Session of 2025
SENATE BILL No. 16
By Committee on Federal and State Affairs
1-16
AN ACT concerning financial services; prohibiting discrimination by
financial services companies on the basis of social credit score;
requiring registered investment advisers to obtain written consent from
clients prior to investing client moneys in mutual funds, equity funds,
companies and financial institutions that engage in ideological
boycotts.
Be it enacted by the Legislature of the State of Kansas:
Section 1. (a) As used in sections 1 through 7, and amendments
thereto:
(1) "Company" means any organization, association, corporation,
partnership, joint venture, limited partnership, limited liability partnership,
limited liability company or other entity of business association, including
a wholly owned subsidiary, majority-owned subsidiary, parent company or
affiliate of such entities or business associations that exists for the purpose
of making a profit.
(2) "Financial institution" means a bank, national banking
association, trust company, savings and loan association, building and loan
association, mutual savings bank, credit union, payment processor or
savings bank.
(3) "Financial services company" means a financial institution,
insurance company or other company that provides investment services.
(4) "Fossil fuels" means coal, natural gas or oil.
(5) "Ideological boycott" means, without an ordinary business
purpose, refusing to deal with, refusing or limiting investment in,
terminating business activities with or otherwise taking any commercial
action that is intended to penalize, inflict economic harm on, limit
commercial relations with or change or limit the activities of a company
because the company, without violating controlling state or federal law:
(A) Engages in the exploration, production, utilization, transportation,
sale or manufacturing of fossil fuel-based energy and does not commit or
pledge to meet environmental standards beyond applicable federal and
state law;
(B) engages in the exploration, production, utilization, transportation,
sale or manufacturing of nuclear energy and does not commit or pledge to
meet environmental standards beyond applicable federal and state law;
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(C) engages in production of agriculture;
(D) engages in production of lumber;
(E) engages in mining;
(F) engages in the exploration, production, utilization, transportation,
sale or manufacturing of any other natural resource;
(G) emits greenhouse gases or does not disclose or offset such
greenhouse gas emissions;
(H) engages, facilitates or supports the manufacture, import,
distribution, marketing, advertising, lawful use or sale of firearms,
ammunition or component parts and accessories of firearms or
ammunition;
(I) does not meet, is not expected to meet or does not commit to meet
environmental standards or disclosure criteria, in particular to eliminate,
reduce, offset or disclose greenhouse gas emissions;
(J) is governed by a corporate board or other officers whose race,
ethnicity, sex or sexual orientation meets or does not meet any criterion;
(K) does not facilitate or assist employees in obtaining abortions,
assisted suicide or gender reassignment services; or
(L) engages with, facilitates, employs, supports, does business with,
represents or advocates for any company described by any of
subparagraphs (A) through (K).
(6) "Insurance company" means the same as defined in K.S.A. 40-
201, and amendments thereto.
(7) "Natural resources" means fossil fuels, minerals, metal ores or any
other nonrenewable or finite resource that cannot be readily replaced by
natural means with the speed at which it is consumed.
(8) (A) "Ordinary business purpose" means any purpose directly
related to:
(i) Promoting the financial success or stability of a financial services
company;
(ii) mitigating risk to a financial services company;
(iii) complying with legal or regulatory requirements; or
(iv) limiting liability of a financial services company.
(B) "Ordinary business purpose" does not mean any purpose to
further social, political or ideological interests. A company may reasonably
be determined to have taken an action or considered a factor with the
purpose to further social, political or ideological interests based upon
evidence indicating that such a purpose is included in, but not limited to:
(i) Branding, advertising, statements, explanations, reports, letters to
clients, communications with portfolio companies, statements of principles
or commitments; or
(ii) participating in, affiliation with or status as a signatory to any
coalition, initiative, joint statement of principles or agreement.
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(9) "Person" means any natural person, partnership, association, joint
stock company, trust or corporation.
(10) "Registered investment adviser" means an investment adviser
that provides financial or investment advice to clients and is registered
either with the United States securities and exchange commission or with
the state of Kansas under the Kansas uniform securities act, or both.
(11) "Social credit score" means any rating, scoring, analysis,
assessment, list, standard, guidance, criterion or tabulation that includes,
without violating controlling state or federal law, a negative assessment of
whether a person is engaging in any of the following lawful activities
within this state:
(A) Not committing or pledging to meet environmental standards
beyond applicable state or federal law in the exploration, production,
utilization, transportation, sale or manufacturing of fossil fuel-based
energy, nuclear energy, agriculture, timber, mining or any other natural
resource;
(B) the emitting of greenhouse gases or refusing to disclose, reduce
or offset such greenhouse gas emissions;
(C) not meeting, not expecting to meet or not committing to meet any
environmental goals, including emissions, standards or disclosures;
(D) not meeting, not expecting to meet or not committing to meet any
corporate board or company employment composition goals, including
standards or disclosures based upon characteristics protected under K.S.A.
