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

77906 

Vol. 88, No. 218 

Tuesday, November 14, 2023 

1 12 U.S.C. 1829. 

2See 63 FR 66177 (Dec. 1, 1998); 72 FR 73823 

(Dec. 8, 2007) with correction issued at 73 FR 5270 

(Oct. 13, 2008); 76 FR 28031 (May 13, 2011); 77 FR 

74847 (Dec. 18, 2012); 83 FR 38143 (Aug. 3, 2018). 

3See 84 FR 68353. 

4See 85 FR 51312 (Aug. 20, 2020). 

5The FHBA appears at section 5705 of the James 

M. Inhofe National Defense Authorization Act for 

Fiscal Year 2023, Public Law 117–263, 136 Stat. 

2395, 3411. 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

12 CFR Parts 303 and 308 

RIN 3064–AF92 

Fair Hiring in Banking Act 

AGENCY: Federal Deposit Insurance 

Corporation. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The Federal Deposit 

Insurance Corporation (FDIC) proposes 

to revise its regulations to conform with 

the Fair Hiring in Banking Act 

(FHBA)—which was enacted on and 

immediately effective as of December 

23, 2022. Among other provisions, the 

FHBA excluded or exempted categories 

of otherwise-covered offenses from the 

scope of statutory prohibitions on 

participation in banking. These 

categories pertain to certain older 

offenses, offenses committed by 

individuals 21 or younger, and ‘‘certain 

lesser offenses.’’ The FHBA also 

clarified several definitions in section 

19 and provided application-processing 

procedures. The FDIC considers most of 

the proposed revisions to its regulations 

to be required by the FHBA. Other 

proposed revisions reflect the FDIC’s 

interpretation of statutory prohibitions 

in light of the FHBA. 

DATES: Comments must be received on 

or before January 16, 2024. 

ADDRESSES: You may submit comments, 

identified by RIN 3064–AF92, by any of 

the following methods: 

• FDIC Website: https://

www.fdic.gov/resources/regulations/ 

federal-register-publications/. Follow 

instructions for submitting comments 

on the agency website. 

• Email: comments@fdic.gov. Include

RIN 3064–AF92 on the subject line of 

the message. 

• Mail: James P. Sheesley, Assistant

Executive Secretary, Attention: 

Comments RIN 3064–AF92, Federal 

Deposit Insurance Corporation, 550 17th 

Street NW, Washington, DC 20429. 

• Hand Delivery to FDIC: Comments

may be hand-delivered to the guard 

station at the rear of the 550 17th Street 

NW building (located on F Street NW) 

on business days between 7 a.m. and 5 

p.m.

Please include your name, affiliation,

address, email address, and telephone 

number(s) in your comment. All 

statements received, including 

attachments and other supporting 

materials, are part of the public record 

and are subject to public disclosure. 

• Public Inspection: Comments

received, including any personal 

information provided, may be posted 

without change to https://www.fdic.gov/ 

resources/regulations/federal-registerpublications/. Commenters should 

submit only information that the 

commenter wishes to make available 

publicly. The FDIC may review, redact, 

or refrain from posting all or any portion 

of any comment that it may deem to be 

inappropriate for publication, such as 

irrelevant or obscene material. The FDIC 

may post only a single representative 

example of identical or substantially 

identical comments, and in such cases 

will generally identify the number of 

identical or substantially identical 

comments represented by the posted 

example. All comments that have been 

redacted, as well as those that have not 

been posted, that contain comments on 

the merits of this document will be 

retained in the public comment file and 

will be considered as required under all 

applicable laws. All comments may be 

accessible under the Freedom of 

Information Act. 

FOR FURTHER INFORMATION CONTACT: 

Timothy Schuett, Senior Review 

Examiner, 763–614–9473, tschuett@

fdic.gov; Brian Zeller, Review Examiner, 

571–345–8170, bzeller@fdic.gov, 

Division of Risk Management 

Supervision; or Graham Rehrig, 

Counsel, 703–314–3401, grehrig@

fdic.gov, Legal Division. 

SUPPLEMENTARY INFORMATION: 

I. Background

Section 19 of the Federal Deposit

Insurance Act (section 19) 1 prohibits, 

without the prior written consent of the 

FDIC (the FDIC refers to applications for 

such consent as ‘‘consent 

applications’’), the participation in 

banking by any person who has been 

convicted of a crime involving 

dishonesty or breach of trust or money 

laundering or who has agreed to enter 

into a pretrial diversion or similar 

program in connection with the 

prosecution for such an offense 

(collectively, covered offenses). Further, 

this law forbids an insured depository 

institution (IDI) from permitting such a 

person to engage in any conduct or to 

continue any relationship prohibited by 

section 19. Section 19 also imposes a 

separate ten-year ban for a person 

convicted of certain crimes enumerated 

in Title 18 of the United States Code, 

which can be removed only upon a 

motion by the FDIC and approval by the 

sentencing court. 

From 1998 until 2020, the FDIC had 

a Statement of Policy that was issued 

related to section 19, occasionally 

revised, and published in the Federal 

Register.2 The purpose of the Statement 

of Policy, as amended through the years, 

was ‘‘to provide the public with 

guidance relating to section 19 and the 

FDIC’s application thereof.’’ 3 In 2020, 

following notice and comment, the FDIC 

revised and codified the Statement of 

Policy into the FDIC’s Filing Procedures 

under 12 CFR part 303, subpart L, and 

Rules of Practice and Procedure under 

part 308, subpart M (2020 Final Rule).4

On December 23, 2022, the President 

signed into law the Fair Hiring in 

Banking Act FHBA,5 which significantly 

revised section 19 and was effective 

immediately. The FHBA created several 

categories of exceptions or exemptions 

to the prohibition on participating in 

banking, including the following: 

• Certain older offenses: (1) if it has

been 7 years or more since the offense 

occurred; (2) if the individual was 

incarcerated with respect to the offense 

and it has been 5 years or more since the 

individual was released from 

incarceration; or (3) for individuals who 

committed an offense when they were 

21 years of age or younger, if it has been 


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6These exceptions do not apply to the offenses 

described under 12 U.S.C. 1829(a)(2). 

7Under the FHBA, a ‘‘consent application’’ 

‘‘means an application filed with [the FDIC] by an 

individual (or by an insured depository institution 

or depository institution holding company on 

behalf of an individual) seeking the written consent 

of the [FDIC] under [12 U.S.C. 1829(a)(1)].’’ 12 

U.S.C. 1829(g)(1). 

8See 12 U.S.C. 1829(f)(9) (‘‘In carrying out this 

section, the [FDIC] shall consult and coordinate 

with the National Credit Union Administration as 

needed to promote consistent implementation 

where appropriate’’). 

9The proposed rule would also make a number 

of non-substantive, technical edits to the section 19 

regulations that are not discussed in this section. 

10 15 U.S.C. 78l. 

11See 12 U.S.C. 1829(g)(2). 

12 12 U.S.C. 1829(g)(2)(C)(ii). 

more than 30 months since the 

sentencing occurred.6

• Offenses for which an order of 

expungement, sealing, or dismissal has 

been issued in regard to the conviction 

in connection with such offense and it 

is 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 record to be 

considered for certain character and 

fitness evaluation purposes. 

• ‘‘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 

FDIC may designate), if 1 year or more 

has passed since the applicable 

conviction or program entry. 

• Misdemeanor criminal offenses 

involving dishonesty, if the offense was 

committed more than one year before 

the date on which an individual files a 

consent application,7 excluding any 

period of incarceration. 

• A criminal offense involving 

dishonesty that also ‘‘involv[es] the 

possession of controlled substances.’’ 

The FHBA clarifies several terms in 

section 19, including ‘‘criminal offense 

involving dishonesty’’ and ‘‘pretrial 

diversion or similar program.’’ It also 

provides conditions regarding de 

minimis offenses, to the extent the FDIC 

provides de minimis exemptions by 

rule. 

The FHBA codifies procedures for 

consent applications filed with the 

FDIC. It requires the FDIC to make all 

forms and instructions related to 

consent applications available to the 

public, including on the FDIC’s website. 

