Banking Provisions in the National Defense
Authorization Act for Fiscal Year 2023
Updated December 29, 2022
The James M. Inhofe National Defense Authorization Act for Fiscal Year 2023 (NDAA; P.L. 117-263 )
contains a few provisions relevant to the financial system. This Insight provides an overview of those
provisions most pertinent to domestic banking regulation.
Title LVII—Financial Services Matters
Title LVII pertains to financial services and there are two provisions that impact the banking system.
Bank Hiring Practices
Section 19 of the Federal Deposit Insurance Act (12 U.S.C. §1829) prohibits, without the prior consent of
the Federal Deposit Insurance Corporation (FDIC), any person from working in banking who has been
convicted of a crime of dishonesty or breach of trust or money laundering, or who has entered a pretrial
diversion or similar program in connection with the prosecution of such an offense. An individual or bank
can seek an exception by filing an application with the FDIC. In 2020, the FDIC issued a rule to revise
and codify its policy on Section 19. Under the rule, an individual whose covered offense has been
expunged is exempt from needing to file an application. The rule also raised the minimum standards for
certain offenses to require an application and reduces the time individuals with certain offenses have to
wait to apply.
Section 5705 of Title LVII of the FY2023 NDAA amends Section 19 to create further exceptions. (This
section is based on H.R. 5911, the Fair Hiring in Banking Act, passed by the House in May 2022.)
Specifically, an individual does not need to apply for an exception if the offense occurred seven or more
years ago or if the individual was incarcerated and released from incarceration five or more years ago.
Similarly, for offenses committed by individuals 21 years or younger, exceptions are not be needed 30
months after sentencing. Further, individuals with expunged or sealed records do not need to apply for an
exception under Section 19. The provision also establishes new minimum standards under which
exceptions are not necessary. Finally, the provision requires the FDIC to coordinate with the National
