Federal Register / Vol. 83, No. 150 / Friday, August 3, 2018 / Notices 38143 

SUPPLEMENTARY INFORMATION: As part of 

its continuing effort to reduce 

paperwork burdens, and as required by 

the PRA, 44 U.S.C. 3501–3520, the FCC 

invites the general public and other 

Federal agencies to take this 

opportunity to comment on the 

following information collections. 

Comments are requested concerning: 

Whether the proposed collection of 

information is necessary for the proper 

performance of the functions of the 

Commission, including whether the 

information shall have practical utility; 

the accuracy of the Commission’s 

burden estimate; ways to enhance the 

quality, utility, and clarity of the 

information collected; ways to minimize 

the burden of the collection of 

information on the respondents, 

including the use of automated 

collection techniques or other forms of 

information technology; and ways to 

further reduce the information 

collection burden on small business 

concerns with fewer than 25 employees. 

OMB Control Number: 3060–0508. 

Title: Parts 1 and 22 Reporting and 

Recordkeeping Requirements 

Form Number: Not applicable. 

Type of Review: Revision of a 

currently approved collection. 

Respondents: Business or other forprofit entities, Individuals or 

households, and State, Local or Tribal 

Governments. 

Number of Respondents and 

Responses: 15,465 respondents; 16,183 

responses. 

Estimated Time per Response: 0.13 

hours–10 hours. 

Frequency of Response: 

Recordkeeping requirement; On 

occasion, quarterly, and semi-annual 

reporting requirements; Third-party 

disclosure requirement. 

Obligation to Respond: Required to 

obtain or retain benefits. The statutory 

authority for this collection is contained 

in 47 U.S.C. 154, 222, 303, 309 and 332. 

Total Annual Burden: 2,606 hours. 

Annual Cost Burden: $19,138,350. 

Privacy Act Impact Assessment: Yes. 

Nature and Extent of Confidentiality: 

There is no need for confidentiality with 

this collection of information. The 

information to be collected will be made 

available for public inspection. 

Applicants may request materials or 

information submitted to the 

Commission be given confidential 

treatment under 47 CFR 0.459 of the 

Commission’s rules. 

Needs and Uses: Part 22 contains the 

technical and legal requirements for 

radio stations operating in the Public 

Mobile Services. The information 

collected is used to determine on a caseby-case basis, whether or not to grant 

licenses authorizing construction and 

operation of wireless 

telecommunications facilities to 

common carriers. Further, this 

information is used to develop statistics 

about the demand for various wireless 

licenses and/or the licensing process 

itself, and occasionally for rule 

enforcement purposes. 

This revised information collection 

reflects deletion of a rule applicable to 

all licensees and applicants governed by 

Part 22 of the Commission’s rules, as 

adopted by the Commission in a Third 

Report and Order in WT Docket Nos. 

12–40 (Cellular Third R&O) (FCC 18– 

92). The Cellular Third R&O deleted 

certain Part 22 rules that either imposed 

administrative and recordkeeping 

burdens that are outdated and no longer 

serve the public interest, or that are 

largely duplicative of later-adopted 

rules and are thus no longer necessary. 

Among the rule deletions and of 

relevance to this information collection, 

the Commission deleted rule section 

22.303, resulting in discontinued 

information collection for that rule 

section. 

The Commission is now seeking 

approval from the OMB for a revision of 

this information collection. 

Federal Communications Commission. 

Marlene Dortch, 

Secretary, Office of the Secretary. 

[FR Doc. 2018–16585 Filed 8–2–18; 8:45 am] 

BILLING CODE 6712–01–P 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

Modifications to the Statement of 

Policy Pursuant to Section 19 of the 

Federal Deposit Insurance Act 

Concerning Participation in the 

Conduct of the Affairs of an Insured 

Institution by Persons Who Have Been 

Convicted of Crimes Involving 

Dishonesty, Breach of Trust or Money 

Laundering or Who Have Entered 

Pretrial Diversion Programs for Such 

Offenses 

AGENCY: Federal Deposit Insurance 

Corporation (FDIC). 

ACTION: Final policy statement. 

SUMMARY: On January 8, 2018, the FDIC 

published in the Federal Register notice 

of proposed changes to its statement of 

policy (SOP) concerning participation in 

banking of a person convicted of a crime 

of dishonesty or breach of trust or 

money laundering or who has entered a 

pretrial diversion or similar program in 

connection with the prosecution for 

such offense pursuant to Section 19 of 

the Federal Deposit Insurance Act, 12 

U.S.C. 1829 and sought comments on 

the proposed changes. After the closing 

of the comment period, the FDIC 

reviewed the comments received and 

has made some changes and 

clarifications to the proposed statement. 

The FDIC is now publishing the SOP in 

its final form. After publication the 

statement of policy will also be 

available on the FDIC’s website. 

DATES: Applicable Date: July 19, 2018. 

FOR FURTHER INFORMATION CONTACT: 

Brian Zeller, Review Examiner (319) 

395–7394 ext. 4125, or Larisa Collado, 

Section Chief (202) 898 8509, in the 

Division of Risk Management 

Supervision, or Michael P. Condon, 

Counsel (202) 898–6536 or Andrea 

Winkler, Supervisory Counsel (202) 898 

3727 in the Legal Division. 

