You May Be Able to Insulate Yourself Against Civil Money Penalties

Civil money penalties insurance

You know the exam is coming. You are told your institution is prepared. And then your bank is served a regulatory Cease & Desist (C&D) order. Civil money penalties insurance may help protect you from fines associated with bank regulatory actions.

As bank directors and officers, you rely on the people managing bank operations and compliance to ensure your institution meets regulatory expectations. Yet even the best and brightest compliance personnel can miss the mark. And when they do, you may be held liable, with the bank unable to provide you indemnification for assessed fines, even in the absence of proof of negligence or wrongdoing.

Civil money penalties insurance may offer some peace of mind. While regulations prohibit banks from purchasing insurance for civil money penalties in their Director and Officer (D&O) policies, you may purchase coverage, in your name and paid for by you, with limits typically varying up to $250,000. This can go a long way in protecting your personal assets.

While no institution endeavors to be involved in a regulatory action, it can happen. Check with insurers to see if you qualify for civil money penalty coverage. And do not wait until your institution is placed under an agreement or order, as insurers may not be willing to cover you.