§ 504. — Civil money penalty.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 12USC504]
TITLE 12--BANKS AND BANKING
CHAPTER 3--FEDERAL RESERVE SYSTEM
SUBCHAPTER XVI--CIVIL LIABILITY OF FEDERAL RESERVE AND MEMBER BANKS,
SHAREHOLDERS, AND OFFICERS
Sec. 504. Civil money penalty
(a) 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 section 371c, 371c-1, 375,
375a, 375b, 376, or 503 of this title, 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.
(b) Second tier
Notwithstanding subsection (a) of this section, 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 \1\
---------------------------------------------------------------------------
\1\ So in original. Probably should be followed by a dash.
---------------------------------------------------------------------------
(1)(A) commits any violation described in subsection (a) of this
section;
(B) recklessly engages in an unsafe or unsound practice in
conducting the affairs of such member bank; or
(C) breaches any fiduciary duty;
(2) which violation, practice, or breach--
(A) is part of a pattern of misconduct;
(B) causes or is likely to cause more than a minimal loss to
such member bank; or
(C) 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.
(c) Third tier
Notwithstanding subsections (a) and (b) of this section, 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--
(1) knowingly--
(A) commits any violation described in subsection (a) of
this section;
(B) engages in any unsafe or unsound practice in conducting
the affairs of such credit union; \2\ or
---------------------------------------------------------------------------
\2\ So in original. Probably should be ``such member bank''.
---------------------------------------------------------------------------
(C) breaches any fiduciary duty; and
(2) knowingly or recklessly causes a substantial loss to such
credit union \2\ 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 subsection (d) of this
section for each day during which such violation, practice, or breach
continues.
(d) Maximum amounts of penalties for any violation described in
subsection (c)
The maximum daily amount of any civil penalty which may be assessed
pursuant to subsection (c) of this section for any violation, practice,
or breach described in such subsection is--
(1) in the case of any person other than a member bank, an
amount to not exceed $1,000,000; and
(2) in the case of a member bank, an amount not to exceed the
lesser of--
(A) $1,000,000; or
(B) 1 percent of the total assets of such member bank.
(e) Assessment; etc.
Any penalty imposed under subsection (a), (b), or (c) of this
section shall be assessed and collected \3\ by
---------------------------------------------------------------------------
\3\ So in original. Probably should be followed by a dash rather
than ``by''.
---------------------------------------------------------------------------
(1) in the case of a national bank, by the Comptroller of the
Currency; and
(2) in the case of a State member bank, 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.
(f) 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.
(g) Disbursement
All penalties collected under authority of this paragraph shall be
deposited into the Treasury.
(h) ``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.
(i) Regulations
The Comptroller of the Currency and the Board shall prescribe
regulations establishing such procedures as may be necessary to carry
out this section.
(m) \4\ Notice under this section after separation from service
---------------------------------------------------------------------------
\4\ So in original. No subsecs. (j) to (l) have been enacted.
---------------------------------------------------------------------------
The resignation, termination of employment or participation, or
separation of an institution-affiliated party (within the meaning of
section 1813(u) of this title) with respect to a member bank (including
a separation caused by the closing of such a bank) shall not affect the
jurisdiction and authority of the appropriate Federal banking agency to
issue any notice and proceed under this section against any such party,
if such notice is served before the end of the 6-year period beginning
on the date such party ceased to be such a party with respect to such
bank (whether such date occurs before, on, or after August 9, 1989).
(Dec. 23, 1913, ch. 6, Sec. 29, as added Pub. L. 95-630, title I,
Sec. 101, Nov. 10, 1978, 92 Stat. 3641; amended Pub. L. 97-320, title
IV, Sec. 424(c), (d)(1), (e), Oct. 15, 1982, 96 Stat. 1523; Pub. L. 101-
73, title IX, Secs. 905(f), 907(g), Aug. 9, 1989, 103 Stat. 461, 470.)
Codification
In subsec. (a), ``section 371c, 371c-1, 375, 375a, 375b, 376, or 503
of this title'' was in the original ``section 22, 23A, or 23B'', meaning
section 22, 23A, or 23B of the Federal Reserve Act. Sections 23A and 23B
are classified to sections 371c and 371c-1, respectively, of this title.
Subsections (d) to (h) of section 22 are classified to sections 375,
375a, 375b, 376, and 503 of this title. Former subsections (a) to (c)
and (h) to (k), which were classified to sections 593 to 599 of this
title, were repealed by act June 25, 1948, ch. 645, Sec. 21, 62 Stat.
862, eff. Sept. 1, 1948, and the provisions thereof were reenacted as
sections 217, 218, 219, 220, 655, 1005, 1014, 1906, and 1909 of Title
18, Crimes and Criminal Procedure. Sections 217, 218, 219, and 220 of
Title 18 were redesignated as sections 212, 213, 214, and 215 of Title
18 by act Oct. 23, 1962, Pub. L. 87-849, Sec. 1(d), 76 Stat. 1125.
Amendments
1989--Pub. L. 101-73, Sec. 907(g), amended section generally,
substituting provisions of subsecs. (a) to (i) for former provisions
which related to the following: subsec. (a), making loans, extensions of
credit, purchases of securities, etc., respecting affiliates, executive
officers, etc.; subsec. (b), amount of penalty; subsec. (c), opportunity
for hearing; subsec. (d), review by United States court of appeals;
subsec. (e), action by Attorney General for failure to pay assessment;
subsec. (f), promulgation of regulations; and subsec. (g), penalties
covered into Treasury of United States.
Subsec. (m). Pub. L. 101-73, Sec. 905(f), added subsec. (m).
1982--Subsec. (a). Pub. L. 97-320, Sec. 424(c), (d)(1), inserted
proviso giving agency discretionary authority to compromise, etc., any
civil money penalty imposed under its authority, and substituted ``may
be assessed'' for ``shall be assessed'', respectively.
Subsec. (d). Pub. L. 97-320, Sec. 424(e), substituted ``twenty days
from the service'' for ``ten days from the date''.
Effective Date of 1989 Amendment
Amendment by section 907(g) of 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.
