FDIC Law, Regulations, Related Acts
5000 - Statements of Policy
GUIDELINES FOR COMPLIANCE WITH THE FEDERAL BANK BRIBERY LAW
The Bank Bribery Amendments Act of 1985 (Pub. L. 99--370, Aug. 4, 1985) amends the federal bank bribery law, 18 U.S.C. 215, and requires that the financial institution regulatory agencies publish guidelines to assist employees, officers, directors, agents and attorneys of financial institutions in complying with the law. These guidelines are issued pursuant to that mandate.
The FDIC encourages all FDIC-insured state-chartered banks that are not members of the Federal Reserve System and all FDIC-insured state-licensed branches of foreign banks ("insured state nonmember banks") to adopt internal codes of conduct or written policies, or to amend their present codes of conduct, to include provisions that explain the general prohibitions of the bank bribery law. These guidelines relate only to the federal bank bribery law and do not address other areas of conduct that an insured state nonmember bank would find advisable to cover in its code of ethics. Consistent with the intent of the statute to proscribe corrupt activity within financial institutions, the bank's code of conduct should prohibit any employee, officer, director, agent or attorney of an insured state nonmember bank (hereinafter "bank official(s)") from (1) soliciting for themselves or for a third party (other than the bank itself) anything of value from anyone in return for any business, service or confidential information of the bank and (2) accepting anything of value (other than bona fide salary, wages and fees referred to in 18 U.S.C. 215(c)) from anyone in connection with the business of the bank, either before or after a transaction is discussed or consummated.
The insured state nonmember bank's codes or policies should be designed to alert bank officials about the bank bribery statute, as well as to establish and enforce written policies on acceptable business practices.
In its code of conduct, the insured state nonmember bank may, however, specify appropriate exceptions to the general prohibition of accepting something of value in connection with bank business. There are a number of instances where a bank official, without risk of corruption or breach of trust, may accept something of value from one doing or seeking to do business with the insured state nonmember bank. The most common examples are the business luncheon or the special occasion gift from a customer. In general, there is no threat of a violation of the statute if the acceptance is based on family or personal relationship existing independent of any business of the institution; if the benefit is available to the general public under the same conditions on which it is available to the bank official; or if the benefit would be paid for by the insured state nonmember bank as a reasonable business expense if not paid for by another party.
Other exceptions to the general prohibition regarding acceptance of things of value in connection with bank business may include:
(a) Acceptance of gifts, gratuities, amenities or favors based on obvious family or personal relationships (such as those between the parents, children or spouse of a bank official) where the circumstances make it clear that it is those relationships rather than the business of the bank concerned which are the motivating factors;
(b) Acceptance of meals, refreshments, entertainment, accommodations or travel arrangements, all of reasonable value, in the course of a meeting or other occasion, the purpose of which is to hold bona fide business discussions or to foster better business relations, provided that the expense would be paid for by the bank as a reasonable business expense if not paid for by another party (the bank may establish a specific dollar limit for such an occasion);
(c) Acceptance of loans from other banks or financial institutions on customary terms to finance proper and usual activities of bank officials, such as home mortgage loans, except where prohibited by law;
(d) Acceptance of advertising or promotional material of reasonable value, such as pens, pencils, note pads, key chains, calendars and similar items;
(f) Acceptance of gifts of reasonable value that are related to commonly recognized events or occasions, such as a promotion, new job, wedding, retirement, holiday or birthday (the bank may establish a specific dollar limit for such an occasion); or
(g) Acceptance of civic, charitable, educational, or religious organization awards for recognition of service and accomplishment (the bank may establish a specific dollar limit for such an occasion).
By adopting a code of conduct with appropriate allowances for such circumstances, an insured state nonmember bank recognizes that acceptance of certain benefits by its bank officials does not amount to a corrupting influence on the bank's transactions. The policy or code may also provide that, on a case by case basis, an insured state nonmember bank may approve of other circumstances, not identified above, in which a bank official accepts something of value in connection with bank business, provided that such approval is made in writing on the basis of a full written disclosure of all relevant facts and is consistent with the bank bribery statute.
In issuing guidance under the statute in the area of business purpose entertainment or gifts, it is not advisable for the FDIC to establish rules about what is reasonable or normal in fixed dollar terms. What is reasonable in one part of the country may appear lavish in another part of the country. An insured state nonmember bank should seek to embody the highest ethical standards in its code of conduct. In doing this, an insured state nonmember bank may establish in its own code of conduct a range of dollar values which covers the various benefits that its bank officials may receive from those doing or seeking to do business with the bank.
The code of conduct should provide that, if a bank official is offered or receives something of value from a customer beyond what is authorized in the bank's code of conduct or written policy, the bank official must disclose that fact to an appropriately designated official of the bank. The insured state nonmember bank should keep contemporaneous written reports of such disclosures. An effective reporting and review mechanism should serve to prevent situations that might otherwise lead to implications of corrupt intent or breach of trust and should enable the insured state nonmember bank to better protect itself from self-dealing. However, a bank official's full disclosure evidences good faith when such disclosure is made in the context of properly exercised supervision and control. Management should review the disclosures and determine that what is accepted is reasonable and does not pose a threat to the integrity of the insured state nonmember bank. Thus, the prohibitions of the bank bribery statute cannot be avoided by simply reporting to management the acceptance of various gifts.
The FDIC recognizes that a serious threat to the integrity of an insured state nonmember bank occurs when its bank officials become involved in outside business interests or employment that gives rise to a conflict of interest. Such conflicts of interest may evolve into corrupt transactions that are covered under the bank bribery statute. Accordingly, insured state nonmember banks are encouraged to prohibit, in their codes of conduct or policies, their bank officials from self-dealing or otherwise trading on their positions with the bank or accepting from one doing or seeking to do business with the bank a business opportunity not available to other persons or that is made available because of such official's position with the bank. In this regard, an insured state nonmember bank's code of conduct or policy should require that its bank officials disclose all potential conflicts of interest, including those in which they have been inadvertently placed due to either business or personal relationships with customers, suppliers, business associates, or competitors of the bank.
Disclosures and Reports
To make effective use of these guidelines, the FDIC recommends the following additional procedures:
(a) The insured state nonmember bank should maintain a copy of any code of conduct or written policy it establishes for its bank officials, including any modifications thereof;
(b) The insured state nonmember bank should require from its bank officials an initial written acknowledgement of its code or policy plus written acknowledgement of any subsequent material changes to the code or policy and the bank officials' agreement to comply therewith; and
(c) The insured state nonmember bank should maintain contemporaneous written reports of any disclosures made by its bank officials in connection with a code of conduct or written policy.
By order of the Board of Directors, November 10, 1987.
[Source: 52 Fed. Reg. 43941, November 17, 1987]