12 USC 1829 – Penalty for unauthorized participation by convicted individual

(a) Prohibition

(1) In general

Except with the prior written consent of the Corporation—

(A) any person who has been convicted of any criminal offense involving dishonesty or a breach of trust or money laundering, or has agreed to enter into a pretrial diversion or similar program in connection with a prosecution for such offense, may not—

(i) become, or continue as, an institution-affiliated party with respect to any insured depository institution;

(ii) own or control, directly or indirectly, any insured depository institution; or

(iii) otherwise participate, directly or indirectly, in the conduct of the affairs of any insured depository institution; and

(B) any insured depository institution may not permit any person referred to in subparagraph (A) to engage in any conduct or continue any relationship prohibited under such subparagraph.

(2) Minimum 10-year prohibition period for certain offenses

(A) In general

If the offense referred to in paragraph (1)(A) in connection with any person referred to in such paragraph is—

(i) an offense under—

(I) section 215, 656, 657, 1005, 1006, 1007, 1008,¹ 1014, 1032, 1344, 1517, 1956, or 1957 of title 18; or

(II) section 1341 or 1343 of such title which affects any financial institution (as defined in section 20 of such title); or

(ii) the offense of conspiring to commit any such offense,

the Corporation may not consent to any exception to the application of paragraph (1) to such person during the 10-year period beginning on the date the conviction or the agreement of the person becomes final.

(B) Exception by order of sentencing court

(i) In general

On motion of the Corporation, the court in which the conviction or the agreement of a person referred to in subparagraph (A) has been entered may grant an exception to the application of paragraph (1) to such person if granting the exception is in the interest of justice.

(ii) Period for filing

A motion may be filed under clause (i) at any time during the 10-year period described in subparagraph (A) with regard to the person on whose behalf such motion is made.

(b) Penalty

Whoever knowingly violates subsection (a) shall be fined not more than $1,000,000 for each day such prohibition is violated or imprisoned for not more than 5 years, or both.

(c) Exceptions

(1) Certain older offenses

(A) In general

With respect to an individual, subsection (a) shall not apply to an offense if—

(i) it has been 7 years or more since the offense occurred; or

(ii) the individual was incarcerated with respect to the offense and it has been 5 years or more since the individual was released from incarceration.

(B) Offenses committed by individuals 21 or younger

For individuals who committed an offense when they were 21 years of age or younger, subsection (a) shall not apply to the offense if it has been more than 30 months since the sentencing occurred.

(C) Limitation

This paragraph shall not apply to an offense described under subsection (a)(2).

(2) Expungement and sealing

With respect to an individual, subsection (a) shall not apply to an offense if—

(A) there is an order of expungement, sealing, or dismissal that has been issued in regard to the conviction in connection with such offense; and

(B) it is intended by the language in the order itself, or in the legislative provisions under which the order was issued, that the conviction shall be destroyed or sealed from the individual’s State, Tribal, or Federal record, even if exceptions allow the record to be considered for certain character and fitness evaluation purposes.

(3) De minimis exemption

(A) In general

Subsection (a) shall not apply to such de minimis offenses as the Corporation determines, by rule.

(B) Confinement criteria

In issuing rules under subparagraph (A), the Corporation shall include a requirement that the offense was punishable by a term of three years or less confined in a correctional facility, where such confinement—

(i) is calculated based on the time an individual spent incarcerated as a punishment or a sanction, not as pretrial detention; and

(ii) does not include probation or parole where an individual was restricted to a particular jurisdiction or was required to report occasionally to an individual or a specific location.

(C) Bad check criteria

In setting the criteria for de minimis offenses under subparagraph (A), if the Corporation establishes criteria with respect to insufficient funds checks, the Corporation shall require that the aggregate total face value of all insufficient funds checks across all convictions or program entries related to insufficient funds checks is $2,000 or less.

(D) Designated lesser offenses

Subsection (a) shall not apply to certain lesser offenses (including the use of a fake ID, shoplifting, trespass, fare evasion, driving with an expired license or tag, and such other low-risk offenses as the Corporation may designate) if 1 year or more has passed since the applicable conviction or program entry.

(d) Bank holding companies

(1) In general

Subsections (a) and (b) shall apply to any company (other than a foreign bank) that is a bank holding company and any organization organized and operated under section 25A of the Federal Reserve Act [12 U.S.C. 611 et seq.] or operating under section 25 of the Federal Reserve Act [12 U.S.C. 601 et seq.], as if such bank holding company or organization were an insured depository institution, except that such subsections shall be applied for purposes of this subsection by substituting “Board of Governors of the Federal Reserve System” for “Corporation” each place that term appears in such subsections.

(2) Authority of Board

The Board of Governors of the Federal Reserve System may provide exemptions, by regulation or order, from the application of paragraph (1) if the exemption is consistent with the purposes of this subsection.

(e) Savings and loan holding companies

(1) In general

Subsections (a) and (b) shall apply to any savings and loan holding company as if such savings and loan holding company were an insured depository institution, except that such subsections shall be applied for purposes of this subsection by substituting “Board of Governors of the Federal Reserve System” for “Corporation” each place that term appears in such subsections.

(2) Authority of Director

(f) Consent applications

(1) In general

The Corporation shall accept consent applications from an individual and from an insured depository institution or depository institution holding company on behalf of an individual that are filed separately or contemporaneously with a regional office of the Corporation.

(2) Sponsored applications filed with regional offices

Consent applications filed at a regional office of the Corporation by an insured depository institution or depository institution holding company on behalf of an individual—

(A) shall be reviewed by such office;

(B) may be approved or denied by such office, if such authority has been delegated to such office by the Corporation; and

(C) may only be denied by such office if the general counsel of the Corporation (or a designee) certifies that the denial is consistent with this section.

