# FDIC FIL-3-2013: Modifications to the Statement of Policy for Section 19 of the Federal Deposit Insurance Act > Federal · Agency guidance · Superseded URL: https://www.frixlaw.com/law-library/statutes/FDIC_FIL13003 ## Section - **Citation:** FDIC FIL-3-2013 - **Heading:** Modifications to the Statement of Policy for Section 19 of the Federal Deposit Insurance Act - **Jurisdiction:** Federal - **Kind:** Agency guidance - **Status:** Superseded - **Text as of:** August 14, 2026 - **Source:** Compiled text - **Location:** FDIC Financial Institution Letters / Modifications to the Statement of Policy for Section 19 of the Federal Deposit Insurance Act ## Text Financial Institution Letter FIL-3-2013 February 8, 2013 MODIFICATIONS TO THE STATEMENT OF POLICY FOR SECTION 19 OF THE FEDERAL DEPOSIT INSURANCE ACT Summary: Section 19 of the Federal Deposit Insurance (FDI) Act prohibits, without the prior written consent of the Federal Deposit Insurance Corporation (FDIC), a person convicted of a criminal offense involving dishonesty, breach of trust, money laundering, or who has entered into a pretrial diversion program, from participating in the affairs of an FDIC-insured institution. On December 11, 2012, the FDIC Board of Directors modified the de minimis exceptions regarding the potential fine and the number of days of imprisonment. Modifications of the criteria are expected to reduce the number of Section 19 applications and regulatory burden. The updated Statement of Policy (SOP) for Section 19 of the FDI Act is available on the FDIC’s Web site and was published in the Federal Register on December 18, 2012. Further, the FDIC reminds the industry to become familiar with the requirements of Section 19 of the FDI Act and the related SOP, and to ensure that its personnel policies and procedures comply. All FDIC-insured institutions, bank holding companies, and savings and loan holding companies must comply with the requirements of Section 19 of the FDI Act (12 U.S.C. 1829). Statement of Applicability to Institutions Under $1 Billion in Total Assets: This guidance applies to all FDIC-insured depository institutions. Distribution: FDIC-Insured Institutions Highlights:  The SOP de minimis exceptions under which the FDIC will grant an automatic approval under Section 19 have been modified to reflect the following: “[t]he 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 did not serve more than three (3) days of actual jail time.”  Industry applications for employment, background check programs, and hiring practices must comply with Section 19 t an automatic approval under Section 19 have been modified to reflect the following: “[t]he 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 did not serve more than three (3) days of actual jail time.”  Industry applications for employment, background check programs, and hiring practices must comply with Section 19. Offenses covered by Section 19 have no statute of limitations. Therefore, institutions must consider a job applicant’s entire legal history.  In matters related to Section 19, federal law pre-empts applicable state law(s).  Individuals with convictions subject to Section 19 may apply to the FDIC for permission to participate in the affairs of an FDIC- insured institution and to the Board of Governors of the Federal Reserve System for permission to participate in the affairs of a bank holding company or a savings and loan holding company.  An individual cannot be affiliated with, or employed by, an insured institution while a Section 19 application is pending with the FDIC. Suggested Routing: Chief Executive Officer Legal Counsel Human Resources Department Compliance Officer Related Guidance: Statement of Policy for Section 19 of the FDI Act: http://www.fdic.gov/regulations/laws/rules/5000- 1300.html#fdic5000applicationsus Attachment: Modification to the Statement of Policy for Section 19 of the FDI Act Application: The Section 19 application form is available at http://www.fdic.gov/regulations/laws/FORMS/section 19.html. Contact: For questions related to the SOP, please contact Larisa Collado, Section Chief, at ct: http://www.fdic.gov/regulations/laws/rules/5000- 1300.html#fdic5000applicationsus Attachment: Modification to the Statement of Policy for Section 19 of the FDI Act Application: The Section 19 application form is available at http://www.fdic.gov/regulations/laws/FORMS/section 19.html. Contact: For questions related to the SOP, please contact Larisa Collado, Section Chief, at (202) 898-8509 or lcollado@fdic.gov; or Martin Thompson, Senior Review Examiner, at (202) 898-6767 or marthompson@fdic.gov. Note: FDIC Financial Institution Letters (FILs) may be accessed from the FDIC's Web site at www.fdic.gov/news/news/financial/2013/index.html. To receive FILs electronically, please visit http://www.fdic.gov/about/subscriptions/fil.html. Paper copies may be obtained through the FDIC's Public Information Center, 3501 Fairfax Drive, E- 1002, Arlington, Virginia 22226. Federal Deposit Insurance Corporation 550 17th Street NW, Washington, D.C. 20429-9990 Modifications to the Statement of Policy for Section 19 of the Federal Deposit Insurance Act Section 19 of the Federal Deposit Insurance (FDI) Act (12 U.S.C. 1829) prohibits, without the prior written consent of the Federal Deposit Insurance Corporation (FDIC), a person convicted of certain criminal offenses (covered offenses), or who has agreed to a pretrial diversion or similar program in connection with a prosecution for such offense, from participating in the affairs of an FDIC-insured institution (insured institution), a bank holding company, or a savings and loan holding company. In matters related to Section 19, federal law pre-empts applicable state law(s). The FDIC has jurisdiction over Section 19 matters for insured institutions, while the Board of Governors of the Federal Reserve System has jurisdiction over Section 19 matters for bank holding companies and savings and loan holding companies ution), a bank holding company, or a savings and loan holding company. In matters related to Section 19, federal law pre-empts applicable state law(s). The FDIC has jurisdiction over Section 19 matters for insured institutions, while the Board of Governors of the Federal