It requires the FDIC to primarily rely on 

the criminal history record of the 

Federal Bureau of Investigation when 

evaluating consent applications and to 

provide such records to the applicant to 

review for accuracy. Further, it requires 

the FDIC to assess evidence of an 

individual’s rehabilitation including: 

the applicant’s age at the time of the 

conviction or program entry; the time 

that has elapsed since conviction or 

program entry; and the relationship of 

an individual’s offense to the 

responsibilities of the applicable 

position. Other information, including 

an individual’s employment history, 

letters of recommendation, certificates 

documenting participation in substance 

abuse programs, successful participation 

in job preparation and educational 

programs, other relevant evidence, and 

any additional information the FDIC 

determines necessary for safety and 

soundness shall also be considered. 

II. Discussion of Proposed Amendments 

The proposed amendments to the 

FDIC’s section 19 regulations are 

primarily intended to align the 

regulations with the FHBA’s provisions. 

The proposed amendments address, 

among other topics, the types of offenses 

covered by section 19, the effect of the 

completion of sentencing or pretrialdiversion program requirements in the 

context of section 19, and the FDIC’s 

procedures for reviewing applications 

filed under section 19. Furthermore, in 

developing these proposed 

amendments, the FDIC has consulted 

and coordinated with the National 

Credit Union Administration, the Board 

of Governors of the Federal Reserve 

System (FRB), and the Office of the 

Comptroller of the Currency ‘‘to 

promote consistent implementation [of 

the FHBA] where appropriate.’’ 8

Significant proposed revisions 9

include the following: 

A. Revised Provisions of 12 CFR Part 

303, Subpart L 

1. Section 303.220 What is section 19 

of the Federal Deposit Insurance Act? 

The FDIC proposes revising paragraph 

(b) of this section to clarify that IDIs 

must make a reasonable, documented 

inquiry to verify an applicant’s history 

to ensure that a person who has a 

covered offense on the person’s record 

is not hired or permitted to participate 

in its affairs without the written consent 

of the FDIC. 

2. Section 303.221 Who is covered by 

section 19? 

The FDIC proposes to revise 

paragraph (d) of this section to more 

closely align its restrictions with the 

analogous FRB regulations under 12 

CFR 225.41 and 238.31 and the FDIC’s 

regulations under 12 CFR part 303, 

subpart E, concerning Change in Bank 

Control applications. A person will be 

deemed to exercise ‘‘control’’ if that 

person: (1) has the ability to direct the 

management or policies of an IDI; (2) 

has the power to vote 25 percent or 

more of the voting shares of an IDI; or 

(3) has the power to vote 10 percent of 

the voting shares of an IDI if: (a) no 

other person owns, controls, or has the 

power to vote more shares; or (b) the 

institution has registered securities 

under section 12 of the Securities 

Exchange Act of 1934.10 Under the same 

standards, a person will be deemed to 

‘‘own’’ an IDI if that person owns: (1) 25 

percent or more of the institution’s 

voting stock; or (2) 10 percent of the 

voting shares if: (a) no other person 

owns more; or (b) the institution has 

registered securities under section 12 of 

the Securities Exchange Act of 1934. 

Paragraph (d) retains language 

concerning individuals acting in concert 

with others so as to have such 

ownership or control. 

3. Section 303.222 Which offenses 

qualify as ‘‘Covered Offenses’’ under 

section 19? 

The proposed revisions to paragraph 

(a) of this section would reflect the new 

statutory definition of ‘‘criminal offense 

involving dishonesty.’’ 11 The FHBA 

excludes from the scope of such 

offenses ‘‘an offense involving the 

possession of controlled substances.’’ 12

The FDIC interprets this phrase 

concerning controlled substances to 

exclude, 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 from court 

determinations that the statutory 

provisions of the offenses do not involve 

dishonesty, breach of trust, or money 

laundering. Potential applicants may 

contact their appropriate FDIC Regional 

Office if they have questions about 

whether their offenses are covered 

under section 19. 

This revised regulatory language 

would mark a shift from the FDIC’s 

current section 19 regulations, which 

require an application for all 

convictions and pretrial diversions 

concerning the illegal manufacture, sale, 

distribution of, or trafficking in 

controlled substances. The FDIC 

believes that this proposed revision 

would be consistent with the text and 

purposes of the FHBA, would align the 

FDIC’s interpretation of section 19 as to 

offenses involving controlled substances 


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13 12 U.S.C. 1829(g)(2)(C)(i). 

14See 12 U.S.C. 1829(c)(1). 

15See 12 U.S.C. 1829(c)(1)(A)(i). 

16See 12 U.S.C. 1829(c)(1)(A)(ii). 

17 12 U.S.C. 1829(c)(1)(B). 

18See 12 U.S.C. 1829(c)(1)(C). 

19See 12 U.S.C. 1829(c)(2). 

20 12 U.S.C. 1829(c)(2). 

21See 12 U.S.C. 1829(g)(3). 

22See 12 U.S.C. 1829(f)(1). 

more closely with other Federal banking 

regulators, and continue to recognize 

that a drug-related offense could 

potentially involve dishonesty, breach 

of trust, or money laundering. The FDIC 

also notes that this proposed revision to 

its section 19 regulations would not 

affect the FDIC’s ability to consider 

drug-related offenses, as they pertain to 

the suitability of an individual, under 

other statutory provisions, including the 

Change in Bank Control Act and section 

32 of the FDI Act. 

The FHBA also states that the term 

‘‘criminal offense involving dishonesty’’ 

does not include ‘‘a misdemeanor 

criminal offense committed more than 

one year before the date on which an 

individual files a consent application, 

excluding any period of 

incarceration.’’ 13 The FDIC interprets 

the term ‘‘offense committed’’ to mean 

the ‘‘last date of the underlying 

misconduct,’’ based on the plain text of 

the statute. In instances with multiple 

offenses, ‘‘offense committed’’ means 

the last date of any of the underlying 

offenses. 

Revised paragraph (c) would include 

new language reflecting the statute’s 

exception of certain older offenses from 

the scope of section 19.14 Among other 

exceptions, the FHBA states that section 

19’s restrictions will not apply to an 

offense if ‘‘it has been 7 years or more 

since the offense occurred.’’ 15 The FDIC 

considers the phrases ‘‘offense 

committed’’—noted above—and 

‘‘offense occurred’’ to be substantially 

similar. Accordingly, the FDIC 

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. Revised paragraph (c) contains 

another FHBA exception: section 19’s 

restrictions would not apply to an 

offense if ‘‘the individual was 

incarcerated with respect to the offense 

and it has been 5 years or more since the 

individual was released from 

incarceration.’’ 16 While the language of 

the statute is clear, the FDIC notes that 

there could be situations in which an 

individual who was incarcerated with 

respect to an offense would be 

permitted to work at a bank before a 

similarly situated individual who was 

not incarcerated in connection with an 

offense. Revised paragraph (c) also 

tracks 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 19 shall not apply to 

the offense if it has been more than 30 

months since the sentencing occurred.17

The FDIC 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, revised 

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. 1829(a)(2).18

Revised paragraph (d) excludes 

‘‘designated lesser offenses’’ (for 

example, using fake identification), as 

specified in 12 U.S.C. 1829(c)(3)(D), if 

one year or more has passed since the 

applicable conviction or program entry. 

Revised paragraph (e) adds language 

to codify 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, breach of trust, or money 

laundering in foreign jurisdictions are 

subject to section 19, unless the offense 

is otherwise excluded by 12 CFR part 

303, subpart L. For example, if an IDI 

has operations outside the United 

States, the IDI could conduct a 

reasonable, documented inquiry to 

verify an applicant’s history, in 

accordance with 12 CFR 303.220, by 

inquiring about potential covered 

offenses that may have occurred in that 

foreign country (or countries) in which 

the IDI conducts operations, as well as 

in the United States. As another 

example of such an inquiry, if an IDI 

plans to hire someone in the United 

States who is from a foreign country, the 

IDI could inquire about potential 

covered offenses that may have occurred 

in the United States and in that foreign 

country. 

4. Section 303.223 What constitutes a 

conviction under section 19? 