SUPPLEMENTARY INFORMATION: 

I. Background 

Section 19 of the Federal Deposit 

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

prohibits, without the prior written 

consent of the FDIC, a person convicted 

of any criminal offense involving 

dishonesty or breach of trust or money 

laundering (covered offenses), or who 

has agreed to enter into a pretrial 

diversion or similar program in 

connection with a prosecution for such 

offense, from becoming or continuing as 

an institution-affiliated party (IAP), 

owning or controlling, directly or 

indirectly an insured depository 

institution (insured institution), or 

otherwise participating, directly or 

indirectly, in the conduct of the affairs 

of the insured institution. In addition, 

the law forbids an insured institution 

from permitting such a person to engage 

in any conduct or to continue any 

relationship prohibited by Section 19. 

Section 19 provides a criminal penalty 

for the knowing violation of its 

provisions of a fine of not more than 

$1,000,000 for each day of the violation 

or imprisonment for not more than five 

years. The FDIC’s current SOP was 

published in December 1998 (63 FR 

66177) to provide the public with 

guidance relating to Section 19, and the 

application thereof. 

II. Revisions to the Statement of Policy 

Based on Comments Received 

Following the close of the comment 

period the FDIC reviewed the comments 

received. All of the comments were, in 

general, supportive of the changes the 

FDIC had proposed but several of the 

comments suggested additional changes, 

modifications or clarifications of both 

existing provisions of the statement of 

policy and in response to the changes 


amozie on DSK3GDR082PROD with NOTICES1
38144 Federal Register / Vol. 83, No. 150 / Friday, August 3, 2018 / Notices 

on which the FDIC had requested 

comment. Having reviewed the 

comments the FDIC has accepted some 

of those comments, in whole or in part, 

as well as making some additional 

technical revisions to the SOP. 

III. Review of Comments Received 

The FDIC received seven comment 

letters or emails on its proposed 

revision of the SOP. The comments 

came from a number of different 

entities—one from an individual; one on 

behalf of an insured depository 

institution; two from different 

depository institution trade groups; two 

from different components of an 

umbrella advocacy group; and one from 

an organization that provides legal aid 

assistance. Of the seven commenters, 

three (from the individual and the two 

depository institution trade groups) 

were supportive of the proposed 

changes in the SOP and did not suggest 

any additional changes or 

modifications. While the remaining four 

commenters were, in general, 

supportive of the FDIC’s proposed 

changes, they suggested additional new 

changes, clarifications or modifications, 

which are discussed below. 

Conditional Offers of Employment 

Two comments addressed proposed 

changes to the SOP that would allow 

institutions to make conditional offers 

of employment prior to conducting a 

background check into the applicant’s 

prior arrests, convictions or entries into 

a pre-trial diversion or similar program 

(program entry). Both comments 

suggested that the FDIC actually instruct 

all FDIC-insured institutions to adopt 

the practice of making such conditional 

offers of employment. The FDIC 

declines to make this change for a 

number of reasons. 

The FDIC’s statutory authority under 

Section 19 is focused upon the 

requirement that the FDIC provide prior 

written consent before an individual 

covered by the statute may participate 

in the affairs of an insured depository 

institution. It does not grant the FDIC 

any rule-making authority to impose 

conditions or requirements on an 

insured depository institution other 

than to note that an institution may face 

a criminal penalty for acting in violation 

of the statute. The FDIC takes the 

position that insured depository 

institutions should be free to develop 

the policies and procedures best suited 

to them to ensure compliance with 

Section 19. In addition, the FDIC does 

not have direct supervisory authority 

over insured depository institutions that 

are subject to the supervisory authority 

of other Federal banking agencies 

(FBAs). Therefore, it is within the 

supervisory authority of the other FBAs 

to determine what is satisfactory to 

them in reviewing the policies and 

procedures their respective supervised 

institutions adopt to ensure compliance 

with Section 19. Insofar as the SOP 

constitutes policy guidance rather than 

an enforceable regulation, it is an 

inappropriate means for the FDIC to 

impose such a mandatory requirement 

even on its own supervised insured 

depository institutions. 

Expungements 

Three comments opined that the 

language proposed by the FDIC 

regarding expungements should be 

clarified or expanded. One suggested 

that the FDIC accept all expungements 

as complete expungements regardless of 

whether the records could be accessible 

for any other purpose. In considering 

the comments, the FDIC agrees that the 

proposed language in the SOP should be 

altered to clarify when an expungement 

is considered complete for Section 19 

purposes, while providing the FDIC’s 

rationale for allowing at least some 

expungements to remove a conviction or 

program entry from Section 19’s 

coverage. 

The FDIC has determined that 

expungements that reflect the complete 

destruction of the records and the 

jurisdiction’s goal to completely remove 

the conviction or program entry from a 

person’s past, justified the interpretation 

that the intent was to, as a matter of law 

and fact, place the person in the 

position as if conviction or program 

entry had never happened. However, in 

cases where the FDIC has considered 

whether an expungement was complete 

it found that in the majority of cases 

either the records were still in existence 

or the expungement was limited and 

allowed the use of the conviction or 

program entry records in subsequent 

matters including, but not limited to, 

questions associated with character and 

fitness depending on the jurisdiction’s 

public policies. 

After reviewing the comments the 

FDIC agrees that the language in the 

proposed changes to the SOP should be 

altered to clarify and more carefully 

focus on the type of expungement that 

it believes should exclude a conviction 

or program entry from the bar in Section 

19. First, as noted in the proposed 

notice and comment, the existence of 

records of convictions and program 

entries may be found in multiple places 

even if the originals are destroyed in a 

timely manner. Second, in considering 

the issue of whether the expungement is 

one that should be outside the scope of 

Section 19 the more fundamental 

question is whether the jurisdiction, by 

statute or court order, intended that the 

conviction or program entry be no 

longer in existence and, essentially, 

gone from the individual’s history. 

