[Federal Register Volume 63, Number 106 (Wednesday, June 3, 1998)]
[Notices]
[Pages 30226-30227]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-14611]


=======================================================================
-----------------------------------------------------------------------

FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL


Assessment of Civil Money Penalties

AGENCY: Federal Financial Institutions Examination Council (FFIEC).

ACTION: Notice of revised policy statement.

-----------------------------------------------------------------------

SUMMARY: The FFIEC Task Force on Supervision, acting under delegated 
authority, has revised the 1980 Interagency Policy Regarding the 
Assessment of Civil Money Penalties by the Federal Financial 
Institutions Regulatory Agencies (1980 CMP Policy). The revised policy 
statement specifies factors that the Federal financial institutions 
regulatory agencies should take into consideration in deciding whether, 
and in what amounts, civil money penalty assessment proceedings should 
be initiated. The revised policy statement supersedes the 1980 CMP 
Policy.

EFFECTIVE DATE: June 3, 1998.

FOR FURTHER INFORMATION CONTACT: The FFIEC is comprised of the Office 
of the Comptroller of the Currency (OCC), the Board of Governors of the 
Federal Reserve System (Board), the Federal Deposit Insurance 
Corporation (FDIC), the Office of Thrift Supervision (OTS), and the 
National Credit Union Administration (NCUA) (collectively, the 
agencies). Questions regarding this notice and the revised policy 
statement may be addressed to the FFIEC contact. Agency specific 
questions should be addressed to the appropriate agency contact.
    FFIEC: Keith Todd, Acting Executive Secretary, Federal Financial 
Institutions Examination Council, (202) 634-6526, 2100 Pennsylvania 
Avenue NW, Suite 200, Washington, DC 20037.
    OCC: Carolyn Amundson, Senior Attorney, Enforcement & Compliance 
Division, (202) 874-5371, 250 E Street SW, Washington, DC 20219.
    Board: Nancy Oakes, Senior Attorney, Division of Banking 
Supervision and

[[Page 30227]]

Regulation, (202) 452-2743, Board of Governors of the Federal Reserve 
System, 20th and C Streets NW, Washington, DC 20551.
    FDIC: Dan Austin, Review Examiner, Division of Supervision, (202) 
898-6774, Federal Deposit Insurance Corporation, 550 17th Street NW, 
Washington DC 20429.
    OTS: Richard Stearns, Deputy Chief Counsel, Office of Enforcement, 
(202) 906-7966, Office of Thrift Supervision, 1700 G Street NW, 
Washington, DC 20552.
    NCUA: John Ianno, Senior Trial Attorney, Office of General Counsel, 
(703) 518-6540, National Credit Union Administration, 1775 Duke Street, 
Alexandria, VA 22314-3428.

SUPPLEMENTARY INFORMATION: The FFIEC Task Force on Supervision, acting 
under delegated authority, is giving notice that it has revised its 
1980 CMP Policy (45 FR 59423; Sept. 9, 1980). The revised policy 
statement, published in full text later in this Federal Register 
notice, updates the 1980 CMP Policy. The revised policy statement:
    (1) Specifies the factors the agencies should take into 
consideration in deciding whether, and in what amounts, to initiate 
civil money penalty proceedings;
    (2) Eliminates references to interagency coordination of civil 
money penalty proceedings, because such coordination is addressed in a 
separate interagency policy (FFIEC, Interagency Coordination of Formal 
Corrective Action by the Federal Bank Regulatory Agencies);
    (3) Eliminates references to the statutes authorizing the agencies 
to initiate civil money penalty proceedings or the authority pursuant 
to the statutes;
    (4) Eliminates references to the agencies' rules of practice and 
procedure for civil money penalty proceedings; and
    (5) Specifies that the amount of a civil money penalty may be 
greater than the economic gain in order to deter future misconduct.
    The FFIEC Task Force on Supervision, acting under delegated 
authority, has recommended that the agencies adopt, through separate 
actions, the revised policy statement.
    The revised policy statement reads as follows:

Interagency Policy Regarding the Assessment of Civil Money 
Penalties by the Federal Financial Institutions Regulatory Agencies

