§ 505. — 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: 12USC505]
TITLE 12--BANKS AND BANKING
CHAPTER 3--FEDERAL RESERVE SYSTEM
SUBCHAPTER XVI--CIVIL LIABILITY OF FEDERAL RESERVE AND MEMBER BANKS,
SHAREHOLDERS, AND OFFICERS
Sec. 505. Civil money penalty
(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.
(Dec. 23, 1913, ch. 6, Sec. 19(l), formerly Sec. 19(j), as added Pub. L.
95-630, title I, Sec. 102, Nov. 10, 1978, 92 Stat. 3642; renumbered
Sec. 19(l), Pub. L. 96-221, title I, Sec. 105(f), Mar. 31, 1980, 94
Stat. 140; amended Pub. L. 97-320, title IV, Sec. 424(a), (d)(2), (e),
Oct. 15, 1982, 96 Stat. 1522, 1523; Pub. L. 101-73, title IX,
Sec. 907(h), Aug. 9, 1989, 103 Stat. 472.)
References in Text
This section, referred to in pars. (1) and (8), means section 19 of
act Dec. 23, 1913, as amended, which is classified to sections 142,
371a, 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, Sec. 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, Sec. 424(e), substituted ``twenty days
from the service'' for ``ten days from the date''.
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.
Section Referred to in Other Sections
This section is referred to in section 1828 of this title.