Preservation in an expungement statute 

or in a court order of the ability to 

subsequently use the conviction or 

program entry for another purpose, 

consistent with the jurisdiction’s public 

policy, means that the conviction or 

program entry has not been completely 

expunged. In such a circumstance, the 

FDIC will also review the conviction or 

program entry to determine if it should 

grant consent for the person to work in, 

or otherwise participate in the affairs of, 

an insured depository institution. The 

FDIC is amending the language in the 

SOP to read: 

If an order of expungement has been issued 

in regard to a conviction or program entry 

and is intended by the language in the order 

itself, or in the legislative provisions under 

which the order was issued, to be a complete 

expungement, then the jurisdiction, either in 

the order or the underlying legislative 

provisions, 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. 

The failure to destroy or seal the records will 

not prevent the expungement from being 

considered complete for the purposes of 

Section 19 in such a case. 

One comment suggested that 

successful completion of a pretrial 

diversion or similar program should be 

considered a complete expungement. 

The FDIC declines to make the 

suggested change for two reasons. First, 

the statutory language in Section 19 

applies in the same manner to 

convictions and program entries. 

Second, consistent with the treatment of 

expungements discussed, in the context 

of a conviction, to the extent a program 

entry is still subject to subsequent use 

by the jurisdiction where it was entered, 

then the FDIC will treat it the same as 

a conviction. One comment also 

suggested that sealed records should be 

excluded from the coverage of Section 

19. If the order sealing the records is one 

that would be the same as an order of 

complete expungement as set out in the 

SOP, then the FDIC will treat it in the 

same manner as a complete order of 

expungement. 

Conviction of Record 

Two comments focused on the 

proposed language in the SOP that 

states that convictions that are set aside 

or reversed after sentencing 

requirements have been completed 

remain convictions of record for 

purposes of Section 19. As noted by one 

of the comments, there are jurisdictions 


amozie on DSK3GDR082PROD with NOTICES1
Federal Register / Vol. 83, No. 150 / Friday, August 3, 2018 / Notices 38145 

in which after an individual has 

completed all of the sentencing 

requirements, the court has set aside the 

conviction based upon the completion 

of sentencing alone. The FDIC is aware 

that such jurisdictions have used the 

foregoing process to create what is 

essentially a ‘‘pretrial diversion or 

similar program.’’ In contrast, courts 

may set aside or reverse a conviction on 

appeal based upon a procedural or 

substantive error in the case. The vast 

majority of such cases will have a 

finding that addresses the error. 

The FDIC believes that where a 

conviction has been set aside because of 

the completion of a sentence, such a 

procedure is, in essence, a pretrial 

diversion or similar program, covered 

by Section 19. On the other hand, in 

cases in which there has been a 

procedural or substantive error that 

results in the conviction being set aside, 

the FDIC will not consider such 

convictions as a conviction of record for 

Section 19 purposes. In order to clarify 

the different treatment, the FDIC has 

adjusted the language in the SOP to 

clearly recognize that convictions set 

aside or reversed on appeal that are 

based on a finding that there has been 

a procedural or substantive error should 

not be considered convictions for the 

purposes of Section 19. 

Three of the comments focused on the 

state of New York’s adjournments in 

contemplation of dismissal (ACD) 

program (and in general seemingly to 

other similar programs), and 

recommended that the FDIC explicitly 

find that ACDs are not pretrial diversion 

or similar programs. As the comments 

recognize, however, one or more of the 

elements of rehabilitation addressed in 

the SOP as a factor for determining 

whether something is a pretrial 

diversion or similar program can apply 

to ACDs. Therefore, it is difficult to treat 

ACDs as anything other than a pretrial 

diversion or similar program. To the 

extent that the FDIC may have 

previously issued a letter determining 

that a particular individual who had an 

ACD was not covered by Section 19, the 

FDIC will not retroactively change its 

response in that case. 

De Miminis Exception 

Three of the comments focused on 

various aspects of the FDIC’s de minimis 

exception to filing, as it currently exists, 

or as proposed, and sought additional 

clarifications or modifications. One 

comment criticized the definition of 

‘‘jail time’’ in the proposed SOP, and 

suggested that the definition should 

remain the traditional definition of that 

term, i.e., actual time in jail. The 

existing SOP does not include any 

definition of jail time; however, the 

FDIC, based on its experience, is aware 

that jurisdictions apply various 

approaches to confinement based upon 

the nature and circumstances of the 

crime. Therefore, the FDIC seeks to 

provide a definition of the term ‘‘jail 

time’’ that is consistent with its efforts 

to apply the de minimis exception to 

lesser crimes. In reviewing the 

comments, however, the FDIC 

determined that the definition, as 

proposed, may be too broad given the 

interpretations reflected in the 

comments, which suggest that such 

items as parole may appear to be 

included. Therefore, the FDIC has 

adjusted the language in the SOP to 

define ‘‘jail time’’ as ‘‘the confinement 

to a specific facility or building on a 

continuous basis . . .’’ The definition is 

not intended to include those on 

probation or parole who may be 

restricted to a particular jurisdiction, or 

who must report occasionally to an 

individual or to a specified location. 

