Texas 2019 - 86th Regular

Texas Senate Bill SB1823 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1		-	S.B. No. 1823
	1	+	86R22445 ATP-F
	2	+	By: Campbell S.B. No. 1823
	3	+	(Murphy)
	4	+	Substitute the following for S.B. No. 1823: No.
2	5
3	6
	7	+	A BILL TO BE ENTITLED
4	8		AN ACT
5	9		relating to the regulation of state banks, state trust companies,
6	10		and third-party service providers of state banks and state trust
7	11		companies.
8	12		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
9	13		SECTION 1. Section 31.002(a)(55-a), Finance Code, is
10	14		amended to read as follows:
11	15		(55-a) "Third-party service provider" means a person
12	16		who performs activities relating to the business of banking on
13	17		behalf of a depository institution for the depository institution's
14	18		customers or on behalf of another person directly engaged in
15	19		providing financial services for the person's customers. The term:
16	20		(A) includes a person who:
17	21		(i) provides data processing services;
18	22		(ii) performs activities in support of the
19	23		provision of financial services, including lending, transferring
20	24		funds, fiduciary activities, trading activities, and deposit
21	25		taking activities; [or]
22	26		(iii) for the purpose of furnishing to
23	27		third parties reports indicating a person's creditworthiness,
24	28		credit standing, or credit capacity, regularly engages in the
25	29		practice of assembling or evaluating, and maintaining, public
26	30		record information and credit account information from persons who
27	31		furnish that information regularly and in the ordinary course of
28	32		business; or
29	33		(iv) provides Internet-related services,
30	34		including web services, processing electronic bill payments,
31	35		developing and maintaining mobile applications, system and
32	36		software development and maintenance, and security monitoring; and
33	37		(B) does not include a provider of an interactive
34	38		computer service or a general audience Internet or communications
35	39		platform, except to the extent that the service or platform is
36	40		specially designed or adapted for the business of banking and
37	41		activities relating to the business of banking.
38	42		SECTION 2. Section 31.105, Finance Code, is amended by
39	43		adding Subsections (f) and (g) to read as follows:
40	44		(f) Except to the extent disclosure is necessary to locate
41	45		and produce responsive records or obtain legal representation and
42	46		subject to Subsection (g), a subpoena issued under this section may
43	47		provide that the person to whom the subpoena is directed or any
44	48		person who comes into receipt of the subpoena may not:
45	49		(1) disclose that the subpoena has been issued;
46	50		(2) disclose or describe any records requested in the
47	51		subpoena;
48	52		(3) disclose whether records have been furnished in
49	53		response to the subpoena; or
50	54		(4) if the subpoena requires a person to be examined
51	55		under oath, disclose or describe the examination, including the
52	56		questions asked, the testimony given, or the transcript produced.
53	57		(g) A subpoena issued under this section may prohibit the
54	58		disclosure of information described by Subsection (f) only if the
55	59		banking commissioner finds, and the subpoena states, that:
56	60		(1) the subpoena, the examination, or the records
57	61		relate to an ongoing investigation; and
58	62		(2) the disclosure could significantly impede or
59	63		jeopardize the investigation.
60	64		SECTION 3. Section 31.107, Finance Code, is amended by
61	65		adding Subsection (e) to read as follows:
62	66		(e) A third-party service provider that refuses to submit to
63	67		examination or to pay an assessed fee for examination under this
64	68		section is subject to an enforcement action under Chapter 35. With
65	69		respect to a third-party service provider's refusal to submit to
66	70		examination, the banking commissioner may notify all state banks of
67	71		the refusal and warn that continued use of the third-party service
68	72		provider may constitute an unsafe and unsound banking practice.
69	73		SECTION 4. Section 33.005, Finance Code, is amended to read
70	74		as follows:
71	75		Sec. 33.005. EXEMPTIONS. The following acquisitions are
72	76		exempt from Section 33.001:
73	77		(1) an acquisition of securities in connection with
74	78		the exercise of a security interest or otherwise in full or partial
75	79		satisfaction of a debt previously contracted for in good faith and
76	80		the acquiring person files written notice of acquisition with the
77	81		banking commissioner before the person votes the securities
78	82		acquired;
79	83		(2) an acquisition of voting securities in any class
80	84		or series by a controlling person who has previously complied with
81	85		and received approval under this subchapter or who was identified
82	86		as a controlling person in a prior application filed with and
83	87		approved by the banking commissioner;
84	88		(3) an acquisition or transfer by operation of law,
85	89		will, or intestate succession and the acquiring person files
86	90		written notice of acquisition with the banking commissioner before
87	91		the person votes the securities acquired;
88	92		(4) a transaction subject to Chapter 202 if:
89	93		(A) the acquiring bank holding company currently
90	94		owns and controls a state bank; or
91	95		(B) the post-transaction controlling person:
92	96		(i) has previously complied with and
93	97		received approval as a controlling person under this subchapter; or
94	98		(ii) is identified as the controlling
95	99		person in a merger or other acquisition-related application filed
96	100		with the banking commissioner concurrently with the submission
97	101		required by Section 202.001; and
98	102		(5) a transaction exempted by the banking commissioner
99	103		or by rules adopted under this subtitle because the transaction is
100	104		not within the purposes of this subchapter or the regulation of the
101	105		transaction is not necessary or appropriate to achieve the
102	106		objectives of this subchapter.
