Federal Register / Vol. 83, No. 5 / Monday, January 8, 2018 / Notices 807 

send the information related to this 

environmental review to all individuals, 

organizations, and government entities 

interested in and/or potentially affected 

by the proposed project. 

If we publish and distribute the EA, 

copies of the EA will be sent to the 

environmental mailing list for public 

review and comment. If you would 

prefer to receive a paper copy of the 

document instead of the CD version or 

would like to remove your name from 

the mailing list, please return the 

attached Information Request (appendix 

2). 

Becoming an Intervenor 

In addition to involvement in the EA 

scoping process, you may want to 

become an ‘‘intervenor’’ which is an 

official party to the Commission’s 

proceeding. Intervenors play a more 

formal role in the process and are able 

to file briefs, appear at hearings, and be 

heard by the courts if they choose to 

appeal the Commission’s final ruling. 

An intervenor formally participates in 

the proceeding by filing a request to 

intervene. Instructions for becoming an 

intervenor are in the Document-less 

Intervention Guide under the e-filing 

link on the Commission’s website. 

Motions to intervene are more fully 

described at http://www.ferc.gov/ 

resources/guides/how-to/intervene.asp. 

Additional Information 

Additional information about the 

project is available from the 

Commission’s Office of External Affairs, 

at (866) 208–FERC, or on the FERC 

website at www.ferc.gov using the 

eLibrary link. Click on the eLibrary link, 

click on General Search and enter the 

docket number, excluding the last three 

digits in the Docket Number field (i.e., 

CP18–12–000). Be sure you have 

selected an appropriate date range. For 

assistance, please contact FERC Online 

Support at FercOnlineSupport@ferc.gov 

or toll free at (866) 208–3676, or for 

TTY, contact (202) 502–8659. The 

eLibrary link also provides access to the 

texts of formal documents issued by the 

Commission, such as orders, notices, 

and rulemakings. 

In addition, the Commission offers a 

free service called eSubscription which 

allows you to keep track of all formal 

issuances and submittals in specific 

dockets. This can reduce the amount of 

time you spend researching proceedings 

by automatically providing you with 

notification of these filings, document 

summaries, and direct links to the 

documents. Go to www.ferc.gov/docsfiling/esubscription.asp. 

Finally, public sessions or site visits 

will be posted on the Commission’s 

calendar located at www.ferc.gov/ 

EventCalendar/EventsList.aspx along 

with other related information. 

Dated: January 2, 2018. 

Kimberly D. Bose, 

Secretary. 

[FR Doc. 2018–00089 Filed 1–5–18; 8:45 am] 

BILLING CODE 6717–01–P 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

Proposed Statement of Policy for 

Participation in the Conduct of the 

Affairs of an Insured Depository 

Institution by Persons Who Have Been 

Convicted or Have Entered a Pretrial 

Diversion or Similar Program for 

Certain Offenses Pursuant to Section 

19 of the Federal Deposit Insurance 

Act 

AGENCY: Federal Deposit Insurance 

Corporation (FDIC). 

ACTION: Notice. 

SUMMARY: The FDIC seeks to update its 

Statement of Policy (SOP), which is 

issued pursuant to Section 19 of the 

Federal Deposit Insurance Act (FDI Act) 

(Section 19). Section 19 prohibits, 

without the prior written consent of the 

FDIC, any person from participating in 

banking who has been 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 an offense. 

Based upon its experience with the 

application of the SOP since 1998, the 

FDIC is now proposing to revise and 

issue an updated SOP and rescind the 

current SOP, and is seeking comments 

on the proposed revisions by issuing 

this Federal Register Notice. Notably, in 

addition to minor format and technical 

changes, as well as clarifying changes, 

the FDIC is proposing to expand its 

current de minimis exception to 

encompass insufficient funds checks of 

aggregate moderate value; small dollar, 

simple theft; and isolated, minor 

offenses committed by young adults. 