Another comment sought to change 

the unlimited time to which Section 

19’s coverage applies to criminal 

convictions or program entries to only 

those occurring within the prior 7 to 10 

years. Because the statutory language 

contains no limits on the period of time 

to which its prohibitions apply, the 

FDIC does not have the authority to 

change that time. In fact, the FDIC notes 

that there is a ten-year restriction on its 

ability to grant consent for certain 

serious crimes that requires the FDIC to 

obtain the sentencing court’s permission 

prior to its granting consent to permit a 

covered individual to participate in the 

affairs of an insured depository 

institution. Further, while the passage of 

time is a factor in the FDIC’s review of 

an application under Section 19, it is 

not, by itself, dispositive. 

One comment proposed that the SOP 

should contain a short list of crimes that 

would never require an application or 

that would be included within a de 

minimis exception to filing once a 

limited period of time has passed. The 

FDIC believes that a sufficient period of 

time should pass after a crime has 

occurred to allow the FDIC to determine 

if the individual has engaged in similar 

behaviors, which would potentially put 

an insured financial institution at risk. 

The FDIC considers this to be an 

important element of the de minimis 

exception to filing and is not prepared 

to eliminate the time requirement. 

One comment appears to suggest that 

all crimes committed by a person under 

the age of 21 should be covered by the 

de minimis exception to filing, provided 

that there is at least 30 months between 

the conviction and the potential 

employment. Again, the FDIC has 

determined that if there is a pattern of 

covered crimes before the age of 21, it 

should look at an individual’s 

application to determine the degree of 

risk to any insured depository 

institutions as proposed in the SOP. 

However, one aspect of the comment 

addressed the use of false, fake or 

altered forms of identification. Although 

the FDIC is not prepared to extend de 

minimis as far as the comment 

suggested, the FDIC has decided that the 

use of a fake, false or altered form of 

identification by a person under the 

legal age to obtain or purchase alcohol, 

or to enter a premises where alcohol is 

served but for which an age appropriate 

identification is required, is an 

acceptable category for the use of the de 

minimis exception to filing, provided 

that the person has no other conviction 

or program entry for a crime covered 

under Section 19. 

Additionally, one comment suggested 

that the proposed de minimis exception 

to filing for crimes or program entries 

that occurred when the individual was 

21 or younger be expanded to include 

cases in which the actions that led to 

the conviction or program entry 

occurred before age 21, but the 

conviction or program entry did not 

occur until after the age of 21. The FDIC 

has determined that this change is 

consistent with the reasons for this 

exception to the filing requirements and 

has included a specific exception to 

include such cases. 

Two comments focused on the 

requirement that drug crimes that do not 

fit the de minimis exception to filing 

should not be covered by Section 19. 

The FDIC maintains that an application 

is required for it to determine the nature 

of the offense and elements of the crime, 

and therefore it will continue the 

current requirement that an application 

be filed. Alternatively, it was suggested 

that the FDIC create a specific category 

of de minimis exceptions to filing to 

cover minor drug offenses. The FDIC in 

its proposed changes has already noted 

that, if the drug crime fits the de 

minimis exception to filing, then no 

application is required, and no separate 

de minimis category for drug offenses is 

necessary. 

One other issue of note is that, after 

careful review, the FDIC has recognized 

that all of the categories falling within 

the de minimis exceptions to filing 

should be consistent, and that no 

category should be included in the 

exception if the covered crime was 

committed against an insured 

depository institution or insured credit 

union. This requirement is contained in 

the general de minimis exception to 


amozie on DSK3GDR082PROD with NOTICES1
38146 Federal Register / Vol. 83, No. 150 / Friday, August 3, 2018 / Notices 

filing, as well as the exception 

pertaining to insufficient funds checks 

and the exception regarding those under 

21. Therefore, the FDIC is making clear 

that the proposed small theft exception 

is treated similarly and is subject to the 

same restriction. As with any crime that 

does not fit a de minimis category, an 

application can still be filed. 

Application Processing 

Two of the comments raised a number 

of suggestions related to the processing 

of applications. One suggestion was to 

clarify the process for job applicants on 

the FDIC website. Similarly, two other 

comments also focused on the FDIC’s 

website and application, suggesting that 

both should explain the process and 

relevant law in a plainer, more 

accessible language. Although these 

suggestions are beyond the language of 

the proposed changes to the SOP, the 

FDIC will update its website and 

application form and will develop a 

brochure that will provide guidance to 

the public on the application process. 

Another suggestion was to require 

financial institutions to provide notice 

to job applicants if the institution will 

not file a waiver on the person’s behalf, 

and to make the forms easily available 

to the applicant. Such a requirement is 

beyond the reach of the SOP insofar as 

it would require a formal rulemaking. A 

third suggested change was to shorten 

the period of time for the processing of 

an application by permitting the FDIC to 

verify documents in the applicant’s 

possession. The FDIC already relies on 

the verification of documents provided 

by the applicant, but must also 

undertake an independent review to 

determine that the information is 

complete and accurate. A fourth 

suggestion was to include a link in the 

SOP to the application form. The FDIC 

agrees that this change is related to the 

SOP and has added a link in the final 

version. 

Two comments relate to the 

evaluation of applications by the FDIC. 

Essentially these comments focused on 

instructions to application evaluators as 

to how to weigh and apply the factors 

set out in the SOP and as set out in the 

FDIC’s regulations (12 CFR 308.157). 