44-1001 et seq., and amendments thereto;
(E) the manufacturing, distribution or sale of firearms, firearms
accessories, ammunition or ammunition components;
(F) the governing of a corporate board or other officers whose race,
ethnicity, sex or sexual orientation meets or does not meet any criterion;
(G) refusing to facilitate or assist employees in obtaining abortions,
assisted suicide or gender reassignment services;
(H) exercising such person's freedom of speech as protected by either
the first amendment to the constitution of the United States or section 11 of
the Kansas bill of rights, if the financial services company were considered
to be a state actor, including the person's political opinions, political
speech, political donations, political affiliations or other expressive
activities;
(I) exercising such person's free exercise of religion as protected by
any of the first amendment to the constitution of the United States, the
federal religious freedom restoration act of 1993, section 7 of the Kansas
bill of rights or the Kansas preservation of religious freedom act, if the
financial services company were considered to be a state actor, including
all aspects of the person's religious observance and practice, as well as
belief and affiliation; or
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(J) engaging with, facilitating of, employing by, supporting of, doing
business with, representing of or advocating for any person who does
business with a person described by subparagraphs (A) through (I).
Sec. 2. To provide fair access to financial services, a financial
services company shall not:
(a) Discriminate in the provision of financial services against a person
based on the person's social credit score, including by refusing to provide a
person new or ongoing financial services of any kind, refraining from
continuing to provide a person existing financial services, terminating a
person's existing financial services or refusing to make each financial
service such financial services company offers to all persons in the
geographic market served by the financial services company on a
nondiscriminatory basis;
(b) agree, conspire or coordinate, directly or indirectly, including
through any intermediary or third party, with another company or group of
companies, to discriminate in the provision of financial services against a
person based on the person's social credit score, including by refusing to
provide a person new or ongoing financial services of any kind, refraining
from continuing to provide a person existing financial services,
terminating a person's existing financial services or deny any person a
financial service such financial services company offers except to the
extent justified by such person's documented failure to meet quantitative,
impartial risk-based financial standards established in advance by such
financial services company;
(c) deny any person a financial service such financial services
company offers, other than as provided by subsection (b), when the effect
of the denial is to prevent, limit or otherwise disadvantage the person:
(1) From entering or competing in a market or business segment; or
(2) in such a way that benefits another person or business activity in
which the financial services company has a financial interest; and
(d) deny, in coordination with others, any person a financial service
such financial services company offers.
Sec. 3. (a) A financial services company shall not utilize standards or
guidelines based on nonfinancial or ideological criteria, including the
criteria constituting an ideological boycott, in determining whether or not
to provide any financial service to a person or company.
(b) A financial services company shall disclose to any person or
company denied a financial service with the specific data, information,
criteria and standard used to support such denial. Such disclosure shall be
provided in writing in bold 14-point font.
Sec. 4. (a) (1) Except as provided in paragraph (2), a financial
services company that violates the provisions of sections 2 and 3, and
amendments thereto, commits a deceptive act or practice and shall be
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subject to enforcement by the attorney general pursuant to K.S.A. 50-626,
and amendments thereto.
(2) A financial services company that is a credit union that violates
the provisions of sections 2 and 3, and amendments thereto, commits an
unsound practice and shall be subject to civil enforcement by the credit
union administrator pursuant to K.S.A. 17-2206, and amendments thereto.
(b) An insurance company that violates the provisions of sections 2
and 3, and amendments thereto, commits an unfair or deceptive act or
practice under K.S.A. 40-2404, and amendments thereto, and shall be
subject to the penalties imposed under K.S.A. 40-2401 et seq., and
amendments thereto.
(c) Notwithstanding enforcement under subsection (a) or (b), upon
conviction of five or more violations of this act, a financial services
company shall be guilty of a class C nonperson misdemeanor.
Sec. 5. The state bank commissioner, the commissioner of insurance
and the credit union administrator shall adopt rules and regulations for the
enforcement of sections 2 through 4, and amendments thereto. Such rules
and regulations shall be adopted on or before July 1, 2026.
Sec. 6. The provisions of sections 1 through 5, and amendments
thereto, shall only apply with respect to financial services companies with
total assets of $20,000,000,000 or more. No public agency or official shall
have the authority to remove or otherwise modify the total asset threshold
established by this section.
Sec. 7. (a) A registered investment adviser, prior to investing any
moneys owned by a client in or through any mutual fund, actively or
passively managed equity fund, company or financial institution that is
engaged in one or more ideological boycotts, shall obtain written consent
from such client stating that the client is fully aware of and consents to the
investment of moneys owned by the client in or through such mutual fund,
actively or passively managed equity fund, company or financial
institution. Such written consent need only be obtained once from the
client. Such written consent shall consist of the following disclosure:
"The institution managing this fund is engaged in one or more
ideological boycotts. If such boycotts are used in managing your fund,
these boycotts may impact the fund's returns compared to the fund's
historical performance or the performance of funds that do not engage in
ideological boycotts. You may have the option to choose a similar fund
that does not engage in ideological boycotts. By signing below, you
consent to have your investment managed by this institution even if the
institution engages in ideological boycotts that may impact your returns
compared to historical performance or other funds."
(b) Conduct prohibited by this section shall be considered an act,
practice or course of business that operates or would operate as a fraud or
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deceit in accordance with K.S.A. 17-12a502, and amendments thereto.
(c) Nothing in this section shall be construed to establish any
requirements for registration, capital, custody, margin, financial
responsibility, making and keeping of records, bonding or financial or
operational reporting for a registered investment adviser that differ from
the requirements established under federal law to the extent that such
requirements are applicable to the registered investment adviser. The
requirements of this section shall not apply to annuities managed by an
insurance company.
(d) The provisions of this section, or any contract or practice subject
to this section, may be enforced by the attorney general. The attorney
general may investigate possible violations of this section in accordance
with the provisions of K.S.A. 50-631, and amendments thereto.
Sec. 8. This act shall take effect and be in force from and after its
publication in the statute book.
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