These carefully measured changes are 

intended to reduce regulatory burden by 

decreasing the number of covered 

offenses that will require an application, 

while ensuring that insured institutions 

are not subject to risk by convicted 

persons. 

DATES: Comments must be received on 

or before March 9, 2018. 

ADDRESSES: You may submit comments, 

identified by Section 19, by any of the 

following methods: 

• Agency website: https://

www.fdic.gov/regulations/laws/federal/. 

Follow instructions for submitting 

comments on the Agency website. 

• Email: Comments@fdic.gov. Include 

Section 19 on the subject line of the 

message. 

• Mail: Robert E. Feldman, Executive 

Secretary, Attention: Comments, Federal 

Deposit Insurance Corporation, 550 17th 

Street NW, Washington, DC 20429. 

• Hand Delivery: Comments may be 

hand delivered to the guard station at 

the rear of the 550 17th Street Building 

(located on F Street) on business days 

between 7:00 a.m. and 5:00 p.m. 

Public Inspection: All comments 

received will be posted without change 

to https://www.fdic.gov/regulations/ 

laws/federal/, including any personal 

information provided. Paper copies of 

public comments may be ordered from 

the FDIC Public Information Center, 

3501 North Fairfax Drive, Room E–1002, 

Arlington, VA 22226 by telephone at 

(877) 275–3342 or (703) 562–2200. 

FOR FURTHER INFORMATION CONTACT: 

Brian Zeller, Review Examiner, (319) 

395–7394 x4125, 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 FDI Act (12 U.S.C. 

1829) 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 an insured institution. Further, 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 

also imposes a ten-year ban against the 

FDIC’s consent for a person convicted of 

certain crimes enumerated in Title 18 of 

the United States Code, absent a motion 

by the FDIC and approval by the 

sentencing court. 

The FDIC issued, after notice and 

comment, the current SOP for Section 


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1 63 FR 66177 (Dec. 1, 1998). 

2The FDIC amended the SOP by including a 

footnote which noted the authority of the Federal 

Reserve Board and the OTS with regard to bank and 

savings and loan holding companies under Section 

19. 72 FR 73823 (Dec. 28, 2007) with correction 

issued at 73 FR 5270 (Jan. 29, 2008). In May of 

2011, the FDIC subsequently eliminated the 

footnote added in December of 2007 and 

incorporated the change directly into the text of the 

SOP. It also noted the coming transfer of authority 

under the Dodd-Frank Wall Street Reform and 

Consumer Protection Act, Public Law 111–202, 

§ 312 (2010) (Dodd-Frank) of savings and loan 

holding company jurisdiction to the Federal 

Reserve Board. 

19 of the FDI Act in December 1998 1 to 

provide the public with guidance 

relating to Section 19 and the FDIC’s 

application thereof. The 1998 SOP, 

among other things, instituted a set of 

criteria to provide for blanket approval 

of certain low-risk crimes, and for 

persons convicted of such de minimis 

crimes to forgo filing an application. 

A clarification to the SOP was issued 

in 2007, based on the 2006 amendment 

to Section 19 of the FDI Act by the 

Financial Services Regulatory Relief Act 

of 2006, Public Law 109–351, § 710, 

which modified Section 19 to include 

coverage of institution-affiliated parties 

(IAPs) participating in the affairs of 

bank holding companies, or savings and 

loan holding companies, and gave 

supervisory authority over such entities 

to the Board of Governors of the Federal 

Reserve System (Federal Reserve Board) 

and the Office of Thrift Supervision 

(OTS), respectively.2 The FDIC, in 2011, 

further clarified the SOP as to: (i) The 

applicability of Section 19 to IAPs of 

bank and savings and loan holding 

companies; (ii) the meaning of the term 

‘‘complete expungement;’’ and (iii) the 

factors for considering which 

convictions are considered de minimis. 