The suggestions were that the FDIC 

should provide instructions on how to 

evaluate the age of the applicant at the 

time of the conviction, the passage of 

time since the conviction, and the 

relevance of prior offenses. Although 

these are just some of the factors used 

by the FDIC to evaluate an application, 

the FDIC does not agree that further 

instruction to application reviewers is 

necessary or appropriate. The weight 

given to the various factors is often 

based on the totality of the 

circumstances and the factors are often 

interwoven in their application to a 

specific case. Each application 

undergoes review in the region by both 

experienced safety and soundness 

examiners and attorneys in the legal 

division, as well as several layers of 

management review, before a final 

determination is made. In the case of 

individuals seeking a waiver of the 

institution filings requirement, in 

addition to the review at the regional 

office, the application undergoes a 

similar review in the Washington Office. 

Further, such instruction would be one 

of internal policy and would not come 

within the purpose or intent of the SOP. 

One comment suggested that the FDIC 

instruct individuals who are filing for 

themselves and requesting a waiver of 

the institution filing requirement to fill 

out the application form and include 

information identifying the position 

sought by the applicant. The FDIC does 

not agree that this would be appropriate 

for such applications which, if 

approved, result in blanket approval to 

participate in banking. One comment 

also suggested that the FDIC process 

applications in fewer than 60 days. 

While the FDIC does work to process 

applications quickly, the establishment 

of such a timeline would be a matter of 

internal controls and does not fall 

within the purpose or intent of the SOP. 

Technical and Clarifying Changes 

In addition to the foregoing, the FDIC, 

upon review of the proposed SOP, has 

made the following technical and 

clarifying changes. 

The FDIC has corrected an incorrect 

citation in Subsection A of the SOP that 

identifies the provisions of Section 19 

that apply to bank and savings and loan 

holding companies. The correct citation 

is to 12 U.S.C. 1829(d) and (e). Also, the 

FDIC believes that the example in 

Subsection A that describes Section 19 

as not applying to employees of bank 

and savings and loan holding 

companies is misleading, and the FDIC 

has simplified the example to focus on 

the circumstances in which Section 19 

may apply in the case of an insured 

depository institution. Therefore, that 

example has been adjusted to read ‘‘For 

example, in the context of the FDIC’s 

application of Section 19, it would 

apply to an insured depository 

institution’s holding company’s 

directors and officers to the extent that 

they have the power to define and direct 

the management or affairs of insured 

depository institution.’’ 

The FDIC also made a slight change 

in Subsection D(1) to remove the word 

‘‘covered’’ from the language in that 

subsection since it would appear to be 

conclusory, and its removal brings this 

factor in line with the language in the 

FDIC’s regulations (12 CFR 

308.157(a)(1)). 

Furthermore, the FDIC is adding 

language stating that Section 19 

applications submitted by depository 

institutions are to be filed with the FDIC 

Regional Office covering the state in 

which the institution’s home office is 

located. 

IV. Paperwork Reduction Act 

In accordance with section 3512 of 

the Paperwork Reduction Act of 1995, 

44 U.S.C. 3501 et seq., an agency may 

not conduct or sponsor, and a person is 

not required to respond to, a collection 

of information unless it displays a 

currently valid Office of Management 

and Budget (OMB) control number. 

These Modifications to the SOP for 

Section 19 of the FDI Act include 

clarification of reporting requirements 

in an existing FDIC information 

collection, entitled Application 

Pursuant to Section 19 of the Federal 

Deposit Insurance Act (3064–0018) that 

should result in a decrease in the 

number of applications filed. 

Specifically, the revised policy 

statement broadens the application of 

the de minimis exception to filing an 

application due to the minor nature of 

the offenses and the low risk that the 

covered party would pose to an insured 

institution based on the conviction or 

program entry. By modifying these 

provisions, the FDIC believes that there 

will be a reduction in the submission of 

applications where approval has been 

granted by virtue of the de minimis 

offenses exceptions to filing in the 

policy statement. In its last submission 

with OMB, the FDIC indicated that it 

will receive approximately 75 

applications per year. The FDIC 

estimates that the revised SOP would 

reduce the number of applications filed 

each year by approximately 28 percent 

bringing the number of applications 

each year down to approximately 54. 

This change in burden will be submitted 

to OMB as a non-significant, 

nonmaterial change to an existing 

information collection. The estimated 

new burden for the information 

collection is as follows: 

Title: ‘‘Application Pursuant to 

Section 19 of the Federal Deposit 

Insurance Act’’. 

Affected Public: Insured depository 

institutions and individuals. 

OMB Number: 3064–0018. 

Estimated Number of Respondents: 

54. 

Frequency of Response: On occasion. 

Average Time per Response: 16 hours. 


amozie on DSK3GDR082PROD with NOTICES1
Federal Register / Vol. 83, No. 150 / Friday, August 3, 2018 / Notices 38147 

Estimated Annual Burden: 864 hours. 

