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5000 - Statements of Policy
{{12-31-87 p.5289}}
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;
(e) Acceptance of discounts or rebates on merchandise or services
that do not exceed those available to other customers;
{{12-31-87 p.5290}}
(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
{{4-30-98 p.5291}}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]
[The page following this is 5299.]
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