutory language. 

Paragraph (e) would add language that 

reflects the FDIC’s long-held position 

that individuals who are convicted of or 

enter into a pretrial diversion program 

for a criminal offense involving 

dishonesty or breach of trust in foreign 

jurisdictions are subject to section 19, 

unless the offense is otherwise excluded 

by 12 CFR 303, subpart L, as stated in 

the FDIC’s parallel proposed rule. The 

Board has not previously had a position 

on foreign offenses; however, given the 

congressional mandate to consult and 

coordinate to promote consistent 

implementation on consent application 

procedures where appropriate, the 

Board is proposing to adopt the FDIC’s 

interpretation. Under the proposed rule, 

for example, if an insured credit union 

has operations outside the United 

States, the credit union could conduct a 

reasonable, documented inquiry to 

verify an applicant’s history by 

inquiring about potential covered 

offenses that may have occurred in that 

foreign country (or countries) in which 

the credit union conducts operations, as 

well as the United States. As another 

example of such an inquiry, if an 

insured credit union plans to hire 

someone in the United States who is 

from a foreign country, the credit union 

could inquire about potential covered 

offenses that may have occurred in the 

United States and in that foreign 

country. 

4. Section 752.4—What constitutes a 

conviction under section 205(d)? 

Paragraph (a) would state that there 

must have been a conviction of record 

for section 205(d) to apply, and that 

section 205(d) would not apply to 

arrests, pending cases not brought to 

trial (unless the person has a program 

entry as set out in § 752.5), or any 

conviction reversed on appeal unless 

the reversal was for the purpose of resentencing. The Board notes, however, 

that covered offenses that have been 

pardoned—and which are not otherwise 

excluded by § 752.8—would still require 

a consent application. Paragraph (a) is 

substantively similar to IRPS 19–1. 

Paragraph (b) would clarify that, 

absent a program entry, when an 

individual is charged with a covered 

offense but is subsequently convicted of 

an offense that is not a covered offense, 

that conviction is not subject to section 

205(d). IRPS 19–1 does not have this 

clarification; however, it is included in 

the FDIC’s current part 303. The 

NCUA’s provision would merely clarify 

that the conviction, not the originally 

charged offense, is relevant under 

section 205(d). 

Paragraph (c) would exclude covered 

offenses that have been expunged or 

sealed by a court of competent 

jurisdiction or by operation of law. 

Under IRPS 19–1, a conviction that has 

been completely expunged is not 

considered a conviction of record and 

does not require a consent application. 

However, IRPS 19–1 further noted that 

where an order of expungement has 

been issued and is intended to be a 

complete expungement, the jurisdiction 

cannot allow the conviction or program 

entry to be used for any subsequent 

purpose including, but not limited to, 

an evaluation of a person’s fitness or 

character. Also, the failure to destroy or 

seal the records will not prevent the 

expungement from being considered 

complete for the purposes of section 

205(d). This caveat to the general 

premise that an expunged conviction is 

not considered a conviction of record is 

not included in the FDIC’s current part 

303. 

The FHBA provides a two-pronged 

test to determine whether a covered 

offense should be considered expunged, 

dismissed, or sealed and therefore 

excluded from the scope of section 

205(d). First, there must be an ‘‘order of 

expungement, sealing, or dismissal that 

has been issued in regard to the 

conviction in connection with such 

offense’’; second, it must be ‘‘intended 

by the language in the order itself, or in 

the legislative provisions under which 

the order was issued, that the conviction 

shall be destroyed or sealed from the 

individual’s state, tribal, or federal 

record, even if exceptions allow the 

conviction to be considered for certain 

character and fitness evaluation 

purposes.’’ 20

The FHBA does not address 

expungements, sealings, or dismissals 

by operation of law, and the Board has 

sought to provide a more 

comprehensive framework as to such 

records. The Board has added language 

to the second (intent) proposed prong of 

the expungement framework to 

encompass the language in the 

expungement order itself, the legislative 


khammond on DSKJM1Z7X2PROD with PROPOSALS
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21See 12 CFR 790.2. The NCUA is composed of 

the Board with a Central Office; Field Offices, 

consisting of 3 Regional Offices and ONES; the 

Asset Management and Assistance Center; the 

Community Development Revolving Loan Program; 

and the NCUA Central Liquidity Facility. 

22 12 U.S.C. 1785(d)(5)(E)(i). 

23 12 U.S.C. 1785(d)(5)(E)(ii). 

provisions under which the order was 

issued, and other legislative provisions. 

The Board believes that the additional 

language is consistent with the purposes 

of the statute and congressional intent to 

provide relief to individuals with older 

or minor offenses. 

Paragraph (d) would exclude 

‘‘youthful offender’’ judgments for 

minors from the scope of section 205(d). 

The proposed rule would clarify that it 

encompasses the term ‘‘youthful 

offender’’ and similar terms, because 

paragraph (d) may apply even if a court 

does not specifically use the term 

‘‘youthful offender’’ in an adjudication. 

5. Section 752.5—What constitutes a 

pretrial diversion or similar program 

under section 205(d)? 

Paragraph (a) would define what 

constitutes a pretrial diversion or 

similar program (a program entry). A 

pretrial diversion or similar program 

means a program characterized by a 

suspension or eventual dismissal or 

reversal of charges or criminal 

prosecution upon agreement by the 

accused to restitution, drug or alcohol 

rehabilitation, anger management, or 

community service. The FHBA 

establishes this definition. 

Paragraph (b) would clarify that when 

a covered offense either is reduced by a 

program entry to an offense that would 

otherwise not be covered by section 

205(d) or is dismissed upon successful 

completion of a program entry, the 

offense remains a covered offense for 

purposes of section 205(d). The covered 

offense will require a consent 

application unless it is de minimis as 

provided by § 752.8. This language is 

new as compared to IRPS 19–1 and 

comes from the FDIC’s part 303. 

Paragraph (c) would state that 

expungements or sealings of program 

entry records will be treated the same as 

expungements or sealings of 

convictions. This language is new as 

compared to IRPS 19–1 and comes from 

the FDIC’s part 303. 

6. Section 752.6—What are the types of 

consent applications that can be filed? 

The FHBA codifies procedures for 

consent applications filed with the 

NCUA. Specifically, the proposed rule 

would provide that the NCUA will 

accept applications from an individual 

or an insured credit union applying on 

behalf of an individual. The Board notes 

the FHBA uses the terms ‘‘national 

office’’ and ‘‘regional office,’’ which are 

inconsistent with the NCUA’s 

organization.21 The Board is 

contemplating addressing those 

technical inconsistencies in the final 

rule. 

Paragraph (b) would provide that an 

individual consent application or a 

credit union-sponsored consent 

application may be filed separately or 

contemporaneously with the 

appropriate NCUA Regional Office or 

ONES. 

7. Section 752.7—When must a consent 

application be filed? 

This section states that a consent 

application is not required for covered 

offenses that are considered de minimis 

under this part or where another 

exception under the part applies. A 

consent application would not be 

considered by the NCUA until all 

sentencing requirements associated with 

a conviction have been met or all 

requirements of the program entry have 

been completed. The Board proposes to 

include this revised language to accord 

with several of the FHBA’s exclusions 

from section 205(d) that are not tied to 

the completion of sentencing 

requirements. 

Furthermore, the FHBA requires the 

NCUA to ‘‘make all forms and 

instructions related to consent 

applications available to the public, 

including on [its] website.’’ 22 These 

forms and instructions ‘‘shall provide a 

sample cover letter and a 

comprehensive list of items that may 

accompany the consent application, 

including clear guidance on evidence 

that may support a finding of 

rehabilitation.’’ 23 While the proposed 

rule would not codify these 

requirements, the agency will comply 

with the statutory mandate to make 

appropriate forms and instructions 

available to the public. The proposed 

rule would provide generally that the 

NCUA’s consent application forms as 

well as additional information 

concerning section 205(d) can be 

accessed at the NCUA’s Regional Offices 

or on the NCUA’s website. 

8. Section 752.8—De Minimis Offenses 

IRPS 19–1 includes several offenses 

that would be otherwise covered under 

section 205(d), but do not require a 

consent application because they are 

considered de minimis. For these de 

minimis offenses, a person is deemed 

automatically approved to serve in an 

insured credit union, and no consent 

application is required. 

IRPS 19–1 updated the general criteria 

for the de minimis offenses to better 

align with developments in criminal 

reform and sentencing guidelines. The 

FHBA largely codified the conditions 

included in IRPS 19–1; however, in 

several cases the FHBA expanded upon 

the relief included in IRPS 19–1. The 

proposed rule generally would retain 

the de minimis factors included in IRPS 

19–1 but would amend the factors to 

reflect the FHBA. 

Paragraph (a)(1) would state an 

individual who has been convicted of 2 

or fewer covered offenses need not file 

if the individual could have been 

sentenced to a term of confinement in 

a correctional facility of 3 years or less 

and/or a fine of $2,500 or less, and the 

individual actually served 3 days or less 

of jail time for each, provided that all of 

the sentencing requirements associated 

with the conviction have been 

completed, each conviction or program 

entry was entered at least 3 years prior 

to the date of a consent application 

(assuming there are 2 convictions or 

program entries for a covered offense), 

and each covered offense was not 

committed against an insured 

depository institution or insured credit 

union. Jail time would be calculated 

based on the time an individual spent 

incarcerated as a punishment or a 

sanction—not as pretrial detention—and 

would not include probation or parole 

where an individual was restricted to a 

particular jurisdiction or was required 

to report occasionally to an individual 

or a specific location. Jail time would 

include confinement to a psychiatric 

treatment center in lieu of a jail, prison, 

or house of correction on mental 

competency grounds. The definition is 

not intended to include any of the 

following: persons who are restricted to 

a substance-abuse treatment program 

facility for part or all of the day; and 

persons who are ordered to attend 

outpatient psychiatric treatment. 

A consent application would also not 

be required if there are 2 convictions or 

program entries for a covered offense, 

and the actions that resulted in both 

convictions or program entries all 

occurred when the individual was 21 

years of age or younger and the 

convictions or program entries were 

entered at least 18 months prior to the 

date of a consent application. 