V. Text of FDIC Statement of Policy for 

Section 19 of the FDI Act 

For the reasons set forth above, the 

entire text of the proposed FDIC 

Statement of Policy for Section 19 is 

stated as follows: 

FDIC Statement of Policy for Section 19 

of the FDI Act 

Section 19 of the Federal Deposit 

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

prohibits, without the prior written 

consent of the Federal Deposit 

Insurance Corporation (FDIC), a person 

convicted of any criminal offense 

involving dishonesty or breach of trust 

or money laundering (covered offenses), 

or who has agreed to enter into a pretrial 

diversion or similar program (program 

entry) in connection with a prosecution 

for such offense, from becoming or 

continuing as an institution-affiliated 

party, owning or controlling, directly or 

indirectly an insured depository 

institution (insured institution), or 

otherwise participating, directly or 

indirectly, in the conduct of the affairs 

of the insured institution. In addition, 

the law forbids an insured institution 

from permitting such a person to engage 

in any conduct or to continue any 

relationship prohibited by Section 19. It 

imposes a ten-year ban against the 

FDIC’s consent for persons convicted of 

certain crimes enumerated in Title 18 of 

the United States Code, absent a motion 

by the FDIC and court approval. 

Section 19 imposes a duty upon an 

insured institution to make a reasonable 

inquiry regarding an applicant’s history, 

which consists of taking steps 

appropriate under the circumstances, 

consistent with applicable law, to avoid 

hiring or permitting participation in its 

affairs by a person who has a conviction 

or program entry for a covered offense. 

The FDIC believes that at a minimum, 

each insured institution should 

establish a screening process that 

provides the insured institution with 

information concerning any convictions 

or program entry pertaining to a job 

applicant. This would include, for 

example, the completion of a written 

employment application that requires a 

listing of all convictions and program 

entries. In the alternative, for the 

purposes of Section 19, an FDICsupervised institution may extend a 

conditional offer of employment 

contingent on the completion of a 

background check satisfactory to the 

institution and to determine if the 

applicant is barred by Section 19. In 

such a case, the job applicant may not 

work for or be employed by the insured 

institution until such time that the 

applicant is determined to not be barred 

under Section 19. The FDIC will look to 

the circumstances of each situation for 

FDIC-supervised institutions to 

determine whether the inquiry is 

reasonable. 

Section 19 applies, by operation of 

law, as a statutory bar to participation 

absent the written consent of the FDIC. 

Upon notice of a conviction or program 

entry, an application must be filed 

seeking the FDIC’s consent prior to the 

person’s participation. The purpose of 

an application is to provide the 

applicant an opportunity to demonstrate 

that, notwithstanding the bar, a person 

is fit to participate in the conduct of the 

affairs of an insured institution 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. 

A. Scope of Section 19 

Section 19 covers institution-affiliated 

parties, as defined by 12 U.S.C. 1813(u) 

and others who are participants in the 

conduct of the affairs of an insured 

institution. This Statement of Policy 

applies only to insured institutions, 

their institution-affiliated parties, and 

those participating in the affairs of an 

insured depository institution. 

Therefore, all employees of an insured 

institution fall within the scope of 

Section 19. In addition, those deemed to 

be 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 who are not 

institution-affiliated parties are covered 

depends upon their degree of influence 

or control over the management or 

affairs of an insured institution. For 

example, in the context of the FDIC’s 

application of Section 19, it would 

apply to an insured depository 

institution’s holding company’s 

directors and officers to the extent that 

they have the power to define and direct 

the management or affairs of insured 

depository institution. Similarly, 

directors and officers of affiliates, 

subsidiaries or joint ventures of an 

insured institution or its holding 

company will be covered if they 

participate in the affairs of the insured 

institution or are in a position to 

influence or control the management or 

affairs of the insured institution. 

Typically, an independent contractor 

does not have a relationship with the 

insured institution other than the 

activity for which the insured 

institution has contracted. In terms of 

participation, an independent contractor 

who influences or controls the 

management or affairs of the insured 

institution would be covered by Section 

19. Further, ‘‘person’’ for purposes of 

Section 19 means an individual, and 

does not include a corporation, firm or 

other business entity. 

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 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) & (e). 

Section 19 specifically prohibits a 

person subject to its coverage from 

owning or controlling an insured 

institution. For purposes of defining 

‘‘control’’ and ‘‘ownership’’ under 

Section 19, the FDIC has adopted the 

definition of ‘‘control’’ set forth in the 

Change in Bank Control Act (12 U.S.C. 

1817(j)(8)(B)). A person will be deemed 

to exercise ‘‘control’’ if that person has 

the power to vote 25 percent or more of 

the voting shares of an insured 

institution (or 10 percent of the voting 

shares if no other person has more 

shares) or the ability to direct the 

management or policies of the insured 

institution. Under the same standards, 

person will be deemed to ‘‘own’’ an 

insured institution if that person owns 

25 percent or more of the insured 

institution’s voting stock, or 10 percent 

of the voting shares if no other person 

owns more. These standards 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 will be 

required to divest their control or 

ownership of shares above the foregoing 

limits. 

B. Standards for Determining Whether 

an Application Is Required 

Except as indicated in paragraph (5), 

below, an application must be filed 

where there is present a conviction by 

a court of competent jurisdiction for a 

covered offense by any adult or minor 

treated as an adult, or where such 

person has entered a pretrial diversion 

or similar program regarding that 

offense. Before an application is 

considered by the FDIC, all of the 

sentencing requirements associated with 

a conviction or conditions imposed by 

the pretrial diversion, or similar 

program, 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’s application 


amozie on DSK3GDR082PROD with NOTICES1
38148 Federal Register / Vol. 83, No. 150 / Friday, August 3, 2018 / Notices 

forms as well as additional information 

concerning Section 19 can be accessed 

at the FDIC website. The link is: https:// 

www.fdic.gov/regulations/laws/forms/ 

section19.html. 

