Insider Activities

Acceptance of Items of Value

It may be appropriate for a bank insider to accept something of value from someone doing or seeking to do business with the bank. The bank’s written policies may authorize an insider to accept an item if it:

• Is offered based on a family or personal relationship, independent of any bank business;

• Is available to the general public on the same conditions; or

• Would be paid for by the bank as a reasonable business expense if not paid for by another party.

Under these circumstances, there is generally no risk to the bank. Common examples of these types of items include a business luncheon or holiday season gift. The bank’s written policies may also permit acceptance of:

• Meals, gratuities, amenities, or favors based on obvious family or personal relationships. The circumstances should make it clear that the relationship, rather than the business of the bank, is the motivating factor.

• Meals, refreshments, travel arrangements, accommodations, or entertainment of reasonable value in the course of a meeting or other occasion. In this case, the occasion must be for a bona fide business discussion or part of an effort to foster better business relations, and the expense should be one the bank would pay as a reasonable business expense if not being paid by another party. The bank may wish to establish a dollar limit on arrangements accepted under this exception.

• Advertising or promotional material of reasonable value, including pens, pencils, note pads, key chains, calendars, and similar items.

• Discounts or rebates on merchandise or services that are available to other customers under similar circumstances.

• Gifts of reasonable value related to commonly recognized events or occasions such as a promotion, new job, wedding, retirement, Christmas, or bar or bat mitzvah. The bank may wish to establish a dollar limit on the value of such gifts.

• Civic, charitable, educational, or religious organizational awards for recognition of service and accomplishment. The bank may wish to establish a dollar limit on such awards.

• Loans from other banks or financial institutions, when made on customary terms for the purpose of financing proper and usual activities of bank insiders. Insiders must ensure that financial arrangements are not contingent upon either bank accepting or offering any other service. Some insiders must also ensure that they do not receive preferential loans from correspondent banks and must report to their board of directors loans received from other financial institutions as required by 12 CFR 215.9 and 215.22.

• Other benefits or items of value, when approved in writing, case by case. Approvals should be based on a full, written disclosure of all relevant facts and should be consistent with the bank bribery statute (18 USC 215).

The OCC has not set a dollar limit on the value of items that may be accepted by insiders. Reasonable standards for one part of the country might appear lavish elsewhere. Each national bank should establish dollar limits on the benefits insiders are allowed to accept. In setting those limits, the bank should observe the highest ethical standards.

A bank’s insider policies should require an insider who is offered, or who receives, something of greater value than is authorized, to disclose that fact to an appropriately designated official of the bank. The bank should maintain written reports of such disclosures, in whatever format the bank deems appropriate.

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