A consent application would also not 

be required under the proposed rule if 

an individual has convictions or 

program entries of record based on the 

writing of ‘‘bad’’ or insufficient funds 

checks and the following conditions 

apply: (i) the aggregate total face value 

of all ‘‘bad’’ or insufficient funds checks 

cited across all the convictions or 


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24See 12 CFR 713 (Fidelity bond and insurance 

coverage for federally insured credit unions). 

25See 12 U.S.C. 1785(d)(5)(F). 

26 Id. 

27While the statute uses the terms 

‘‘rehabilitation’’ and ‘‘mitigating’’ as separate 

categories of evidence, the terms appear to be 

substantially similar in the context of section 205 

consent applications, and the use of both terms in 

these regulations may create confusion. Therefore, 

the proposed rule uses the term rehabilitation, not 

mitigating. 28See 12 U.S.C. 1785(d)(2)(A). 

program entries for ‘‘bad’’ or insufficient 

funds checks is $2,000 or less; (ii) no 

insured depository institution or 

insured credit union was a payee on any 

of the ‘‘bad’’ or insufficient funds 

checks that were the basis of the 

convictions or program entries; and (iii) 

the individual has no more than 1 other 

de minimis offense. 

The FHBA and the proposed rule 

would also not require a consent 

application for convictions or program 

entries for small-dollar, simple theft. 

Under the proposed rule, convictions or 

program entries based on the simple 

theft of goods, services, or currency (or 

other monetary instrument) would be 

considered de minimis offenses if the 

following conditions apply: (i) the value 

of the currency, goods, or services taken 

is $1,000 or less; (ii) the theft was not 

committed against an insured 

depository institution or insured credit 

union; (iii) the individual has no more 

than 1 other de minimis offense under 

this section; and (iv) if there are 2 de 

minimis offenses under this section, 

each conviction or program entry was 

entered at least 3 years prior to the date 

a consent application would otherwise 

be required, or at least 18 months prior 

to the date a consent application would 

otherwise be required if the actions that 

resulted in the conviction or program 

entry all occurred when the individual 

was 21 years of age or younger. This 

exception excludes burglary, forgery, 

robbery, identity theft, and fraud. 

Paragraph (c) would provide that 

individuals must be covered by a 

fidelity bond to the same extent as 

others in similar positions. This policy 

is consistent with IRPS 19–1.24

Paragraph (d) would state that any 

conviction or program entry for specific 

criminal offenses under Title 18 set out 

in 12 U.S.C. 1785(d)(2) cannot qualify 

for a de minimis exemption. 

Finally, the Board notes that the 

FHBA includes ‘‘designated lesser 

offenses’’ in addition to de minimis 

offenses. Designated lesser offenses, 

including use of fake identification, 

shoplifting, trespass, fare evasion, or 

driving with an expired license or tag, 

are low-risk offenses statutorily 

excluded from the scope of section 

205(d). 

9. § 752.9—How To File a Consent 

Application 

This section would provide that 

consent applications filed by a credit 

union should be filed with the NCUA’s 

Regional Office where the credit union’s 

home office is located (or with ONES for 

credit unions that office supervises), 

and consent applications filed by an 

individual should be filed with the 

NCUA’s Regional Office where the 

person lives. States covered by each 

NCUA Regional Office are listed in 12 

CFR 790.2. 

When the proposed rule is finalized, 

the Board will revise delegations of 

authority related to consent 

applications. Under the revised 

delegations, Regional Directors and the 

ONES Director will have authority to act 

on both individual and credit unionsponsored applications. Currently, the 

Regional Directors and the ONES 

Director only have delegated authority 

to act on credit union-sponsored 

applications, and the Board has retained 

the authority to approve/disapprove 

individual applications. 

10. Section 752.10—How a Consent 

Application Is Evaluated 

Paragraph (a) would set out the factors 

the NCUA would assess to determine 

the level of risk the applicant poses to 

an insured credit union and whether the 

NCUA would consent to the person’s 

participation in a credit union’s affairs. 

The paragraph reflects new statutory 

requirements related to the NCUA’s 

review process, including the 

requirement that the NCUA primarily 

rely on the criminal history record of 

the Federal Bureau of Investigation in 

its review and provide such record to 

the applicant to review for accuracy.25

The Board interprets the term ‘‘criminal 

history record’’ to mean ‘‘identity 

history summary checks,’’ which are 

commonly known as ‘‘rap sheets.’’ 

Under paragraph (a)—and in accordance 

with the FHBA—the NCUA, in 

reviewing a consent application, would 

provide ‘‘such record’’ to the individual 

to review for accuracy.26 The NCUA 

would not provide it to the credit union, 

but only to the individual. In evaluating 

the risk posed by the person’s 

participation, the Board has proposed 8 

considerations that it would evaluate. 

These considerations are substantively 

similar to factors under IRPS 19–1. 

Paragraph (b) would state that the 

NCUA would not require an applicant 

to provide certified copies of criminal 

history records unless the NCUA 

determines that there is a clear and 

compelling justification to require 

additional information to verify the 

accuracy of the criminal history record 

of the Federal Bureau of Investigation. 

Paragraph (c) would state that the 

determining factors in assessing a 

consent application would be whether 

the person has demonstrated their 

fitness to participate in the conduct of 

the affairs of an insured credit union, 

and whether the affiliation, or 

participation by the person in the 

conduct of the affairs of the credit 

union, may constitute a threat to the 

safety and soundness of the credit union 

or the interests of its members or 

threaten to impair public confidence in 

the credit union. 

Paragraph (d) would set forth the 

considerations the NCUA would 

evaluate in conducting an 

individualized assessment. The 

proposed rule also clarifies how the 

NCUA will evaluate evidence of 

rehabilitation and other evidence, as 

required by the FHBA.27

Paragraph (e) would provide that the 

question of whether a person, who was 

convicted of a crime or who agreed to 

a program entry, was guilty of that crime 

shall not be at issue in a proceeding 

under this subpart or under 12 CFR part 

746, subpart B. 

Paragraph (f) would provide that the 

NCUA will also apply the 

considerations in paragraph (d) to 

determine whether the interests of 

justice are served in seeking an 

exception in the appropriate court when 

a consent application is made prior to 

10 years after the final conviction or 

agreement to program entry for certain 

federal offenses.28

Paragraph (g) would provide that all 

approvals and orders will be subject to 

the condition that the person be covered 

by a fidelity bond to the same extent as 

others in similar positions. 

Paragraph (h) would provide that 

when deemed appropriate by the 

NCUA, credit union-sponsored consent 

applications are intended to allow the 

individual to work for the same 

employer and across positions. NCUA 

consent would be required for any 

proposed significant changes in the 

individual’s security-related duties or 

responsibilities, such as promotion to an 

officer or other positions that the 

employer determines will require higher 

security-screening credentials. 

Paragraph (i) would provide that 

when a person who has received 

approval under section 205(d) 

subsequently seeks to participate in the 

conduct of the affairs of another insured 

credit union, another consent 

application must be submitted. 


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29 12 U.S.C. 1785(d)(5)(D). 30 12 CFR 308.158(d). 

11. Section 752.11—What will the 

NCUA do if the consent application is 

denied? 

Paragraph (a) would provide that the 

NCUA would provide a written denial 

that would summarize or cite the 

relevant factors from the proposed 

§ 752.10. Paragraph (b) would provide 

that the applicant can file a written 

request for reconsideration or appeal 

under the process contained in 12 CFR 

part 746, subpart B. That subpart 

includes uniform procedures by which 

petitioners may appeal initial agency 

determinations to the Board. 

Under part 746, subpart B, prior to 

submitting an appeal to the Board, the 

petitioner may make a written request to 

the appropriate Regional Office or, if 

appropriate, ONES, to reconsider an 

initial agency determination within 30 

calendar days of the date of that 

determination. Within 60 calendar days 

of the date of an initial agency 

determination or, as applicable, a 

determination by the Regional Office or, 

if appropriate, ONES, on any request for 

reconsideration, a petitioner may file an 

appeal seeking review of the 

determination by the Board. Under part 

746, subpart B, a petitioner may also 

request an oral hearing before the Board. 

These procedures meet the statutory 

requirement for ‘‘national office review’’ 

of any consent application that is 

denied by a Regional Office, if the 

individual requests a review by the 

Board.29 This option is also 

substantially similar to the FDIC’s 

current parts 303 and 308, except that 

under those regulations, an oral hearing 

is conducted unless the applicant or the 

insured depository institution waives it 

in writing and instead makes a written 

submission.30

NCUA Practice on Section 205(d) 

In general, the proposed rule would 

mirror the FDIC’s part 303 with 

minimal, non-substantive changes. 

Additionally, while there were a few 

differences between the FDIC’s part 303 

and IRPS 19–1 before the FHBA, such 

as some details on de minimis offenses, 

expungements, and treatment of drugrelated offenses, the enactment of the 

FBHA resolved most discrepancies 

between the two agencies’ rules and 

created a more uniform standard. 

However, there are a few areas in which 

IRPS 19–1 provided additional context 

and discussion on its policy and 

procedures related to section 205(d) 

compared to part 303. In general, the 

additional information does not provide 

any substantive difference from part 303 

and instead provides additional 

clarifying information. 

The Board has chosen to omit much 

of the clarifying information in the 

proposed rule to ensure its uniformity 

with part 303; however, the Board also 

believes credit unions generally have 

less experience with section 205(d) than 

insured depository institutions and are 

typically smaller in size with fewer 

resources, so additional guidance would 

help insured credit unions to discharge 

their responsibilities under section 

205(d). Therefore, in finalizing and 

implementing this rule, the NCUA will 

prepare guidance that provides insured 

credit unions additional information 

about section 205(d). The guidance will 

include portions of IRPS 19–1 that were 

not incorporated into the proposed rule. 

For example, IRPS 19–1 provides that 

when the credit union learns that a 

prospective employee has a prior 

conviction or entered into a pretrial 

diversion program for a covered offense, 

the credit union should document in its 

files that a consent application is not 

required because the covered offense is 

considered de minimis and meets all of 

the criteria for the exception, or—if the 

credit union is willing to sponsor the 

prospective employee’s consent 

application—submit an application 

requesting the Board’s consent. The 

credit union could also extend a 

conditional offer of employment and 

notify the prospective employee that it 

is contingent upon a satisfactory 

background check to determine whether 

the individual is prohibited under 

section 205(d). The Board intends no 

change of position regarding these 

policies even though they are not 

included in the proposed rule. 

