On November 14, 2023, the Federal Deposit Insurance Corporation (FDIC) unveiled proposals for revised regulations pertaining to Section 19 of the Federal Deposit Insurance Act (12 U.S.C. § 1829, also known as “Section 19”). The proposed amendments aim to bring the regulations in line with the Fair Hiring in Banking Act, which came into effect swiftly on December 23, 2022. The information was published on a legal news platform, JD Supra. For a more detailed look at these proposals, you can read their report here.
Essentially, Section 19 imposes prohibitions on individuals convicted of any criminal offense concerning dishonesty, breach of trust, or money laundering. The same applies to those who have agreed to enter into a pretrial diversion. The goal of these restrictions is to maintain the integrity of banking systems and ensure that those implicated in serious misconduct are barred from key roles within banking institutions.
The new Fair Hiring in Banking Act, however, calls for some adjustments to this stance. While still adamant about protecting banking systems from malpractice, the Act seeks to provide a fairer hiring process that doesn’t automatically disadvantage those with past criminal convictions.
There is yet to be confirmation of these proposed changes, meaning banking and legal professionals should be vigilant in keeping track of these developments. The proposed amendments could have significant implications for bank hiring policies and procedures, affecting both current employees and potential future hires.