(1) Convictions 

There must be present a conviction of 

record. Section 19 does not cover 

arrests, pending cases not brought to 

trial, acquittals, or any conviction that 

has been reversed on appeal. 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. A conviction that has been 

completely expunged is not considered 

a conviction of record and will not 

require an application. If an order of 

expungement has been issued in regard 

to a conviction or program entry and is 

intended by the language in the order 

itself, or in the legislative provisions 

under which the order was issued, to be 

a complete expungement, then the 

jurisdiction, either in the order or the 

underlying legislative provisions, 

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. The failure to destroy or seal 

the records will not prevent the 

expungement from being considered 

complete for the purposes of Section 19 

in such a case. Expungements of pretrial 

diversion or similar program entries will 

be treated the same as those for 

convictions. Convictions that are set 

aside or reversed after the applicant has 

completed sentencing will be treated 

consistent with pretrial diversions or 

similar programs unless the court 

records reflect that the underlying 

conviction was set aside based on a 

finding on the merits that such 

conviction was wrongful. 

(2) Pretrial Diversion or Similar Program 

Program entry, whether formal or 

informal, is characterized by a 

suspension or eventual dismissal of 

charges or criminal prosecution often 

upon agreement by the accused to 

treatment, rehabilitation, restitution, or 

other noncriminal or non-punitive 

alternatives. Whether a program 

constitutes a pretrial diversion or 

similar program is determined by 

relevant Federal, state or local law, and, 

if not so designated under applicable 

law then the determination of whether 

it is a pretrial diversion or similar 

program 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. 

(3) Dishonesty or Breach of Trust 

The conviction or program entry must 

be for a criminal offense involving 

dishonesty, breach of trust or money 

laundering. ‘‘Dishonesty’’ means 

directly or indirectly to cheat or 

defraud; to cheat or defraud for 

monetary gain or its equivalent; or 

wrongfully to take property belonging to 

another in violation of any criminal 

statute. Dishonesty includes acts 

involving want of integrity, lack of 

probity, or a disposition to distort, 

cheat, or act deceitfully or fraudulently, 

and may include crimes which Federal, 

state or local laws define as dishonest. 

‘‘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. 

Whether a crime involves dishonesty 

or breach of trust will be determined 

from the statutory elements of the crime 

itself. All convictions or program entries 

for offenses concerning the illegal 

manufacture, sale, distribution of, or 

trafficking in controlled substances shall 

require an application unless they fall 

within the provisions for de minimis 

offenses set out in (5) below. 

(4) Youthful Offender Adjudgments 

An adjudgment by a court against a 

person as a ‘‘youthful offender’’ under 

any youth offender law, or any 

adjudgment as a ‘‘juvenile delinquent’’ 

by any court having jurisdiction over 

minors as defined by state law does not 

require an application. Such 

adjudications are not considered 

convictions for criminal offenses. Such 

adjudications do not constitute a matter 

covered under Section 19 and is not an 

offense or program entry for 

determining the applicability of the de 

minimis offenses exception to the filing 

of an application. 

(5) De minimis Offenses 

(a) In General 

Approval is automatically granted and 

an application will not be required 

where the covered offense is considered 

de minimis, because it meets all of the 

following criteria: 

• There is only one conviction or 

program entry of record for a covered 

offense; 

• The offense was punishable by 

imprisonment for a term of one year or 

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

the individual served three (3) days or 

less of jail time. The FDIC considers jail 

time to include any significant restraint 

on an individual’s freedom of 

movement which includes, as part of 

the restriction, confinement to a specific 

facility or building on a continuous 

basis where the person may leave 

temporarily only to perform specific 

functions or during specified times 

periods or both. The definition is not 

intended to include those on probation 

or parole who may be restricted to a 

particular jurisdiction, or who must 

report occasionally to an individual or 

to a specified location. 

• The conviction or program was 

entered at least five years prior to the 

date an application would otherwise be 

required; and 

• The offense did not involve an 

insured depository institution or 

insured credit union. 

(b) Additional Applications of the De 

Minimis Offenses Exception to Filing 

Age at time of covered offense: 

• If the actions that resulted in a 

covered conviction or program entry of 

record all occur when the individual 

was 21 years of age or younger, then the 

subsequent conviction or program entry, 

that otherwise meets the general de 

minimis criteria in (a) above, will be 

considered de minimis if the conviction 

or program entry was entered at least 30 

months prior to the date an application 

would otherwise be required and all 

sentencing or program requirements 

have been met. 

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 a de minimis offense under 

this provision and will not be 

considered as having involved an 

insured depository institution if the 

following applies: 

• There is no other conviction or 

program entry subject to Section 19, and 

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 $1,000 or 

less; and 

• 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). 

Convictions or program entries for 

small-dollar, simple theft: 

• A conviction or program entry 

based on a simple theft of goods, 

services and/or currency (or other 

monetary instrument) where the 

aggregate value of the currency, goods 

and/or services taken was $500 or less 

at the time of conviction or program 


amozie on DSK3GDR082PROD with NOTICES1
Federal Register / Vol. 83, No. 150 / Friday, August 3, 2018 / Notices 38149 

entry, where the person has no other 

conviction or program entry under 

Section 19, where it has been five years 

since the conviction or program entry 

(30 months in the case of a person 21 

or younger as described above) and 

which does not involve an insured 

financial institution or insured credit 

union is considered de minimis. Simple 

theft excludes burglary, forgery, robbery, 

identity theft, and fraud. 