IRPS 19–1 also states that persons 

who will occupy clerical, maintenance, 

service, or purely administrative 

positions generally can be approved 

without an extensive review. A more 

detailed analysis, however, would be 

performed in the case of persons who 

will be in a position to influence or 

control the management or affairs of the 

insured credit union. The proposed rule 

would not include a similar delineation 

between how the NCUA intends to 

approve consent applications for 

different types of positions. The Board 

continues to believe that applications 

for clerical, maintenance, service, or 

purely administrative positions do not 

require the same review as applications 

for other positions that have access to 

more of the day-to-day financial 

operations of a credit union. The NCUA 

will address this issue in future 

guidance. 

Waiting Time for a Subsequent Consent 

Application if a Consent Application Is 

Denied 

The FDIC’s current part 303 states that 

an applicant will need to wait one year 

from the date of the denial or decision 

of the FDIC Board, or its designee, 

before resubmitting a consent 

application. The Board is not proposing 

to include similar language for several 

reasons. First, the NCUA does not 

receive a significant volume of section 

205(d) consent applications and does 

not believe allowing credit unions or 

individuals to resubmit consent 

applications at any time would present 

a burden on the agency and its 

resources. Second, the NCUA would not 

want to unfairly delay an individual 

from seeking employment if the consent 

application was denied for a reason that 

could be immediately addressed by the 

applicant. For example, if the consent 

application was denied due to 

insufficient support showing 

rehabilitation, the individual could 

immediately refile with additional 

evidence, such as employment history, 

letters of recommendation, 

documentation of participation in 

substance-abuse programs or job 

preparation and educational programs, 

or other relevant evidence. 

Other Conforming Amendments 

Both the standard FCU Bylaws in 

appendix A of part 701 and the criteria 

for determining the insurability of a 

credit union in 12 CFR 741.3(c) 

reference section 205(d). In general, 

both sections prohibit a person who has 

been convicted of any criminal offense 

involving dishonesty or breach of trust 

from serving at an insured credit union, 

except with the written consent of the 

Board. The Board believes these 

references are incomplete because not 

all convictions of criminal offenses 

involving dishonesty or breach of trust 

now serve as the valid basis for a section 

205(d) prohibition. Therefore, the 

proposed rule would replace the current 

reference to ‘‘any crime involving 

dishonesty or a breach of trust’’ to refer 

to the specific crimes covered under 

section 205(d). Referring directly to the 

FCU Act would also automatically 

incorporate future statutory changes to 

section 205(d). The Board may make 

other similar conforming amendments 

in finalizing this proposed rule if it 

identifies other provisions that should 

be clarified simply to reflect the changes 

that the FHBA made to the statutory 

prohibitions. 

Additionally, as required by the 

Gramm-Leach-Bliley Act, appendix B to 

part 748 (Appendix B) contains 


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31 12 CFR 748, App. B. 

32The Board notes that insured credit unions may 

extend a conditional offer of employment 

contingent on the completion of a background 

check satisfactory to the credit union to determine 

if the applicant is barred under section 205(d). 

33 12 U.S.C. 1790a. 

34 12 CFR 701.14. 

35 77 FR 45285 (July 31, 2012). 

36 12 U.S.C. 1786(i)(1)(A). 

37 12 U.S.C. 5101 et seq. 

38 12 U.S.C. 5104. 

guidance on creating an effective 

incident response plan in the event of 

unauthorized access to member 

information and the requirements of the 

notices distributed to the affected 

members.31 Appendix B states that 

credit unions should also conduct 

background checks of employees to 

ensure that the credit union does not 

violate 12 U.S.C. 1785(d). The proposed 

rule would require a background check 

in § 752.1(b), which is consistent with 

current expectations, as discussed in the 

introductory portion of this preamble.32

Therefore, the proposed rule would 

amend this footnote to state that insured 

credit unions must also conduct 

background checks of employees. 

Proposed Amendments to § 701.14 on 

Change in Official or Senior Executive 

Officer in Credit Unions That Are Newly 

Chartered or Are in Troubled Condition 

In addition to the prohibition on 

certain individuals participating in the 

conduct of the affairs of a credit union 

included in section 205(d), the FCU Act 

also sets forth conditions under which 

certain insured credit unions must 

notify the NCUA in writing of any 

proposed changes in its board of 

directors, committee members, or senior 

executive staff (section 212).33 The 

Board implements section 212 through 

§ 701.14 of its rules.34 Section 701.14 

requires generally that insured credit 

unions that are newly chartered or 

troubled file notice with the NCUA 

before adding, replacing, or changing 

the duties of a board or committee 

member or a senior executive officer. 

The Board has not substantively 

amended § 701.14 since 2012 when the 

Board revised the definition of troubled 

condition.35 The proposed rule would 

make minor amendments to § 701.14 

and would clarify when a notice is 

required, how the NCUA would process 

the notice, and what information must 

be included in the NCUA’s notice of 

disapproval to the applicant. 

First, the proposed rule would clarify 

when notice is required. Currently, 

§ 701.14 specifies that notice is required 

whenever there is ‘‘any addition or 

replacement of a member of the board 

of directors or committee member or the 

employment or change in 

responsibilities of an individual to a 

position of senior executive officer.’’ 

NCUA staff has received questions on 

whether notice is required when a 

member of the board or a committee 

moves to another position, such as 

when an existing board member 

switches to the board chair position. For 

clarity, the proposed rule would specify 

that a credit union must provide notice 

when adding or replacing any member 

of its board of directors or committees, 

employing any person as a senior 

executive officer of the credit union, or 

changing the responsibilities of a board 

member, committee member, or a senior 

executive officer so that the person 

would assume a different position. The 

Board solicits comment on whether this 

proposed change provides clarity or 

increases burden on credit unions. 

Second, the proposed rule would 

increase the amount of time the NCUA 

has to initially review a notice. 

Currently, in § 701.14(c)(3)(iii), the 

NCUA has 10 calendar days after 

receiving the notice to inform the credit 

union that the notice is complete or that 

additional information is needed. The 

10-day notification requirement is not 

specified in the statute, and NCUA staff 

has found the 10-day timeframe difficult 

to meet, as additional information to 

analyze the request may be required. 

The Board does not believe that the 

additional 5 calendar days would 

unduly delay the start or change in 

position of board members, committee 

members, or senior executive officers. 

However, the Board solicits comments 

on whether insured credit unions 

believe this change would pose any 

significant operational burden, in 

addition to the general solicitation for 

comments included in this proposed 

rule. 

The proposed rule would also specify 

that Regional Director and ONES 

Director communications under 

§ 701.14 may be done through email. 

This is not a substantive change but 

rather a clarification of existing 

practices and common use of electronic 

communications in time-sensitive 

matters. 

Finally, the proposed rule would 

explicitly state that the notice of 

disapproval will identify the reason(s) 

for the denial. On occasion, when 

appealing such a denial, the NCUA has 

received complaints that applicants 

were not provided sufficient 

information in the notice of disapproval 

about the reason for the decision. 

Appellants have expressed frustrations 

that they could not adequately support 

their appeal without sufficient 

information on the rationale for the 

NCUA’s decision. The Board believes 

any notice of disapproval should 

explicitly state the reason(s) for denial 

and has included clarifying language in 

the proposed rule. 

Other Relevant Authorities on 

Prohibitions 

Under section 206(i) of the FCU Act 

(section 206(i)), the Board is authorized 

to suspend or prohibit an IAP from 

further participation in the conduct of 

the affairs of any credit union if: (1) an 

IAP is charged in any information, 

indictment, or complaint with a crime 

involving dishonesty or breach of trust 

which is punishable by imprisonment 

for a term exceeding 1 year under state 

or federal law or certain specific 

violations of federal criminal law 

relating to anti-money laundering 

provisions; and (2) continued service or 

participation by the IAP may pose a 

threat to the interests of the credit 

union’s members or may threaten to 

impair public confidence in the credit 

union.36 Despite the similar language 

between section 206(i) and section 

205(d), the FHBA did not make similar 

amendments to section 206(i) as were 

made to section 205(d). Section 206(i) is 

narrower in scope than section 205(d), 

as it applies to current IAPs and 

requires an additional showing by the 

agency to suspend or prohibit an IAP. 

Because the FHBA did not amend 

section 206(i), the Board retains 

statutory authority to suspend or 

prohibit an IAP for all crimes involving 

dishonesty or breach of trust, provided 

that the IAP’s continued service or 

participation may pose a threat to the 

interests of the credit union’s members 

or may threaten to impair public 

confidence in the credit union. 

The Board also notes that the Secure 

and Fair Enforcement for Mortgage 

Licensing Act of 2008 (commonly 

known as the S.A.F.E. Act) mandates a 

nationwide licensing and registration 

system for residential mortgage loan 

originators.37 The S.A.F.E. Act includes 

certain requirements related to 

minimum standards for state-licensed 

loan originators—including those 

working at credit union service 

organizations—and related to felonies 

involving dishonesty and breach of 

trust.38 Additionally, regulations 

implementing the S.A.F.E. Act impose 

an obligation on depository institutions 

to adopt certain policies, including a 

requirement that the depository 

institution review employee criminal 

background reports, including the 

criminal background standards for 

employees in section 206(i) of the FCU 

Act, 12 U.S.C. 1786(i). The Board notes 


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39Public Law 116–283, codified at 31 U.S.C. 

5321(g). 

40 12 U.S.C. 1785(d)(4)(A). 

41 12 U.S.C. 1785(d)(6)(B)(iii). 

42See 84 FR 65907, 65917 (Dec. 2, 2019) (‘‘There 

must be a conviction of record. Section 205(d) does 

not apply to arrests, pending cases not brought to 

trial, acquittals, or any conviction which has been 

reversed on appeal.’’) 

43 12 U.S.C. 1785(d)(4)(A)(ii). 

44 12 U.S.C. 1785(d)(1). 

45See 12 U.S.C. 1785(d)(6). 

46 12 U.S.C. 1785(d)(4)(B). 

47 12 U.S.C. 1785(d)(6)(B)(iii)(II). 

these requirements are not included in 

the FHBA and remain applicable to 

credit unions and credit union service 

organizations. 

