IIB
114th CONGRESS
2d Session
H. R. 766
IN THE SENATE OF THE UNITED STATES
February 8, 2016
Received; read twice and referred to the Committee on Banking, Housing, and Urban Affairs
AN ACT
To provide requirements for the appropriate Federal banking agencies when requesting or ordering a depository institution to terminate a specific customer account, to provide for additional requirements related to subpoenas issued under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, and for other purposes.
Short title
This Act may be cited as the Financial Institution Customer Protection Act of 2016
.
Requirements for deposit account termination requests and orders
Termination requests or orders must be material
In general
An appropriate Federal banking agency may not formally or informally request or order a depository institution to terminate a specific customer account or group of customer accounts or to otherwise restrict or discourage a depository institution from entering into or maintaining a banking relationship with a specific customer or group of customers unless—
the agency has a material reason for such request or order; and
such reason is not based solely on reputation risk.
Treatment of national security threats
If an appropriate Federal banking agency believes a specific customer or group of customers is, or is acting as a conduit for, an entity which—
poses a threat to national security;
is involved in terrorist financing;
is an agency of the government of Iran, North Korea, Syria, or any country listed from time to time on the State Sponsors of Terrorism list;
is located in, or is subject to the jurisdiction of, any country specified in subparagraph (C); or
does business with any entity described in subparagraph (C) or (D), unless the appropriate Federal banking agency determines that the customer or group of customers has used due diligence to avoid doing business with any entity described in subparagraph (C) or (D),
Notice requirement
In general
If an appropriate Federal banking agency formally or informally requests or orders a depository institution to terminate a specific customer account or a group of customer accounts, the agency shall—
provide such request or order to the institution in writing; and
accompany such request or order with a written justification for why such termination is needed, including any specific laws or regulations the agency believes are being violated by the customer or group of customers, if any.
Justification requirement
A justification described under paragraph (1)(B) may not be based solely on the reputation risk to the depository institution.
Customer notice
Notice required
Except as provided under paragraph (2), if an appropriate Federal banking agency orders a depository institution to terminate a specific customer account or a group of customer accounts, the depository institution shall inform the customer or customers of the justification for the customer’s account termination described under subsection (b).
Notice prohibited in cases of national security
If an appropriate Federal banking agency requests or orders a depository institution to terminate a specific customer account or a group of customer accounts based on a belief that the customer or customers pose a threat to national security, or are otherwise described under subsection (a)(2), neither the depository institution nor the appropriate Federal banking agency may inform the customer or customers of the justification for the customer’s account termination.
Reporting requirement
Each appropriate Federal banking agency shall issue an annual report to the Congress stating—
the aggregate number of specific customer accounts that the agency requested or ordered a depository institution to terminate during the previous year; and
the legal authority on which the agency relied in making such requests and orders and the frequency on which the agency relied on each such authority.
Definitions
For purposes of this section:
Appropriate Federal banking agency
The term appropriate Federal banking agency
means—
the appropriate Federal banking agency, as defined under section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813); and
the National Credit Union Administration, in the case of an insured credit union.
Depository institution
The term depository institution
means—
a depository institution, as defined under section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813); and
an insured credit union.
Amendments to the Financial Institutions Reform, Recovery, and Enforcement Act of 1989
Section 951 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1833a) is amended—
in subsection (c)(2), by striking affecting a federally insured financial institution
and inserting against a federally insured financial institution or by a federally insured financial institution against an unaffiliated third person
; and
in subsection (g)—
in the header, by striking subpoenas
and inserting investigations
; and
by amending paragraph (1)(C) to read as follows:
summon witnesses and require the production of any books, papers, correspondence, memoranda, or other records which the Attorney General deems relevant or material to the inquiry, if the Attorney General—
requests a court order from a court of competent jurisdiction for such actions and offers specific and articulable facts showing that there are reasonable grounds to believe that the information or testimony sought is relevant and material for conducting an investigation under this section; or
either personally or through delegation no lower than the Deputy Attorney General, issues and signs a subpoena for such actions and such subpoena is supported by specific and articulable facts showing that there are reasonable grounds to believe that the information or testimony sought is relevant for conducting an investigation under this section.
.
Passed the House of Representatives February 4, 2016.
Karen L. Haas,
Clerk