Convictions or program entries for the 

use of a fake, false or altered 

identification card: 

The use of a fake, false or altered 

identification card used by person 

under the legal age for the purpose of 

obtaining or purchasing alcohol, or used 

for the purpose of entering a premise 

where alcohol is served but for which 

age appropriate identification is 

required, provided that there is no other 

conviction or program entry for a 

covered offense, will be considered de 

minimis. 

Any person who meets the criteria 

under (5) above shall be covered by a 

fidelity bond to the same extent as 

others in similar positions, and shall 

disclose the presence of the conviction 

or program entry to all insured 

institutions in the affairs of which he or 

she intends to participate. 

Further, 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 to filing set out in 5 above. 

C. Procedures 

When an application is required, 

forms and instructions should be 

obtained from, and the application filed 

with, the appropriate FDIC Regional 

Director. The application must be filed 

by an insured institution on behalf of a 

person (bank-sponsored) unless the 

FDIC grants a waiver of that requirement 

(individual waiver). Such waivers will 

be considered on a case-by-case basis 

where substantial good cause for 

granting a waiver is shown. The 

appropriate Regional Office for a banksponsored application is the office 

covering the state where the bank’s 

home office is located. The appropriate 

Regional Office for an individual filing 

for a waiver of the institution filing 

requirement is the office covering the 

state where the person resides. 

D. Evaluation of Section 19 

Applications 

The essential criteria in assessing an 

application are whether the person has 

demonstrated his or her fitness to 

participate in the conduct of the affairs 

of an insured institution, and whether 

the affiliation, ownership, control or 

participation by the person in the 

conduct of the affairs of the insured 

institution may constitute a threat to the 

safety and soundness of the insured 

institution or the interests of its 

depositors or threaten to impair public 

confidence in the insured institution. In 

determining the degree of risk, the FDIC 

will consider, in conjunction with the 

factors set out in 12 CFR 308.157: 

(1) Whether the conviction or program 

entry and the specific nature and 

circumstances of the offense are a 

criminal offense under Section 19; 

(2) Whether the participation directly 

or indirectly by the person in any 

manner in the conduct of the affairs of 

the insured institution constitutes a 

threat to the safety and soundness of the 

insured institution or the interests of its 

depositors or threatens to impair public 

confidence in the insured institution; 

(3) Evidence of rehabilitation 

including the person’s reputation since 

the conviction or program entry, the 

person’s age at the time of conviction or 

program entry, and the time that has 

elapsed since the conviction or program 

entry; 

(4) The position to be held or the level 

of participation by the person at an 

insured institution; 

(5) The amount of influence and 

control the person will be able to 

exercise over the management or affairs 

of an insured institution; 

(6) The ability of management of the 

insured institution to supervise and 

control the person’s activities; 

(7) The level of ownership the person 

will have of the insured institution; 

(8) The applicability of the insured 

institution’s fidelity bond coverage to 

the person; and 

(9) Any additional factors in the 

specific case that appear relevant 

including but not limited to the opinion 

or position of the primary Federal and/ 

or state regulator. 

The foregoing criteria 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 

under 12 U.S.C. 1829(a)(2) for certain 

Federal offenses, prior to its expiration 

date. 

Some applications can be approved 

without an extensive review because the 

person will not be in a position to 

constitute any substantial risk to the 

safety and soundness of the insured 

institution. Persons who will occupy 

clerical, maintenance, service, or purely 

administrative positions, generally fall 

into this category. A more detailed 

analysis will be performed in the case 

of persons who will be in a position to 

influence or control the management or 

affairs of the insured institution. All 

approvals and orders will be subject to 

the condition that the person shall be 

covered by a fidelity bond to the same 

extent as others in similar positions. In 

cases in which a waiver of the 

institution filing requirement has been 

granted to an individual, approval of the 

application will also be conditioned 

upon that person disclosing the 

presence of the conviction(s) or program 

entry(ies) to all insured institutions in 

the affairs of which he or she wishes to 

participate. When deemed appropriate, 

bank sponsored applications are to 

allow the person to work in a specific 

job at a specific bank and may also be 

subject to the condition that the prior 

consent of the FDIC will be required for 

any proposed significant changes in the 

person’s duties and/or responsibilities. 

In the case of bank applications such 

proposed changes may, in the discretion 

of the Regional Director, require a new 

application. In situations in which an 

approval has been granted for a person 

to participate in the affairs of a 

particular insured institution and who 

subsequently seeks to participate at 

another insured depository institution, 

another application must be submitted. 

By order of the Board of Directors, 

July 19, 2018. 

Dated at Washington, DC, on July 19, 2018. 

By order of the Board of Directors. 

Valerie Best, 

Assistant Executive Secretary. 

[FR Doc. 2018–16634 Filed 8–2–18; 8:45 am] 

BILLING CODE 6714–01–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Food and Drug Administration 

[Docket No. FDA–2012–N–1093] 

Agency Information Collection 

Activities; Proposed Collection; 

Comment Request; Food Additive 

Petitions and Investigational Food 

Additive Exemptions 

AGENCY: Food and Drug Administration, 

HHS. 

ACTION: Notice. 

SUMMARY: The Food and Drug 

Administration (FDA or Agency) is 

announcing an opportunity for public 

comment on the proposed collection of 

certain information by the Agency. 

Under the Paperwork Reduction Act of 

1995 (PRA), Federal Agencies are 

required to publish notice in the 

Federal Register concerning each 

proposed collection of information, 


amozie on DSK3GDR082PROD with NOTICES1