Paragraph (c) of this section has been 

revised to reflect statutory language 

related to the treatment of orders of 

expungement, sealing, or dismissal of 

criminal records.19 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 19. 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 record to be 

considered for certain character and 

fitness evaluation purposes.’’ 20 The 

statute does not address expungements, 

sealings, or dismissals by operation of 

law, and the FDIC has sought to 

harmonize its current regulations 

concerning expunged and sealed 

records with the statutory language to 

provide a more comprehensive 

framework as to such records. The FDIC 

has also added language to the second 

(intent) prong of the expungement 

framework to encompass the language 

in the expungement order itself, the 

legislative provisions under which the 

order was issued, and other legislative 

provisions. This proposed revision also 

seeks to harmonize the FDIC’s current 

regulations concerning expungements 

with the FHBA’s provisions. The FDIC 

believes that all of the additional 

language is consistent with the purposes 

of the statute. 

Revised paragraph (d) clarifies that it 

encompasses the terms ‘‘youthful 

offender’’ and ‘‘juvenile delinquent’’ 

and similar terms, since a court does not 

have to specifically use these terms in 

an adjudication in order for paragraph 

(d)’s provisions to apply. 

5. Section 303.224 What constitutes a 

pretrial diversion or similar program 

(program entry) under section 19? 

This section has been revised to 

reflect the statutory definition of 

‘‘pretrial diversion or similar 

program.’’ 21

6. Section 303.225 What are the types 

of applications that can be filed? 

This section has been revised to 

reflect the updated statutory filing 

procedures. The statute removes the 

FDIC’s former policy that an institution 

sponsor a consent application or that an 

individual seek a waiver of the 

institution filing requirement. Moreover, 

the statute enables a depository 

institution holding company to file an 

application on behalf of an individual 

(previously, only IDIs could file such 

sponsored applications).22 In order to 

avoid duplication of applications filed 

with the FRB and the FDIC, revised 

paragraph (a) states that the FDIC will 

accept applications from: an individual; 

an IDI applying on behalf of an 


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23See 12 U.S.C. 1829(f)(1). 

24 12 U.S.C. 1829(f)(5)(A). 

25 12 U.S.C. 1829(f)(5)(B). 

26See 12 U.S.C. 1829(c)(3)(D). 

27See 12 U.S.C. 1829(c)(3)(B). 

28See 12 U.S.C. 1829(c)(3)(C). 

29See 12 U.S.C. 1829(f)(1). 

30See 12 U.S.C. 1829(f)(6)(A)(i). 

31See 12 U.S.C. 1829(f)(6)(A)(ii). 

32 12 U.S.C. 1829(f)(6)(B). 

33 12 U.S.C. 1829(f)(7). While 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 19 

applications, and the use of both terms in these 

regulations may create confusion. Therefore, the 

proposed rule uses the term rehabilitation not 

mitigating. 

34See 12 U.S.C. 1829(f)(8). 

individual; a depository institution 

holding company applying on behalf of 

an individual with respect to a 

depository institution subsidiary of the 

holding company; and a depository 

institution holding company applying 

on behalf of an individual who will 

work at the holding company but also 

participate in the affairs of the IDI or 

who would be in a position to influence 

or control the management or affairs of 

the IDI, in accordance with 12 CFR 

303.221(a). 

Revised paragraph (b), consistent with 

the FHBA, states that an individual or 

an institution may file applications at 

separate times. Under either approach, 

the application(s) must be filed with the 

appropriate FDIC Regional Office.23

7. Section 303.226 When may an 

application be filed? 

This revised section notes that, before 

an 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.’’ The FDIC 

proposes to include this revised 

language to accord with several of the 

FHBA’s exclusions from section 19 that 

are not tied to the completion of 

sentencing requirements. 

Furthermore, the FHBA requires the 

FDIC to ‘‘make all forms and 

instructions related to consent 

applications available to the public, 

including on the website of the 

Corporation.’’ 24 These forms and 

instructions ‘‘shall provide a sample 

cover letter and a comprehensive list of 

items that may accompany the 

application, including clear guidance on 

evidence that may support a finding of 

rehabilitation.’’ 25 While the FDIC has 

not explicitly mentioned these 

requirements in its regulations, the 

agency will comply with them. 

8. Section 303.227 De minimis 

Offenses 

The FDIC proposes to retitle this 

section to avoid confusion between 

‘‘designated lesser offenses’’ and ‘‘de 

minimis offenses.’’ This section’s 

current title is, ‘‘When is an application 

not required for a covered offense or 

program entry (De minimis offenses)?’’ 

The FHBA includes ‘‘designated lesser 

offenses,’’ which offenses are excluded 

from the scope of section 19 (that is, 

they are not considered de minimis 

offenses—which offenses are considered 

covered offenses for which no 

application is required because the 

application is deemed automatically 

granted). The FDIC believes that the 

current title would cause confusion for 

a reader and therefore proposes retitling 

this section. 

The FHBA removed the use of fake 

identification from the scope of section 

19, and revised paragraphs (a)(1) and 

(b)(4) reflect this exclusion.26 Revised 

paragraph (a)(2) would reflect the 

FHBA’s confinement criteria as to the 

FDIC’s determination of de minimis 

offenses.27

The FDIC proposes to revise the de 

minimis requirement related to the 

aggregate total face value of all ‘‘bad’’ or 

insufficient funds checks in paragraph 

(b)(2)(i) from $1,000 to $2,000 to 

conform with the statute.28

9. Section 303.228 How To File an 

Application 

This revised section would eliminate 

the institution filing requirement and 

waiver process and indicate that an 

‘‘institution’’—an IDI or a depository 

institution holding company—could file 

an application on behalf of an 

individual, rather than just an IDI. Both 

of these proposed revisions are due to 

the updated statutory language.29 This 

revised section would also clarify that 

the appropriate FDIC Regional Office for 

an institution-sponsored application 

would be the office covering the state 

where the institution’s home office is 

located and that the appropriate FDIC 

Regional Office for an individual 

application would be the office covering 

the state where the person resides. 

10. Section 303.229 How an 

Application Is Evaluated 

Revised paragraph (a) would reflect 

new statutory requirements related to 

the FDIC’s review process, including the 

requirement that the FDIC primarily rely 

on the criminal history record of the 

Federal Bureau of Investigation in the 

FDIC’s review and provide such record 

to the applicant to review for 

accuracy.30 The FDIC interprets the term 

‘‘criminal history record’’ to mean 

‘‘identity history summary checks,’’ 

which are commonly known as ‘‘rap 

sheets.’’ Under revised paragraph (a)— 

and in accordance with the FHBA—the 

FDIC, in reviewing a consent 

application, would provide a copy of 

the rap sheet to an applicant to review 

for accuracy.31

Revised paragraph (b) would state that 

the FDIC will not require an applicant 

to provide certified copies of criminal 

history records unless the FDIC 

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 

(that is, the rap sheet).32

Revised paragraph (d) would clarify 

how the FDIC will evaluate evidence of 

rehabilitation and other evidence, as 

required by the FHBA.33

Revised paragraph (g) would 

eliminate references to the former 

application-waiver requirement. 

Finally, revised paragraph (h) would 

incorporate statutory language 

explaining when a new institutionsponsored application would be 

necessary due to changes in the scope 

of an applicant’s employment.34

11. Section 303.231 Waiting Time for 

a Subsequent Application if An 

Application Is Denied 

This section, as currently written and 

among other provisions, requires a oneyear waiting period to file a consent 

application, following the issuance of a 

decision denying such an application. 

The proposed rule would retain the 

existing regulatory text as paragraph (a) 

and create a new paragraph (b)—which 

would note that an institutionsponsored application is not subject to 

the one-year waiting period if the 

application (1) follows the denial of an 

individual application, or (2) follows 

the denial of an institution-sponsored 

application and the subsequent 

application is sponsored by a different 

institution or is for a different position. 

B. Revised Provisions of 12 CFR Part 

308, Subpart M 

The proposed rule would make 

several technical amendments to 

§§ 308.156 and 308.158 to encompass 

applications that are sponsored by 

depository institution holding 

companies, clarify two sentences 

concerning hearing procedures, and use 

more consistent terminology. 


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35FDIC Call Report data, March 31, 2023. 36FDIC Application Tracking System. 37 (76/4,654) * 100 = 1.6 percent. 

38 12 U.S.C. 1829(c)(1). 

39 12 U.S.C. 1829(g)(2)(C)(i). 

