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Federal Register / Vol. 86, No. 174 / Monday, September 13, 2021 / Rules and Regulations who else in the institution receives the disclosures.
2 Explaining what constitutes SOC
program compliance, including setting criteria for documentation submitted with conflicts of interest reports and providing instructions to help directors and employees identify and report on interests or circumstances that could give rise to an actual or apparent conflict of interest.
i The board must explain within the policies and procedures what transactions are likely to present real or potential conflicts, setting benchmarks and thresholds for both single and aggregate activities. The policies and procedures must also explain how transactions in the ordinary course of business are identified.
ii The board must explain within the policies and procedures, setting benchmarks and thresholds, how materiality of a conflict is identified.
The materiality guidelines must be used when evaluating conflicts of interest reports filed by employees and directors. An exception for those matters affecting all shareholders or borrowers may be used in making the determination of materiality.
3 Addressing the process by which real and apparent conflicts will be resolved. The procedures must also explain actions to be taken when a conflict cannot be resolved to the satisfaction of the institution. The procedures must explain the role and authorities of the SOCO in resolving conflicts.
4 Addressing the conduct of thirdparty relationships. The board of directors at each institution must adopt conflict-of-interest policies for thirdparty relationships and develop safeguards for use in contractual obligations that require third-party service providers to perform services on behalf of the institution in an ethical manner. At a minimum, the policies for third-party relationships must set forth expectations for disclosing known conflicts of interest to the institution.
The policies must also implement the requirements of 612.2180 for agents of the institution.
5 Setting criteria for accepting gifts that are not otherwise prohibited by this subpart. The criteria must explain the scope of application and may make appropriate exceptions for non-business events where the gift is not viewed by the institution as attempting to influence official institution business.
The gift criteria must include de minimis dollar thresholds for all permissible gifts, regardless of the gift giving reason. The thresholds must apply both per gift and in the aggregate
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per recipient, per year. The institution must also establish disclosure requirements for gifts received as well as procedures for disposing of impermissible gifts.
6 Identifying the appropriate actions that may be taken against any director or employee who violates the standards of conduct policies and procedures, Code of Ethics, or regulations under this subpart. The board must also identify who is authorized to take which action and when. The board must address how the SOCO exercises his or her authority under 612.2170 to investigate certain conduct issues.
7 Providing for anonymous reporting by individuals of known or suspected violations of the institutions Standards of Conduct Program and Code of Ethics, through a hotline or other venue.
e Monitor the SOC program through internal controls. Each institutions board of directors must establish a system of internal controls for its SOC
program that includes, at a minimum, a process to:
1 Protect against unauthorized disclosure of confidential information maintained by the institution.
2 Conduct scheduled periodic reviews of the Standards of Conduct Program that determine the continued adequacy of the program. Each review must look for consistency with institution practices, financial services industry best practices, and Farm Credit Administration FCA regulations in this chapter, identifying any required updates.
3 Perform internal audits of the Standards of Conduct Program. The board of directors, with the assistances of the SOCO and appropriate officers of the institution, must determine the scope and depth of the audit. The board is responsible for identifying who will conduct the internal audit. The audit findings must be given directly to the institutions board or designated board committee. The audit itself must be designed to:
i Review the effectiveness of advancing the core principles;
ii Identify weaknesses;
iii Recommend and report necessary corrective actions; and iv Cover the entire Standards of Conduct Program across the institution, including all activities conducted through a System institution unincorporated business entity UBE
formed under 611.1150b of this chapter, including UBEs organized for the express purpose of investing in a Rural Business Investment Company.
f Train institution personnel. Each institutions board of directors must establish a training program to
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administer periodic Standards of Conduct and Code of Ethics training to directors and employees. The training must be given by the SOCO and the board must address how the SOCO will exercises his or her training responsibilities under 612.2170. The Standards of Conduct training must be administered under the following timeframes:
1 Newly elected or appointed directors must receive Standards of Conduct training within 60 calendar days of the director assuming his or her position.
2 New employees must receive Standards of Conduct training within 10
business days of beginning work.
3 Periodic training for all directors and employees must occur at least annually but may be more frequent.
612.2140

Reserved
612.2145 Disclosing and reporting conflicts of interest.

a Responsibilities. As a director or employee of a System institution you must identify, disclose, and report on any interest or circumstances that does or could constitute a conflict of interest and potential conflict of interest. You must carry out this responsibility to the best of your knowledge and belief. You must cooperate with, and provide information requested by, the Standards of Conduct Official for use in determining the materiality of a conflict and to resolve conflicts of interest and potential conflicts of interest.
1 If you have a conflict of interest in a matter, transaction, or activity subject to official action by the institution or before the board of directors then you must disclose it and refrain from participating in official action or board discussion of the matter, transaction, or activity. You must also avoid voting on or influencing any decision directed at the matter, transaction, or activity.
2 You must report, either to the SOCO or by using the institutions anonymous reporting procedures, any known or suspected activity by a person affiliated with the institution that you suspect is illegal, unethical, or a violation of the institutions standards of conduct and Code of Ethics.
b Reporting conflicts of interest. As a director or employee of a System institution, you must file with the SOCO
reports on any real or potential conflicts of interest. The reports must be filed at least annually and at such other times as may be required by your institution policies and procedures. The reports must be in sufficient detail for a reasonable person to make a conflict of interest determination and decide if the
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