76 FR 28031 (May 13, 2011). In 

December of 2012, the FDIC modified 

the de minimis exception to filing by 

changing the amount of the maximum 

potential fine to qualify for de minimis 

treatment from $1,000 to $2,500. The 

modification also changed the limit on 

the amount of jail time needed to 

qualify for the de minimis exception 

from no jail time served to a maximum 

number of three days spent in jail. 77 FR 

74847 (Dec 18, 2012)). 

The FDIC is again proposing to amend 

the SOP as more fully set forth below, 

and seeks comments on a number of the 

proposed changes as set out forth 

Section II of this Federal Register 

Notice. The proposed changes are 

identified by the area of the SOP that is 

being considered for the revision. 

When final, the revised SOP, after 

consideration of any comments 

received, will be published in the 

Federal Register and on the FDIC’s 

website at www.fdic.gov. 

II. Revisions to the Statement of Policy 

The SOP will be revised in the 

following areas: 

1. Introductory Section 

In addition to some minor 

grammatical and format changes, the 

introductory section includes language 

that would allow an FDIC-supervised 

insured institution, in the case of a 

prospective employee or other person 

seeking to participate in the affairs of 

the institution, to make a conditional 

offer of employment to such a person, 

contingent on the completion of a 

background check satisfactory to the 

institution and a determination that the 

person is not barred by the provisions 

of Section 19. In such a case, the SOP 

makes clear that the prospective 

employee or person seeking to 

participate in the affairs of the 

institution will not be permitted to work 

at or participate in the affairs of, the 

institution unless the applicant’s 

background check is completed to the 

satisfaction of the institution and a 

determination is made that the 

applicant’s employment or participation 

at the institution is not barred by 

Section 19. Related to this change is an 

alteration of the language that limits the 

FDIC’s determination whether an 

institution’s inquiry as to whether 

Section 19 applies is reasonable. 

The FDIC is seeking to clarify its 

supervisory role regarding Section 19 

and seeks comments whether the use of 

a conditional offer of employment is a 

practice that is helpful to FDICsupervised institutions in their hiring 

practices and in their determination 

whether Section 19 bars an applicant 

from being employed at, or participating 

in, the affairs of the institution. 

2. A. Scope of Section 19 

In addition to some minor 

grammatical and format changes, the 

FDIC is proposing to provide a more 

consistent view of the application of 

Section 19 to certain persons who are 

not employees, officers, directors or 

shareholders of an insured institution. 

The definition of persons covered by 

Section 19 includes ‘‘institution 

affiliated parties’’ (a term which is 

defined in 12 U.S.C. 1813(u) and that is 

broader than employees, officers, 

directors or shareholders). The FDIC 

believes that the key concern under 

Section 19 is whether a person 

participates directly or indirectly in the 

affairs of an insured institution, 

regardless of their formal relationship 

with the institution. Therefore, the 

example currently set out in the SOP 

regarding employees of the insured 

institution’s holding company has been 

changed to be more consistent with the 

language of Section 19 and the 

definition contained in 12 U.S.C. 

1813(u), to focus on the ability of 

employees to define and direct the 

management or affairs of the insured 

institution. Similarly, the concept of 

participating in the affairs of an insured 

institution has been added to the 

example of directors and officers of 

affiliates, subsidiaries or joint ventures 

to more accurately reflect the concerns 

of Section 19. 

In addition, the inclusion of the 

definition of independent contractors, 

as contained in 12 U.S.C. 1813(u), has 

been deleted as unnecessary in 

determining whether Section 19 would 

apply at the time the person 

commenced work for, or participated in 

the affairs of, the insured institution. 

Further, the FDIC deleted language 

referencing the change that expanded 

Section 19’s application to bank and 

savings and loan holding companies. 

The language now simply notes that if 

a person also seeks to participate in the 

affairs of a bank or savings and loan 

holding company, they may be required 

to comply with any requirements of the 

Federal Reserve Board under 12 U.S.C. 

1829(d) & (e). 

The FDIC seeks comments on the 

consistency of the application of Section 

19 to officers and directors of bank and 

savings and loan holding companies, 

affiliates, subsidiaries and joint ventures 

as well as independent contractors. 