40See 12 CFR 303.223(a) (2020). (‘‘There must be 

a conviction of record. Section 19 does not cover 

arrests or pending cases not brought to trial, unless 

the person has a program entry as set out in 

§ 303.224.’’). The FDIC’s current section 19 

regulations only focus on underlying misconduct in 

the context of de minimis offenses for individuals 

who were 21 years of age of younger when the 

‘‘actions that resulted in [the] conviction[ ] or 

III. Expected Effects 

As previously discussed, the 

proposed rule would align the FDIC’s 

regulations with the FHBA’s provisions, 

make additional changes to further 

clarify the FDIC’s regulations related to 

section 19, more closely align the FDIC’s 

section 19 regulations with those of 

other Federal financial regulators, and 

make a number of non-substantive, 

technical edits. As of the quarter ending 

June 30, 2023, there were 4,654 FDICinsured depository institutions, all of 

which are covered by the rule and 

therefore could be affected.35

Additionally, the rule will apply to 

persons covered by the provisions of 

section 19, including those who are or 

wish to become employees, officers, 

directors, or controlling shareholders of 

an IDI or who otherwise are or wish to 

become an institution-affiliated party 

(IAP) of an IDI. 

To estimate the number of institutions 

and individuals affected by the rule, the 

FDIC counted the number of section 19 

applications it has received between 

2020 and 2022. Over this period, the 

FDIC received 27 bank-sponsored 

section 19 applications, an average of 9 

per year. Additionally, the FDIC 

received 202 individual section 19 

applications during the same period, an 

average of approximately 67 per year.36

Therefore, the FDIC estimates that the 

proposed rule could affect at least 9 

FDIC-insured depository institutions 

and 67 individuals per year. Assuming 

that each application involves a 

different institution, approximately 2 

percent of insured institutions, or 76, 

could be affected per year on average.37

As previously described, the proposed 

rule would align the FDIC’s regulations 

with the FHBA’s provisions. In 

particular, the FHBA created several 

categories of exceptions or exemptions 

to the prohibition on participating in 

banking. The proposed rule would 

incorporate these categories of 

exemptions and exceptions. The FDIC 

believes that the additional categories 

for exceptions or exemptions to the 

prohibition on participating in banking 

established by the FHBA could benefit 

certain individuals and IDIs by reducing 

the number of applications they would 

otherwise be required to file under 

section 19. Additionally, the categories 

of exceptions or exemptions to the 

prohibition on participating in banking 

established by the FHBA could benefit 

IDIs by marginally expanding the 

supply of labor available. However, 

these changes were created by the FHBA 

and were effective immediately upon 

passage, and the proposed rule aligns 

the FDIC’s regulations with these 

elements of the FHBA; therefore, the 

associated changes in the proposed rule 

will have no direct effect on individuals 

or IDIs. 

The proposed rule would amend the 

FDIC’s existing section 19 applicationprocedure regulations to incorporate the 

FHBA’s provisions. The FDIC’s current 

section 19 regulations contain 

references to existing application 

procedures that are similar in substance 

to those established by FHBA. However, 

the FHBA, among other requirements, 

compels the FDIC to primarily rely on 

the criminal history record of the 

Federal Bureau of Investigation when 

reviewing consent applications. It is the 

current practice of the FDIC to consider 

all relevant information when 

evaluating a section 19 application. 

However, the establishment of a 

common source of criminal history, 

together with only requiring certified 

copies of criminal history records if 

there exists clear and compelling 

justification for doing so, could benefit 

certain individuals and IDIs by 

marginally reducing the volume of 

information they need to supply to the 

FDIC. The FDIC believes that, while 

these proposed changes to the 

application procedures will directly 

affect certain individuals and 

institutions that file section 19 

applications, they may not have a 

substantial effect on potential 

applicants. Finally, these changes were 

created by the FHBA and were effective 

immediately upon passage, and the 

proposed rule aligns the FDIC’s 

regulations with these elements of the 

FHBA; therefore, the associated changes 

in the proposed rule will have no direct 

effect on individuals or IDIs. 

Finally, in seeking to align its section 

19 regulations with the provisions of the 

FHBA, the FDIC used its discretion to 

marginally increase the scope of certain 

terms so as to better reflect the purposes 

of the FHBA. In particular, the FDIC has 

provided broader language as to the 

scope of expunged, sealed, or dismissed 

offenses. This aspect of the proposed 

rule could potentially benefit persons 

covered by the provisions of section 19, 

including individuals who are or wish 

to become employees, officers, directors, 

or controlling shareholders of an IDI, or 

who otherwise are or wish to become an 

IAP of an IDI. However, given that most 

of the proposed amendments are 

focused on aligning the FDIC’s 

regulations with the FHBA, the marginal 

effect of this aspect of the proposed rule 

is likely to be small. 

The FDIC invites comments on all 

aspects of this analysis. In particular, 

would the proposed rule have any costs 

or benefits that the FDIC has not 

identified? 

IV. Alternatives 

As discussed above, almost all of the 

proposed substantive changes stem from 

the FHBA’s revisions to section 19. The 

FDIC does not have discretion in 

considering alternatives to those 

statutory revisions. The FDIC has, 

however, proposed several clarifications 

and interpretations to its section 19 

regulations. For example, the FDIC has 

provided broader language as to the 

scope of expunged, sealed, or dismissed 

offenses. The FDIC considered whether 

to simply provide the statutory 

definition for such offenses. The FDIC 

chose to propose the inclusion of more 

expansive language, in the interest of 

harmonizing the FDIC’s existing 

regulations with the revisions to section 

19, and under the belief that this 

language would be consistent with the 

purposes of the FHBA. The FDIC invites 

comments on its consideration of 

alternatives. In particular, are there 

other alternatives that the FDIC should 

consider? 

V. Request for Comments 

1. The FDIC seeks comments on all 

aspects of its approach to section 19 and 

more specifically on the questions that 

follow. 

2. Offense date. As revised, section 19 

provides for an exception for an offense 

if ‘‘it has been 7 years or more since the 

offense occurred.’’ 38 There is a similar 

provision that removes from the 

definition of ‘‘criminal offense involving 

dishonesty’’ ‘‘a misdemeanor criminal 

offense committed more than one year 

before the date on which an individual 

files a consent application, excluding 

any period of incarceration[.]’’ 39

Historically, the FDIC’s position has 

been that actions do not amount to a 

covered ‘‘offense,’’ for section 19 

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.40 However, for purposes 


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program entr[y] all occurred.’’ See 12 CFR 

303.227(b)(1). 

41 12 U.S.C. 1829(c)(1)(B). 

42 12 U.S.C. 1829(a)(1). 

43See 12 U.S.C. 1829(g)(2). 

44See 12 U.S.C. 1829(c)(2). 

45 12 U.S.C. 1829(g)(2)(C)(ii). 

46See 12 CFR 303.227. 

47 44 U.S.C. 3501 et seq. 

of evaluating whether the seven-year or 

one-year exception applies, the FDIC 

must evaluate if it has been seven years 

or more since the ‘‘offense occurred’’ or 

whether the ‘‘offense [was] committed 

more than one year before the date on 

which an individual files a consent 

application, excluding any period of 

incarceration.’’ The FDIC 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 FDIC acknowledges that 

there may be other, supportable 

interpretations of this phrase. For 

example, the FDIC 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 only begins with conviction or 

program entry, rather than the date of 

their misconduct. As such, the FDIC 

seeks public comment on the following 

topic: Is the FDIC’s interpretation of the 

phrases ‘‘offense occurred’’ and ‘‘offense 

committed’’ as the ‘‘last date of 

underlying misconduct’’ appropriate or 

are there other interpretations the FDIC 

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.41 However, the 

statute does not define the phrase 

‘‘sentencing occurred.’’ The FDIC 

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 FDIC seeks public 

comment on the following topic: Is the 

FDIC’s proposed interpretation of the 

phrase ‘‘sentencing occurred’’ 

appropriate? 

4. Foreign convictions and pretrial 

diversions. Section 19 applies to ‘‘any 

person who has been convicted of any 

criminal offense involving dishonesty or 

a breach of trust or money laundering, 

or has agreed to enter into a pretrial 

diversion or similar program in 

connection with a prosecution for such 

offense.’’ 42 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).43 The statute does 

not define ‘‘offense involving . . . 

breach of trust or money laundering.’’ 

The FDIC’s position has been that 

foreign convictions and pretrial 

diversions are included within the 

scope of section 19. There are strong 

public policy rationales for prohibiting 

persons who have been convicted of 

certain foreign criminal offenses (or 

entered into a pre-trial diversion 

program in connection with such an 

offense) from becoming or continuing as 

an IAP or owning, controlling, or 

otherwise participating in the affairs of 

an insured depository institution. 

