The Development of Civil Monetary Penalties Laws

At the opening of 2017, Congress amped up its efforts to hand out disciplinary actions to those who violate the Civil Monetary Penalty Law (CMPL). In its full effect, the law punishes those who essentially defraud clients in anything to do with healthcare. But other CMPL violations can be accrued by different industries, especially banking institutions. Congress doubled the statutory civil fines for certain parts of the law, but the message was clear that infringing upon this law wasn’t going to be taken lightly.

Professionals in virtually every major industry are looking for ways to protect themselves against such penalties as increased fines with Civil Monetary Penalty Insurance. But regardless of coverage it’s important to know just how serious this law and the disciplinary actions tied to it are.

You Can Bank On It

The CMPL is a sort of all-in-one law that operates to impose civil financial penalties on account of various types of fraud and abuse. The FDIC has this authority as well as the Office of the Inspector General. Depending on the industry in which a fraudulent activity is committed, there is a specific office that handles the penalties.

For example, the Federal Reserve Board issued an Order to Cease and Desist and a $41 million civil money penalty to Deutsche Bank in the spring of 2017. The penalty was due to the financial institution’s infringement on the anti-money laundering statutes. Besides the financial fee, Deutsche Bank was ordered to revamp its senior management oversight and in-house compliance with its U.S. banking operations.

A Heavier Hand

Back in 1989, the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) imposed amendments to the Federal Deposit Insurance Act, giving federal banking agencies authority to assess big civil fines against FDIC-insured banks and their holding companies, officers, directors, and others for violations of laws. There are three tiers of maximum penalties based on violations and banks and individuals are having to find the best way to pay their fines.

The trend now, especially in light of the recent economic crisis brought on by failing banks, is to tighten laws and become stricter. With this revisiting of the laws and its violations, banks and their employees are left not as protected as before.

About Financial Guaranty Insurance Brokers

Since 1983, Financial Guaranty Insurance Brokers has distinguished itself as a provider of Professional Liability, Cyber Liability, and Crime insurance products for entities of all types. To receive timely, personalized service from a knowledgeable and experienced staff, call us today at (626) 793-3330 to speak with one of our professionals.