3. B. Standards for Determining 

Whether an Application is Required 

In addition to some minor 

grammatical and format changes, the 

FDIC is proposing a number of changes 

in this section of the SOP which 

pertains to determining whether an 

application under Section 19 is 

required. In the introductory paragraph 

of this section, the FDIC has included 

language addressing when an 

application will be considered by the 

FDIC which states that the FDIC will not 

consider an application unless all of the 

sentencing requirements associated with 

the conviction, or the conditions 

imposed by a pretrial diversion or 

similar program, are completed, and the 

court’s decision must be considered 

final under the procedures of the 

applicable jurisdiction. 

The FDIC seeks comments on whether 

the requirement that an applicant 

completes the sentencing requirements 

of a conviction, or the conditions 

imposed by a program entry, and that 

the case is considered final are relevant 


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factors to accepting an application 

under Section 19. 

In subsection B(1) ‘‘Convictions’’, the 

FDIC has added additional language to 

address questions regarding 

expungements. Previously, the FDIC 

simply stated that an expungement was 

considered a complete expungement 

only when the conviction of record was 

no longer accessible even by court 

order. However, it is clear that in recent 

times, the existence of such records 

cannot always be completely sealed or 

destroyed. If the expungement is 

intended to be complete under the law 

of the jurisdiction that issues the 

expungement, and the jurisdiction 

intends that no governmental body or 

court can use the prior conviction or 

program entry for any subsequent 

purpose, then the SOP makes clear that 

the fact that the records have not been 

timely destroyed, or that there exist 

copies of the records that are not 

covered by the order sealing or 

destroying them, will not prevent the 

expungement from being considered 

complete for the purposes of Section 19. 

The FDIC seeks comment on whether 

this interpretation would aid in 

determining if an expungement is 

complete. 

In this section, the FDIC also proposes 

language that treats certain convictions 

that have been set aside or reversed after 

the sentencing requirements have been 

completed the same as pretrial diversion 

or similar programs are treated, unless 

the reason that the conviction was set 

aside or reversed is based on a finding 

on the merits that the conviction was 

wrongful. 

Given the wide range or pretrial 

diversion and similar programs, the 

FDIC seeks comments on whether this 

language serves to properly include as 

pretrial diversion or similar programs, 

programs in jurisdictions that set aside 

or reverse convictions in a manner that, 

in effect, operates as a pretrial diversion 

or similar program. 

In subsection B(2) ‘‘Pretrial Diversion 

or Similar Program’’, the FDIC is also 

clarifying that whether a program 

constitutes a pretrial diversion or 

similar program is determined by 

relevant Federal, state or local law, and 

if that program is not so designated 

under applicable law, then the 

determination will be made by the FDIC 

on a case-by-case basis. 

The FDIC is seeking comments 

whether using some or all of the 

elements of a pretrial diversion program 

as cited in the SOP are appropriate for 

determining on a case-by-case basis 

whether a procedure is a similar 

program for the purposes of Section 19, 

and whether a determination that 

considers such elements is required 

under the statute. 

In subsection B(3) ‘‘Dishonesty or 

Breach of Trust’’, the FDIC proposes 

language that would allow certain minor 

drug convictions or program entries 

which currently require an application 

to fall within the de minimis exceptions 

to filing that are set out in subsection 

B(5). 

The FDIC seeks comments whether 

allowing the de minimis treatment for 

certain minor drug crimes would be 

beneficial. 

In subsection B(4) ‘‘Youthful Offender 

Adjudgments’’, the FDIC has added 

language confirming that an 

adjudication under ‘‘youthful offender’’ 

statutes is not covered by Section 19 at 

all and, therefore, is not a matter 

covered under the de minimis exception 

to the filing requirements. 

