Payoffs, kickbacks, payola, hush money, sweetener – all mean the same thing, a bribe. Federal financial institutions are subject to the requirements of the Bank Bribery Act (18 U.S.C. § 215).The Bank Bribery Act or BBA was last amended in 1985 when it required federal financial regulatory agencies to establish guidelines to assist financial institution officials with complying with the BBA. The prohibitions of the BBA apply to all credit union officials and employees and all product lines and services offered by the credit union. In 1987, NCUA released its guidelines for complying with the BBA by way of NCUA’s Interpretive Ruling and Policy Statement, No. 87-1; it encourages federally insured credit unions to adopt codes of conduct or written policies that cover the conflict-of-interest prohibitions of bank bribery law.
The Justice Department prosecutes violations of the BBA, so let’s look at the criminal penalties that apply when a credit union official or employee corruptly solicits, seeks, demands, or corruptly accepts, or agrees to accept anything of value from any person – if that credit union official or employee intends to be influenced or rewarded in connection with any business or transaction of the credit union.
- If the value of the thing/item given, offered, promised, solicited, demanded, accepted, or agreed to be accepted is greater than $1000, then it is a felony offense punishable by up to 30 years in prison and/or a fine of up to $1,000,000 or three times the value (whichever is greater) of the bribe or gratuity.
- If the thing/item given, offered, promised, solicited, demanded, accepted, or agreed to be accepted offered is valued at $1000 or less, then it is a misdemeanor, punishable by up to one year in prison and/or a similar fine.
As indicated by the IRPS, a credit union’s policy or code of conduct should include a general/broad prohibition against acceptance of things of value in connection (such as discounts or direct/indirect payment of property or money) with credit union business. However, there are situations such as the acceptance of a gift which is why the IRPS recommends that credit union policy also contain a list of acceptable situations (exceptions) so that credit union officials and employees can be knowledgeable about what may be acceptable or unacceptable. For example, NCUA’s IRPS lists the following as possible permissible exceptions to the prohibitions under the BBA:
- Gifts, gratuities, amenities, or favors based on obvious family or personal relationships (such as those between the parents, children, or spouse of a Credit Union Official) where the circumstances make it clear that it is those relationships rather than the business of the credit union concerned which are the motivating factor;
- Meals, refreshments or entertainment, all of reasonable value and in the course of a meeting or other occasion the purpose of which is to hold bona fide business discussions, provided these expenses would be paid for by the credit union if not paid for by the other party as a reasonable business expense (the credit union may establish a specific dollar limit for such an occasion);
- Loans from banks or financial institutions on customary terms to finance proper and usual activities of Credit Union Officials, such as home mortgage loans, except where prohibited by law;
- Advertising or promotional material of reasonable value, such as pens, pencils, note pads, key chains, calendars, and similar items;
- Discounts or rebates on merchandise or services that do not exceed those available to other members;
- Gifts of reasonable value that are related to commonly recognized events or occasions, such as a promotion, new job, wedding, retirement, Christmas, or bar or bat mitzvah (the credit union may establish a specific dollar limit for such occasions); or
- Civic, charitable, educational, or religious organizational awards for recognition of service and accomplishment (the credit union may establish a specific dollar limit for such occasions)
Another recommendation is that the credit union include in its policy/code of conduct that the credit union may approve other situations or circumstances on a case-by-case basis in which a credit union official or employee may accept something of value in connection with credit union business as long as the credit union provides written approval on the basis of a full written disclosure of all relevant facts and is consistent with the BBA statute.
While credit unions are not required to use the guidelines as provided in the IRPS, the Justice Department will consider a credit union’s use of the guidelines in a credit union’s policy or code of conduct when deciding whether the activity is considered criminal under the BBA.
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