II
114th CONGRESS
2d Session
S. 2790
IN THE SENATE OF THE UNITED STATES
April 13, 2016
Mr. Lee (for Mr. Cruz (for himself, Mr. Lee, Mr. Crapo, and Mr. Cornyn)) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs
A BILL
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
Definitions
In this section—
the term appropriate Federal banking agency—
has the meaning given the term in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813); and
in the case of an insured credit union, means the National Credit Union Administration;
the term depository institution—
has the meaning given the term in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813); and
includes an insured credit union; and
the term insured credit union has the meaning given the term in section 101 of the Federal Credit Union Act (12 U.S.C. 1752).
Termination requests or orders must be material
In general
The 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 the request or order; and
that reason is not based solely on reputation risk to the depository institution.
Treatment of national security threats
The appropriate Federal banking agency shall satisfy the requirement under paragraph (1) if the 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 sponsor of terrorism list;
is located in, or is subject to the jurisdiction of, any country described 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 the 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 the request or order to the institution in writing; and
include with the request or order a written justification for why the termination is necessary, including any specific laws or regulations, if any, the agency believes that the customer or group of customers are violating.
Justification requirement
A written justification 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 the 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 termination of the account or accounts under subsection (c)(1)(B).
Notice prohibited in cases of national security
If the 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 in subsection (b)(2), neither the depository institution nor the appropriate Federal banking agency may inform the customer or customers of the justification for the termination of the account or accounts.
Reporting requirement
Each appropriate Federal banking agency shall issue an annual report to Congress stating—
the aggregate number of specific customer accounts that the agency requested or ordered a depository institution to terminate during the 1-year period preceding the issuance of the report;
the legal authority on which the agency relied in making the requests and orders described in paragraph (1); and
the frequency with which the agency relied on each authority described in paragraph (2).
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 subsection heading, 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.
.