Similarly, under the Anti-Money 

Laundering Act of 2020, individuals 

who are found to have committed an 

‘‘egregious violation’’ of the Bank 

Secrecy Act or its rules are barred from 

serving on a U.S. financial institution’s 

board of directors for 10 years from the 

date of conviction or judgment.39 The 

FHBA does not affect this separate 

statutory prohibition, and it remains 

applicable to credit unions. 

III. Request for Comments 

The Board seeks comments on all 

aspects of this proposed rule and its 

approach to section 205(d) and more 

specifically on the questions that follow. 

1. Scope. Should the final rule 

include additional information on who 

may fall within the scope of section 

205(d), including persons who 

participate in the conduct of the affairs 

of an insured credit union? 

2. Offense date. Section 

205(d)(4)(A)(i) provides for an exception 

for an offense if ‘‘it has been 7 years or 

more since the offense occurred.’’ 40

There is a similar provision that 

removes from the definition of 

‘‘criminal offense involving dishonesty’’ 

‘‘a misdemeanor criminal offense 

committed more than 1 year before the 

date on which an individual files a 

consent application, excluding any 

period of incarceration[.]’’ 41

Historically, the NCUA’s position has 

been that actions do not amount to a 

covered ‘‘offense,’’ for section 205(d) 

purposes, until there has been either a 

conviction via a guilty plea, finding of 

guilt, or an entry into a pretrialdiversion program. This is because 

culpability and responsibility for the 

actions do not attach until one of those 

events occurs.42 However, for purposes 

of evaluating whether the 7-year or 1- 

year exception applies, the Board must 

evaluate if it has been 7 years or more 

since the ‘‘offense occurred’’ or if an 

‘‘offense [was] committed more than one 

year before the date on which an 

individual files a consent application, 

excluding any period of incarceration.’’ 

The Board proposes to interpret the 

phrases ‘‘offense occurred’’ and 

‘‘offenses committed’’ as the ‘‘last date 

of the underlying misconduct’’ given the 

text of the statute. In instances with 

multiple offenses, ‘‘offense occurred’’ or 

‘‘offense committed’’ would mean the 

last date of any of the underlying 

offenses. However, the Board 

acknowledges that there may be other, 

supportable interpretations of this 

phrase. For example, the Board is aware 

of legislative history indicating that the 

timeframes established by the FHBA 

were chosen because of their relation to 

an individual’s likelihood of 

rehabilitation and that an individual’s 

rehabilitation likely begins only with 

conviction or program entry, rather than 

the date of their misconduct. As such, 

the Board seeks public comment on the 

following topic: Is the Board’s 

interpretation of the phrases ‘‘offense 

occurred’’ and ‘‘offense committed’’ as 

the ‘‘last date of underlying 

misconduct’’ appropriate, or are there 

other interpretations the Board should 

consider? What support do commenters 

have for other interpretations given the 

language of the statute? 

3. ‘‘Sentencing occurred.’’ The FHBA 

exempts offenses committed by 

individuals 21 years of age or younger 

if it has been more than 30 months since 

the sentencing occurred.43 However, the 

statute does not define the phrase 

‘‘sentencing occurred.’’ The Board 

proposes to interpret ‘‘sentencing 

occurred’’ to mean the date on which a 

court imposed the sentence, not the date 

on which all conditions of sentencing 

were completed. The Board seeks public 

comment on the following topic: Is the 

Board’s proposed interpretation of the 

phrase ‘‘sentencing occurred’’ 

appropriate? 

4. Foreign convictions. Section 205(d) 

applies to any person who has been 

convicted of any criminal offense 

involving dishonesty or a breach of 

trust, or has agreed to enter into a 

pretrial diversion or similar program in 

connection with a prosecution for such 

offense.44 The phrase ‘‘criminal offense 

involving dishonesty’’ is defined in the 

statute but is silent as to whether it 

includes convictions and pretrial 

diversions for criminal offenses 

prosecuted by foreign authorities 

(foreign convictions).45 The statute does 

not define ‘‘offense involving . . . 

breach of trust.’’ The FDIC’s position 

has been that foreign convictions and 

pretrial diversions are included within 

the scope of section 19. The Board 

believes it is reasonable to follow and 

adopt the FDIC’s long-held position 

given the statutory mandate for 

consistency and the FDIC’s greater 

experience with section 19 consent 

applications. In addition, there are 

strong public policy rationales for 

prohibiting a person who has been 

convicted of certain foreign criminal 

offenses (or entered into a pretrial 

diversion program in connection with 

such an offense) from becoming or 

continuing as an IAP or participating in 

the affairs of an insured credit union. 

However, the Board acknowledges that 

there may be case law, statutory 

construction, and other arguments that 

support a reading of section 205(d) that 

would exclude foreign convictions and 

pretrial diversions from the scope of 

section 205(d). Therefore, the Board 

seeks public comment on the following 

topic: Does section 205(d) encompass 

foreign convictions and pretrial 

diversions? What support do 

commenters have for their position? 

5. Expungements, sealings, and 

dismissals. The FHBA establishes a new 

statutory exemption for expunged, 

sealed, and dismissed convictions 

(collectively, ‘‘expungements’’).46 The 

statutory language does not mention 

expungements ‘‘by operation of law’’— 

as opposed to through a court order. The 

proposed rule incorporates the new 

statutory language but also includes a 

broad interpretation of ‘‘expungement’’ 

to encompass covered offenses that have 

been expunged by operation of law. The 

Board seeks public comment on the 

following topic: Given the new statutory 

exemption for expunged offenses, is the 

Board’s more expansive proposed 

interpretation of expungement—which 

term includes records that have been 

expunged by application of law— 

appropriate? 

6. Offenses involving controlled 

substances. The FHBA states that an 

‘‘offense involving the possession of 

controlled substances’’ is not included 

within the definition of ‘‘criminal 

offense involving dishonesty’’ and, 

therefore, are not subject to the section 

205(d) prohibition.47 The proposed rule 

includes this definitional exclusion and 

notes that the Board interprets the 

phrase ‘‘offenses involving the 

possession of controlled substances’’ to 

include, at a minimum, the offenses of 

simple possession of controlled 

substances and possession with intent 

to distribute controlled substances. This 

interpretation would mark an expansion 

from IRPS 19–1. At the same time, this 

interpretation would track the statutory 

language of ‘‘offenses involving the 

possession of controlled substances’’ by 

encompassing the offense of possession 


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48 44 U.S.C. 3507(d); 5 CFR part 1320. 49NCUA IRPS 15–1, 80 FR 57512 (Sept. 24, 2015). 

with intent to distribute controlled 

substances. The Board seeks public 

comment on the following topic: Is the 

Board’s interpretation of ‘‘offense[s] 

involving the possession of controlled 

substances’’ as applying, at a minimum, 

to simple possession and possession 

with intent to distribute appropriate? 

7. De minimis offenses. The FHBA 

states that the NCUA may exempt by 

rule certain de minimis offenses from 

the section 205(d) prohibition. The 

NCUA considers de minimis offenses to 

be covered offenses for which a consent 

application is not required because the 

NCUA deems the application 

automatically granted. The NCUA has 

previously promulgated IRPS 19–1, 

which specified de minimis offenses 

under section 205(d). However, given 

this new statutory language, the Board 

is reevaluating its current approach to 

de minimis offenses. Accordingly, the 

Board seeks public comment on the 

following topic: Is the Board’s current 

approach to de minimis offenses 

appropriate? Are there additional 

offenses that the Board should consider 

de minimis under section 19? 

Commenters should provide support for 

such a designation. 

8. Conforming changes. The Board 

also requests comments on other 

conforming changes or updates that it 

should make to its regulations or 

guidance to implement the new 

statutory provisions. As noted, in the 

final rule, the Board may adopt 

additional conforming amendments to 

its regulations if it finds that other 

provisions should be changed solely to 

indicate the new, more limited scope of 

the section 205(d) prohibitions. The 

Board would not anticipate making 

substantive changes to these provisions 

that would create new standards beyond 

those in the statutory amendments. 

IV. Regulatory Procedures 

Paperwork Reduction Act 

The Paperwork Reduction Act of 1995 

(PRA) applies to rulemakings in which 

an agency creates a new or amends 

existing information collection 

requirements.48 For purposes of the 

PRA, an information collection 

requirement may take the form of a 

reporting, recordkeeping, or a thirdparty disclosure requirement. The 

NCUA may not conduct or sponsor and 

the respondent is not required to 

respond to an information collection, 

unless it displays a valid Office of 

Management and Budget (OMB) control 

number. 

The proposed rule would extend 

greater relief than what is currently 

available to certain individuals with 

prior convictions seeking employment 

with an insured credit union, thereby 

eliminating the need to submit consent 

applications for certain offenses, 

particularly older or expunged 

convictions, prior misdemeanors, drug 

possession offenses, and other lesser 

offenses. The proposed rule should 

reduce the number of respondents 

applying for consent, but it may also 

increase the number of applications 

because of a renewed awareness of the 

statutory prohibition. Thus, the 

estimated number of respondents 

applying for consent would remain at 

one. The proposed rule continues to 

require credit unions to document when 

an application is not required. This 

recordkeeping requirement is minimal 

and only impacts those credit unions or 

individuals who would otherwise have 

submitted an application for consent. 

These program changes would revise 

the information collection requirement 

currently approved OMB control 

number 3133–0203, as follows: 

Title of Information Collection: IRPS 

19–1, Guidance Regarding Prohibitions 

Imposed by Section 205(d) of the 

Federal Credit Union Act. 

Estimated Number of Respondents: 4. 

Estimated Number of Responses per 

Respondent: 1. 

Estimated Annual Frequency of 

Response: 1. 

Estimated Hours per Response: 0.75. 

Estimated Total Annual Burden 

Hours: 3. 

Affected Public: Private Sector: Notfor-profit institutions; Individual or 

Household. 

The NCUA invites comments on: (a) 

whether the collections of information 

are necessary for the proper 

performance of the agencies’ functions, 

including whether the information has 

practical utility; (b) the accuracy of the 

estimates of the burden of the 

information collections, including the 

validity of the methodology and 

assumptions used; (c) ways to enhance 

the quality, utility, and clarity of the 

information to be collected; (d) ways to 

minimize the burden of the information 

collections on respondents, including 

through the use of automated collection 

techniques or other forms of information 

technology; and (e) estimates of capital 

or start-up costs and costs of operation, 

maintenance, and purchase of services 

to provide information. 