    This supervisory policy provides general guidance concerning the 
criteria used by the Federal financial institutions regulatory agencies 
(agencies) in the assessment of civil money penalties under statutes 
that require consideration of the five following factors in setting the 
amount of fines:\1\
---------------------------------------------------------------------------

    \1\ See generally 12 U.S.C. 1786(k)(2)(G) and 1818(i)(2)(G).
---------------------------------------------------------------------------

    (1) Size of financial resources;
    (2) Good faith;
    (3) Gravity of the violation;
    (4) History of previous violations; and
    (5) Other factors that justice may require.
    The principles set forth in this policy apply to penalties assessed 
both by consent and through formal enforcement proceedings.
    The agencies generally are authorized, under these statutes, to 
assess civil money penalties for violations of:
    (1) Any law or regulation;
    (2) Any final or temporary order, including a cease and desist, 
suspension, removal, or prohibition order;
    (3) Any condition imposed in writing in connection with the grant 
of any application or other request;
    (4) Any written agreement; and
    (5) Regulatory reporting requirements.
    Under certain circumstances, the agencies may also assess fines for 
unsafe or unsound practices and breaches of fiduciary duty.
    In determining the amount and the appropriateness of initiating a 
civil money penalty assessment proceeding under statutes requiring 
consideration of the above-mentioned five statutory 
factors,2 the agencies have identified the following factors 
as relevant:
---------------------------------------------------------------------------

    \2\ Some federal laws authorizing the Federal financial 
institutions regulatory agencies to assess fines, such as the civil 
money penalty provisions of section 102(f) of the Flood Disaster 
Protection Act of 1973, as amended, 42 U.S.C. 4012a(f), and section 
21B of the Securities Exchange Act of 1934, 15 U.S.C. 78u-2, do not 
require the consideration of the five statutory factors.
---------------------------------------------------------------------------

    (1) Evidence that the violation or practice or breach of fiduciary 
duty was intentional or was committed with a disregard of the law or 
with a disregard of the consequences to the institution;
    (2) The duration and frequency of the violations, practices, or 
breaches of fiduciary duty;
    (3) The continuation of the violations, practices, or breach of 
fiduciary duty after the respondent was notified or, alternatively, its 
immediate cessation and correction;
    (4) The failure to cooperate with the agency in effecting early 
resolution of the problem;
    (5) Evidence of concealment of the violation, practice, or breach 
of fiduciary duty or, alternatively, voluntary disclosure of the 
violation, practice or breach of fiduciary duty;
    (6) Any threat of loss, actual loss, or other harm to the 
institution, including harm to the public confidence in the 
institution, and the degree of such harm;
    (7) Evidence that a participant or his or her associates received 
financial gain or other benefit as a result of the violation, practice, 
or breach of fiduciary duty;
    (8) Evidence of any restitution paid by a participant of losses 
resulting from the violation, practice, or breach of fiduciary duty;
    (9) History of prior violation, practice, or breach of fiduciary 
duty, particularly where they are similar to the actions under 
consideration;
    (10) Previous criticism of the institution or individual for 
similar actions;
    (11) Presence or absence of a compliance program and its 
effectiveness;
    (12) Tendency to engage in violations of law, unsafe or unsound 
banking practices, or breaches of fiduciary duty; and
    (13) The existence of agreements, commitments, orders, or 
conditions imposed in writing intended to prevent the violation, 
practice, or breach of fiduciary duty.
    The agencies will give additional consideration in cases where the 
violation, practice, or breach causes quantifiable, economic benefit or 
loss. In those cases, removal of the benefit or recompense of the loss 
usually will be insufficient, by itself, to promote compliance with 
statutory and regulatory requirements. The penalty amount should 
reflect a remedial purpose and should provide a deterrent to future 
misconduct.
    The agencies intend these factors to provide guidance on the 
appropriateness of a civil money penalty, in a manner consistent with 
the statutes authorizing such an action. This policy does not preclude 
any agency from considering any other matter relevant to the civil 
money penalty assessment.

    Dated: May 28, 1998.
Keith Todd,
Acting Executive Secretary, Federal Financial Institutions Examination 
Council.
[FR Doc. 98-14611 Filed 6-2-98; 8:45 am]
BILLING CODE 6210-01-P, 6720-01-P, 6714-01-P, 4810-33-P, 7535-01-P