Section 19 FDIC Waivers
A section 19 FDIC Waiver is the Federal Deposit Insurance Corporation’s (FDIC) written consent for an employment applicant who has a criminal history that consists of a crime of dishonesty, breach of trust, or money laundering, to work at an FDIC insured institution or their affiliate (i.e., banks, credit unions, etc.).
A section 19 FDIC waiver is required because section 19 of the Federal Deposit Insurance Act (12 U.S Code § 1829) requires all FDIC-insured institutions and their affiliates to make a reasonable examination of every applicant’s criminal history in order to avoid hiring someone who has a criminal record for a crime of dishonesty, breach of trust, or money laundering and who does not meet the requirement for a “de minimis” waiver.
If an employment applicant has one of these categorical offenses, they cannot work at a bank or other FDIC insured institution without the written consent of the FDIC. Furthermore, the applicant who has one of these offenses has the burden of proving that they are still fit to work at an insured institution, do not pose a risk to its safety, or impair the public’s confidence in it.
What does it take to qualify for a Section 19 FDIC Waiver?
An applicant must file for a waiver if they are not a “youthful offender” or a “juvenile delinquent,” obtain a conviction or enter into a pretrial diversion or similar program for a for a crime of dishonesty, breach of trust, or money laundering, and their record does not fit within the de minimis exception.
Because a conviction is required, if you have an arrest alone, a pending case not yet brought to trial, an acquittal, or any conviction that has been reversed on appeal, they are not considered a “conviction” for purposes of the FDIC.
If, however, you participated in a pre-trial diversion program, a waiver is still required. A pre-trial diversion program is one that suspends or dismisses the criminal charges when the accused agrees to a non-criminal or non-punitive alternative. Whether a program is considered a pretrial diversion, is determined by relevant federal, state, or local law. The FDIC will consider each on a case-by-case basis.
Finally, the crime must be one of dishonesty, breach of trust, or money laundering:
- “Dishonesty” refers to acts involving a lack of integrity, an act that shows a disposition to distort, cheat, or act deceitfully or fraudulently (e.g., using a fake ID)
- “Breach of trust” refers to a wrongful act, use, misappropriation, or omission with respect to any property or fund that has been committed to a person in a fiduciary or official capacity, or the misuse of one’s official or fiduciary position to engage in a wrongful act, use, misappropriation, or omission.
- “Money laundering”’ includes trafficking, selling, manufacturing, distributing, or transporting controlled substances or drugs. Simple drug possession is not included.
Understanding the De Minimis Waiver
The FDIC does not require an FDIC waiver for every offense which is covered under its rules. If your case falls under the de minimiscategory, then you are automatically granted a waiver and an application is not required.
In 2018, the FDIC clarified in their Statement of Policy that the following three categories will be considered de minimis:
- Convictions or program entries based on a simple theft of goods, services, and/or currency (or other monetary instrument) where the aggregate value of the currency, goods and/or services taken was $500 or less at the time of conviction or program entry
- Provided there is no other conviction or program entry for a covered offense, convictions or program entries based on the use of a fake, false, or altered identification card by a person under the legal age for the purpose of obtaining or purchasing alcohol, or used for the purpose of entering a premise where alcohol is served but for which age appropriate identification is required
- Convictions or program entries of record based on the writing of “bad” or “insufficient funds.” These shall be considered a de minimisoffense under and will not be considered as having involved an insured depository institution if the following applies:
- There is no other conviction or program entry subject to Section 19, and the aggregate total face value of all “bad” or “insufficient funds” check(s) cited across all the conviction(s) or program entry(ies) for bad or insufficient funds checks is $1,000 or less; and
- No insured depository institution or insured credit union was a payee on any of the “bad” or “insufficient funds” checks that were the basis of the conviction(s) or program entry(ies).
If your case does not fall under one of these carved out exceptions, then you must meet all of the following criteria for the de minimis waiver:
- You may only have one covered offense;
- The offense was punishable by imprisonment for a term of 1 year or less and/or a fine of $2,500 or less, and the individual served three (3) days or less of actual jail time;
- The conviction or program was entered at least five years prior to the date an application would otherwise be required; or, if the actions that resulted in a covered conviction or program entry of record all occurred when the individual was 21 years of age or younger, the conviction or program was entered at least 30 months prior to the date an application would otherwise be required andall sentencing or program requirements have been met; and
- The offense did not involve an insured bank or credit union (unless it is a “bad” or “insufficient funds” check case for $1,000 or less and the check did not have a bank or credit union as the payee)
To determine the potential punishment, you will need to consult an attorney who can pull the code for the specific year in which your offense was committed.
Cases expunged under state law may still require an FDIC Waiver
If you do not meet the de minimis requirement and have an offense that falls in one of the prohibited categories, then the FDIC requires an individual FDIC waiver even if you completed a pre-trial diversion program, paid a fine, or completed any other deferred adjudication. This includes any “expunged” cases. For purposes of the FDIC, you case is not considered expunged unless it is a “complete expungement.” A “complete expungement” is defined as a case which no one – (including law enforcement) – can access, even by court order.
Over the past several years, our law firm has become one of the leading advocates in helping individuals obtain a Section 19 FDIC Waiver. We also expedite your application.
If you are facing a Section 19 FDIC, we are here to help. Learn more about Section 19 waivers on our Lifeback Legal website or request a free consultation below.
Lifeback Legal is the Licensing and employment division of the Law Firm of Shea M. Randall. We are a full service Law Firm — from hand crafting your FDIC waiver application, gathering supporting documentation, and dealing with the headache of the FDIC on your behalf.
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