In subsection B(5) ‘‘De Minimis 

Offenses’’, the FDIC, based upon its 

experiences and past Section 19 

applications that it has reviewed since 

the current SOP was adopted in 1998, 

has decided to create several additional 

conditions under which the de minimis 

exception to filing may apply, and has 

restructured the pertinent subsection. 

The subsection has been divided into 

two parts. The first (a) ‘‘In General’’, 

restates the current version of the de 

minimis exception to filing, and moves 

the current provision related to bad or 

insufficient funds checks into the 

second part of the subsection. The FDIC 

has also made one modification to the 

provision addressing imprisonment 

and/or fines. In order to clarify what the 

FDIC intends by the concept of jail time, 

the FDIC is including explanatory 

language which indicates that a 

significant restraint on a person’s 

freedom of movement will be 

considered jail time. The intent is to 

address situations such as work release 

or other situations that allow a person’s 

release to perform a specific function or 

functions, or a release in which a person 

must report continuously to a facility 

that is not itself a jail for some portion 

of the day or night. 

The FDIC is seeking comments as to 

whether this clarification of what 

constitutes jail time for the purposes of 

the SOP is useful and levels the playing 

field among those who are convicted. 

A second part of subsection (5), (b) 

‘‘Additional Applications of the De 

Minimis Exception to Filing’’, includes 

an expanded version of the current 

provision related to bad or insufficient 

funds checks as well as two additional 

limited circumstances in which the de 

minimis exception to filing applies. The 

first new exception that the FDIC is 

proposing would create an age-based 

exception to the filing requirement. A 

person with a covered conviction or 

program entry that occurred when the 

individual was 21 or younger at the time 

of the conviction or program entry, who 

also meets the general de minimis 

exception to filing and who has 

completed all sentencing or program 

requirements, will qualify for this de 

minimis exception to filing if it least 30 

months have passed prior to the date an 

application would otherwise be 

required. 

A second new de minimis exception 

to filing is proposed for convictions or 

program entries for small-dollar theft. 

The exception applies if the conviction 

or program entry is based on a small 

dollar theft of goods, services, and/or 

currency (or other monetary instrument) 

and the aggregate value of the goods, 

services and/or currency was $500 or 

less at the time of the conviction or 

program entry. Additionally, the 

individual must have only one 

conviction or program entry under 

Section 19, and five years must have 

passed since the conviction or program 

entry. Simple theft for the purposes of 

this exception to filing does not include 

burglary, forgery, robbery, 

embezzlement, identity theft and/or 

fraud. Additionally, if the conviction or 

program entry occurred when the 

individual was 21 or younger, then 

proposal reduces the five-year period to 

30 months. 

The FDIC also proposes to modify the 

current de minimis exception to filing 

for convictions or program entries 

related to bad or insufficient funds 

checks, to cover multiple convictions or 

program entries for bad or insufficient 

funds checks, provided that the 

aggregate value of all the checks across 

all the convictions or program entries is 

$1,000 or less. The current requirement 

that there are no other convictions or 

program entries subject to Section 19, 

and that no insured financial institution 

or credit union was a payee on any of 

the checks, remains. 

Lastly, the FDIC proposes to add 

qualifying language that no conviction 

for a violation of certain Title 18 

provisions, as set out in 12 U.S.C. 

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

de minimis exceptions to filing that are 

set out in subsection (5). 

The FDIC is seeking comments 

regarding whether these expansions of 

the de minimis exceptions to filing are 

appropriate and reasonable, and 

whether individuals with the minor 

offenses covered in the expansion of the 

exceptions should be able to participate 

in the affairs of an insured institution 

without filing a Section 19 application. 


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4. C. Procedures 

The FDIC has added language to this 

subsection clarifying that individual 

applicants file their application with the 

FDIC Regional Office covering the state 

where the person lives. 

5. D. Evaluation of Section 19 

Applications 

The FDIC has redrafted some of the 

factors set forth in the SOP for 

considering a Section 19 application to 

more closely follow the provisions for 

considering applications set forth in the 

FDIC’s rules at 12 CFR 308.157. 

