1-1 By: Carona S.B. No. 689
1-2 (In the Senate - Filed February 24, 1999; March 1, 1999, read
1-3 first time and referred to Committee on Economic Development;
1-4 April 9, 1999, reported adversely, with favorable Committee
1-5 Substitute by the following vote: Yeas 4, Nays 0; April 9, 1999,
1-6 sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR S.B. No. 689 By: Carona
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to an exemption from the Sale of Checks Act for electronic
1-11 transfers.
1-12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-13 SECTION 1. Section 152.002, Finance Code, is amended to read
1-14 as follows:
1-15 Sec. 152.002. DEFINITIONS. In this chapter:
1-16 (1) "Account" has the meaning assigned by Section 903,
1-17 Electronic Fund Transfer Act (15 U.S.C. Section 1693a).
1-18 (2) "Check" means an instrument for the transmission
1-19 or payment of money, including a draft, traveler's check, or money
1-20 order. The term also includes an instrument for the transmission
1-21 or payment of money in which the purchaser or remitter of the
1-22 instrument appoints or purports to appoint the seller as its agent
1-23 for the receipt, transmission, or handling of money, regardless of
1-24 who signs the instrument.
1-25 (3) [(2)] "Commission" means the Finance Commission of
1-26 Texas.
1-27 (4) [(3)] "Commissioner" means the banking
1-28 commissioner of Texas.
1-29 (5) [(4)] "Deliver" means to deliver a check to the
1-30 first person who in payment for the check remits or purports to
1-31 remit the face amount of the check or makes a remittance or
1-32 purported remittance against the face amount, regardless of whether
1-33 the person who delivers the check:
1-34 (A) signs the check; or
1-35 (B) charges a fee in addition to the face
1-36 amount.
1-37 (6) [(5)] "Department" means the Texas Department of
1-38 Banking.
1-39 (7) [(6)] "Permissible investment" means:
1-40 (A) cash;
1-41 (B) an investment security that is an
1-42 obligation:
1-43 (i) of the United States or an
1-44 instrumentality of the United States;
1-45 (ii) the principal and interest of which
1-46 are fully guaranteed by the United States; or
1-47 (iii) of a state or a political
1-48 subdivision of a state; or
1-49 (C) any other investment approved by the
1-50 commissioner.
1-51 (8) [(7)] "Person" means an individual, partnership,
1-52 joint stock or other association, trust, or corporation. The term
1-53 does not include the United States or this state.
1-54 (9) [(8)] "Sell" includes issue or deliver.
1-55 (10) [(9)] "Traveler's check" means a type of check
1-56 that:
1-57 (A) is a multiple of a denomination;
1-58 (B) provides for the purchaser's signature to be
1-59 completed at the time the instrument is purchased; and
1-60 (C) provides for the purchaser's
1-61 countersignature to be completed when the instrument is negotiated.
1-62 SECTION 2. Section 152.202, Finance Code, is amended by
1-63 amending Subsection (a) and adding Subsections (c) and (d) to read
1-64 as follows:
2-1 (a) Section 152.201 does not apply to:
2-2 (1) a bank, credit union, savings and loan
2-3 association, or savings bank, whether the institution is state or
2-4 federal, if the institution does not sell checks, other than
2-5 traveler's checks:
2-6 (A) off premises; or
2-7 (B) through an agent who is not directly or
2-8 indirectly owned by the institution unless the agent is a federally
2-9 insured bank, credit union, savings and loan association, or
2-10 savings bank;
2-11 (2) an agent or subagent of a license holder unless
2-12 the agent or subagent sells the license holder's checks
2-13 over-the-counter to the public and in the regular conduct of that
2-14 business receives or at any time has access to:
2-15 (A) a check of the license holder that is
2-16 returned after payment for verification, reconciliation, or
2-17 accounting; or
2-18 (B) a bank statement relating to a returned
2-19 check;
2-20 (3) a title company or attorney that issues an escrow
2-21 or trust fund check;
2-22 (4) the United States; [or]
2-23 (5) with the commissioner's prior written consent, a
2-24 person who:
2-25 (A) holds a license issued under Chapter 153;
2-26 (B) has a net worth of at least $250,000 and
2-27 meets the licensing requirements of this chapter;
2-28 (C) maintains a bond under Section 152.206 in
2-29 the minimum principal amount of $350,000; and
2-30 (D) sells checks only in conjunction with a
2-31 currency exchange or transmission transaction, as defined by
2-32 Chapter 153, and separates all proceeds from that transaction from
2-33 the sale of checks; or
2-34 (6) a transfer of funds that is subject to Regulation
2-35 E (12 C.F.R. Part 205), if the person receiving authorization to
2-36 debit or credit an account is:
2-37 (A) subject to audit by:
2-38 (i) a federal regulatory authority; or
2-39 (ii) a depository financial institution;
2-40 (B) considered an acceptable risk under the
2-41 policies of the depository financial institution; and
2-42 (C) registered with the Securities and Exchange
2-43 Commission as a corporation with stockholder equity of not less
2-44 than $100 million.
2-45 (c) The commissioner shall exempt from licensing under this
2-46 chapter a person who submits documents with the commission
2-47 evidencing that:
2-48 (1) the Office of the Comptroller of the Currency has
2-49 determined that the person submitting the documents is engaged in
2-50 transactions subject to Regulation E (12 C.F.R. Part 205);
2-51 (2) the primary liability to consumers for all losses
2-52 arising out of or related to a failed transaction has been assumed
2-53 by a financial institution;
2-54 (3) the person is subject to audit by:
2-55 (A) a federal regulatory authority; or
2-56 (B) a depository financial institution; and
2-57 (4) the person is registered with the Securities and
2-58 Exchange Commission as a corporation with stockholder equity of not
2-59 less than $100 million.
2-60 (d) A person exempted under Subsection (c) is subject to any
2-61 penalties under this chapter for operating without a license if it
2-62 is later determined that the person did not qualify for the
2-63 exemption.
2-64 SECTION 3. This Act takes effect September 1, 1999.
2-65 SECTION 4. The importance of this legislation and the
2-66 crowded condition of the calendars in both houses create an
2-67 emergency and an imperative public necessity that the
2-68 constitutional rule requiring bills to be read on three several
2-69 days in each house be suspended, and this rule is hereby suspended.
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