November 14, 2025

Vol. XLII, No. 9

FDIC's Revisions to Section 19 Regulations

I. Introduction
Section 19 of the Federal Deposit Insurance ("FDI") Act generally prohibits individuals convicted of certain crimes from becoming employed by, or participating in the affairs of, an FDIC-insured depository institution (IDI). This prohibition applies to any person convicted of, or who has entered into a pretrial diversion or similar program (program entry) for, a criminal offense involving dishonesty, breach of trust, or money laundering. However, under certain circumstances, the law permits the FDIC to grant written consent to allow a covered individual to be employed by or participate in the affairs of an IDI. For an individual to obtain such written consent, an application must be filed with the FDIC.

The Federal Deposit Insurance Corporation (FDIC) recently approved revisions to regulations under Section 19 of the FDI Act to conform to the Fair Hiring in Banking Act (FHBA), which became effective on December 23, 2022.

The most significant changes to the Section 19 regulations include:

​A. Certain older offenses excluded
The FHBA excludes certain offenses from the scope of Section 19 based on the amount of time that has passed since the offense occurred or since the individual was released from incarceration. The final rule reflects these exclusions.

The Act excludes from the scope of Section 19 offenses that occurred seven or more years ago. Likewise, if an individual was incarcerated with respect to the offense and it has been five years or more since the individual was released from incarceration, that offense is excluded.

If an individual committed an offense when they were 21 or younger, and if it has been more than 30 months since the sentencing for that offense occurred, the Act excludes the offense from the scope of Section 19.

B. De minimis offenses that do not require an application
​Under certain circumstances — generally involving relatively minor (de minimis) offenses — a person with such an offense is not required to submit an application; the FDIC's consent is deemed automatically granted. The final rule provides conforming changes to match the FHBA's exclusion of de minimis offenses — including "designated lesser offenses" — from the scope of Section 19 including relatively minor offenses that are specified either by FHBA or by the FDIC through regulations.

The Act requires that any additional de minimis offense criteria that the FDIC may designate, by rule, must include specific criteria regarding confinement criteria and offenses involving nonsufficient funds checks. The Act also excludes from the scope of Section 19 "designated lesser offenses," including the use of a fake form of identification, shoplifting, trespassing, fare evasion, and driving with an expired license or tag, if 1 year or more has passed since the applicable conviction or program entry.

C. Expunged, sealed and dismissed criminal records
The FHBA excludes certain convictions from the scope of Section 19 that have been expunged, sealed, or dismissed. The Act excludes from the scope of Section 19 an offense where:

• a) there is an order of expungement, sealing, or dismissal that has been issued in regard to the conviction in connection with such an 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.

D. Criminal offenses involving dishonesty
The FHBA excludes certain offenses from the definition of "criminal offenses involving dishonesty," including (1) misdemeanor criminal offenses committed more than one year before the date on which an individual files an application, excluding any period of incarceration, and (2) "an offense involving the possession of controlled substances."

The FDIC interprets the term "offense involving the possession of controlled substances" to exclude, at least, the offenses of simple possession and possession with intent to distribute from the "involving dishonesty" category of crimes. Additionally, the final rule shifts the FDIC's position from its previous presumption that other drug-related offenses are subject to Section 19 as crimes involving dishonesty, breach of trust, or money laundering. Under the final rule, such crimes do not automatically trigger the need for an application but may require one, depending on the elements of the underlying criminal offense.

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The foregoing Compliance Update is for informational purposes only and does not constitute legal advice. As a reminder, the NBA general counsel is the attorney for the Nebraska Bankers Association, not its member banks. The general counsel is available to assist members with finding resources to help answer their questions. However, for specific legal advice about specific situations, members must consult and retain their own attorney.