86R11590 ATP-F
By: Murphy H.B. No. 2173
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.