However, the FDIC acknowledges that 

there may be caselaw, statutory 

construction, and other arguments that 

support a reading of section 19 that 

would exclude foreign convictions and 

pretrial diversions from the scope of 

section 19. As such, the FDIC seeks 

public comment on the following topic: 

Does section 19 encompass foreign 

convictions and pretrial diversions? 

What support do commenters have for 

their position? 

5. Expungements, sealings, and 

dismissals. The FHBA established a new 

statutory exemption for expunged, 

sealed, and dismissed convictions 

(collectively, ‘‘expungements’’).44 The 

FDIC’s current regulations contain more 

expansive language concerning 

expungements than the statutory text. 

Notably, the FDIC’s expungement 

provisions encompass all convictions 

that had been expunged—whether by 

court order or otherwise by operation of 

law. 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 

maintains the FDIC’s broad 

interpretation of ‘‘expungement’’ to 

encompass covered offenses that have 

been expunged by operation of law. The 

FDIC seeks public comment on the 

following topic: Given the new statutory 

exemption for expunged offenses, is the 

FDIC’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 

‘‘offenses involving the possession of 

controlled substances’’ are not included 

within the definition of ‘‘criminal 

offense involving dishonesty’’ and, 

therefore, are not subject to section 19’s 

prohibition.45 The proposed rule 

includes this definitional exclusion and 

notes that the FDIC 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 the FDIC’s current section 19 

regulations, which only provide an 

exclusion for the simple possession of 

controlled substances. 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 with intent to 

distribute controlled substances. The 

FDIC seeks public comment on the 

following topic: Is the FDIC’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 FDIC may exempt by rule 

certain de minimis offenses from section 

19’s prohibition. The FDIC considers de 

minimis offenses to be covered offenses 

for which an application is not required 

because the FDIC deems the application 

automatically granted. The FDIC has 

previously promulgated rules that 

specified de minimis offenses under 

section 19.46 However, given this new 

statutory language, the FDIC is 

reevaluating its current approach to de 

minimis offenses. Accordingly, the FDIC 

seeks public comment on the following 

topic: Is the FDIC’s current approach to 

de minimis offenses appropriate? Are 

there additional offenses that the FDIC 

should consider de minimis under 

section 19? Please provide support for 

such a designation. 

8. Written comments must be received 

by the FDIC no later than January 16, 

2024. 

VI. Regulatory Analysis and Procedure 

A. The Paperwork Reduction Act 

In accordance with the requirements 

of the Paperwork Reduction Act 

(PRA),47 the FDIC may not conduct or 

sponsor, and the respondent is not 

required to respond to, an information 

collection unless it displays a currently 


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48 5 U.S.C. 601 et seq. 49The SBA defines a small banking organization 

as having $850 million or less in assets, where an 

organization’s ‘‘assets are determined by averaging 

the assets reported on its four quarterly financial 

statements for the preceding year.’’ See 13 CFR 

121.201 (as amended by 87 FR 69118, effective 

December 19, 2022). In its determination, the ‘‘SBA 

counts the receipts, employees, or other measure of 

size of the concern whose size is at issue and all 

of its domestic and foreign affiliates.’’ See 13 CFR 

121.103. Following these regulations, the FDIC uses 

an IDI’s affiliated and acquired assets, averaged over 

the preceding four quarters, to determine whether 

the insured depository institution is ‘‘small’’ for the 

purposes of the RFA. 

50FDIC Call Report, March 31, 2023. 

51FDIC Application Tracking System. 

52 (70/3,433) * 100 = 2.04 percent. 

valid Office of Management and Budget 

(OMB) control number. 

The FDIC is revising its section 19 

application form to conform with the 

changes to section 19 under the FHBA. 

These changes will amend the FDIC’s 

existing information collection 

associated with this proposed rule, 

entitled ‘‘Application Pursuant to 

Section 19 of the Federal Deposit 

Insurance Act’’ (3064–0018). For this 

reason, the information-collection 

requirements contained in this proposed 

rule will be submitted by the FDIC to 

OMB for review and approval under 

section 3507(d) of the PRA (44 U.S.C. 

3507(d)) and § 1320.11 of the OMB’s 

implementing regulations (5 CFR part 

1320). Based on available data, the 

number of respondents and the 

estimated annual burden associated 

with the information collection will 

decrease. Comments are invited on: 

(a) Whether the collection of 

information is necessary for the proper 

performance of the FDIC’s functions, 

including whether the information has 

practical utility; 

(b) The accuracy of the estimate of the 

burden of the information collection, 

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 collection 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 will become a matter of 

public record. Comments on the 

collection of information should be sent 

to the address listed in the ADDRESSES

section of this document. A copy of the 

comments may also be submitted to the 

OMB desk officer: By mail to U.S. Office 

of Management and Budget, 725 17th 

Street NW, #10235, Washington, DC 

20503, or by facsimile to 202–395–6974; 

or email to oira_submission@

omb.eop.gov, Attention, Federal 

Banking Agency Desk Officer. 

Information Collection 

Title: ‘‘Application Pursuant to 

Section 19 of the Federal Deposit 

Insurance Act’’. 

OMB Number: 3064–0018. 

Affected Public: Insured depository 

institutions and individuals. 

SUMMARY OF ESTIMATED ANNUAL BURDENS

[OMB No. 3064–0018] 

IC Description Type of burden (obligation 

to respond) 

Frequency 

of response 

Number of 

respondents 

Number of 

responses/ 

respondent 

Hours per 

response 

Annual burden 

(hours) 

Application Pursuant to 

Section 19 of the Federal 

Deposit Insurance Act.

Reporting (Required to obtain or retain benefits).On occasion ... 76 1 16 1,216 

Total Annual Burden 

Hours: 

............................................. ........................ ........................ ........................ ........................ 1,216 

Source: FDIC. 

B. The Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 

generally requires an agency, in 

connection with a proposed rule, to 

prepare and make available for public 

comment an initial regulatory flexibility 

analysis that describes the impact of the 

proposed rule on small entities.48

However, an initial regulatory flexibility 

analysis is not required if the agency 

certifies that the proposed rule will not, 

if promulgated, have a significant 

economic impact on a substantial 

number of small entities. The Small 

Business Administration (SBA) has 

defined ‘‘small entities’’ to include 

banking organizations with total assets 

of less than or equal to $850 million.49

Generally, the FDIC considers a 

significant economic impact to be a 

quantified effect in excess of 5 percent 

of total annual salaries and benefits or 

2.5 percent of total noninterest 

expenses. The FDIC believes that effects 

in excess of one or more of these 

thresholds typically represent 

significant economic impacts for FDICsupervised institutions. 

As discussed further below, the FDIC 

certifies that the proposed rule, if 

adopted, will not have a significant 

economic impact on a substantial 

number of FDIC-supervised small 

entities. 

As of the quarter ending June 30, 

2023, the FDIC insured 4,654 depository 

institutions, of which 3,373 are defined 

as small banking organizations for the 

purposes of the RFA.50 In the period 

from 2020 through 2022, the FDIC 

received 9 bank-sponsored section 19 

applications from small, FDIC-insured 

institutions, an average of 3 per year. 

Additionally, the FDIC received 202 

section 19 applications from individuals 

during the same period, an average of 

about 67 per year.51 To determine the 

maximum number of small, FDICinsured institutions that could be 

affected by the proposed rule, this 

analysis assumes that each applicant is 

seeking employment at a different bank 

and that each bank is a small, FDICinsured institution. Based on these 

assumptions, 70 (2.1 percent of) small, 

FDIC-insured institutions, on average, 

annually, could be affected by the 

proposed rule.52 Section 19 applications 

from individuals are compelled by the 

applicant’s intent to seek employment at 

FDIC-insured institutions, many of 

which are not small. Therefore, the 

FDIC believes that the number of small, 

FDIC-insured institutions affected by 

the proposed rule is likely to be less 

than 70. 

As discussed in the SUPPLEMENTARY

INFORMATION section, the proposed rule 

would align the FDIC’s regulations with 

the FHBA’s provisions, make additional 


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53Public Law 106–102, sec. 722, 113 Stat. 1338, 

1471 (1999), 12 U.S.C. 4809. 

