Session of 2023
SENATE BILL No. 199
By Senator Holland
2-7
AN ACT concerning financial institutions; relating to the technology-
enabled fiduciary financial institutions act; authorizing the state
banking board to deny, suspend or revoke the charter of a fiduciary
financial institution in certain circumstances; providing procedures
therefor; requiring fiduciary financial institutions to purchase a surety
bond; establishing a civil money penalty for violations.
Be it enacted by the Legislature of the State of Kansas:
Section 1. (a) The state banking board, after notice and an
opportunity for a hearing in accordance with the provisions of the Kansas
administrative procedure act, may deny, suspend, revoke or refuse to
approve a fiduciary financial institution charter issued pursuant to this act
or issue a cease and desist order, if the state banking board finds that:
(1) The fiduciary financial institution has violated any provision of
this act or any rules and regulations adopted or orders lawfully made
pursuant to this act;
(2) facts or conditions exist that would have justified the denial of the
charter if such facts or conditions had existed or been known to exist at the
time the application for the charter was made;
(3) the fiduciary financial institution has filed with the commissioner
or state banking board any document or statement containing any false
representation of a material fact or fails to state a material fact;
(4) the fiduciary financial institution or any director, officer,
employee or agent of the fiduciary financial institution has been convicted
of a felony under the laws of Kansas or in any other jurisdiction;
(5) the fiduciary financial institution has engaged in or is engaging in
deceptive business practices;
(6) the fiduciary financial institution or any director, officer,
employee or agent of the fiduciary financial institution has been the
subject of any disciplinary action by the commissioner, the state banking
board or any other state or federal regulatory agency;
(7) a final judgment has been entered against the fiduciary financial
institution in a civil action and the state banking board finds, based upon
the conduct on which the judgment is based, that issuing a charter to such
fiduciary financial institution would be contrary to the public interest;
(8) the fiduciary financial institution or any director, officer,
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employee or agent of the fiduciary financial institution has been convicted
of engaging in fiduciary financial institution activity without authorization
pursuant to K.S.A. 9-2302 or 9-2325, and amendments thereto, or a
substantially similar offense in another jurisdiction;
(9) the fiduciary financial institution has refused to furnish
information required by the commissioner or the state banking board
within a reasonable period of time as established by the commissioner or
the state banking board;
(10) the fiduciary financial institution failed to pay timely any
assessment required by this act or any rules and regulations adopted
pursuant to this act; or
(11) the fiduciary financial institution failed to provide and maintain a
surety bond pursuant to section 2, and amendments thereto.
(b) None of the following actions shall deprive the commissioner or
the state banking board of any jurisdiction or right to institute or proceed
with any disciplinary proceeding against a fiduciary financial institution to
render a decision suspending, revoking or refusing to approve a charter or
to establish and make a record of the facts of any violation of law for any
lawful purpose:
(1) The imposition of an administrative penalty;
(2) the lapse or suspension of any charter issued under this act by
operation of law; or
(3) the fiduciary financial institution's voluntary surrender of any
charter issued under this act.
(c) Any final order of the state banking board pursuant to this section
shall be subject to review in accordance with the Kansas judicial review
act.
(d) This section shall be a part of and supplemental to the technology-
enabled fiduciary financial institutions act.
Sec. 2. (a) Each fiduciary financial institution shall purchase a surety
bond in an amount equal to 5% of the total assets of such fiduciary
financial institution. The determination of total assets shall be based on
generally accepted accounting principles. Such surety bond shall be used
for, but not limited to:
(1) Liquidation expenses incurred by the office of the state bank
commissioner;
(2) payment of fines, fees and penalties; or
(3) reimbursement of losses or damages incurred by customers of
such fiduciary financial institution.
(b) The surety bond shall:
(1) Be issued by a company authorized to do business in this state and
not affiliated in any manner with such fiduciary financial institution;
(2) be payable to the office of the state bank commissioner;
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(3) be filed with the commissioner; and
(4) contain a minimum 30-day cancellation or nonrenewal provision.
(c) This section shall be a part of and supplemental to the technology-
enabled fiduciary financial institutions act.
Sec. 3. (a) After providing notice and an opportunity for a hearing in
accordance with the Kansas administrative procedure act, the
commissioner may, with the approval of the state banking board, assess
against and collect a civil money penalty from any fiduciary financial
institution or any director, officer, employee or agent of the fiduciary
financial institution that violates the provisions of this act or any rules and
regulations adopted pursuant to this act.
(b) The amount of the civil money penalty shall be established by the
commissioner, with the approval of the state banking board, in rules and
regulations, except that such civil money penalty shall be not less than
$5,000 per violation.
(c) This section shall be a part of and supplemental to the technology-
enabled fiduciary financial institutions act.
Sec. 4. This act shall take effect and be in force from and after its
publication in the statute book.
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