All comments are a matter of public 

record. Comments regarding the 

information collection requirements 

should be sent to (1) Jennifer Harrison, 

NCUA PRA Clearance Officer, National 

Credit Union Administration, 1775 

Duke Street, Alexandria, Virginia 22314, 

or email at PRAcomments@ncua.gov 

and the (2) Office of Information and 

Regulatory Affairs, Office of 

Management and Budget, Attention: 

Desk Officer for NCUA, New Executive 

Office Building, Room 10235, 

Washington, DC 20503, or email at 

OIRA_Submission@OMB.EOP.gov. 

Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 

generally requires that when an agency 

issues a proposed rule or a final rule 

pursuant to the Administrative 

Procedure Act or another law, the 

agency must prepare a regulatory 

flexibility analysis that meets the 

requirements of the RFA and publish 

such analysis in the Federal Register. 

Specifically, the RFA normally requires 

agencies to describe the impact of a 

rulemaking on small entities by 

providing a regulatory impact analysis. 

For purposes of the RFA, the Board 

considers credit unions with assets less 

than $100 million to be small entities.49

A regulatory flexibility analysis is not 

required, however, if the agency 

certifies that the rule will not have a 

significant economic impact on a 

substantial number of small entities and 

publishes its certification and a short, 

explanatory statement in the Federal 

Register together with the rule. 

The Board does not believe the 

proposed rule would have a significant 

economic impact on a substantial 

number of small entities. In the period 

from 2019 through 2023, the NCUA 

received 4 consent applications. This 

averages to one application a year. 

Therefore, on average, only about one 

small entity—at most—would be 

affected by the proposed rule annually. 

As discussed in the SUPPLEMENTARY

INFORMATION section, the proposed rule 

would align the NCUA’s regulations 

with the FHBA’s provisions and more 

closely align the NCUA’s section 205(d) 

regulations with those of other federal 

financial regulators. Most of the 

proposed changes were precipitated by 

the FHBA—which was effective 

immediately upon passage—and the 

proposed rule aligns the NCUA’s 

regulations with these elements of the 

FHBA; therefore, most of the associated 

changes in the proposed rule will have 

no direct effect on individuals or credit 

unions. Further, since the NCUA 

estimates that on average approximately 

one NCUA-insured institution could be 

affected by the proposed rule annually, 

any direct effects realized because of the 

proposed rule are likely to be small and 


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50Public Law 105–277, 112 Stat. 2681 (1998). 

affect a relatively small number of 

entities. 

In light of the foregoing, the NCUA 

certifies that the proposed rule would 

not have a significant economic impact 

on a substantial number of small 

entities. The NCUA invites comments 

on all aspects of the supporting 

information provided in this section. In 

particular, would this proposed rule 

have any significant effects on small 

entities that the NCUA has not 

identified? 

Executive Order 13132 

Executive Order 13132 encourages 

independent regulatory agencies to 

consider the impact of their actions on 

state and local interests. The NCUA, an 

independent regulatory agency as 

defined in 44 U.S.C. 3502(5), voluntarily 

complies with the executive order to 

adhere to fundamental federalism 

principles. 

This proposed rule would apply to all 

insured credit unions, including 

federally insured, state-chartered credit 

unions. The Board has determined that 

the proposed amendments would not 

have a substantial direct effect on the 

states, on the connection between the 

national government and the states, or 

on the distribution of power and 

responsibilities among the various 

levels of government. Further, the 

proposed rule would implement a 

statutory amendment, and the NCUA 

does not have discretion in 

implementing the statutory changes to 

section 205(d). In particular, the Board 

does not believe that these changes will 

affect its existing agreements and 

division of supervisory responsibilities 

with state regulatory agencies. The 

Board expects to continue to coordinate 

with these agencies as appropriate in 

carrying out its responsibilities under 

section 205(d) and related provisions. 

Therefore, the Board has determined 

that this rule does not constitute a 

policy that has federalism implications 

for purposes of the executive order. 

Assessment of Federal Regulations and 

Policies on Families 

The NCUA has determined that this 

proposed rule may affect family wellbeing positively within the meaning of 

section 654 of the Treasury and General 

Government Appropriations Act, 1999, 

Public Law 105–277, 112 Stat. 2681 

(1998). In particular, the NCUA has 

reviewed the criteria specified in 

section 654(c)(1) of that act, by 

evaluating whether this proposed 

regulatory action (1) impacts the 

stability or safety of the family, 

particularly in terms of marital 

commitment; (2) impacts the authority 

of parents in the education, nurture, and 

supervision of their children; (3) helps 

the family perform its functions; (4) 

affects disposable income or poverty of 

families and children; (5) only 

financially impacts families, if at all, to 

the extent such impacts are justified; (6) 

may be carried out by State or local 

government or by the family; or (7) 

establishes a policy concerning the 

relationship between the behavior and 

personal responsibility of youth and the 

norms of society. Under this statute, if 

the agency determines the proposed 

regulation may negatively affect family 

well-being, then the agency must 

provide an adequate rationale for its 

implementation. 

The proposed rule would implement 

legislative amendments that increase 

employment opportunities for 

individuals with certain older or minor 

criminal offenses involving dishonesty 

or breach of trust. These increased 

employment opportunities may 

strengthen the stability of families, help 

families perform their functions, and 

increase disposable income. These 

changes are not likely to affect the rights 

of parents in the education or nurture of 

their children. The changes call for 

federal rather than state or local 

government action because the 

legislation affects the federal statute 

governing all federally insured credit 

unions. The Board also notes that it has 

limited discretion in whether and how 

to implement the legislative 

amendments and thus cannot 

substantially vary from the legislation. 

The Board has determined that this 

proposed rule may affect family wellbeing positively within the meaning of 

this statute.50 As with all aspects of the 

proposed rule, commenters are invited 

to offer their opinion on this issue. 

Providing Accountability Through 

Transparency Act of 2023 

The Providing Accountability 

Through Transparency Act of 2023 (5 

U.S.C. 553(b)(4)) (Act) requires that a 

notice of proposed rulemaking include 

the internet address of a summary of not 

more than 100 words in length of a 

proposed rule, in plain language, that 

shall be posted on the internet website 

under section 206(d) of the EGovernment Act of 2002 (44 U.S.C. 3501 

note) (commonly known as 

regulations.gov). The Act, under its 

terms, applies to notices of proposed 

rulemaking and does not expressly 

include other types of documents that 

the Board publishes voluntarily for 

public comment, such as notices and 

interim-final rules that request comment 

despite invoking ‘‘good cause’’ to forgo 

such notice and public procedure. The 

Board, however, has elected to address 

the Act’s requirement in these types of 

documents in the interests of 

administrative consistency and 

transparency. 

In summary, the proposal would 

incorporate the ‘‘Second Chance’’ 

Interpretive Ruling and Policy 

Statement 19–1 and the Fair Hiring in 

Banking Act into the NCUA’s 

regulations. Section 205(d) of the 

Federal Credit Union Act prohibits, 

except with the Board’s prior written 

consent, any person who has been 

convicted of certain criminal offenses 

involving dishonesty or breach of trust, 

or who has entered into a pretrial 

diversion or similar program in 

connection with a prosecution for such 

an offense, from participating in the 

conduct of the affairs of an insured 

credit union. 

The proposal and the required 

summary can be found at https://

www.regulations.gov. 

List of Subjects 

12 CFR Part 701 

Administrative practice and 

procedure, Credit, Credit unions. 

12 CFR Part 741 

Bank deposit insurance, Credit 

unions, Reporting and recordkeeping 

requirements. 

12 CFR Part 746 

Administrative practice and 

procedure, Claims, Credit unions, 

Investigations. 

12 CFR Part 748 

Computer technology, Confidential 

business information, Credit unions, 

internet, Personally identifiable 

information, Privacy, Reporting and 

recordkeeping requirements, Security 

measures. 

12 CFR Part 752 

Administrative practice and 

procedure. 

By the NCUA Board on October 19, 2023. 

Melane Conyers-Ausbrooks, 

Secretary of the Board. 

For the reasons discussed in the 

preamble, the Board proposes to amend 

12 CFR chapter VII as follows: 

PART 701— ORGANIZATION AND 

OPERATION OF FEDERAL CREDIT 

UNIONS 

■ 1. The authority citation for part 701 

continues to read as follows: 


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Authority: 12 U.S.C. 1752(5), 1755, 1756, 

1757, 1758, 1759, 1761a, 1761b, 1766, 1767, 

1782, 1784, 1785, 1786, 1787, 1788, 1789. 

Section 701.6 is also authorized by 15 U.S.C. 

3717. Section 701.31 is also authorized by 15 

U.S.C. 1601 et seq.; 42 U.S.C. 1981 and 3601– 

3610. Section 701.35 is also authorized by 42 

U.S.C. 4311–4312. 

■ 2. In 701.14, revise paragraphs (c)(1), 

(c)(3)(iii), and the second sentence in 

paragraph (e) as follows: 

§ 701.14 Change in official or senior 

executive officer in credit unions that are 

newly chartered or are in troubled 

condition. 

(c) * * * (1) Prior Notice 

Requirement. An insured credit union 

must give the NCUA written notice at 

least 30 days before the effective date of 

adding or replacing any member of its 

board of directors or committee 

member, employing any person as a 

senior executive officer of the credit 

union, or changing the responsibilities 

of a board member, committee member, 

or a senior executive officer so that the 

person would assume a different 

position if: 

(i) The credit union has been 

chartered for less than 2 years; or 

(ii) The credit union meets the 

definition of troubled condition in 

paragraph (b)(3) or (4) of this section. 

* * * * * 

(3) * * * 

(iii) Processing. Within 15 calendar 

days after receiving the notice, the 

Regional Director will inform the credit 

union either that the notice is complete 

or that additional, specified information 

is needed and must be submitted within 

30 calendar days. If the initial notice is 

complete, the Regional Director will 

issue a written decision of approval or 

disapproval to the individual and the 

credit union within 30 calendar days of 

receipt of the notice. If the initial notice 

is not complete, the Regional Director 

will issue a written decision within 30 

calendar days of receipt of the original 

notice plus the amount of time the 

credit union takes to provide the 

requested additional information. If the 

additional information is not submitted 

within 30 calendar days of the Regional 

Director’s request, the Regional Director 

may either disapprove the proposed 

individual or review the notice based on 

the information provided. If the credit 

union and the individual have 

submitted all requested information and 

the Regional Director has not issued a 

written decision within the applicable 

time period, the individual is approved. 

