Bank Bribery Act Flashcards
Harvey Smith is a loan officer at First National Bank. Which of the following of Harvey’s outside business interests may be considered to be a conflict of interest that should be disclosed to the bank?
a. His ownership of 4,000 shares of stock in a local car dealership (the car dealership is not a bank customer)
b. His wife’s position as chair of the board of a local bank
c. His attendance at a party hosted by one of his customers where other financial institutions were represented
d. His role as honorary chair of a fund drive for a local charitable organization
b. His wife’s position as chair of the board of a local bank
In her position, Harvey’s wife has access to confidential information about her bank, a competitor with First National. Harvey also has a certain amount of access to bank information. Therefore, this personal relationship involves a potential conflict of interest, which should be disclosed to the bank.
Martin Taylor, a loan officer at First National Bank, is a long-time friend of Bill Evans, a local homebuilder. Bill would like a line of credit at the bank and discusses the potential loan with Martin. During the discussion, Martin expresses his desire to build a house one day and Bill offers to build him one “at cost plus 5 percent.” If Martin accepts Bill’s offer, can he continue to act as his loan officer?
a. No. The value of the gift is too great.
b. Yes, if Martin discloses this fact to the bank.
c. Yes, if Martin does not let the discount on the house affect his decision-making process.
d. Yes, if the bank’s code of conduct allows such activity.
a. No. The value of the gift is too great.
In this case the offer came up for discussion in a lending context. Although Martin and Bill are close personal friends, no amount of disclosure will make a lender-borrower relationship acceptable. The value of what was offered is too great. Martin should excuse himself from any decision making on Bill’s lending requests.
Which of the following factors would NOT be considered when evaluating whether specific behavior by a banker violates the statute?
a. The social and family ties of the banker
b. The standard for business amenities and entertaining in that particular part of the country
c. Whether there was a demonstrable business purpose
d. Whether a business transaction was consummated as a result
d. Whether a business transaction was consummated as a result
A banker’s family and social relationships are important when evaluating whether the banker has been involved in behavior that violates the statute. If the motivation for accepting a gift is personal relationships, the statute is not violated. Also, activity that would be reasonable in one part of the country might be considered lavish in another. Therefore, the standard of the region must be taken into account. Finally, another factor is whether there was a demonstrable business purpose. A dinner for bank employees might violate the statute if there is no business purpose; whereas, if the dinner is for the purpose of conducting business discussions there would be no violation.
Which of the following is NOT a written record the bank should retain in complying with the Bank Bribery Act?
a. A copy of the bank’s internal code of conduct
b. A list of all gifts received by bank officers during the year
c. Disclosures of unauthorized gifts
d. A list of all bank officers’ outside business interests
b. A list of all gifts received by bank officers during the year
The bank is to keep copies of its own code of conduct, a list of outside business interests, and a record of disclosures of unauthorized gifts.
Which of the following would NOT be acceptable under the Bank Bribery Act and the relevant guidelines?
a. A luncheon paid for by a bank customer after a transaction is closed
b. A gift of a hunting rifle to a loan officer from a borrower at Christmas
c. The gift of a gold watch to a loan officer from a customer who is the loan officer’s cousin
d. An award of a writing pen and pencil set to a bank officer by a civic organization
b. A gift of a hunting rifle to a loan officer from a borrower at Christmas
While Christmas gifts of modest value do not violate the statute, the hunting rifle is probably too expensive to qualify. The other gifts are related to business transactions or family ties or are specifically approved in the guidelines.
When does a gift accepted by a banker clearly violate the Bank Bribery Act?
a. When it is given for personal reasons
b. When it is given with corrupt intent
c. When it is valued at a dollar amount exceeding $50
d. When it is not given in connection with a generally accepted holiday
b. When it is given with corrupt intent
In some circumstances gifts may be given for personal reasons (based on family or social relationships), and they may be given at other times than holidays. In some cases the gift may have a value greater than $50. However, if the gift is given with corrupt intent, it will violate the Bank Bribery Act.
The bank’s compliance officer has been invited to speak at the ABA National Compliance Conference to a general session of compliance professionals. The ABA gives the compliance officer a thank you gift of a glass engraved bowl worth approximately $60. Does the compliance officer’s acceptance of the gift constitute a violation of the Bank Bribery Act?
a. No, because the value of the gift is below the threshold permitted by the Act.
b. Yes, because the value of the gift is more than $50
c. Yes, if the Bank’s Code of Conduct prohibits such gifts
d. No, because the gift is not given in connection with the loan decision process
c. Yes, if the Bank’s Code of Conduct prohibits such gifts
It’s a gift. It depends on the bank’s code of conduct and what it says about gifts. The Bank Bribery Act isn’t specific about where the gifts or bribes are coming from. It requires that the bank establish a code of conduct to regulate the practice of accepting gifts. That’s why the answer is Yes IF the bank’s code of conduct prohibits such gifts. If the bank’s code of conduct allows such gifts, there is no problem. The other choices don’t make sense because there is no specific dollar amount in the law that is prohibited. That, too, is established by the bank’s code of conduct. And, the law is not only applicable to the loan decision process. One bank I worked for had a policy of allowing gifts under $50 only. If it was over $50, it had to be reported to the General Counsel.
