86R11590 ATP-F
 
  By: Campbell S.B. No. 1823
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the regulation of state banks, state trust companies,
  and third-party service providers of state banks and state trust
  companies.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 31.002(a)(55-a), Finance Code, is
  amended to read as follows:
               (55-a) "Third-party service provider" means a person
  who performs activities relating to the business of banking on
  behalf of a depository institution for the depository institution's
  customers or on behalf of another person directly engaged in
  providing financial services for the person's customers. The term:
                     (A)  includes a person who:
                           (i)  provides data processing services;
                           (ii)  performs activities in support of the
  provision of financial services, including lending, transferring
  funds, fiduciary activities, trading activities, and deposit
  taking activities; [or]
                           (iii)  engages wholly or partly in the
  practice of assembling or evaluating consumer credit information or
  other information on consumers for the purpose of furnishing
  consumer reports to third parties, including depository
  institutions; or
                           (iv) provides Internet-related services,
  including web services, processing electronic bill payments,
  developing and maintaining mobile applications, system and
  software development and maintenance, and security monitoring; and
                     (B)  does not include a provider of an interactive
  computer service or a general audience Internet or communications
  platform, except to the extent that the service or platform is
  specially designed or adapted for the business of banking and
  activities relating to the business of banking.
         SECTION 2.  Section 31.105, Finance Code, is amended by
  adding Subsections (f) and (g) to read as follows:
         (f)  Except to the extent disclosure is necessary to locate
  and produce responsive records or obtain legal representation and
  subject to Subsection (g), a subpoena issued under this section may
  provide that the person to whom the subpoena is directed or any
  person who comes into receipt of the subpoena may not:
               (1)  disclose that the subpoena has been issued;
               (2)  disclose or describe any records requested in the
  subpoena;
               (3)  disclose whether records have been furnished in
  response to the subpoena; or
               (4)  if the subpoena requires a person to be examined
  under oath, disclose or describe the examination, including the
  questions asked, the testimony given, or the transcript produced.
         (g)  A subpoena issued under this section may prohibit the
  disclosure of information described by Subsection (f) only if the
  banking commissioner finds, and the subpoena states, that:
               (1)  the subpoena, the examination, or the records
  relate to an ongoing investigation; and
               (2)  the disclosure could significantly impede or
  jeopardize the investigation.
         SECTION 3.  Section 31.107, Finance Code, is amended by
  adding Subsection (e) to read as follows:
         (e)  A third-party service provider that refuses to submit to
  examination or to pay an assessed fee for examination under this
  section is subject to an enforcement action under Chapter 35. With
  respect to a third-party service provider's refusal to submit to
  examination, the banking commissioner may notify all state banks of
  the refusal and warn that continued use of the third-party service
  provider may constitute an unsafe and unsound banking practice.
         SECTION 4.  Section 33.005, Finance Code, is amended to read
  as follows:
         Sec. 33.005.  EXEMPTIONS. The following acquisitions are
  exempt from Section 33.001:
               (1)  an acquisition of securities in connection with
  the exercise of a security interest or otherwise in full or partial
  satisfaction of a debt previously contracted for in good faith and
  the acquiring person files written notice of acquisition with the
  banking commissioner before the person votes the securities
  acquired;
               (2)  an acquisition of voting securities in any class
  or series by a controlling person who has previously complied with
  and received approval under this subchapter or who was identified
  as a controlling person in a prior application filed with and
  approved by the banking commissioner;
               (3)  an acquisition or transfer by operation of law,
  will, or intestate succession and the acquiring person files
  written notice of acquisition with the banking commissioner before
  the person votes the securities acquired;
               (4)  a transaction subject to Chapter 202 if:
                     (A)  the acquiring bank holding company currently
  owns and controls a state bank; or
                     (B)  the post-transaction controlling person:
                           (i)  has previously complied with and
  received approval as a controlling person under this subchapter; or
                           (ii)  is identified as the controlling
  person in a merger or other acquisition-related application filed
  with the banking commissioner concurrently with the submission
  required by Section 202.001; and
               (5)  a transaction exempted by the banking commissioner
  or by rules adopted under this subtitle because the transaction is
  not within the purposes of this subchapter or the regulation of the
  transaction is not necessary or appropriate to achieve the
  objectives of this subchapter.
         SECTION 5.  Section 35.010(c), Finance Code, is amended to
  read as follows:
         (c)  If the banking commissioner determines after the
  hearing that the alleged conduct occurred and that the conduct
  constitutes a violation, the banking commissioner may impose an
  administrative penalty against a bank or other person, as
  applicable, in an amount:
               (1)  if imposed against a bank, [not less than $500 and]
  not more than $10,000 for each violation for each day the violation
  continues, except that the maximum administrative penalty that may
  be imposed is the lesser of $500,000 or one percent of the bank's
  assets; or
               (2)  if imposed against a person other than a bank, [not
  less than $500 and] not more than $5,000 for each violation for each
  day the violation continues, except that the maximum administrative
  penalty that may be imposed is $250,000.
         SECTION 6.  Section 35.203, Finance Code, is amended by
  adding Subsections (h) and (i) to read as follows:
         (h)  Except to the extent disclosure is necessary to locate
  and produce responsive records or obtain legal representation and
  subject to Subsection (i), a subpoena issued under this section may
  provide that the person to whom the subpoena is directed or any
  person who comes into receipt of the subpoena may not:
               (1)  disclose that the subpoena has been issued;
               (2)  disclose or describe any records requested in the
  subpoena;
               (3)  disclose whether records have been furnished in
  response to the subpoena; or
               (4)  if the subpoena requires a person to be examined
  under oath, disclose or describe the examination, including the
  questions asked, the testimony given, or the transcript produced.