Regional Director communications may 

be done through electronic mail. 

* * * * * 

(e) * * * The Notice of Disapproval 

will identify the reason(s) for the denial 

and advise the parties of their rights to 

request reconsideration from the 

Regional Director and/or file an appeal 

with the NCUA Board in accordance 

with the procedures set forth in 12 CFR 

part 746, subpart B. 

■ 3. In the Official Commentary to 

Appendix A to part 701, under ‘‘Article 

V. Elections,’’ revise paragraph i.(b) to 

read as follows: 

Appendix A to Part 701—Federal 

Credit Union Bylaws 

Official NCUA Commentary—Federal 

Credit Union Bylaws 

Article V. Elections 

* * * * * 

i. Eligibility Requirements: * * * 

(b) The individual cannot have been 

convicted of a crime covered under section 

205(d) of the Federal Credit Union Act (12 

U.S.C. 1785(d)) unless the NCUA Board has 

waived the prohibition for the conviction; 

and 

* * * * * 

PART 741—REQUIREMENTS OF 

INSURANCE 

■ 4. The authority citation for part 741 

continues to read as follows: 

Authority: 12 U.S.C. 1757, 1766(a), 1781– 

1790, and 1790d; 31 U.S.C. 3717. 

■ 5. In § 741.3, revise the second 

sentence of paragraph (c) as follows: 

§ 741.3 Criteria. 

(c) Fitness of management. * * * No 

person shall serve as a director, officer, 

committee member, or employee of an 

insured credit union who has been 

convicted of a crime covered under 

section 205(d) of the Federal Credit 

Union Act (12 U.S.C. 1785(d)), except 

with the written consent of the Board. 

* * * * * 

PART 746—APPEALS PROCEDURES 

■ 6. The authority citation for part 746 

continues to read as follows: 

Authority: 12 U.S.C. 1766, 1787, and 1789. 

§ 746.201 [Amended] 

■ 7. In § 746.201, in paragraph (c), add 

‘‘752.11(b),’’ between ‘‘745.201(c),’’ and 

‘‘subpart J to part 747 of this chapter,’’. 

PART 748—SECURITY PROGRAM, 

SUSPICIOUS TRANSACTIONS, 

CATASTROPHIC ACTS, CYBER 

INCIDENTS, AND BANK SECRECY 

ACT COMPLIANCE 

■ 8. The authority citation for part 748 

continues to read as follows: 

Authority: 12 U.S.C. 1766(a), 1786(b)(1), 

1786(q), 1789(a)(11); 15 U.S.C. 6801–6809; 31 

U.S.C. 5311 and 5318. 

■ 9. Revise footnote 7 in appendix B to 

part 748 to read as follows. 

Appendix B to Part 748—Guidance on 

Response Programs for Unauthorized 

Access to Member Information and 

Member Notice 

7 Credit unions must also conduct 

background checks of employees to ensure 

that the credit union does not violate 12 

U.S.C. 1785(d), which prohibits a credit 

union from hiring an individual convicted of 

certain criminal offenses or who is subject to 

a prohibition order under 12 U.S.C. 1786(g). 

* * * * * 

■ 10. Add part 752 to read as follows: 

PART 752—CONSENT TO SERVICE OF 

PERSONS CONVICTED OF, OR WHO 

HAVE PROGRAM ENTRIES FOR, 

CERTAIN CRIMINAL OFFENSES 

Sec. 

752.1 What is section 205(d) of the FCU 

Act? 

752.2 Who is covered by section 205(d)? 

752.3 What offenses are covered under 

section 205(d)? 

752.4 What constitutes a conviction under 

section 205(d)? 

752.5 What constitutes a pretrial diversion 

or similar program under section 205(d)? 

752.6 What are the types of consent 

applications that can be filed? 

752.7 When must a consent application be 

filed? 

752.8 De minimis offenses. 

752.9 How to file a consent application. 

752.10 How a consent application is 

evaluated. 

752.11 What will the NCUA do if the 

consent application is denied? 

Authority: 12 U.S.C. 1785(d). 

§ 752.1 What is section 205(d) of the 

Federal Credit Union Act? 

(a) This subpart covers consent 

applications under section 205(d) of the 

Federal Credit Union Act (FCU Act), 12 

U.S.C. 1785(d). The NCUA refers to 

such applications as ‘‘consent 

applications.’’ Under section 205(d), any 

person who has been convicted of any 

criminal offense involving dishonesty or 

breach of trust, or has agreed to enter 

into a pretrial diversion or similar 

program (program entry) in connection 

with a prosecution for such offense 

(collectively, covered offenses), may not 

become, or continue as, an institutionaffiliated party (IAP) of an insured 

credit union; or otherwise participate, 

directly or indirectly, in the conduct of 

the affairs of any insured credit union 

without the prior written consent of the 

NCUA. Section 205(d) imposes a tenyear ban against the Board granting 

consent for a person convicted of certain 

crimes enumerated in Title 18 of the 

United States Code. In order for the 

Board to grant consent during the tenyear period, the Board must file a 


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motion with, and obtain the approval of, 

the sentencing court. 

(b) In addition, the law prohibits an 

insured credit union from permitting 

such a person to engage in any conduct 

or to continue any relationship 

prohibited by section 205(d). Insured 

credit unions must therefore make a 

reasonable, documented, inquiry to 

verify an applicant’s history to ensure 

that a person who has a conviction or 

program entry covered by the provisions 

of section 205(d) is not hired or 

permitted to participate in its affairs 

without the written consent of the 

NCUA issued under this subpart. 

Insured credit unions may extend a 

conditional offer of employment 

contingent on the completion of a 

background check satisfactory to the 

credit union to determine if the 

applicant is prohibited under section 

205(d), but the applicant may not work 

for, be employed by, or otherwise 

participate in the affairs of the insured 

credit union until the credit union has 

determined that the applicant is not 

prohibited under section 205(d). 

(c) If there is a conviction or program 

entry covered by the prohibitions of 

section 205(d), a consent application 

under this subpart must be filed seeking 

the NCUA’s consent to become, or to 

continue as, an IAP; or to otherwise 

participate, directly or indirectly, in the 

affairs of the insured credit union. The 

consent application must be filed, and 

consented to, prior to serving in any of 

the foregoing capacities unless such 

consent application is not required 

under the subsequent provisions of this 

subpart. The purpose of a consent 

application is to provide the applicant 

an opportunity to demonstrate that, 

notwithstanding the prohibition, a 

person is fit to participate in the 

conduct of the affairs of an insured 

credit union without posing a risk to its 

safety and soundness or impairing 

public confidence in that credit union. 

The burden is upon the applicant to 

establish that the consent application 

warrants approval. 

§ 752.2 Who is covered by section 205(d)? 

(a)(1) Persons covered by section 

205(d) include IAPs, as defined by 12 

U.S.C. 1786(r), and others who are 

participants in the conduct of the affairs 

of an insured credit union. Therefore, 

all directors, officers, and employees of 

an insured credit union who fall within 

the scope of section 205(d), including de 

facto employees, as determined by the 

NCUA based upon generally applicable 

standards of employment law, will also 

be subject to section 205(d). 

(2) Whether other persons who are not 

IAPs are covered depends upon their 

degree of influence or control over the 

management or affairs of an insured 

credit union. Those who exercise major 

policymaking functions of an insured 

credit union are deemed participants in 

the affairs of that institution and 

covered by section 205(d). Similarly, 

directors and officers of subsidiaries or 

joint ventures of an insured credit union 

will be covered if they participate in the 

affairs of the insured credit union or are 

in a position to influence or control the 

management or affairs of the insured 

credit union. Typically, an independent 

contractor does not have a relationship 

with the insured credit union other than 

the activity for which the credit union 

has contracted. However, an 

independent contractor who influences 

or controls the management or affairs of 

the insured credit union would be 

covered by section 205(d). 

(b) The term person, for purposes of 

section 205(d), means an individual and 

does not include a corporation, firm, or 

other business entity. 

§ 752.3 Which offenses qualify as 

‘‘Covered Offenses’’ under section 205(d)? 

(a) General definitions. The 

conviction or program entry must be for 

a criminal offense involving dishonesty 

or breach of trust. 

(1) The term criminal offense 

involving dishonesty— 

(i) Means an offense under which an 

individual, directly or indirectly— 

(A) Cheats or defrauds; or 

(B) Wrongfully takes property 

belonging to another in violation of a 

criminal statute; 

(ii) Includes an offense that federal, 

state, or local law defines as dishonest, 

or 

for which dishonesty is an element of 

the offense; and 

(iii) Does not include— 

(A) A misdemeanor criminal offense 

committed more than 1 year before the 

date on which an individual files a 

consent application, excluding any 

period of incarceration; or 

(B) An offense involving the 

possession of controlled substances. At 

a minimum, this exclusion applies to 

criminal offenses involving the simple 

possession of a controlled substance and 

possession with intent to distribute a 

controlled substance. This exclusion 

may also apply to other drug-related 

offenses depending on the statutory 

elements of the offenses or from court 

determinations that the statutory 

provisions of the offenses involve 

dishonesty or breach of trust as noted in 

paragraph (b) of this section. Potential 

applicants may contact their appropriate 

NCUA Regional Office or the Office of 

National Examinations and Supervision, 

if applicable, if they have questions 

about whether their offenses are covered 

under section 205(d). 

(iv) The term offense committed in 

paragraph (a)(1)(iii)(A) means the last 

date of the underlying misconduct. In 

instances with multiple offenses, 

offense committed means the last date of 

any of the underlying offenses. 

(2) The term breach of trust means a 

wrongful act, use, misappropriation, or 

omission with respect to any property or 

fund that has been committed to a 

person in a fiduciary or official capacity, 

or the misuse of one’s official or 

fiduciary position to engage in a 

wrongful act, use, misappropriation, or 

omission. 

