PRIA, Government Policy, Made Personal

Summary

Member banks and people tied to those banks must pay fines if they break a rule or a regulation. Ordinary violations can bring fines up to $5,000 for each day the problem continues. Worse conduct — like reckless or unsafe behavior, breaking duties of trust, a pattern of bad acts, causing more than a small loss to the bank, or getting money from the act — can bring fines up to $25,000 per day. The most serious cases, where someone knowingly causes a big loss to the bank or gains a large amount, can bring daily fines up to the limits below: up to $1,000,000 for people who are not the bank, and for a member bank the smaller of $1,000,000 or 1 percent of its total assets. The Board is allowed to assess and collect these penalties using its normal procedures. A bank or person can ask for an agency hearing if they request it within 20 days after the notice of the fine. All collected fines go to the U.S. Treasury. “Violate” here also covers acting to cause, help, or encourage a violation. The Board must make rules needed to run this process.

Title 12, §505

Banks and Banking, Source: USLM XML via OLRC

(1)First tier

Any member bank which, and any institution-affiliated party (within the meaning of section 1813(u) of this title) with respect to such member bank who, violates any provision of this section, or any regulation issued pursuant thereto, shall forfeit and pay a civil penalty of not more than $5,000 for each day during which such violation continues.

(2)Second tier

Notwithstanding paragraph (1), any member bank which, and any institution-affiliated party (within the meaning of section 1813(u) of this title) with respect to such member bank who—

(A)(i)commits any violation described in paragraph (1);

(ii)recklessly engages in an unsafe or unsound practice in conducting the affairs of such member bank; or

(iii)breaches any fiduciary duty;

(B)which violation, practice, or breach—

(i)is part of a pattern of misconduct;

(ii)causes or is likely to cause more than a minimal loss to such member bank; or

(iii)results in pecuniary gain or other benefit to such party,

shall forfeit and pay a civil penalty of not more than $25,000 for each day during which such violation, practice, or breach continues.

(3)Third tier

Notwithstanding paragraphs (1) and (2), any member bank which, and any institution-affiliated party (within the meaning of section 1813(u) of this title) with respect to such member bank who—

(A)knowingly—

(i)commits any violation described in paragraph (1);

(ii)engages in any unsafe or unsound practice in conducting the affairs of such member bank; or

(iii)breaches any fiduciary duty; and

(B)knowingly or recklessly causes a substantial loss to such member bank or a substantial pecuniary gain or other benefit to such party by reason of such violation, practice, or breach,

shall forfeit and pay a civil penalty in an amount not to exceed the applicable maximum amount determined under paragraph (4) for each day during which such violation, practice, or breach continues.

(4)Maximum amounts of penalties for any violation described in paragraph (3)

The maximum daily amount of any civil penalty which may be assessed pursuant to paragraph (3) for any violation, practice, or breach described in such paragraph is—

(A)in the case of any person other than a member bank, an amount not to exceed $1,000,000; and

(B)in the case of a member bank, an amount not to exceed the lesser of—

(i)$1,000,000; or

(ii)1 percent of the total assets of such member bank.

(5)Assessment; etc.

Any penalty imposed under paragraph (1), (2), or (3) may be assessed and collected by the Board in the manner provided in subparagraphs (E), (F), (G), and (I) of section 1818(i)(2) of this title for penalties imposed (under such section) and any such assessment shall be subject to the provisions of such section.

(6)Hearing

The member bank or other person against whom any penalty is assessed under this section shall be afforded an agency hearing if such member bank or person submits a request for such hearing within 20 days after the issuance of the notice of assessment. section 1818(h) of this title shall apply to any proceeding under this section.

(7)Disbursement

All penalties collected under authority of this section shall be deposited into the Treasury.

(8)“Violate” defined

For purposes of this section, the term “violate” includes any action (alone or with another or others) for or toward causing, bringing about, participating in, counseling, or aiding or abetting a violation.

(9)Regulations

The Board shall prescribe regulations establishing such procedures as may be necessary to carry out this section.

Notes & Related Subsidiaries

Editorial Notes

References in Text

This section, referred to in pars. (1) and (8), means section 19 of act Dec. 23, 1913, which is classified to section 142, 371b, 371b–1, 374, 374a, 461, 463 to 466, 505, and 506 of this title.

Amendments

1989—Pub. L. 101–73 amended section generally, revising and restating as pars. (1) to (9) provisions of former pars. (1) to (7) which related to civil penalty respecting depository, reserve, etc., requirements; amount; hearing; review; action by Attorney General; and

Regulations

. 1982—Par. (1). Pub. L. 97–320, § 424(a), (d)(2), inserted proviso giving Board discretionary authority to compromise, etc., any civil money penalty imposed under this section, and substituted “may be assessed” for “shall be assessed”. Par. (4). Pub. L. 97–320, § 424(e), substituted “twenty days from the service” for “ten days from the date”.

Statutory Notes and Related Subsidiaries

Effective Date

of 1989 AmendmentAmendment by Pub. L. 101–73 applicable to conduct engaged in after Aug. 9, 1989, except that increased maximum penalties of $5,000 and $25,000 may apply to conduct engaged in before such date if such conduct is not already subject to a notice issued by the appropriate agency and occurred after completion of the last report of the examination of the institution by the appropriate agency occurring before Aug. 9, 1989, see section 907(l) of Pub. L. 101–73, set out as a note under section 93 of this title.

Effective Date

Section effective with respect to violations occurring or continuing after Nov. 10, 1978, see section 109 of Pub. L. 95–630 set out as an

Effective Date

of 1978 Amendment note under section 93 of this title.

§505 Civil Money Penalty

Summary

Title 12, §505

Notes & Related Subsidiaries

Editorial Notes

References in Text

Amendments

Regulations

Statutory Notes and Related Subsidiaries

Effective Date

Effective Date

Effective Date

Citations & Metadata