02-18493. FDIC Statement of Policy on Bank Merger Transactions

AGENCY:

Federal Deposit Insurance Corporation (FDIC).

ACTION:

Final agency policy statement (amended).

SUMMARY:

The FDIC is amending its Statement of Policy on Bank Merger Transactions to incorporate a recent statutory change to the Bank Merger Act, as amended by the USA PATRIOT Act, which makes an insured depository institution's effectiveness in combating money laundering a factor in evaluating a proposed merger transaction.

EFFECTIVE DATE:

July 23, 2002.

FOR FURTHER INFORMATION CONTACT:

Kevin W. Hodson, Review Examiner (202/898-6919), Division of Supervision and Consumer Protection; Robert C. Fick, Counsel (202/898-8962), or Carl Gold, Counsel (202/898-8702), Legal Division, FDIC, 550 17th Street, NW., Washington, DC 20429.

SUPPLEMENTARY INFORMATION:

Section 327 of the USA PATRIOT Act (Pub. L. 107-56, enacted October 26, 2001) amends section 18(c) of the Federal Deposit Insurance Act 12 U.S.C. 1828(c) (commonly known as the Bank Merger Act), adding a new factor for consideration in deciding merger transactions covered by the Bank Merger Act. The factor reads, “In every case, the responsible agency shall take into consideration the effectiveness of any insured depository institution involved in the proposed merger transaction in combating money laundering activities, including in overseas branches.” The amended statement of policy essentially restates the USA PATRIOT Act requirement. No new informational requirements relating to Bank Merger Act applications are imposed at this time. Consideration of the new factor is required on applications submitted after December 31, 2001. The FDIC is not soliciting comment on the revised Statement of Policy. The amendment to the Policy Statement, which was published at 63 FR 44761 on August 20, 1998, is effective immediately upon publication in the Federal Register.

The Statement of Policy is hereby amended by adding a new paragraph at the end of section III., to read as follows:

FDIC Statement of Policy on Bank Merger Transactions

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III. Evaluation of Merger Applications

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Anti-Money Laundering Record

In every case, the FDIC will take into consideration the effectiveness of each insured depository institution involved in the proposed merger transaction in combating money-laundering activities, including in overseas branches. In this regard, the FDIC will consider the adequacy of each institution's programs, policies, and procedures relating to anti-money laundering activities; the relevant supervisory history of each participating institution, including their compliance with anti-money laundering laws and regulations; and the effectiveness of any corrective program outstanding. The FDIC's assessment may also incorporate information made available to the FDIC by the Department of the Treasury, other Federal or State authorities, and/or foreign governments. Adverse findings may warrant correction of identified problems before consent is granted, or the imposition of conditions. Significantly adverse findings in this area may form the basis for denial of the application.

Federal Deposit Insurance Corporation.

Dated at Washington, DC, this 12th day of July, 2002.

By order of the Board of Directors.

Valerie J. Best,

Assistant Executive Secretary/Supervisory Counsel.