         (i)  A subpoena issued under this section may prohibit the
  disclosure of information described by Subsection (h) only if the
  banking commissioner finds, and the subpoena states, that:
               (1)  the subpoena, the examination, or the records
  relate to an ongoing investigation; and
               (2)  the disclosure could significantly impede or
  jeopardize the investigation.
         SECTION 7.  Sections 181.002(a)(47-b) and (49), Finance
  Code, are amended to read as follows:
               (47-b) "Third-party service provider" means a person
  who performs activities relating to the trust business on behalf of
  a trust institution for the trust institution's customers or on
  behalf of another person directly engaged in providing financial
  services for the person's customers. The term:
                     (A)  includes a person who:
                           (i)  provides data processing services;
                           (ii)  performs activities in support of the
  provision of financial services, including lending, transferring
  funds, fiduciary activities, trading activities, and deposit
  taking activities; [or]
                           (iii)  engages wholly or partly in the
  practice of assembling or evaluating consumer credit information or
  other information on consumers for the purpose of furnishing
  consumer reports to third parties, including trust institutions; or
                           (iv) provides Internet-related services,
  including web services, processing electronic bill payments,
  developing and maintaining mobile applications, system and
  software development and maintenance, and security monitoring; and
                     (B)  does not include a provider of an interactive
  computer service or a general audience Internet or communications
  platform, except to the extent that the service or platform is
  specially designed or adapted for the trust business and activities
  relating to the trust business.
               (49)  "Trust business" means the business of a company
  holding itself out to the public as a fiduciary for hire or
  compensation to hold or administer accounts.  The term includes:
                     (A)  the business of a trustee or custodian of an
  individual retirement account described by Section 408(a),
  Internal Revenue Code of 1986; and
                     (B)  the business of an administrator or servicer
  of individual retirement accounts described by Section 408(a),
  Internal Revenue Code of 1986, who [possesses or controls any
  assets, including cash, of those accounts and who] makes the
  administrator's or servicer's services available to the public for
  hire or compensation.
         SECTION 8.  Section 181.104, Finance Code, is amended by
  adding Subsections (h) and (i) to read as follows:
         (h)  Except to the extent disclosure is necessary to locate
  and produce responsive records or obtain legal representation and
  subject to Subsection (i), a subpoena issued under this section may
  provide that the person to whom the subpoena is directed or any
  person who comes into receipt of the subpoena may not:
               (1)  disclose that the subpoena has been issued;
               (2)  disclose or describe any records requested in the
  subpoena;
               (3)  disclose whether records have been furnished in
  response to the subpoena; or
               (4)  if the subpoena requires a person to be examined
  under oath, disclose or describe the examination, including the
  questions asked, the testimony given, or the transcript produced.
         (i)  A subpoena issued under this section may prohibit the
  disclosure of information described by Subsection (h) only if the
  banking commissioner finds, and the subpoena states, that:
               (1)  the subpoena, the examination, or the records
  relate to an ongoing investigation; and 
               (2)  the disclosure could significantly impede or
  jeopardize the investigation.
         SECTION 9.  Section 181.106, Finance Code, is amended by
  adding Subsection (d) to read as follows:
         (d)  A third-party service provider that refuses to submit to
  examination or to pay an assessed fee for examination under this
  section is subject to an enforcement action under Chapter 185. With
  respect to a third-party service provider's refusal to submit to
  examination, the banking commissioner may notify all state trust
  companies of the refusal and warn that continued use of the
  third-party service provider may constitute an unsafe and unsound
  fiduciary practice.
         SECTION 10.  Section 185.010(c), Finance Code, is amended to
  read as follows:
         (c)  If the banking commissioner determines after the
  hearing that the alleged conduct occurred and that the conduct
  constitutes a violation, the banking commissioner may impose an
  administrative penalty against a state trust company or other
  person, as applicable, in an amount:
               (1)  if imposed against a state trust company, [not
  less than $500 and] not more than $10,000 for each violation for
  each day the violation continues, except that the maximum
  administrative penalty that may be imposed is the lesser of
  $500,000 or one percent of the state trust company's assets; or
               (2)  if imposed against a person other than a state
  trust company, [not less than $500 and] not more than $5,000 for
  each violation for each day the violation continues, except that
  the maximum administrative penalty that may be imposed is $250,000.
         SECTION 11.  Section 185.202, Finance Code, is amended by
  adding Subsections (h) and (i) to read as follows:
         (h)  Except to the extent disclosure is necessary to locate
  and produce responsive records or obtain legal representation and
  subject to Subsection (i), a subpoena issued under this section may
  provide that the person to whom the subpoena is directed or any
  person who comes into receipt of the subpoena may not:
               (1)  disclose that the subpoena has been issued;
               (2)  disclose or describe any records requested in the
  subpoena;
               (3)  disclose whether records have been furnished in
  response to the subpoena; or
               (4)  if the subpoena requires a person to be examined
  under oath, disclose or describe the examination, including the
  questions asked, the testimony given, or the transcript produced.
         (i)  A subpoena issued under this section may prohibit the
  disclosure of information described by Subsection (h) only if the
  banking commissioner finds, and the subpoena states, that:
               (1)  the subpoena, the examination, or the records
  relate to an ongoing investigation; and 
               (2)  the disclosure could significantly impede or
  jeopardize the investigation.
         SECTION 12.  This Act takes effect September 1, 2019.