103	107		SECTION 5. Section 35.010(c), Finance Code, is amended to
104	108		read as follows:
105	109		(c) If the banking commissioner determines after the
106	110		hearing that the alleged conduct occurred and that the conduct
107	111		constitutes a violation, the banking commissioner may impose an
108	112		administrative penalty against a bank or other person, as
109	113		applicable, in an amount:
110	114		(1) if imposed against a bank, [not less than $500 and]
111	115		not more than $10,000 for each violation for each day the violation
112	116		continues, except that the maximum administrative penalty that may
113	117		be imposed is the lesser of $500,000 or one percent of the bank's
114	118		assets; or
115	119		(2) if imposed against a person other than a bank, [not
116	120		less than $500 and] not more than $5,000 for each violation for each
117	121		day the violation continues, except that the maximum administrative
118	122		penalty that may be imposed is $250,000.
119	123		SECTION 6. Section 35.203, Finance Code, is amended by
120	124		adding Subsections (h) and (i) to read as follows:
121	125		(h) Except to the extent disclosure is necessary to locate
122	126		and produce responsive records or obtain legal representation and
123	127		subject to Subsection (i), a subpoena issued under this section may
124	128		provide that the person to whom the subpoena is directed or any
125	129		person who comes into receipt of the subpoena may not:
126	130		(1) disclose that the subpoena has been issued;
127	131		(2) disclose or describe any records requested in the
128	132		subpoena;
129	133		(3) disclose whether records have been furnished in
130	134		response to the subpoena; or
131	135		(4) if the subpoena requires a person to be examined
132	136		under oath, disclose or describe the examination, including the
133	137		questions asked, the testimony given, or the transcript produced.
134	138		(i) A subpoena issued under this section may prohibit the
135	139		disclosure of information described by Subsection (h) only if the
136	140		banking commissioner finds, and the subpoena states, that:
137	141		(1) the subpoena, the examination, or the records
138	142		relate to an ongoing investigation; and
139	143		(2) the disclosure could significantly impede or
140	144		jeopardize the investigation.
141	145		SECTION 7. Sections 181.002(a)(47-b) and (49), Finance
142	146		Code, are amended to read as follows:
143	147		(47-b) "Third-party service provider" means a person
144	148		who performs activities relating to the trust business on behalf of
145	149		a trust institution for the trust institution's customers or on
146	150		behalf of another person directly engaged in providing financial
147	151		services for the person's customers. The term:
148	152		(A) includes a person who:
149	153		(i) provides data processing services;
150	154		(ii) performs activities in support of the
151	155		provision of financial services, including lending, transferring
152	156		funds, fiduciary activities, trading activities, and deposit
153	157		taking activities; [or]
154	158		(iii) for the purpose of furnishing to
155	159		third parties reports indicating a person's creditworthiness,
156	160		credit standing, or credit capacity, regularly engages in the
157	161		practice of assembling or evaluating, and maintaining, public
158	162		record information and credit account information from persons who
159	163		furnish that information regularly and in the ordinary course of
160	164		business; or
161	165		(iv) provides Internet-related services,
162	166		including web services, processing electronic bill payments,
163	167		developing and maintaining mobile applications, system and
164	168		software development and maintenance, and security monitoring; and
165	169		(B) does not include a provider of an interactive
166	170		computer service or a general audience Internet or communications
167	171		platform, except to the extent that the service or platform is
168	172		specially designed or adapted for the trust business and activities
169	173		relating to the trust business.
170	174		(49) "Trust business" means the business of a company
171	175		holding itself out to the public as a fiduciary for hire or
172	176		compensation to hold or administer accounts. The term includes:
173	177		(A) the business of a trustee or custodian of an
174	178		individual retirement account described by Section 408(a),
175	179		Internal Revenue Code of 1986; and
176	180		(B) the business of an administrator or servicer
177	181		of individual retirement accounts described by Section 408(a),
178	182		Internal Revenue Code of 1986, who [possesses or controls any
179	183		assets, including cash, of those accounts and who] makes the
180	184		administrator's or servicer's services available to the public for
181	185		hire or compensation.