Additionally, the FDIC has noted that 

under the provision that allows the 

FDIC to consider other appropriate 

factors, the FDIC may contact the 

primary Federal and/or state regulator to 

aid in the evaluation of an application. 

The FDIC seeks comment on whether 

there remains a material inconsistency 

between the factors used in the 

proposed SOP and the regulation. 

Additionally, in this section, the FDIC 

has added clarifying language that states 

that the utilization of the evaluation 

factors related to the ten-year ban 

provision refers to the restriction in 12 

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

Lastly, the FDIC is proposing to add 

clarifying language related to banksponsored applications that makes clear 

that changes in an individual’s duties at 

the insured institution which filed a 

previously approved Section 19 

application on that individual’s behalf 

will require a new application. There is 

also a clarification that a new 

application will be required if an 

individual covered by a previously 

approved bank-sponsored application 

desires to participate in the affairs of 

another insured depository institution. 

The FDIC seeks comments on whether 

the changes to this subsection 

sufficiently clarify the requirement for 

previously approved bank-sponsored 

applications—first, that the bank seek 

additional approval of the FDIC when 

the duties previously approved by the 

FDIC change and second, that a new 

application must be filed when the 

individual covered by the previous bank 

sponsored application wishes to work at 

a different insured institution. 

III. 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. 

Estimated Annual Burden: 864 hours. 

Comments are invited on: 

(a) Whether this 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 estimates of the 

burden of the information collection, 

including the validity of the 

methodologies 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 

All comments will become a matter of 

public record. Comments may be 

submitted to the FDIC by any of the 

following methods: 

• http://www.FDIC.gov/regulations/ 

laws/federal/. 

• Email: comments@fdic.gov. Include 

the name and number of the collection 

in the subject line of the message. 

• Mail: Robert E. Feldman, Executive 

Secretary, Attention: Comments, Federal 

Deposit Insurance Corporation, 550 17th 

Street NW, Washington, DC 20429. 

• Hand Delivery: Comments may be 

hand-delivered to the guard station at 

the rear of the 550 17th Street Building 

(located on F Street), on business days 

between 7 a.m. and 5 p.m. 

A copy of the comment may also be 

submitted to the OMB Desk Officer for 

the FDIC, Office of Information and 

Regulatory Affairs, Office of 

Management and Budget, 725 17th 

Street NW, #10235, Washington, DC 

20503; by facsimile to (202) 395–5806; 

or by email to: oira_submission@

omb.eop.gov, Attention, Federal 

Banking Agency Desk Officer. All 

comments should refer to the 

‘‘Application Pursuant to Section 19 of 

the Federal Deposit Insurance Act,’’ 

OMB No. 3064–0018. 

IV. Proposed Statement of Policy for 

Section 19 

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. 


sradovich on DSK3GMQ082PROD with NOTICES
Federal Register / Vol. 83, No. 5 / Monday, January 8, 2018 / Notices 811 

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, Section 19 would not apply to 

persons who are merely employees of an 

insured institution’s holding company, 

but would apply to its directors and 

officers to the extent that they have the 

power to define and direct the 

management or affairs of the insured 

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. 

1819(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. 

(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. For an 

expungement to be considered 

complete, no one, including law 

enforcement, can be permitted access to 

the record even by court order under the 

state or Federal law that was the basis 

of the expungement. Further, the 

jurisdiction issuing the expungement 

cannot permit the use of the expunged 

conviction in any subsequent 

proceeding or review of the person’s 

character or fitness. 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 


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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 where the 

person may leave temporarily only to 

perform specific functions or during 

specified times periods or both. 

• 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 Conviction or Program 

Entry 

• A covered conviction or program 

entry of record that occurred when the 

individual was 21 years of age or 

younger at the time of 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 

entry, where the person has no other 

conviction or program entry under 

Section 19, and where it has been five 

years since the conviction or program 

entry (30 months in the case of a person 

21 or younger at the time of the 

conviction or program entry) is 

considered de minimis. Simple theft 

excludes burglary, forgery, robbery, 

identity theft, and fraud. 