(b) Dishonesty or breach of trust. 

Whether a crime involves dishonesty or 

breach of trust will be determined from 

the statutory elements of the offense 

itself or from court determinations that 

the statutory provisions of the offense 

involve dishonesty or breach of trust. 

(c) Certain older offenses excluded. — 

(1) General. Section 205(d) does not 

apply to an offense if— 

(i) it has been 7 years or more since 

the offense occurred; or 

(ii) the individual was incarcerated 

with respect to the offense, and it has 

been 5 years or more since the 

individual was released from 

incarceration. 

(iii) The NCUA interprets the term 

‘‘offense occurred’’ to mean the last date 

of the underlying misconduct. In 

instances with multiple covered 

offenses, ‘‘offense occurred’’ means the 

last date of any of the underlying 

offenses. 

(2) Offenses committed by individuals 

21 years of age or younger. For 

individuals who committed an offense 

when they were 21 years of age or 

younger, section 205(d) shall not apply 

to the offense if it has been more than 

30 months since the sentencing 

occurred. The NCUA interprets 

‘‘sentencing occurred’’ to mean the date 

on which a court imposed the sentence, 

not the date on which all conditions of 

sentencing were completed. 

(3) Limitation. This paragraph (c) 

shall not apply to an offense described 

under 12 U.S.C. 1785(d)(2). 

(d) Designated lesser offenses 

excluded. Section 205(d) does not apply 

to the following offenses, if 1 or more 

years has passed since the applicable 

conviction or program entry: using fake 

identification; shoplifting; trespassing; 

fare evasion; and driving with an 

expired license or tag. 

(e) Foreign convictions. The NCUA 

considers individuals who are convicted 

of or enter into a pretrial diversion 

program for a criminal offense involving 


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dishonesty or breach of trust in foreign 

jurisdictions to be subject to section 

205(d), unless the offense is otherwise 

excluded by this subpart. 

§ 752.4 What constitutes a conviction 

under section 205(d)? 

(a) Convictions requiring a consent 

application. There must be a conviction 

of record. Section 205(d) does not cover 

arrests or pending cases not brought to 

trial, unless the person has a program 

entry as set out in § 752.5. Section 

205(d) does not cover acquittals or any 

conviction that has been reversed on 

appeal, unless the reversal was for the 

purpose of re-sentencing. A conviction 

with regard to which an appeal is 

pending requires a consent application. 

A conviction for which a pardon has 

been granted will require a consent 

application. 

(b) Convictions not requiring a 

consent application. When an 

individual is charged with a covered 

offense and, in the absence of a program 

entry as set out in § 752.5, is 

subsequently convicted of an offense 

that is not a covered offense, the 

conviction is not subject to section 

205(d). 

(c) Expungement, dismissal, and 

sealing. A conviction shall not be 

considered a conviction of record and 

shall not require a consent application 

if— 

(1) there is an order of expungement, 

sealing, or dismissal that has been 

issued in regard to the conviction in 

connection with such offense, or if a 

conviction has been otherwise 

expunged, sealed, or dismissed by 

operation of law; and 

(2) it is intended by the language in 

the order itself, or in the legislative 

provisions under which the order was 

issued, or in other legislative provisions, 

that the conviction shall be destroyed or 

sealed from the individual’s state, tribal, 

or federal record, even if exceptions 

allow the conviction to be considered 

for certain character and fitness 

evaluation purposes. 

(d) Youthful offenders. An 

adjudication by a court against a person 

as a ‘‘youthful offender’’ (or similar 

term) under any youth-offender law 

applicable to minors as defined by state 

law, or any judgment as a ‘‘juvenile 

delinquent’’ by any court having 

jurisdiction over minors as defined by 

state law, does not require a consent 

application. Such an adjudication does 

not constitute a matter covered under 

section 205(d) and is not a conviction or 

program entry for determining the 

applicability of § 752.8. 

§ 752.5 What constitutes a pretrial 

diversion or similar program under section 

205(d)? 

(a) The term ‘‘pretrial diversion or 

similar program’’ (program entry) means 

a program characterized by a suspension 

or eventual dismissal or reversal of 

charges or criminal prosecution upon 

agreement by the accused to restitution, 

drug or alcohol rehabilitation, anger 

management, or community service. 

Whether the outcome of a case 

constitutes a program entry is 

determined by relevant Federal, State, 

or local law, and, if not so designated 

under applicable law, then the 

determination of whether a disposition 

is a program entry will be made by the 

Board on a case-by-case basis. 

(b) When a covered offense either is 

reduced by a program entry to an 

offense that would otherwise not be 

covered by section 205(d) or is 

dismissed upon successful completion 

of a program entry, the covered offense 

remains a covered offense for purposes 

of section 205(d). The covered offense 

will require a consent application 

unless it is de minimis as provided by 

§ 752.8 of this subpart. 

(c) Expungements, dismissals, or 

sealings of program entries will be 

treated the same as those for 

convictions. 

§ 752.6 What are the types of consent 

applications that can be filed? 

(a) The NCUA will accept consent 

applications from— 

(1) an individual; or 

(2) an insured credit union applying 

on behalf of an individual. 

(b) An individual or an insured credit 

union may file consent applications at 

separate times. Under either approach, 

the consent application(s) must be filed 

with the appropriate NCUA Regional 

Office, or the Office of National 

Examinations and Supervision, as 

required by this subpart. 

§ 752.7 When may a consent application 

be filed? 

(a) Except for situations in which no 

consent application is required under 

section 205(d) and this subpart, a 

consent application must be filed when 

there is a conviction by a court of 

competent jurisdiction for a covered 

offense by any adult or minor treated as 

an adult, or when such person has a 

program entry regarding that offense. 

Before a consent application may be 

filed, all of the sentencing requirements 

associated with a conviction, or 

conditions imposed by the program 

entry, including but not limited to, 

imprisonment, fines, condition of 

rehabilitation, and probation 

requirements, must be completed, and 

the case must be considered final by the 

procedures of the applicable 

jurisdiction. 

(b) The NCUA’s consent application 

forms as well as additional information 

concerning section 205(d) can be 

accessed at the NCUA’s Regional Offices 

or the Office of National Examinations 

and Supervision, if applicable, or on the 

NCUA’s website. 

§ 752.8 De minimis offenses 

(a) In general. Approval is 

automatically granted, and a consent 

application will not be required where 

all of the following de minimis criteria 

are met. 

(1) The individual has been convicted 

of, or has program entries for, no more 

than 2 covered offenses, including those 

subject to paragraph (b) of this section; 

and for each covered offense, all of the 

sentencing requirements associated with 

the conviction, or conditions imposed 

by the program entry, have been 

completed (the sentence- or programcompletion requirement does not apply 

under paragraph (b)(2) of this section); 

(2) For each covered offense, the 

individual could have been sentenced to 

a term of confinement in a correctional 

facility of 3 years or less and/or a fine 

of $2,500 or less, and the individual 

actually served 3 days or less of jail time 

for each covered offense. 

(i) Jail time is calculated based on the 

time an individual spent incarcerated as 

a punishment or a sanction—not as 

pretrial detention—and does not 

include probation or parole where an 

individual was restricted to a particular 

jurisdiction or was required to report 

occasionally to an individual or a 

specific location. Jail time includes 

confinement to a psychiatric treatment 

center in lieu of a jail, prison, or house 

of correction on mental-competency 

grounds. The definition is not intended 

to include either of the following: 

(ii) Persons who are restricted to a 

substance-abuse treatment program 

facility for part or all of the day; and 

(iii) Persons who are ordered to attend 

outpatient psychiatric treatment. 

(3) If there are 2 convictions or 

program entries for a covered offense, 

each conviction or program entry was 

entered at least 3 years prior to the date 

a consent application would otherwise 

be required, except as provided in 

paragraph (b)(1) of this section; and 

(4) Each covered offense was not 

committed against an insured 

depository institution or insured credit 

union. 

(b) Other types of offenses for which 

the de minimis exception applies and 

no consent application is required—(1) 


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Age of person at time of covered offense. 

If there are 2 convictions or program 

entries for a covered offense, and the 

actions that resulted in both convictions 

or program entries all occurred when 

the individual was 21 years of age or 

younger, then the de minimis criteria in 

paragraph (a)(3) of this section shall be 

met if the convictions or program 

entries were entered at least 18 months 

prior to the date a consent application 

would otherwise be required. 

(2) Convictions or program entries for 

insufficient funds checks. Convictions 

or program entries of record based on 

the writing of ‘‘bad’’ or insufficient 

funds check(s) shall be considered de 

minimis offenses under this provision if 

the following conditions apply: 

(i) The aggregate total face value of all 

‘‘bad’’ or insufficient funds check(s) 

cited across all the conviction(s) or 

program entry(ies) for ‘‘bad’’ or 

insufficient funds checks is $2,000 or 

less; 

(ii) No insured depository institution 

or insured credit union was a payee on 

any of the ‘‘bad’’ or insufficient funds 

checks that were the basis of the 

conviction(s) or program entry(ies); and 

(iii) The individual has no more than 

1 other de minimis offense under this 

section. 

(3) Convictions or program entries for 

small-dollar, simple theft. Convictions 

or program entries based on the simple 

theft of goods, services, or currency (or 

other monetary instrument) shall be 

considered de minimis offenses under 

this provision if the following 

conditions apply: 

(i) The value of the currency, goods, 

or services taken is $1,000 or less; 

(ii) The theft was not committed 

against an insured depository institution 

or insured credit union; 

(iii) The individual has no more than 

1 other de minimis offense under this 

section; and 

(iv) If there are 2 de minimis offenses 

under this section, each conviction or 

program entry was entered at least 3 

years prior to the date a consent 

application would otherwise be 

required, or at least 18 months prior to 

the date a consent application would 

otherwise be required if the actions that 

resulted in the conviction or program 

entry all occurred when the individual 

was 21 years of age or younger. 

(v) Simple theft excludes burglary, 

forgery, robbery, identity theft, and 

fraud. 

(c) Fidelity bond coverage and 

disclosure to institutions. Any person 

who meets the criteria under this 

section shall be covered by a fidelity 

bond to the same extent as others in 

similar positions, and shall disclose the 

presence of the conviction(s) or program 

entry(ies) to all insured credit unions in 

the affairs of which he or she intends to 

participate. 