54 12 U.S.C. 4802(a). 

55 12 U.S.C. 4802. 

changes to further clarify the FDIC’s 

regulations related to section 19, more 

closely align the FDIC’s section 19 

regulations with those of other Federal 

financial regulators, and make a number 

of non-substantive, technical edits. Most 

of the proposed changes were 

precipitated by the FHBA—which was 

effective immediately upon passage— 

and the proposed rule aligns the FDIC’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 IDIs. 

Further, since the FDIC estimates that a 

maximum of 70 small, FDIC-insured 

institutions could be affected by the 

proposed rule, on average, annually, any 

direct affects realized as a result of the 

proposed rule are likely to be small and 

affect a relatively small number of 

entities. 

In light of the foregoing, the FDIC 

certifies that the proposed rule would 

not have a significant economic impact 

on a substantial number of small 

entities. The FDIC invites comments on 

all aspects of the supporting information 

provided in this RFA section. In 

particular, would this proposed rule 

have any significant effects on small 

entities that the FDIC has not identified? 

C. Plain Language 

Section 722 of the Gramm-LeachBliley Act 53 requires each Federal 

banking agency (FBA) to use plain 

language in its proposed and final rules 

published after January 1, 2000. The 

FDIC has sought to present the proposed 

rule in a simple and straightforward 

manner. The FDIC invites comments on 

whether the proposal is clearly stated 

and effectively organized, and how the 

FDIC might make the proposal easier to 

understand. For example: 

• Has the FDIC organized the material 

to suit your needs? If not, how could it 

present the rule more clearly? 

• Have we clearly stated the 

requirements of the rule? If not, how 

could the rule be more clearly stated? 

• Does the rule contain technical 

jargon that is not clear? If so, which 

language requires clarification? 

• Would a different format (grouping 

and order of sections, use of headings, 

paragraphing) make the regulation 

easier to understand? If so, what 

changes would make the regulation 

easier to understand? 

• What else could we do to make the 

regulation easier to understand? 

D. Riegle Community Development and 

Regulatory Improvement Act of 1994 

Under section 302(a) of the Riegle 

Community Development and 

Regulatory Improvement Act 

(RCDRIA),54 in determining the effective 

date and administrative compliance 

requirements for new regulations that 

impose additional reporting, disclosure, 

or other requirements on IDIs, each FBA 

must consider, consistent with 

principles of safety and soundness and 

the public interest, any administrative 

burdens that such regulations would 

place on depository institutions, 

including small depository institutions, 

and customers of depository 

institutions, as well as the benefits of 

such regulations. In addition, section 

302(b) of the RCDRIA requires new 

regulations and amendments to 

regulations that impose additional 

reporting, disclosures, or other new 

requirements on IDIs generally to take 

effect on the first day of a calendar 

quarter that begins on or after the date 

on which the regulations are published 

in final form.55 The FDIC invites 

comments that further will inform its 

consideration of RCDRIA. 

List of Subjects 

12 CFR Part 303 

Administrative practice and 

procedure, Bank deposit insurance, 

Banks, banking, Reporting and 

recordkeeping requirements, Savings 

associations. 

12 CFR Part 308 

Administrative practice and 

procedure, Bank deposit insurance, 

Banks, banking, Claims, Crime, Equal 

access to justice, Fraud, Investigations, 

Lawyers, Penalties, Savings 

associations. 

Authority and Issuance 

For the reasons stated in the preamble 

and under the authority of 12 U.S.C. 

1819 (Seventh and Tenth), the FDIC 

proposes to amend 12 CFR parts 303 

and 308 as follows: 

PART 303—FILING PROCEDURES 

■ 1. The authority citation for part 303 

is revised to read as follows: 

Authority: 12 U.S.C. 378, 1464, 1813, 

1815, 1817, 1818, 1819(a) (Seventh and 

Tenth), 1820, 1823, 1828, 1829, 1831a, 1831e, 

1831o, 1831p–1, 1831w, 1835a, 1843(l), 3104, 

3105, 3108, 3207, 5414, 5415, and 15 U.S.C. 

1601–1607. 

■ 2. Revise subpart L, consisting of 

§§ 303.220 through 303.231, to read as 

follows: 

Subpart L—Section 19 of the FDI Act 

(Consent to Service of Persons 

Convicted of, or Who Have Program 

Entries for, Certain Criminal Offenses) 

Sec. 

303.220 What is section 19 of the Federal 

Deposit Insurance Act? 

303.221 Who is covered by section 19? 

303.222 Which offenses qualify as ‘‘Covered 

Offenses’’ under section 19? 

303.223 What constitutes a conviction 

under section 19? 

303.224 What constitutes a pretrial 

diversion or similar program under 

section 19? 

303.225 What are the types of applications 

that can be filed? 

303.226 When may an application be filed? 

303.227 De minimis offenses. 

303.228 How to file an application. 

303.229 How an application is evaluated. 

303.230 What will the FDIC do if the 

application is denied? 

303.231 Waiting time for a subsequent 

application if an application is denied. 

§ 303.220 What is section 19 of the Federal 

Deposit Insurance Act? 

(a) This subpart covers applications 

under section 19 of the Federal Deposit 

Insurance Act (FDI Act), 12 U.S.C. 1829. 

The FDIC refers to such applications as 

‘‘consent applications.’’ Under section 

19, any person who has been convicted 

of any criminal offense involving 

dishonesty, breach of trust, or money 

laundering, 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 

institution-affiliated party (IAP) of an 

insured depository institution (IDI); own 

or control, directly or indirectly, any 

IDI; or otherwise participate, directly or 

indirectly, in the conduct of the affairs 

of any IDI without the prior written 

consent of the FDIC. 

(b) In addition, the law prohibits an 

IDI from permitting such a person to 

engage in any conduct or to continue 

any relationship prohibited by section 

19. IDIs must therefore make a 

reasonable, documented inquiry to 

verify an applicant’s history to ensure 

that a person who has a Covered Offense 

under section 19 is not hired or 

permitted to participate in its affairs 

without the written consent of the FDIC 

issued under this subpart. FDICsupervised IDIs may extend a 

conditional offer of employment 

contingent on the completion of a 

background check satisfactory to the 

institution to determine if the applicant 

is prohibited under section 19, but the 


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applicant may not work for, be 

employed by, or otherwise participate in 

the affairs of the IDI until the IDI has 

determined that the applicant is not 

prohibited under section 19. 

(c) If there is a conviction or program 

entry covered by the prohibitions of 

section 19, an application under this 

subpart must be filed seeking the FDIC’s 

consent to become, or to continue as, an 

IAP; to own or control, directly or 

indirectly, an IDI; or to otherwise 

participate, directly or indirectly, in the 

affairs of the IDI. The application must 

be filed, and consented to, prior to 

serving in any of the foregoing 

capacities unless such application is not 

required under the subsequent 

provisions of this subpart. The purpose 

of an 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 IDI without 

posing a risk to its safety and soundness 

or impairing public confidence in that 

institution. The burden is upon the 

applicant to establish that the 

application warrants approval. 

§ 303.221 Who is covered by section 19? 

(a) Persons covered by section 19 

include IAPs, as defined by 12 U.S.C. 

1813(u), and others who are participants 

in the conduct of the affairs of an IDI. 

Therefore, all directors, officers, and 

employees of an IDI who fall within the 

scope of section 19, including de facto 

employees, as determined by the FDIC 

based upon generally applicable 

standards of employment law, will also 

be subject to section 19. Whether other 

persons are covered by section 19 

depends upon their degree of influence 

or control over the management or 

affairs of an IDI. For example, section 19 

would apply to an officer or director of 

an IDI’s holding company to the extent 

that they have the power to define and 

direct the management or affairs of an 

IDI. Similarly, directors and officers of 

affiliates, subsidiaries, or joint ventures 

of an IDI or its holding company will be 

covered if they participate in the affairs 

of the IDI or are in a position to 

influence or control the management or 

affairs of the IDI. Typically, an 

independent contractor does not have a 

relationship with the IDI other than the 

activity for which the institution has 

contracted. However, an independent 

contractor who influences or controls 

the management or affairs of the IDI 

would be covered by section 19. 

(b) The term person, for purposes of 

section 19, means an individual, and 

does not include a corporation, firm, or 

other business entity. 

