ried at cost or to be carried at cost shall be accounted for as follows:

(A) If a commitment fee will be or has been received with respect to the matched asset, the option commitment fee shall be treated as an adjustment of such fee. The adjusted commitment fee shall then be treated as a fee paid or received in connection with the matched asset;

(B) If a commitment fee has not been received with respect to matched asset, the option commitment fee (except if received for the * sale of a short call option) shall be amortized to income or expense over the commitment period by the straight:line method;

(C) Any resulting gain or loss from an option position (except from a short call option) shall be treated as a discount or premium on the matched tasset or liability;

(D) Any resulting gain or loss from a short call option position shall be rec#ognized as income or expense upon termination of the option position;

(E) In the event that an option position is not matched with a cashmarket or forward-commitment position or if the cash-market or forwardE commitment position with which an option is matched is sold or will not occur, the option shall be marked to market.

(iii) The immediate exercise value of short puts and other unmatched option positions shall be carried at their current market value.

[47 FR 36625, Aug. 23, 1982, as amended at 50 FR 16461, Apr. 26, 1985; 50 FR 23395, * June 4, 1985; 53 FR 27672, July 22, 1988]

§ 563.17-6 Interest-rate-risk-management procedures.

Insured institutions shall take the following actions:

(a) The board of directors or a committee thereof shall review the institution's interest-rate-risk exposure and devise a policy for the institution's management of that risk.

(b) To assist in this review and formulation of policy, by October 31, 1984, the board of directors shall obtain an initial report from the management of the institution containing at least the following information:

(1) Analyses of the difference between the dollar value of assets and liabilities with the same remaining term to repricing, or “gap” analyses, together with assumptions used to adjust contractual maturities to anticipated maturities; and

(2) Analyses of the impact of differing market-interest-rate scenarios on earnings, net asset values, and regulatory capital.

(c) The board of directors shall formerly adopt a policy for the management of interest-rate risk. The management of the institution shall establish guidelines and procedures to ensure that the board's policy is successfully implemented.

(d) The management of the institution shall periodically report to the board of directors regarding implementation of the institution's policy for interest-rate-risk management and shall make that information available upon request to the Corporation.

(e) The institution's board of directors shall review the results of operations at least quarterly and shall make such adjustments as it considers necessary and appropriate to the policy for interest-rate-risk management, including adjustments to the authorized acceptable level of interestrate risk.

(f) See also § 571.3 of this subchapter, containing the Corporation's statement of policy on interest-raterisk management.

[49 FR 27298, July 3, 1984]

§ 563.17-7

monitoring

Procedures for
Bank Secrecy Act compliance.

(a) Purpose. The purpose of this regulation is to require insured institutions (as defined by § 561.1 of this subchapter) to establish and maintain procedures reasonably designed to assure and monitor compliance with the requirements of Subchapter II of Chapter 53 of Title 31, United States Code, and the implementing regulations promulgated thereunder by the U.S. Department of Treasury, 31 CFR Part 103.

(b) Compliance procedure. On or before April 27, 1987, each insured institution shall develop and provide for the continued administration of a pro

30-039 0-89--12

gram reasonably designed to assure and monitor compliance with the recordkeeping and reporting requirements set forth in Subchapter II of Chapter 53 of Title 31, United States Code, and the implementing regulations promulgated thereunder by the Department of Treasury, 31 CFR Part 103. The compliance program shall be reduced to writing, approved by the insured institution's board of directors, and reflected in the minutes of the institution.

(c) Contents of compliance program. The compliance program shall, at a minimum:

(1) Provide for a system of internal controls to assure ongoing compliance; (2) Provide for independent testing for compliance to be conducted by an insured institution's in-house personnel or by an outside party;

(3) Designate individual(s) responsible for coordinating and monitoring day-to-day compliance; and

(4) Provide training for appropriate personnel.

(Approved by the Office of Management and Budget under control number 30680530)

[52 FR 2860, Jan. 27, 1987, as amended at 52 FR 3207, Feb. 2, 1987]

§ 563.18 Criminal referrals and other reports or statements.

(a) Periodic reports. Each insured institution and service corporation thereof shall make such periodic or other reports of its affairs in such manner and on such forms as the Corporation may prescribe. The Corporation may provide that reports filed by insured institutions or service corporations to meet the requirements of other regulations also satisfy requirements imposed under this section.

(b) False or misleading statements or omissions. No insured institution or director, officer, agent, employee, affiliated person, or other person participating in the conduct of the affairs of such institution nor any person filing or seeking approval of any application shall knowingly (1) make any written or oral statement to the Board, the Corporation, or an agent, representative or employee of either of them that is false or misleading with respect to any material fact or omits to state a

material fact concerning any matter within the jurisdiction of the Board or Corporation; or (2) make any such statement or omission to a person or organization auditing an insured institution or otherwise preparing or reviewing its financial statements concerning the accounts, assets, management condition, owership, safety, or soundness, or other affairs of the institution.