182	186		SECTION 8. Section 181.104, Finance Code, is amended by
183	187		adding Subsections (h) and (i) to read as follows:
184	188		(h) Except to the extent disclosure is necessary to locate
185	189		and produce responsive records or obtain legal representation and
186	190		subject to Subsection (i), a subpoena issued under this section may
187	191		provide that the person to whom the subpoena is directed or any
188	192		person who comes into receipt of the subpoena may not:
189	193		(1) disclose that the subpoena has been issued;
190	194		(2) disclose or describe any records requested in the
191	195		subpoena;
192	196		(3) disclose whether records have been furnished in
193	197		response to the subpoena; or
194	198		(4) if the subpoena requires a person to be examined
195	199		under oath, disclose or describe the examination, including the
196	200		questions asked, the testimony given, or the transcript produced.
197	201		(i) A subpoena issued under this section may prohibit the
198	202		disclosure of information described by Subsection (h) only if the
199	203		banking commissioner finds, and the subpoena states, that:
200	204		(1) the subpoena, the examination, or the records
201	205		relate to an ongoing investigation; and
202	206		(2) the disclosure could significantly impede or
203	207		jeopardize the investigation.
204	208		SECTION 9. Section 181.106, Finance Code, is amended by
205	209		adding Subsection (d) to read as follows:
206	210		(d) A third-party service provider that refuses to submit to
207	211		examination or to pay an assessed fee for examination under this
208	212		section is subject to an enforcement action under Chapter 185. With
209	213		respect to a third-party service provider's refusal to submit to
210	214		examination, the banking commissioner may notify all state trust
211	215		companies of the refusal and warn that continued use of the
212	216		third-party service provider may constitute an unsafe and unsound
213	217		fiduciary practice.
214	218		SECTION 10. Section 185.010(c), Finance Code, is amended to
215	219		read as follows:
216	220		(c) If the banking commissioner determines after the
217	221		hearing that the alleged conduct occurred and that the conduct
218	222		constitutes a violation, the banking commissioner may impose an
219	223		administrative penalty against a state trust company or other
220	224		person, as applicable, in an amount:
221	225		(1) if imposed against a state trust company, [not
222	226		less than $500 and] not more than $10,000 for each violation for
223	227		each day the violation continues, except that the maximum
224	228		administrative penalty that may be imposed is the lesser of
225	229		$500,000 or one percent of the state trust company's assets; or
226	230		(2) if imposed against a person other than a state
227	231		trust company, [not less than $500 and] not more than $5,000 for
228	232		each violation for each day the violation continues, except that
229	233		the maximum administrative penalty that may be imposed is $250,000.
230	234		SECTION 11. Section 185.202, Finance Code, is amended by
231	235		adding Subsections (h) and (i) to read as follows:
232	236		(h) Except to the extent disclosure is necessary to locate
233	237		and produce responsive records or obtain legal representation and
234	238		subject to Subsection (i), a subpoena issued under this section may
235	239		provide that the person to whom the subpoena is directed or any
236	240		person who comes into receipt of the subpoena may not:
237	241		(1) disclose that the subpoena has been issued;
238	242		(2) disclose or describe any records requested in the
239	243		subpoena;
240	244		(3) disclose whether records have been furnished in
241	245		response to the subpoena; or
242	246		(4) if the subpoena requires a person to be examined
243	247		under oath, disclose or describe the examination, including the
244	248		questions asked, the testimony given, or the transcript produced.
245	249		(i) A subpoena issued under this section may prohibit the
246	250		disclosure of information described by Subsection (h) only if the
247	251		banking commissioner finds, and the subpoena states, that:
248	252		(1) the subpoena, the examination, or the records
249	253		relate to an ongoing investigation; and
250	254		(2) the disclosure could significantly impede or
251	255		jeopardize the investigation.
252	256		SECTION 12. This Act takes effect September 1, 2019.
253		-	______________________________ ______________________________
254		-	President of the Senate Speaker of the House
255		-	I hereby certify that S.B. No. 1823 passed the Senate on
256		-	April 11, 2019, by the following vote: Yeas 31, Nays 0; and that
257		-	the Senate concurred in House amendment on May 23, 2019, by the
258		-	following vote: Yeas 31, Nays 0.
259		-	______________________________
260		-	Secretary of the Senate
261		-	I hereby certify that S.B. No. 1823 passed the House, with
262		-	amendment, on May 16, 2019, by the following vote: Yeas 139,
263		-	Nays 1, two present not voting.
264		-	______________________________
265		-	Chief Clerk of the House
266		-	Approved:
267		-	______________________________
268		-	Date
269		-	______________________________
270		-	Governor