(c) Individuals who file an application 

with the FDIC under the provisions of 

section 19 who also seek to participate 

in the affairs of a bank holding company 

or savings and loan holding company 

may have to comply with any filing 

requirements of the Board of the 

Governors of the Federal Reserve 

System under 12 U.S.C. 1829(d) and (e). 

(d) Section 19 specifically prohibits a 

person subject to its provisions from 

owning or controlling, directly or 

indirectly, an IDI. The terms control and 

ownership under section 19 shall have 

the meaning given to those terms in 

subpart E of this part (including the 

rebuttable presumptions stated in 

subpart E). 

(1) A person will be deemed to 

exercise ‘‘control’’ if that person— 

(i) Has the ability to direct the 

management or policies of an IDI; 

(ii) Has the power to vote 25 percent 

or more of the voting shares of an IDI; 

or 

(iii) Has the power to vote 10 percent 

of the voting shares of an IDI if— 

(A) No other person owns, controls, or 

has the power to vote more shares; or 

(B) The institution has registered 

securities under section 12 of the 

Securities Exchange Act of 1934 (15 

U.S.C. 78l). 

(2) Under this paragraph (d), a person 

will be deemed to ‘‘own’’ an IDI if that 

person owns— 

(i) 25 percent or more of the 

institution’s voting stock; or 

(ii) 10 percent of the voting shares if— 

(A) No other person owns more; or 

(B) The institution has registered 

securities under section 12 of the 

Securities Exchange Act of 1934 (15 

U.S.C. 78l). 

(3) The standards in this paragraph (d) 

would also apply to an individual acting 

in concert with others so as to have such 

ownership or control. Absent the FDIC’s 

consent, persons subject to the 

prohibitions of section 19 must divest 

their control or ownership of shares 

above the foregoing limits. 

§ 303.222 Which offenses qualify as 

‘‘Covered Offenses’’ under section 19? 

(a) Categories of Covered Offenses. 

The conviction or program entry must 

be for a criminal offense involving 

dishonesty, breach of trust, or money 

laundering. 

(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 one 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 do not involve 

dishonesty, breach of trust, or money 

laundering, as noted in paragraph (b) of 

this section. Potential applicants may 

contact their appropriate FDIC Regional 

Office if they have questions about 

whether their offenses are covered 

under section 19. 

(iv) The term offense committed in 

paragraph (a)(1)(iii)(A) of this section 

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) Elements of the offense. Whether 

a crime involves dishonesty, breach of 

trust, or money laundering will be 

determined from the statutory elements 

of the offense itself or from court 

determinations that the statutory 

provisions of the offense involve 

dishonesty, breach of trust, or money 

laundering. 

(c) Certain older offenses excluded— 

(1) Exclusions for certain older offenses. 

Section 19 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 term offense occurred means 

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. 


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(2) Offenses committed by individuals 

21 year of age or younger. For 

individuals who committed an offense 

when they were 21 years of age or 

younger, section 19 does not apply to 

the offense if it has been more than 30 

months since the sentencing occurred. 

The term sentencing occurred means 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) does 

not apply to an offense described under 

12 U.S.C. 1829(a)(2). 

(d) Designated lesser offenses 

excluded. Section 19 does not apply to 

the following offenses, if one year or 

more 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. Individuals 

who are convicted of or enter into a 

pretrial diversion program for a criminal 

offense involving dishonesty, breach of 

trust, or money laundering in any 

foreign jurisdiction are subject to 

section 19, unless the offense is 

otherwise excluded by this subpart. 

§ 303.223 What constitutes a conviction 

under section 19? 

(a) Convictions requiring an 

application. There must be a conviction 

of record. Section 19 does not cover 

arrests or pending cases not brought to 

trial, unless the person has a program 

entry as set out in § 303.224. Section 19 

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 an application. A 

conviction for which a pardon has been 

granted will require an application. 

(b) Convictions not requiring an 

application. When an individual is 

charged with a Covered Offense and, in 

the absence of a program entry as set out 

in § 303.224, is subsequently convicted 

of an offense that is not a Covered 

Offense, the conviction is not subject to 

section 19. 

(c) Expungement, dismissal, and 

sealing. A conviction is not considered 

a conviction of record and does not 

require an 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’’ (or similar term) by any 

court having jurisdiction over minors as 

defined by State law, does not require 

an application. Such an adjudication 

does not constitute a matter covered 

under section 19 and is not a conviction 

or program entry for determining the 

applicability of § 303.227. 

§ 303.224 What constitutes a pretrial 

diversion or similar program under section 

19? 

(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 

FDIC on a case-by-case basis. Program 

entries prior to November 29, 1990, are 

not covered by section 19. 

(b) When a Covered Offense either is 

reduced by a program entry to an 

offense that would otherwise not be 

covered by section 19 or is dismissed 

upon successful completion of a 

program entry, the offense remains a 

Covered Offense for purposes of section 

19. The Covered Offense will require an 

application unless it is de minimis as 

provided by § 303.227. 

(c) Expungements, dismissals, or 

sealings of program entries will be 

treated the same as those for 

convictions. 

§ 303.225 What are the types of 

applications that can be filed? 

(a) The FDIC will accept applications 

from— 

(1) An individual; 

(2) An IDI applying on behalf of an 

individual; 

(3) A depository institution holding 

company applying on behalf of an 

individual with respect to an IDI 

subsidiary of the holding company; and 

(4) A depository institution holding 

company applying on behalf of an 

individual who will work at the holding 

company but also participate in the 

affairs of the IDI or who would be in a 

position to influence or control the 

management or affairs of the IDI, in 

accordance with § 303.221(a). 

(b) An individual or an institution 

may file applications at separate times. 

Under either approach, the 

application(s) must be filed with the 

appropriate FDIC Regional Office, as 

required by this subpart. 

§ 303.226 When may an application be 

filed? 

Except for situations in which no 

application is required under section 19 

and this subpart, an 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 an 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, conditions of 

rehabilitation, and probation 

requirements, must be completed, and 

the case must be considered final by the 

procedures of the applicable 

jurisdiction. The FDIC’s application 

forms as well as additional information 

concerning section 19 can be accessed at 

the FDIC’s Regional Offices or on the 

FDIC’s website. 

§ 303.227 De minimis offenses. 

(a) In general. Approval is 

automatically granted and an 

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 two 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 program-completion 

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 three years or less and/or a 

fine of $2,500 or less, and the individual 

actually served three days or less of jail 

time for each Covered Offense. 

(3) Jail time under paragraph (a)(2) of 

this section is calculated based on the 

time an individual spent incarcerated as 


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77916 Federal Register / Vol. 88, No. 218 / Tuesday, November 14, 2023 / Proposed Rules 

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: 

persons who are restricted to a 

substance-abuse treatment program 

facility for part or all of the day; or 

persons who are ordered to attend 

outpatient psychiatric treatment. 

(4) If there are two convictions or 

program entries for a Covered Offense, 

each conviction or program entry was 

entered at least three years prior to the 

date an application would otherwise be 

required, except as provided in 

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

each Covered Offense was not 

committed against an IDI or insured 

credit union. 

(b) Other types of offenses for which 

the de minimis exception applies and 

no application is required—(1) Age of 

person at time of Covered Offense. If 

there are two 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 an 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 IDI 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 

one 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 paragraph (b) 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 IDI or insured credit union; 

(iii) The individual has no more than 

one other de minimis offense under this 

section; and 

(iv) If there are two de minimis 

offenses under this section, each 

conviction or program entry was entered 

at least three years prior to the date an 

application would otherwise be 

required, or at least 18 months prior to 

the date an 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 must disclose the 

presence of the conviction(s) or program 

entry(ies) to all IDIs in the affairs of 

which that person 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. 

1829(a)(2) can qualify under any of the 

de minimis exceptions set out in this 

section. 

§ 303.228 How to file an application. 

Forms and instructions should be 

obtained from the FDIC’s website 

(www.fdic.gov), and the application(s) 

must be filed with the appropriate FDIC 

Regional Office. An application may be 

filed by an individual and by an IDI or 

depository institution holding company 

on behalf of an individual. The 

appropriate Regional Office for an 

institution-sponsored application is the 

office covering the state where the 

institution’s home office is located. The 

appropriate Regional Office for an 

individual application is the office 

covering the state where the person 

resides. States covered by each FDIC 

Regional Office can be located on the 

FDIC’s website. 