(c) Notifications of loss and reports of increase in deductible amount of bond. An insured institution maintaining bond coverage as required by § 563.19 of this subchapter shall promptly notify its bond company and file a proof of loss under the procedures provided by its bond, concerning any covered losses greater than twice the deductible amount. Whenever a deductible amount specified in a bond is increased above the permissible deductible amount specified in the table in § 563.19(b) of this subchapter, the affected insured institution or service corporation shall report promptly the facts concerning such increase in writing to the Director of Examinations of the Federal Home Loan Bank of which the institution is a member.

(d) Reports of crimes, suspected crimes, and unexplained losses. (1) Purpose and scope. Insured institutions and service corporations are required promptly to notify the appropriate law enforcement authorities and the Corporation after discovery of known or suspected criminal acts:

(i) If those acts involve affiliated persons (as defined in § 561.29 of this subchapter);

(ii) If those acts involve actual or anticipated losses of more than $1,000 and the institution has a substantial factual basis for identifying a suspect or group of suspects;

(iii) If those acts result in a loss of $5,000 or more, regardless of whether a suspect is identified; or

(iv) If money laundering, engaging in monetary transactions known to have been derived from unlawful activities, or structuring a transaction to evade the reporting requirements of the Bank Secrecy Act (also known as the Currency and Foreign Transactions Act) is known or suspected.

This paragraph (d)(1) applies to known or suspected crimes involving insured institutions and service corporations committed either by their employees or others and to crimes or suspected crimes against another financial institution believed to be committed by a person associated with the reporting insured institution or a service corporation. As used in this paragraph (d)(1) the phrase "suspected crimes" refers to all matters, including unexplained losses, for which there is a known factual basis for a belief that a crime has been or may have been committed. In the case of a crime or suspected crime against a service corporation that is wholly owned by an insured institution, either the service corporation or the insured institution may make the report.

(2) Filing of reports. Other than under paragraph (d)(3) of this section and other than robberies, burglaries and non-employee larcenies for which a record must be kept under § 563a.5 of this subchapter, an insured institution or a service corporation shall notify the appropriate law enforcement authorities and the Corporation by filing FHLBB Form 366 within 14 business days after discovery of any crime, suspected crime, or unexplained I loss that meets the criteria of para| graph (d)(1) of this section and is suffered by the insured institution or service corporation, including:

(i) Embezzlement, non-employee larceny, check-kiting operation, fraud or attempted fraud, unexplained loss, or other known or suspected misapplication of funds or other things of value belonging to an insured institution or entrusted to its care;

(ii) Bank bribery, the corrupt offering, solicitation, or acceptance of things of value in connection with any transaction or business of a financial institution;

(iii) False statements or reports of overvaluation of land, property or security, or omission to state or attempt to conceal information for the purpose of influencing the actions of an insured institution, the Corporation or the Board; or

(iv) Other violations of statutes as described in the instructions to Form 366.

(3) Oral reports. Required reports may be made orally in emergency cases, such as when it is likely that evidence or witnesses will become unavailable before a written report can be made; or where other circumstances dictate an immediate referral. In such cases, the report shall be documented by later completion and filing of the prescribed form(s), if required under paragraph (d)(2) of this section.

(4) Notification of the Board of Directors. The chief executive officer of the insured institution or his designee shall notify the board of directors concerning any report filed pursuant to this paragraph (d)(4) by the institution or a service corporation in which it has an ownership interest not later than its next regularly schedule meeting following the filing of the report. If the chief executive officer is suspected of being involved in the violation, the next ranking officer shall notify the institution's Board.

(5) Maintenance of records. Reports made under this section and related records of all crimes or suspected crimes shall be maintained at the insured institution's home office for three years.

[50 FR 49348, Dec. 2, 1985, as amended at 53 FR 11243, Apr. 6, 1988]

§ 563.18-1 Reports of change in control of mutual institutions.

(a) Reports of change in control-(1) When reports are required. Reports are required under this paragraph (a) whenever any change occurs in the control of an insured institution and no report is required under any other paragraph of this section. As used in this section, the term "control" means power, directly or indirectly, to direct or cause the direction of the management or policies of the institution, and the term "institution" means a mutual institution. Reports shall be made to the Corporation by the president or other chief executive officer of the institution involved within 15 days after he obtains knowledge of such change. If there is any doubt as to whether a change in control has occurred, such doubt shall be resolved in favor of reporting to the Corporation.

(2) Contents of reports. Reports of change in the control of an insured institution, as required under this paragraph (a), shall contain the following information to the extent that such information is known by the person making the report:

(i) The name or names of the person or persons who acquired such control; (ii) The basis of such control; and

(iii) The date and a description of the transaction or transactions by which such control was acquired.

(b) Reports of changes in voting stock or voting rights—(1) When reports are required. (i) Reports are required under this paragraph (b) whenever a change occurs in the outstanding voting stock or voting rights of an insured institution resulting in control or a change in the control of such institution. Reports shall be made to the Corporation by the president or other chief executive officer of the institution involved within 15 days after he obtains knowledge of such change. If there is any doubt as to whether such a change has resulted in control or a change in control, such doubt shall be resolved in favor of reporting to the Corporation.

