105 Subpart B—Referral of Known Or Suspected Criminal Violations

Farm Credit Administration § 612.2301

Subpart B—Referral of Known or able basis to conclude that a criminal Suspected Criminal Violations violation has been committed and, if so, to report the matter to the proper law enforcement authorities for consid- SOURCE: 62 FR 24566, May 6, 1997, unless eration of prosecution. otherwise noted. Redesignated at 69 FR 10907, Mar. 9, 2004. (e) Each referral required by § 612.2301(a) shall be made on the FCA § 612.2300 Purpose and scope. Referral Form in accordance with the FCA Referral Form instructions relat- (a) This part applies to all institu- ing to its filing and distribution. tions of the Farm Credit System as de- fined in section 1.2(a) of the Farm Cred- [62 FR 24566, May 6, 1997. Redesignated and it Act of 1971, as amended, (Act) (12 amended at 69 FR 10907, Mar. 9, 2004; 75 FR U.S.C. 2002(a)) including, but not lim- 35968, June 24, 2010.] ited to, associations, banks, service corporations chartered under section § 612.2301 Referrals. 4.25 of the Act, the Federal Farm Cred- (a) Each institution and its board of it Banks Funding Corporation, the directors shall exercise due diligence to Farm Credit Leasing Services Corpora- ensure the discovery, appropriate in- tion, and the Federal Agricultural vestigation, and reporting of criminal Mortgage Corporation (hereinafter, in- activity. Within 30 calendar days of de- stitutions). The purposes of this part termining that there is a known or sus- are to ensure public confidence in the pected criminal violation of the United Farm Credit System, to ensure the re- States Code involving or affecting its porting of known or suspected criminal assets, operations, or affairs, the insti- activity, to reduce potential losses to tution shall refer such criminal viola- institutions, and to ensure the safety tion to the appropriate regional offices and soundness of institutions. This of the United States Attorney, and the part requires that institutions use the Federal Bureau of Investigation or the Farm Credit Administration Criminal United States Secret Service or both, Referral Form (hereinafter FCA Refer- using the FCA Referral Form. A copy ral Form) to notify the appropriate of the completed FCA Referral Form, Federal authorities when any known or accompanied by any relevant docu- suspected Federal criminal violations mentation, shall be provided at the of the type described in § 612.2301 are same time to the Farm Credit Adminis- discovered by institutions. tration’s Office of General Counsel. In (b) The specific referral requirements the event that a Farm Credit bank of this part apply to known or sus- makes a loan through a Federal land pected criminal violations of the bank association which services the United States Code involving the as- loan, the Federal land bank association sets, operations, or affairs of an insti- must inform the Farm Credit bank of tution. This part prescribes procedures any known or suspected violation in- for referring those violations to the volving that loan and the Farm Credit proper Federal authorities and the bank shall refer the violation to Fed- Farm Credit Administration. No spe- eral law enforcement authorities under cific procedural requirements apply to this section. A report is required in cir- the referral of violations of State or cumstances where there is: local laws. (1) Any known or suspected criminal (c) Nothing in this part should be activity (e.g., theft, embezzlement), construed as reducing in any way an mysterious disappearance, unexplained institution’s ability to report known or shortage, misapplication, or other de- suspected criminal activities to the ap- falcation of property and/or funds, re- propriate investigatory or prosecuting gardless of amount, where an institu- authorities, whether Federal, State, or tion employee, officer, director, agent, local, even when the circumstances in or other person participating in the which a report is required under conduct of the affairs of such an insti- § 612.2301 are not present. tution is suspected; (d) It shall be the responsibility of (2) Any known or suspected criminal each System institution to determine activity involving an actual or poten- whether there appears to be a reason- tial loss of $5,000 or more, through false

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statements or other fraudulent means, tions under any applicable surety bond where the institution has a substantial or other contract for protection. basis for identifying a possible suspect or group of suspects and the suspect(s) § 612.2303 Institution responsibilities. is not an institution employee, officer, Each institution shall establish effec- director, agent, or other person partici- tive policies and procedures designed pating in the conduct of the affairs of to ensure compliance with this part, such an institution; including, but not limited to, adequate (3) Any known or suspected criminal internal controls. activity involving an actual or potential loss of $25,000 or more, through PART 613—ELIGIBILITY AND SCOPE false statements or other fraudulent OF FINANCING means, where the institution has no substantial basis for identifying a pos- Subpart A—Financing Under Titles I and II sible suspect or group of suspects; or of the Farm Credit Act (4) Any known or suspected criminal activity involving a financial trans- Sec. action in which the institution was 613.3000 Financing for farmers, ranchers, used as a conduit for such criminal ac- and aquatic producers or harvesters. tivity (such as money laundering/struc- 613.3005 Lending objective. 613.3010 Financing for processing or mar- turing schemes). keting operations. (b) In circumstances where there is a 613.3020 Financing for farm-related service known or suspected violation of State businesses. or local criminal law, the institution 613.3030 Rural home financing. shall notify the appropriate State or local law enforcement authorities. Subpart B—Financing for Banks Operating (c) In addition to the requirements of Under Title III of the Farm Credit Act paragraph (a) of this section, the insti- 613.3100 Domestic lending. tution shall immediately notify by 613.3200 International lending. telephone the appropriate Federal law enforcement authorities and FCA of- Subpart C—Similar Entity Authority Under fices specified on the FCA Referral Sections 3.1(11)(B) and 4.18A of the Act Form upon determining that a known 613.3300 Participations and other interests or suspected criminal violation of Fed- in loans to similar entities. eral law requiring urgent attention has occurred or is ongoing. Such cases in- AUTHORITY: Secs. 1.5, 1.7, 1.9, 1.10, 1.11, 2.2, clude, but are not limited to, those 2.4, 2.12, 3.1, 3.7, 3.8, 3.22, 4.18A, 4.25, 4.26, 4.27, 5.9, 5.17 of the Farm Credit Act (12 U.S.C. where: 2013, 2015, 2017, 2018, 2019, 2073, 2075, 2093, 2122, (1) There is a likelihood that the sus- 2128, 2129, 2143, 2206a, 2211, 2212, 2213, 2243, pect(s) will flee; 2252). (2) The magnitude or the continu- ation of the known or suspected crimi- Subpart A—Financing Under Titles nal violation may imperil the institu- I and II of the Farm Credit Act tion’s continued operation; or (3) Key institution personnel are in- SOURCE: 62 FR 4441, Jan. 30, 1997, unless volved. otherwise noted.

§ 612.2302 Notification of board of di- § 613.3000 Financing for farmers, rectors and bonding company. ranchers, and aquatic producers or (a) The institution’s board of direc- harvesters. tors shall be promptly notified of any (a) Definitions. For purposes of this criminal referral by the institution, ex- subpart, the following definitions cept that if the criminal referral in- apply: volves a member of the board of direc- (1) Bona fide farmer or rancher means tors, discretion may be exercised in no- a person owning agricultural land or tifying such member of the referral. engaged in the production of agricul- (b) The institution involved shall tural products, including aquatic prod- promptly make all required notifica- ucts under controlled conditions.

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