Vol. XLIII, No. 17

Vol. XLIII, No. 17

Federal Deposit Insurance Section 19

I. Introduction
The Federal Deposit Insurance Corporation (FDIC) has adopted a final rule to amend certain regulatory thresholds in the FDIC's regulations to reflect inflation. Specifically, the final rule generally updates such thresholds to reflect inflation from the date of initial implementation or the most recent adjustment and provides for future adjustments pursuant to an indexing methodology.

II. FDI Act - Section 19
Section 19 of the FDI Act (Section 19) prohibits, without the prior written consent of the FDIC, a person convicted of any criminal offense involving dishonesty, breach of trust, or money laundering, or who has entered into a pretrial diversion or similar program in connection with a prosecution for such an offense (collectively, covered offenses), from becoming or continuing to serve as an institution-affiliated party. Subpart L of part 303 of the FDIC’s regulations implements Section 19 and includes separate $2,500 and $1,000 de minimis thresholds for certain offenses that are excluded from the scope of Section 19 and for which no Section 19 application is required.

Specifically, under 12 CFR 303.227, the requirements of Section 19 do not apply to covered offenses where the individual could have been sentenced to a term of confinement in a correctional facility of three years or less and/or a fine of $2,500 or less, and that meet the additional criteria set forth in that section. In addition, the requirements of Section 19 do not apply to “small dollar, simple theft,” which includes, among other requirements, the simple theft of goods, services, or currency (or other monetary instrument) if the value of the currency, goods, or services involved has a value of $1,000 or less.

​Under the final rule, the $2,500 and $1,000 de minimis thresholds have been updated to $3,500 and $1,225, respectively, to reflect inflation since these thresholds were previously set.

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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.