§ 303.229 How an application is evaluated. 

(a) Criminal-history records. In 

reviewing an application, the FDIC 

will— 

(1) Primarily rely on the criminal 

history record of the Federal Bureau of 

Investigation (rap sheet); and 

(2) Provide such record to the 

applicant to review for accuracy. 

(b) Certified copies. The FDIC will not 

require an applicant to provide certified 

copies of criminal history records unless 

the FDIC 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) Ultimate determinations. The 

ultimate determinations in assessing an 

application are whether the person has 

demonstrated their fitness to participate 

in the conduct of the affairs of an IDI, 

and whether the affiliation, ownership, 

control, or participation by the person 

in the conduct of the affairs of the 

institution may constitute a threat to the 

safety and soundness of the institution 

or the interests of its depositors or 

threaten to impair public confidence in 

the institution. 

(d) Individualized assessment. When 

evaluating applications, the FDIC will 

conduct an individualized assessment 

that will consider: 

(1) Whether the conviction or program 

entry is subject to section 19, 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 IDI constitutes a threat to the safety 

and soundness of the institution or the 

interests of its depositors or threatens to 

impair public confidence in the 

institution; 

(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, and 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 

IDI to supervise and control the person’s 

activities; 

(6) The level of ownership or control 

the person will have of an IDI; 

(7) The applicability of the IDI’s 

fidelity bond coverage to the person; 

and 

(8) Any additional factors in the 

specific case that appear relevant to the 

application or the applicant including, 

but not limited to, the opinion or 

position of the primary Federal or State 

regulator. 

(e) No re-consideration of guilt. The 

question of whether a person, who was 

convicted of a crime or who agreed to 


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a program entry, was guilty of that crime 

shall not be at issue in a proceeding 

under this subpart or under 12 CFR part 

308, subpart M. 

(f) Factors considered for enumerated 

offenses. The foregoing factors will also 

be applied by the FDIC to determine 

whether the interests of justice are 

served in seeking an exception in the 

appropriate court when an application 

is made to terminate the ten-year ban 

prior to its expiration date under 12 

U.S.C. 1829(a)(2) for certain Federal 

offenses. 

(g) Mandatory conditions of approval. 

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 FDIC has approved an application 

filed by an individual and has issued a 

consent order, the individual must 

disclose the presence of the 

conviction(s) or program entry(ies) to all 

IDIs in the affairs of which they wish to 

participate. 

(h) Institution-sponsored 

applications: work at same employer. 

When deemed appropriate by the FDIC, 

institution-sponsored 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 FDIC 

(which may require a new 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) Work at a different employer after 

certain approvals. In situations in 

which an approval has been granted for 

a person to participate in the affairs of 

a particular IDI and the person 

subsequently seeks to participate at 

another IDI, another application must be 

submitted and approved by the FDIC 

prior to the person participating in the 

affairs of the other IDI. 

§ 303.230 What will the FDIC do if the 

application is denied? 

(a) The FDIC will inform the applicant 

in writing that the application has been 

denied and summarize or cite the 

relevant considerations specified in 

§ 303.229. 

(b) The denial will also notify the 

applicant that a written request for a 

hearing under 12 CFR part 308, subpart 

M, may be filed with the FDIC Executive 

Secretary within 60 days after the 

denial. The request for a hearing must 

include the relief desired, the grounds 

supporting the request for relief, and 

any supporting evidence. 

§ 303.231 Waiting time for a subsequent 

application if an application is denied. 

(a) An application under section 19 

may be made in writing at any time 

more than one year after the issuance of 

a decision denying an application under 

section 19. If the original denial is 

subject to a request for a hearing, then 

the subsequent application may be filed 

at any time more than one year after the 

decision of the FDIC Board of Directors, 

or its designee, denying the application. 

Unless with the passage of time the 

individual is no longer subject to 

section 19, the prohibition against 

participating in the affairs of an IDI 

under section 19 shall continue until 

the individual has been granted consent 

in writing to participate in the affairs of 

an IDI by the Board of Directors or its 

designee. 

(b) An institution-sponsored 

application is not subject to the one-year 

waiting period if the application— 

(1) Follows the denial of an 

individual application; or 

(2) Follows the denial of an 

institution-sponsored application and 

the subsequent application is sponsored 

by a different institution or is for a 

different position. 

PART 308—RULES OF PRACTICE AND 

PROCEDURE 

■ 3. The authority citation for part 308 

continues to read as follows: 

Authority: 5 U.S.C. 504, 554–557; 12 

U.S.C. 93(b), 164, 505, 1464, 1467(d), 1467a, 

1468, 1815(e), 1817, 1818, 1819, 1820, 1828, 

1829, 1829(b), 1831i, 1831m(g)(4), 1831o, 

1831p–1, 1832(c), 1884(b), 1972, 3102, 

3108(a), 3349, 3909, 4717, 5412(b)(2)(C), 

5414(b)(3); 15 U.S.C. 78(h) and (i), 78o(c)(4), 

78o–4(c), 78o–5, 78q–1, 78s, 78u, 78u–2, 

78u–3, 78w, 6801(b), 6805(b)(1); 28 U.S.C. 

2461 note; 31 U.S.C. 330, 5321; 42 U.S.C. 

4012a; Pub. L. 104–134, sec. 31001(s), 110 

Stat. 1321; Pub. L. 109–351, 120 Stat. 1966; 

Pub. L. 111–203, 124 Stat. 1376; Pub. L. 114– 

74, sec. 701, 129 Stat. 584. 

■ 4. Revise § 308.156 to read as follows: 

§ 308.156 Scope. 

The rules and procedures set forth in 

this subpart shall apply to an 

application filed under section 19 of the 

FDI Act, 12 U.S.C. 1829 (section 19), 

and 12 CFR part 303, subpart L, by an 

insured depository institution (IDI), 

depository institution holding company, 

or an individual (any of which could be 

termed an applicant). Section 19 states 

that if an individual has been convicted 

of any criminal offense involving 

dishonesty, a breach of trust, or money 

laundering, or who has agreed to enter 

into a pretrial diversion or similar 

program in connection with the 

prosecution of such offense, the 

individual must seek the prior written 

consent of the FDIC to: become or 

continue as an institution-affiliated 

party (IAP) with respect to an IDI; own 

or control directly or indirectly an IDI; 

or participate directly or indirectly in 

any manner in the conduct of the affairs 

of an IDI. This subpart shall apply only 

after such application has been denied 

under 12 CFR part 303, subpart L. 

■ 5. Amend § 308.158 by revising 

paragraphs (b) and (d) through (f) to 

read as follows: 

§ 308.158 Hearings. 

* * * * * 

(b) Burden of proof. The burden of 

going forward with a prima facie case 

shall be upon the FDIC. The ultimate 

burden of proof shall be upon the 

applicant seeking the FDIC’s consent for 

an individual to: become or continue as 

an IAP with respect to an IDI; own or 

control directly or indirectly an IDI; or 

participate directly or indirectly in any 

manner in the conduct of the affairs of 

an IDI. 

* * * * * 

(d) Written submissions in lieu of 

hearing. The applicant may in writing 

waive a hearing and elect to have the 

matter determined on the basis of 

written submissions. 

(e) Failure to request or appear at 

hearing. Failure to request a hearing 

shall constitute a waiver of the 

opportunity for a hearing. Failure to 

appear at a hearing in person or through 

an authorized representative shall 

constitute a waiver of a hearing. If a 

hearing is waived, and if there has not 

been a written submission in lieu of a 

hearing, the individual shall remain 

prohibited under section 19. 

(f) Decision by Board of Directors or 

its designee. Within 60 days following 

the Administrative Officer’s certification 

of the record to the Board of Directors 

or its designee, the Board of Directors or 

its designee shall notify the applicant 

whether the individual shall remain 

prohibited under section 19. The 

notification shall state the basis for any 

decision of the Board of Directors or its 

designee that is adverse to the applicant. 

Federal Deposit Insurance Corporation. 

By order of the Board of Directors. 

Dated at Washington, DC, on October 24, 

2023. 

James P. Sheesley, 

Assistant Executive Secretary. 

[FR Doc. 2023–23853 Filed 11–13–23; 8:45 am] 

BILLING CODE 6714–01–P 


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