By:  Carona                                            S.B. No. 689
                                A BILL TO BE ENTITLED
                                       AN ACT
 1-1     relating to an exemption from the Sale of Checks Act for electronic
 1-2     transfers.
 1-3           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-4           SECTION 1.  Section 152.002, Finance Code, is amended to read
 1-5     as follows:
 1-6           Sec. 152.002.  DEFINITIONS.  In this chapter:
 1-7                 (1)  "Account" has the meaning assigned by Section 903,
 1-8     Electronic Fund Transfer Act (15 U.S.C. Section 1693a).
 1-9                 (2)  "Check" means an instrument for the transmission
1-10     or payment of money, including a draft, traveler's check, or money
1-11     order.  The term also includes an instrument for the transmission
1-12     or payment of money in which the purchaser or remitter of the
1-13     instrument appoints or purports to appoint the seller as its agent
1-14     for the receipt, transmission, or handling of money, regardless of
1-15     who signs the instrument.
1-16                 (3) [(2)]  "Commission" means the Finance Commission of
1-17     Texas.
1-18                 (4) [(3)]  "Commissioner" means the banking
1-19     commissioner of Texas.
1-20                 (5) [(4)]  "Deliver" means to deliver a check to the
1-21     first person who in payment for the check remits or purports to
1-22     remit the face amount of the check or makes a remittance or
1-23     purported remittance against the face amount, regardless of whether
1-24     the person who delivers the check:
 2-1                       (A)  signs the check; or
 2-2                       (B)  charges a fee in addition to the face
 2-3     amount.
 2-4                 (6) [(5)]  "Department" means the Texas Department of
 2-5     Banking.
 2-6                 (7) [(6)]  "Permissible investment" means:
 2-7                       (A)  cash;
 2-8                       (B)  an investment security that is an
 2-9     obligation:
2-10                             (i)  of the United States or an
2-11     instrumentality of the United States;
2-12                             (ii)  the principal and interest of which
2-13     are fully guaranteed by the United States; or
2-14                             (iii)  of a state or a political
2-15     subdivision of a state; or
2-16                       (C)  any other investment approved by the
2-17     commissioner.
2-18                 (8) [(7)]  "Person" means an individual, partnership,
2-19     joint stock or other association, trust, or corporation.  The term
2-20     does not include the United States or this state.
2-21                 (9) [(8)]  "Sell" includes issue or deliver.
2-22                 (10) [(9)]  "Traveler's check" means a type of check
2-23     that:
2-24                       (A)  is a multiple of a denomination;
2-25                       (B)  provides for the purchaser's signature to be
2-26     completed at the time the instrument is purchased; and
 3-1                       (C)  provides for the purchaser's
 3-2     countersignature to be completed when the instrument is negotiated.
 3-3           SECTION 2.  Section 152.202, Finance Code, is amended by
 3-4     amending Subsection (a) and adding Subsections (c) and (d) to read
 3-5     as follows:
 3-6           (a)  Section 152.201 does not apply to:
 3-7                 (1)  a bank, credit union, savings and loan
 3-8     association, or savings bank, whether the institution is state or
 3-9     federal, if the institution does not sell checks, other than
3-10     traveler's checks:
3-11                       (A)  off premises; or
3-12                       (B)  through an agent who is not directly or
3-13     indirectly owned by the institution unless the agent is a federally
3-14     insured bank, credit union, savings and loan association, or
3-15     savings bank;
3-16                 (2)  an agent or subagent of a license holder unless
3-17     the agent or subagent sells the license holder's checks
3-18     over-the-counter to the public and in the regular conduct of that
3-19     business receives or at any time has access to:
3-20                       (A)  a check of the license holder that is
3-21     returned after payment for verification, reconciliation, or
3-22     accounting; or
3-23                       (B)  a bank statement relating to a returned
3-24     check;
3-25                 (3)  a title company or attorney that issues an escrow
3-26     or trust fund check;
 4-1                 (4)  the United States; [or]
 4-2                 (5)  with the commissioner's prior written consent, a
 4-3     person who:
 4-4                       (A)  holds a license issued under Chapter 153;
 4-5                       (B)  has a net worth of at least $250,000 and
 4-6     meets the licensing requirements of this chapter;
 4-7                       (C)  maintains a bond under Section 152.206 in
 4-8     the minimum principal amount of $350,000; and
 4-9                       (D)  sells checks only in conjunction with a
4-10     currency exchange or transmission transaction, as defined by
4-11     Chapter 153, and separates all proceeds from that transaction from
4-12     the sale of checks; or
4-13                 (6)  a transfer of funds that is subject to Regulation
4-14     E (12 C.F.R. Part 205), if the person receiving authorization to
4-15     debit or credit an account is:
4-16                       (A)  subject to audit by:
4-17                             (i)  a federal regulatory authority; or
4-18                             (ii)  a depository financial institution;
4-19                       (B)  considered an acceptable risk under the
4-20     policies of the depository financial institution; and
4-21                       (C)  registered with the Securities and Exchange
4-22     Commission as a corporation with stockholder equity of not less
4-23     than $100 million.
4-24           (c)  The commissioner shall exempt from licensing under this
4-25     chapter a person who submits documents with the commission
4-26     evidencing that:
 5-1                 (1)  the Office of the Comptroller of the Currency has
 5-2     determined that the person submitting the documents is engaged in
 5-3     transactions subject to Regulation E (12 C.F.R. Part 205);
 5-4                 (2)  the primary liability to consumers for all losses
 5-5     arising out of or related to a failed transaction has been assumed
 5-6     by a financial institution;
 5-7                 (3)  the person is subject to audit by:
 5-8                       (A)  a federal regulatory authority; or
 5-9                       (B)  a depository financial institution; and
5-10                 (4)  the person is registered with the Securities and
5-11     Exchange Commission as a corporation with stockholder equity of not
5-12     less than $100 million.
5-13           (d)  A person exempted under Subsection (c) is subject to any
5-14     penalties under this chapter for operating without a license if it
5-15     is later determined that the person did not qualify for the
5-16     exemption.
5-17           SECTION 3.  This Act takes effect September 1, 1999.
5-18           SECTION 4.  The importance of this legislation and the
5-19     crowded condition of the calendars in both houses create an
5-20     emergency and an imperative public necessity that the
5-21     constitutional rule requiring bills to be read on three several
5-22     days in each house be suspended, and this rule is hereby suspended.