(d) Non-qualifying convictions or 

program entries. No conviction or 

program entry for a violation of the Title 

18 sections set out in 12 U.S.C. 

1785(d)(2) can qualify under any of the 

de minimis exceptions set out in this 

section. 

§ 752.9 How to file a consent application. 

Forms and instructions should be 

obtained from the NCUA’s website 

(www.ncua.gov), and the consent 

application(s) must be filed with the 

appropriate NCUA Regional Director. A 

consent application may be filed by an 

individual and by an insured credit 

union on behalf of an individual. The 

appropriate Regional Office for a credit 

union-sponsored application is the 

office covering the state where the 

insured credit union’s home office is 

located, or the Office of National 

Examinations and Supervision. The 

appropriate Regional Office for an 

individual consent application is the 

office covering the state where the 

person resides. States covered by each 

NCUA Regional Office are listed in 

section 790.2 of this chapter. 

§ 752.10 How a consent application is 

evaluated. 

(a) Criminal history records. In 

reviewing a consent application, the 

NCUA will— 

(1) primarily rely on the criminal 

history record of the Federal Bureau of 

Investigation; and 

(2) provide such record to the 

applicant to review for accuracy. 

(b) Certified copies. The NCUA will 

not require an applicant to provide 

certified copies of criminal history 

records unless the NCUA determines 

that there is a clear and compelling 

justification to require additional 

information to verify the accuracy of the 

criminal history record of the Federal 

Bureau of Investigation. 

(c) Factors for determination. The 

ultimate determinations in assessing a 

consent application are whether the 

person has demonstrated their fitness to 

participate in the conduct of the affairs 

of an insured credit union, and whether 

the affiliation, or participation by the 

person in the conduct of the affairs of 

the credit union may constitute a threat 

to the safety and soundness of the credit 

union or the interests of its members or 

threaten to impair public confidence in 

the credit union. 

(d) Individualized assessment. When 

evaluating consent applications, the 

NCUA will conduct an individualized 

assessment that will consider: 

(1) Whether the conviction or program 

entry is subject to section 205(d) and the 

specific nature and circumstances of the 

offense; 

(2) Whether the participation directly 

or indirectly by the person in any 

manner in the conduct of the affairs of 

the insured credit union constitutes a 

threat to the safety and soundness of the 

credit union or the interests of its 

members or threatens to impair public 

confidence in the credit union; 

(3) Evidence of rehabilitation 

including the applicant’s age at the time 

of the conviction or program entry, the 

time that has elapsed since the 

conviction or program entry, the 

relationship of the individual’s offense 

to the responsibilities of the applicable 

position; 

(4) The individual’s employment 

history, letters of recommendation, 

certificates documenting participation 

in substance-abuse programs, successful 

participating in job preparation and 

educational programs, and other 

relevant evidence; 

(5) The ability of management of the 

insured credit union to supervise and 

control the person’s activities; 

(6) The applicability of the insured 

credit union’s fidelity bond coverage to 

the person; and 

(7) For state-chartered, federally 

insured credit unions, the opinion or 

position of the state regulator; and 

(8) Any additional factors in the 

specific case that appear relevant to the 

consent application. 

(e) Underlying merits not at issue. The 

question of whether a person, who was 

convicted of a crime or who agreed to 

a program entry, was guilty of that crime 

shall not be at issue in a proceeding 

under this subpart or under 12 CFR part 

746, subpart B. 

(f) Application of factors to 10-year 

ban exception. The foregoing factors 

will also be applied by the NCUA to 

determine whether the interests of 

justice are served in seeking an 

exception in the appropriate court when 

a consent application is made to 

terminate the 10-year ban prior to its 

expiration date under 12 U.S.C. 

1785(d)(2)(A) for certain Federal 

offenses. 

(g) Fidelity bond requirements not 

affected. All approvals and orders will 

be subject to the condition that the 

person be covered by a fidelity bond to 

the same extent as others in similar 

positions. If the NCUA has approved a 

consent application filed by an 

individual and has issued a consent 

order, the individual must disclose the 

presence of the conviction(s) or program 


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Federal Register / Vol. 88, No. 214 / Tuesday, November 7, 2023 / Proposed Rules 76717 

entry(ies) to all insured credit unions in 

the affairs of which they wish to 

participate. 

(h) Sponsored consent applications. 

When deemed appropriate by the 

NCUA, credit union-sponsored consent 

applications are to allow the individual 

to work for the same employer (without 

restrictions on the location) and across 

positions, except that the prior consent 

of the NCUA (which may require a new 

consent application) will be required for 

any proposed significant changes in the 

individual’s security-related duties or 

responsibilities, such as promotion to an 

officer or other positions that the 

employer determines will require higher 

security screening credentials. 

(i) Subsequent consent applications. 

In situations in which an approval has 

been granted for a person to participate 

in the affairs of a particular insured 

credit union and the person 

subsequently seeks to participate at 

another insured credit union, another 

consent application must be submitted 

and approved by the NCUA prior to the 

person participating in the affairs of the 

other insured credit union. 

§ 752.11 What will the NCUA do if the 

consent application is denied? 

(a) The NCUA will inform the 

applicant in writing that the consent 

application has been denied and 

summarize or cite the relevant 

considerations specified in § 752.10 of 

this subpart. 

(b) The denial will also notify the 

applicant of the right to request 

reconsideration from the Regional Office 

or the Office of National Examinations 

and Supervision, or to file an appeal 

with the Board, and shall include a 

description of applicable filing 

deadlines and time frames for agency 

responses. The Regional Office or the 

Office of National Examinations and 

Supervision and the Board will apply 

the review process contained in 12 CFR 

part 746, subpart B, to any request for 

reconsideration or appeal. The request 

for review must include a statement of 

the underlying facts that form the basis 

of the request for reconsideration or 

appeal, a statement of the basis for the 

denial to which the applicant objects 

and the alleged error in such denial, and 

any other support, materials, or 

evidence relied upon by the applicant 

that were not previously provided. 

[FR Doc. 2023–23509 Filed 11–6–23; 8:45 am] 

BILLING CODE 7535–01–P 

CONSUMER PRODUCT SAFETY 

COMMISSION 

16 CFR Part 1408 

[Docket No. CPSC–2019–0020] 

Safety Standard for Residential Gas 

Furnaces and Boilers; Correction 

AGENCY: Consumer Product Safety 

Commission. 

ACTION: Proposed rule; correction. 

SUMMARY: On October 25, 2023, the 

Commission published a notice of 

proposed rulemaking (NPR) to address 

dangerous levels of carbon monoxide 

production and leakage from residential 

gas furnaces and boilers. That document 

contained a typographical error in the 

preamble. This document corrects that 

error. 

DATES: November 7, 2023. 

FOR FURTHER INFORMATION CONTACT: 

Ronald A. Jordan, Directorate for 

Engineering Sciences, Mechanical 

Engineering, Consumer Product Safety 

Commission, National Product Testing 

and Evaluation Center, 5 Research 

Place, Rockville, MD 20850; telephone: 

301–987–2219; rjordan@cpsc.gov. 

SUPPLEMENTARY INFORMATION: The 

Commission is correcting a 

typographical error in the preamble of 

the NPR, Safety Standard for 

Residential Gas Furnaces and Boilers, 

16 CFR part 1408, which appeared in 

the Federal Register on October 25, 

2023. 88 FR 73272. This document 

corrects a typographical error in section 

XV of the preamble, entitled Paperwork 

Reduction Act. On page 73289, first 

column, second paragraph, the first 

sentence erroneously states ‘‘4,374 

hours (833 hours + 833 + 208 hours + 

2,500 hours)’’. This notice corrects that 

error by revising that language to 

correctly read ‘‘3,541 hours (833 hours 

+ 208 hours + 2,500 hours)’’. The 

estimated time burden thus is lower 

than stated in the NPR. The estimated 

financial burden in the same sentence is 

unchanged. 

Alberta E. Mills, 

Secretary, Consumer Product Safety 

Commission. 

[FR Doc. 2023–24538 Filed 11–6–23; 8:45 am] 

BILLING CODE 6355–01–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Parts 1, 31, and 301 

[REG–122793–19] 

RIN 1545–BP71 

Gross Proceeds and Basis Reporting 

by Brokers and Determination of 

Amount Realized and Basis for Digital 

Asset Transactions 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Notification of rescheduling of 

public hearing on a proposed 

rulemaking. 

SUMMARY: This document reschedules 

and changes to telephonic-only the 

public hearing originally scheduled for 

November 7, 2023, for a notice of 

proposed rulemaking (REG–122793–19) 

that was published in the Federal 

Register on Tuesday, August 29, 2023. 

The rescheduled hearing will be held on 

November 13, 2023, at 10 a.m. ET by 

telephone only. The proposed 

regulations relate to information 

reporting by brokers, the determination 

of amount realized and basis, and 

backup withholding, for certain digital 

asset sales and exchanges. 

DATES: The previously scheduled public 

hearing for the notice of proposed 

rulemaking published on August 29, 

2023 (88 FR 59576), has been 

rescheduled to a telephonic-only 

hearing on November 13, 2023, at 10 

a.m. ET. 

ADDRESSES: Commenters are strongly 

encouraged to submit public comments 

electronically. Submit electronic 

submissions via the Federal 

eRulemaking Portal at 

www.regulations.gov (indicate IRS and 

REG–122793–19) by following the 

online instructions for submitting 

comments. Once submitted to the 

Federal eRulemaking Portal, comments 

cannot be edited or withdrawn. The 

Department of the Treasury and the IRS 

will publish any comments submitted 

electronically or on paper to the public 

docket. Send paper submissions to 

CC:PA:01:PR (REG–122793–19), Room 

5203, Internal Revenue Service, P.O. 

Box 7604, Ben Franklin Station, 

Washington, DC 20044. Submissions 

may be hand-delivered Monday through 

Friday between the hours of 8 a.m. and 

4 p.m. to CC:PA:01:PR (REG–122793– 

19), Courier’s Desk, Internal Revenue 

Service, 1111 Constitution Ave. NW, 

Washington, DC 20224. 

FOR FURTHER INFORMATION CONTACT: 

Concerning submissions of comments 


khammond on DSKJM1Z7X2PROD with PROPOSALS