The Federal Deposit Insurance Act requires individuals convicted of certain criminal offenses to obtain written permission from the Federal Deposit Insurance Corporation (FDIC) prior to employment with a depository institution. The FDIC announced on July 24, 2020, that it has amended its Statement of Policy (SOP) relating to the law. The amendments were designed to ease lenders’ restrictions and expand the pool of potential employees in the financial industry.
Below is a summary of the major changes to the SOP.
Convictions that have been expunged or sealed are now excluded from the SOP, meaning no written permission will be required from the FDIC prior to employment. Additionally, the exception for de minimis offenses (offenses for which a person will be deemed automatically approved without need for an application) has been expanded as follows:
- The small-dollar theft exception threshold was raised from $500 to $1000; and
- The exception for the use of a fake identification by a person under the age of 21 for alcohol-related purposes was expanded to cover use to circumvent any age-based restrictions on purchases, activities, or entry.
Previously, there was a limit of one de minimis offense to this exception, but it has now been raised to allow for two offenses. Finally, the required five-year waiting period after one de minimis offense has been eliminated.
Going forward, there will a three-year waiting period only for those with two offenses on record. The FDIC states that, after reviewing applications that were approved over the last several years, it believes these restrictions can be relaxed without significantly increasing the risk to the financial system.
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