TERMINATING INSURANCE OF STATE DEPOSITORY INSTITUTIONS CONVICTED OF MONEY LAUNDERING OR CASH TRANSACTION REPORTING OFFENSES.

SEC. 1503. TERMINATING INSURANCE OF STATE DEPOSITORY INSTITUTIONS CONVICTED OF MONEY LAUNDERING OR CASH TRANSACTION REPORTING OFFENSES. (a) State Banks and Savings Associations.— (1) In general.—Section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818) is amended by adding at the end the following new subsection: “(w) Termination of Insurance for Money Laundering or Cash Transaction Reporting Offenses.— “(1) In general.— “(A) Conviction of title is offenses.— “(i) Duty to notify.—If an insured State depository institution has been convicted of any criminal offense under section 1956 or 1957 of title 18, United States Code, the Attorney General shall provide to the Corporation a written notification of the conviction and shall include a certified copy of the order of conviction from the court rendering the decision. 106 STAT. 4049 “(ii) Notice of termination; pretermination hearing.—After receipt of written notification from the Attorney General by the Corporation of such a conviction, the Board of Directors shall issue to the insured depository institution a notice of its intention to terminate the insured status of the insured depository institution and schedule a hearing on the matter, which shall be conducted in all respects as a termination hearing pursuant to paragraphs (3) through (5) of subsection (a). “(B) Conviction of title 31 offenses.—If an insured State depository institution is convicted of any criminal offense under section 5322 of title 31, United States Code, after receipt of written notification from the Attorney General by the Corporation, the Board of Directors may initiate proceedings to terminate the insured status of the insured depository institution in the manner described in subparagraph (A). “(C) Notice to state supervisor.—The Corporation shall simultaneously transmit a copy of any notice issued under this paragraph to the appropriate State financial institutions supervisor. “(2) Factors to be considered.— In determining whether to terminate insurance under paragraph (1), the Board of Directors shall take into account the following factors: “(A) The extent to which directors or senior executive officers of the depository institution knew of, or were involved in, the commission of the money laundering offense of which the institution was found guilty. “(B) The extent to which the offense occurred despite the existence of policies and procedures within the depository institution which were designed to prevent the occurrence of any such offense. “(C) The extent to which the depository institution has fully cooperated with law enforcement authorities with respect to the investigation of the money laundering offense of which the institution was found guilty. “(D) The extent to which the depository institution has implemented additional internal controls (since the commission of the offense of which the depository institution was found guilty) to prevent the occurrence of any other money laundering offense. “(E) The extent to which the interest of the local community in having adequate deposit and credit services available would be threatened by the termination of insurance. “(3) Notice to state banking supervisor and public.— When the order to terminate insured status initiated pursuant to this subsection is final, the Board of Directors shall— “(A) notify the State banking supervisor of any State depository institution described in paragraph (1) and the Office of Thrift Supervision, where appropriate, at least 10 days prior to the effective date of the order of termination of the insured status of such depository institution, including a State branch of a foreign bank; and “(B) publish notice of the termination of the insured status of the depository institution in the Federal Register. 106 STAT. 4050 “(4) Temporary insurance of previously insured deposits.—Upon termination of the insured status of any State depository institution pursuant to paragraph (1), the deposits of such depository institution shall be treated in accordance with subsection (a)(7). “(5) Successor liability.—This subsection shall not apply to a successor to the interests of, or a person who acquires, an insured depository institution that violated a provision of law described in paragraph (1), if the successor succeeds to the interests of the violator, or the acquisition is made, in good faith and not for purposes of evading this subsection or regulations prescribed under this subsection. “(6) Definition.—The term ‘senior executive officer’ has the same meaning as in regulations prescribed under section 32(f) of this Act.”. (2) Technical amendment.—Section 8(a)(3) of the Federal Deposit Insurance Act (12 U.S.C. 1818(a)(3)) is amended by inserting “of this subsection or subsection (w) ” after “subparagraph (B)”. (b) State Credit Unions.—Section 206 of the Federal Credit Union Act (12 U.S.C. 1786) is amended by adding at the end the following new subsection: “(v) Termination of Insurance for Money Laundering or Cash Transaction Reporting Offenses.— “(1) In general.— “(A) Conviction of title is offenses.— “(i) Duty to notify.—If an insured State credit union has been convicted of any criminal offense under section 1956 or 1957 of title 18, United States Code, the Attorney General shall provide to the Board a written notification of the conviction and shall include a certified copy of the order of conviction from the court rendering the decision. “(ii) Notice of termination.—After written notification from the Attorney General to the Board of such a conviction, the Board shall issue to such Insured credit union a notice of its intention to terminate the insured status of the insured credit union and schedule a hearing on the matter, which shall be conducted as a termination hearing pursuant to subsection (b) of this section, except that no period for correction shall apply to a notice issued under this subparagraph. “(B) Conviction of title 31 offenses.—If a credit union is convicted of any criminal offense under section 5322 of title 31, United States Code, after prior written notification from the Attorney General, the Board may initiate proceedings to terminate the insured status of such credit union in the manner described in subparagraph (A). “(C) Notice to state supervisor.—The Board shall simultaneously transmit a copy of any notice under this paragraph to the appropriate State financial institutions supervisor. “(2) Factors to be considered.— In determining whether to terminate insurance under paragraph (1), the Board shall take into account the following factors: 106 STAT. 4051 “(A) The extent to which directors, committee members, or senior executive officers (as defined by the Board in regulations which the Board shall prescribe) of the credit union knew of, or were involved in, the commission of the money laundering offense of which the credit union was found guilty. “(B) The extent to which the offense occurred despite the existence of policies and procedures within the credit union which were designed to prevent the occurrence of any such offense. “(C) The extent to which the credit union has fully cooperated with law enforcement authorities with respect to the investigation of the money laundering offense of which the credit union was found guilty. “(D) The extent to which the credit union has implemented additional internal controls (since the commission of the offense of which the credit union was found guilty) to prevent the occurrence of any other money laundering offense. “(E) The extent to which the interest of the local community in having adequate deposit and credit services available would be threatened by the termination of insurance. “(3) Notice to state credit union supervisor and public.— When the order to terminate insured status initiated pursuant to this subsection is final, the Board shall— “(A) notify the commission, board, or authority (if any) having supervision of the credit union described in paragraph (1) at least 10 days prior to the effective date of the order of the termination of the insured status of such credit union; and “(B) publish notice of the termination of the insured status of the credit union. “(4) Temporary insurance of previously insured deposits.—Upon termination of the insured status of any State credit union pursuant to paragraph (1), the deposits of such credit union shall be treated in accordance with section 2O6(d)(2). “(5) Successor liability.—This subsection shall not apply to a successor to the interests of, or a person who acquires, an insured credit union that violated a provision of law described in paragraph (1), if the successor succeeds to the interests of the violator, or the acquisition is made, in good faith and not for purposes of evading this subsection or regulations prescribed under this subsection.”.