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