(3) Individual applications filed with regional offices

Consent applications filed at a regional office by an individual—

(A) shall be reviewed by such office; and

(B) may be approved or denied by such office, if such authority has been delegated to such office by the Corporation, except with respect to—

(i) cases involving an offense described under subsection (a)(2); and

(ii) such other high-level security cases as may be designated by the Corporation.

(4) National office review

The national office of the Corporation shall—

(A) review any consent application with respect to which a regional office is not authorized to approve or deny the application; and

(B) review any consent application that is denied by a regional office, if the individual requests a review by the national office.

(5) Forms and instructions

(A) Availability

The Corporation shall make all forms and instructions related to consent applications available to the public, including on the website of the Corporation.

(B) Contents

The forms and instructions described under subparagraph (A) shall provide a sample cover letter and a comprehensive list of items that may accompany the application, including clear guidance on evidence that may support a finding of rehabilitation.

(6) Consideration of criminal history

(A) Regional office consideration

In reviewing a consent application, a regional office shall—

(i) primarily rely on the criminal history record of the Federal Bureau of Investigation; and

(ii) provide such record to the applicant to review for accuracy.

(B) Certified copies

The Corporation may not require an applicant to provide certified copies of criminal history records unless the Corporation determines that there is a clear and compelling justification to require additional information to verify the accuracy of the criminal history record of the Federal Bureau of Investigation.

(7) Consideration of rehabilitation

Consistent with title VII of the Civil Rights Act of 1964 (42 U.S.C. 2000e et seq.), the Corporation shall—

(A) conduct an individualized assessment when evaluating consent applications that takes into account evidence of rehabilitation, the applicant’s age at the time of the conviction or program entry, the time that has elapsed since conviction or program entry, and the relationship of individual’s ² offense to the responsibilities of the applicable position;

(B) consider the individual’s employment history, letters of recommendation, certificates documenting participation in substance abuse programs, successful participating in job preparation and educational programs, and other relevant mitigating evidence; and

(8) Scope of employment

With respect to an approved consent application filed by an insured depository institution or depository institution holding company on behalf of an individual, if the Corporation determines it appropriate, such approved consent application shall allow the individual to work for the same employer (without restrictions on the location) and across positions, except that the prior consent of the Corporation (which may require a new application) shall be required for any proposed significant changes in the individual’s security-related duties or responsibilities, such as promotion to an officer or other positions that the employer determines will require higher security screening credentials.

(9) Coordination with the NCUA

In carrying out this section, the Corporation shall consult and coordinate with the National Credit Union Administration as needed to promote consistent implementation where appropriate.

(g) Definitions

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Terms Used In 12 USC 1829

bank holding company: has the meaning given to such term in section 1841 of this title. See 12 USC 1813
control: has the meaning given to such term in section 1841 of this title. See 12 USC 1813
Conviction: A judgement of guilt against a criminal defendant.
Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
depository institution: means any bank or savings association. See 12 USC 1813
depository institution holding company: means a bank holding company or a savings and loan holding company. See 12 USC 1813
Dismissal: The dropping of a case by the judge without further consideration or hearing. ^Source:
Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
Federal Reserve System: The central bank of the United States. The Fed, as it is commonly called, regulates the U.S. monetary and financial system. The Federal Reserve System is composed of a central governmental agency in Washington, D.C. (the Board of Governors) and twelve regional Federal Reserve Banks in major cities throughout the United States. ^{Source: OCC}
individual: shall include every infant member of the species homo sapiens who is born alive at any stage of development. See 1 USC 8
institution-affiliated party: means &mdash. See 12 USC 1813
insured depository institution: includes any uninsured branch or agency of a foreign bank or a commercial lending company owned or controlled by a foreign bank for purposes of section 1818 of this title. See 12 USC 1813
Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
National Credit Union Administration: The federal regulatory agency that charters and supervises federal credit unions. (NCUA also administers the National Credit Union Share Insurance Fund, which insures the deposits of federal credit unions.) ^{Source: OCC}
officer: includes any person authorized by law to perform the duties of the office. See 1 USC 1
Probation: A sentencing alternative to imprisonment in which the court releases convicted defendants under supervision as long as certain conditions are observed.
Restitution: The court-ordered payment of money by the defendant to the victim for damages caused by the criminal action.
savings and loan holding company: has the meaning given to such term in section 1467a of this title. See 12 USC 1813
State: means any State of the United States, the District of Columbia, any territory of the United States, Puerto Rico, Guam, American Samoa, the Trust Territory of the Pacific Islands, the Virgin Islands, and the Northern Mariana Islands. See 12 USC 1813
Statute: A law passed by a legislature.
violation: includes any action (alone or with another or others) for or toward causing, bringing about, participating in, counseling, or aiding or abetting a violation. See 12 USC 1813

In this section:

(1) Consent application

The term “consent application” means an application filed with Corporation ² by an individual (or by an insured depository institution or depository institution holding company on behalf of an individual) seeking the written consent of the Corporation under subsection (a)(1).

(2) Criminal offense involving dishonesty

The term “criminal offense involving dishonesty”—

(A) means an offense under which an individual, directly or indirectly—

(i) cheats or defrauds; or

(ii) wrongfully takes property belonging to another in violation of a criminal statute;

(B) includes an offense that Federal, State, or local law defines as dishonest, or for which dishonesty is an element of the offense; and

(i) a misdemeanor criminal offense committed more than one year before the date on which an individual files a consent application, excluding any period of incarceration; or

(ii) an offense involving the possession of controlled substances.

(3) Pretrial diversion or similar program

The term “pretrial diversion or similar program” means a program characterized by a suspension or eventual dismissal or reversal of charges or criminal prosecution upon agreement by the accused to restitution, drug or alcohol rehabilitation, anger management, or community service.

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