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 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 


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Federal Register / Vol. 83, No. 5 / Monday, January 8, 2018 / Notices 813 

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 covered 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. 

Dated at Washington, DC, the 19th day of 

December 2017. 

Federal Deposit Insurance Corporation. 

Robert E. Feldman, 

Executive Secretary. 

[FR Doc. 2017–28222 Filed 1–5–18; 8:45 am] 

BILLING CODE 6714–01–P 

FEDERAL ELECTION COMMISSION 

Sunshine Act Meeting 

TIME AND DATE: Thursday, January 11, 

2018 at 10:00 a.m. 

PLACE: 999 E Street NW, Washington, 

DC (Ninth Floor) 

STATUS: This meeting will be open to 

the public. 

MATTERS TO BE CONSIDERED: REG 2014– 

02: Draft Notice of Proposed 

Rulemaking on Independent 

Expenditures by Authorized 

Committees; Reporting Multistate 

Independent Expenditures and 

Electioneering Communications 

Management and Administrative 

Matters 

* * * * * 

CONTACT PERSON FOR MORE INFORMATION: 

Judith Ingram, Press Officer, Telephone: 

(202) 694–1220. 

Individuals who plan to attend and 

require special assistance, such as sign 

language interpretation or other 

reasonable accommodations, should 

contact Dayna C. Brown, Secretary and 

Clerk, at (202)694–1040, at least 72 

hours prior to the meeting date. 

Laura E. Sinram, 

Deputy Secretary of the Commission. 

[FR Doc. 2018–00211 Filed 1–4–18; 4:15 pm] 

BILLING CODE 6715–01–P 

FEDERAL RESERVE SYSTEM 

Formations of, Acquisitions by, and 

Mergers of Bank Holding Companies 

The companies listed in this notice 

have applied to the Board for approval, 

pursuant to the Bank Holding Company 

Act of 1956 (12 U.S.C. 1841 et seq.) 

(BHC Act), Regulation Y (12 CFR part 

225), and all other applicable statutes 

and regulations to become a bank 

holding company and/or to acquire the 

assets or the ownership of, control of, or 

the power to vote shares of a bank or 

bank holding company and all of the 

banks and nonbanking companies 

owned by the bank holding company, 

including the companies listed below. 

The applications listed below, as well 

as other related filings required by the 

Board, are available for immediate 

inspection at the Federal Reserve Bank 

indicated. The applications will also be 

available for inspection at the offices of 

the Board of Governors. Interested 

persons may express their views in 

writing on the standards enumerated in 

the BHC Act (12 U.S.C. 1842(c)). If the 

proposal also involves the acquisition of 

a nonbanking company, the review also 

includes whether the acquisition of the 

nonbanking company complies with the 

standards in section 4 of the BHC Act 

(12 U.S.C. 1843). Unless otherwise 

noted, nonbanking activities will be 

conducted throughout the United States. 

Unless otherwise noted, comments 

regarding each of these applications 

must be received at the Reserve Bank 

indicated or the offices of the Board of 

Governors not later than January 29, 

2018. 

A. Federal Reserve Bank of Atlanta 

(Kathryn Haney, Director of 

Applications) 1000 Peachtree Street NE, 

Atlanta, Georgia 30309. Comments can 

also be sent electronically to 

Applications.Comments@atl.frb.org: 

1. Ameris Bancorp, Moultrie, Georgia; 

to merge with Atlantic Coast Financial 

Corporation, and thereby directly 

acquire shares of Atlantic Coast Bank, 

both of Jacksonville, Florida. 

Board of Governors of the Federal Reserve 

System, January 2, 2018. 

Ann E. Misback, 

Secretary of the Board. 

[FR Doc. 2018–00063 Filed 1–5–18; 8:45 am] 

BILLING CODE P 


sradovich on DSK3GMQ082PROD with NOTICES