Reserve System has jurisdiction over Section 19 matters for bank holding companies and savings and loan holding companies. Since it was enacted in 1950, Section 19 has been revised primarily to consider money laundering and other statutory regulatory changes such as the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 and the Dodd-Frank Wall Street Reform and Consumer Protection Act. In implementing Section 19, the FDIC is guided by the Statement of Policy for Section 19 of the FDI Act (SOP), and de minimis factors discussed therein to determine the need for a Section 19 application. An individual subject to Section 19 cannot be affiliated with, or employed by, an insured institution while a Section 19 application is pending. Two methods are available for obtaining regulatory approval for Section 19 applications: an institution can sponsor the application or an individual can seek a waiver of the sponsorship requirements. The FDIC must consider an individual's lifetime legal record and rehabilitation when processing a Section 19 application. Historically, the FDIC has received a number of applications for Section 19 individual waivers for minor infractions that did not meet the de minimis factors regarding the maximum potential fine or the jail time served. Experience has shown that, under most state potential sentencing guidelines, fines for minor infractions can be up to $2,500. Additionally, there have been numerous cases where minimal actual jail time was included as part of the sentence; however, such minimal jail time has not been a significant factor in the FDIC’s consideration of the Section 19 application fine or the jail time served. Experience has shown that, under most state potential sentencing guidelines, fines for minor infractions can be up to $2,500. Additionally, there have been numerous cases where minimal actual jail time was included as part of the sentence; however, such minimal jail time has not been a significant factor in the FDIC’s consideration of the Section 19 application. Adjusting the de minimis exceptions to increase the potential fine to $2,500 and allow a limited number days of actual jail time served for minor infractions appears just and reasonable. Therefore, the FDIC Board of Directors has modified the de minimis language of the SOP regarding the potential fine and imprisonment to reflect the following: “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 did not serve more than three (3) days of actual jail time.” Insured institutions should become familiar with the SOP and refer to it when reviewing the applicability of Section 19 to current and potential institution- affiliated parties (IAP). An IAP includes, but is not limited to employees, board members, and consultants. An individual with a covered offense or program entry cannot participate in the affairs of an insured institution without prior regulatory approval. Industry applications for employment, background check programs, and hiring practices must comply with Section 19. Offenses covered by Section 19 have no statute of limitations. Therefore, institutions must consider a job applicant’s entire legal history. Further, the industry should ensure that its employment due diligence, including Section 19 compliance, is completed prior to an employee’s start date. Insured institutions that knowingly employ an individual with a covered offense or program entry contrary to Section 19 can be subject to criminal penalties ns. Therefore, institutions must consider a job applicant’s entire legal history. Further, the industry should ensure that its employment due diligence, including Section 19 compliance, is completed prior to an employee’s start date. Insured institutions that knowingly employ an individual with a covered offense or program entry contrary to Section 19 can be subject to criminal penalties. Whoever knowingly violates Section 19 can be fined not more than $1,000,000 for each day such prohibition is violated or imprisoned for not more than five (5) years, or both. ## Nearby sections - [FDIC FIL-1-2002 FOREIGN ASSETS CONTROL ACT](https://www.frixlaw.com/law-library/statutes/FDIC_FIL02001.md) - [FDIC FIL-1-2010 Employee Compensation Advance Notice of Proposed Rulemaking](https://www.frixlaw.com/law-library/statutes/FDIC_FIL10001.md) - [FDIC FIL-1-2015 DEPOSITORY INSTITUTION REPORTS](https://www.frixlaw.com/law-library/statutes/FDIC_FIL15001.md) - [FDIC FIL-1-2018 DEPOSITORY INSTITUTION REPORTS](https://www.frixlaw.com/law-library/statutes/FDIC_FIL18001.md) - [FDIC FIL-1-2024 Consolidated Reports of Condition and Income for Fourth Quarter 2023](https://www.frixlaw.com/law-library/statutes/FDIC_FIL24001.md) - [FDIC FIL-2-2019 DEPOSITORY INSTITUTION REPORTS](https://www.frixlaw.com/law-library/statutes/FDIC_FIL19002.md) - [FDIC FIL-2-2020 Consolidated Reports of Condition and Income for Fourth Quarter 2019](https://www.frixlaw.com/law-library/statutes/FDIC_FIL20002.md) - [FDIC FIL-3-2017 Community Banking Conference 2016 Highlights](https://www.frixlaw.com/law-library/statutes/FDIC_FIL17003.md) - [FDIC FIL-4-2015 The FDIC Launches Web Page to Support Marketing of Failing Financial Institutions](https://www.frixlaw.com/law-library/statutes/FDIC_FIL15004.md) - [FDIC FIL-4-2018 Revisions to the Consolidated Reports of Condition and Income (Call Report) for March and June 2018](https://www.frixlaw.com/law-library/statutes/FDIC_FIL18004.md) - [FDIC FIL-4-2019 Banker Webinar: Update on the Standardized Export of Imaged Loan Documents Initiative](https://www.frixlaw.com/law-library/statutes/FDIC_FIL19004.md) - [FDIC FIL-4-2021 Revised Guidelines for Appeals of Material Supervisory Determinations](https://www.frixlaw.com/law-library/statutes/FDIC_FIL21004.md) - [FDIC FIL-4-2023 Guidance to Help Financial Institutions and Facilitate Recovery in Areas of California Affected by Severe Winter Storms, Flooding, Landslides and Mudslides](https://www.frixlaw.com/law-library/statutes/FDIC_FIL23004.md) - [FDIC FIL-4-2025 FDIC Statement of Policy on Bank Merger Transactions](https://www.frixlaw.com/law-library/statutes/FDIC_FIL25004.md) --- Source: Frix Law Library, https://www.frixlaw.com/law-library/statutes/FDIC_FIL13003. 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