(ii) Without any limitation on the foregoing, a report is required under this paragraph (b) whenever any person, partnership, corporation, trust or group of associated persons acquires, receives, or becomes the holder of:

(a) Ten percent or more of the outstanding shares of any class of the voting stock of the institution or of the voting rights thereto;

(b) Ten percent or more of the outstanding voting rights of the institution; or

(c) Any appointment, designation or right of substitution with respect to 10 percent or more of the outstanding voting rights of the institution.

(2) Contents of reports-(i) General. The reports required under this paragraph (b) shall contain the items of information set forth below to the extent that such information is known by the person making the report. In addition, such reports shall contain such other information as may be available to inform the Corporation of

the effect of the transaction upon control of the institution.

(ii) Reports of changes in voting stock or voting rights with respect to such stock. Reports of changes in ownership of voting stock or holdings of voting rights with respect to such stock, resulting in control or a change in the control of an insured institution, shall contain the following information:

(a) The number of shares of each class of voting stock and the number of voting rights with respect thereto involved in the transaction;

(b) The names of the purchasers (or transferees) of such stock or such voting rights;

(c) The names of the sellers (or transferors) of such stock or voting rights;

(d) The amount of consideration received by the sellers (or transferors) in connection with the transaction;

(e) The names of the beneficial owners if the shares or voting rights are of record in another name or other names;

The total number of shares of each class of voting stock owned by the sellers (or transferors), the purchasers (or transferees), and the beneficial owners both immediately before and after the transaction;

(g) The total number of shares of each class of voting stock outstanding both immediately before and after the transaction;

(h) The total number of voting rights (with respect to voting stock) held by the sellers (or transferors), the purchasers (or transferees), and the beneficial owners both immediately before and after the transaction;

(i) The total number of such voting rights outstanding both immediately before and after the transaction; and

(j) In the case of any appointment, designation, or substitution of a holder or holders of such voting rights, the name or names of the holder or holders both immediately before and after the transaction.

(iii) Reports of changes in voting rights with respect to withdrawable accounts. Reports of changes in holdings of voting rights with respect to withdrawable accounts, resulting in control or a change in the control of

an insured institution, shall contain the following information:

(a) In the case of a transfer or transfers of such voting rights from one holder or group of holders to another holder or group of holders;

(1) The date of each such transfer; and

(2) The name or names of the acquiring holder or holders and of the transferor or transferors (unless such transferors are the original owners of the accounts to which such voting rights attach);

a

(b) In the case of any appointment, designation, or substitution of holder or holders of voting rights, with respect to a holder or group of holders already having control:

(1) The date of such appointment, designation or substitution; and =(2) The names of each of the holders 2 both immediately before and after I such change; and

(c) In the case of any other acquisition of or change in control (without I regard to the number of voting rights involved):

(1) The name or names of the person =or persons acquiring such control;

1

(2) The basis of such control; and (3) The date and a description of Į such acquisition or change.

(c) Reports of solicitation of voting rights-(1) When reports are required. Reports are required under this paratgraph (d) whenever any person, partnership, corporation, trust, or group of associated persons:

(i) Solicits voting rights with respect to 10 percent or more of the outstanding shares of any class of voting stock of an insured institution.

(ii) Solicits 10 percent or more of the outstanding voting rights in an insured institution; or

(iii) Solicits any voting rights in an insured institution when such solicitor already holds either:

(a) Voting rights with respect to 10 percent or more of the outstanding shares of any class of the voting stock of such institution; or

(b) Ten percent or more of the outstanding voting rights in such institution.

(2) Contents of reports—(i) General. The reports required under this paragraph (d) shall contain the items of in

formation set forth below to the extent that such information is known by the person making the report. In addition, such reports shall contain such other information as may be available to inform the Corporation of the possible impact of the solicitation upon control of the institution.

(ii) Voting rights with respect to stock. Reports of solicitation of voting rights with respect to any class of voting stock of an insured institution shall contain the following information:

(a) The name or names of the person or persons making the solicitation;

(b) The extent of such solicitation (including relevant dates) and the class or classes of such voting stock with respect to which the solicitation of voting rights is made;

(c) The number of shares of such class or classes of voting stock which the solicitor already owns and the total number of voting rights with respect thereto which he holds at the time of such solicitation; and

(d) The total number of shares of such class or classes of voting stock outstanding at the time of such solicitation.

(iii) Voting rights with respect to withdrawable accounts. Reports of solicitation of voting rights with respect to withdrawable accounts of an insured institution shall contain the following information:

(a) The name or names of the person or persons making the solicitation;

(b) The extent of such solicitation (including relevant dates); and

(c) The approximate percentage of the outstanding voting rights which the solicitor already holds at the time of such solicitation.

(d) Definitions. As used in this section

(1) The term "stock" means rights, interests, or powers with respect to a mutual institution.

(2) The term "voting rights" means stock which carries voting rights.

(3) The term "voting rights" means any proxies, consents, or authorizations which give the holder or holders the right to vote with respect to shares of voting stock, or with respect