Civil money penalty

12 U.S.C. § 505

• Title: 12 — Banks and Banking
• Chapter: SUBCHAPTER XVI—CIVIL LIABILITY OF FEDERAL RESERVE AND MEMBER BANKS, SHAREHOLDERS, AND OFFICERS

Text

(1) First tier
Any member bank which, and any institution-affiliated party (within the meaning of section 1813(u) of this title) with respect to such member bank who, violates any provision of this section, or any regulation issued pursuant thereto, shall forfeit and pay a civil penalty of not more than $5,000 for each day during which such violation continues.
(2) Second tier
Notwithstanding paragraph (1), any member bank which, and any institution-affiliated party (within the meaning of section 1813(u) of this title) with respect to such member bank who—
(A)(i) commits any violation described in paragraph (1);
(ii) recklessly engages in an unsafe or unsound practice in conducting the affairs of such member bank; or
(iii) breaches any fiduciary duty;
(B) which violation, practice, or breach—
(i) is part of a pattern of misconduct;
(ii) causes or is likely to cause more than a minimal loss to such member bank; or
(iii) results in pecuniary gain or other benefit to such party,
shall forfeit and pay a civil penalty of not more than $25,000 for each day during which such violation, practice, or breach continues.
(3) Third tier
Notwithstanding paragraphs (1) and (2), any member bank which, and any institution-affiliated party (within the meaning of section 1813(u) of this title) with respect to such member bank who—
(A) knowingly—
(i) commits any violation described in paragraph (1);
(ii) engages in any unsafe or unsound practice in conducting the affairs of such member bank; or
(iii) breaches any fiduciary duty; and
(B) knowingly or recklessly causes a substantial loss to such member bank or a substantial pecuniary gain or other benefit to such party by reason of such violation, practice, or breach,
shall forfeit and pay a civil penalty in an amount not to exceed the applicable maximum amount determined under paragraph (4) for each day during which such violation, practice, or breach continues.
(4) Maximum amounts of penalties for any violation described in paragraph (3)
The maximum daily amount of any civil penalty which may be assessed pursuant to paragraph (3) for any violation, practice, or breach described in such paragraph is—
(A) in the case of any person other than a member bank, an amount not to exceed $1,000,000; and
(B) in the case of a member bank, an amount not to exceed the lesser of—
(i) $1,000,000; or
(ii) 1 percent of the total assets of such member bank.
(5) Assessment; etc.
Any penalty imposed under paragraph (1), (2), or (3) may be assessed and collected by the Board in the manner provided in subparagraphs (E), (F), (G), and (I) of section 1818(i)(2) of this title for penalties imposed (under such section) and any such assessment shall be subject to the provisions of such section.
(6) Hearing
The member bank or other person against whom any penalty is assessed under this section shall be afforded an agency hearing if such member bank or person submits a request for such hearing within 20 days after the issuance of the notice of assessment. Section 1818(h) of this title shall apply to any proceeding under this section.
(7) Disbursement
All penalties collected under authority of this section shall be deposited into the Treasury.
(8) "Violate" defined
For purposes of this section, the term "violate" includes any action (alone or with another or others) for or toward causing, bringing about, participating in, counseling, or aiding or abetting a violation.
(9) Regulations
The Board shall prescribe regulations establishing such procedures as may be necessary to carry out this section.

History

(Dec. 23, 1913, ch. 6, §19(l), formerly §19(j), as added Pub. L. 95–630, title I, §102, Nov. 10, 1978, 92 Stat. 3642; renumbered §19(l), Pub. L. 96–221, title I, §105(f), Mar. 31, 1980, 94 Stat. 140; amended Pub. L. 97–320, title IV, §424(a), (d)(2), (e), Oct. 15, 1982, 96 Stat. 1522, 1523; Pub. L. 101–73, title IX, §907(h), Aug. 9, 1989, 103 Stat. 472.)

Editorial Notes

Editorial Notes

References in Text
This section, referred to in pars. (1) and (8), means section 19 of act Dec. 23, 1913, which is classified to sections 142, 371b, 371b–1, 374, 374a, 461, 463 to 466, 505, and 506 of this title.

Amendments
1989—Pub. L. 101–73 amended section generally, revising and restating as pars. (1) to (9) provisions of former pars. (1) to (7) which related to civil penalty respecting depository, reserve, etc., requirements; amount; hearing; review; action by Attorney General; and regulations.
1982—Par. (1). Pub. L. 97–320, §424(a), (d)(2), inserted proviso giving Board discretionary authority to compromise, etc., any civil money penalty imposed under this section, and substituted "may be assessed" for "shall be assessed".
Par. (4). Pub. L. 97–320, §424(e), substituted "twenty days from the service" for "ten days from the date".

Statutory Notes and Related Subsidiaries

Effective Date of 1989 Amendment
Amendment by Pub. L. 101–73 applicable to conduct engaged in after Aug. 9, 1989, except that increased maximum penalties of $5,000 and $25,000 may apply to conduct engaged in before such date if such conduct is not already subject to a notice issued by the appropriate agency and occurred after completion of the last report of the examination of the institution by the appropriate agency occurring before Aug. 9, 1989, see section 907(l) of Pub. L. 101–73, set out as a note under section 93 of this title.

Effective Date
Section effective with respect to violations occurring or continuing after Nov. 10, 1978, see section 109 of Pub. L. 95–630 set out as an Effective Date of 1978 Amendment note under section 93 of this title.