Exempts state chartered depository institutions from any duty to review transactions of licensed money transmitters or check cashers for compliance with certain provisions of federal law.
BILL NUMBER: S7732A
TITLE OF BILL : An act to amend the banking law, in relation to money services businesses
PURPOSE : Provides for review by the superintendent of banking institution of any denials of banking services to money services businesses in the state, and for mediation should a bank deny these services.
SUMMARY OF PROVISIONS : This bill provides that a state chartered depository institution shall have no obligation to conduct any due diligence or compliance review on any New York State money transmitter or New York State licensed check casher provided such transmitter or check casher is licensed by the state and has a program that fulfills requirements of 31 U.S,C 5318 and its implementing regulations.
A state chartered depository institution shall not deny banking services business on the basis of compliance with the Banking Secrecy Act. Further, no state chartered depository institution shall deny banking services to a money services business without first providing an opportunity to meet any reasonable requirements set by the banking institution for opening and maintaining such services.
In cases where an institution denies banking services to a money services business, such institution must provide a written statement to the Superintendent of Banking" The Superintendent may direct the banking institution to offer services under certain circumstances.
JUSTIFICATION : Money services businesses play a vital role in the economy of New York State. The bill puts in place a set of guidelines and a review process to be followed by the Superintendent of Banks and state chartered financial institutions with regards to deposit accounts for money services businesses. This legislation has been worded to mirror Federal legislation passed by the US House of Representatives.
LEGISLATIVE HISTORY : 2007-2008 - A.1678B 06/18/08 - Held for consideration in Banks
FISCAL IMPLICATIONS : To be determined.
EFFECTIVE DATE : This act shall take effect immediately.
STATE OF NEW YORK ________________________________________________________________________ 7732--A IN SENATE May 5, 2010 ___________Introduced by Sens. PERALTA, DIAZ -- read twice and ordered printed, and when printed to be committed to the Committee on Banks -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee AN ACT to amend the banking law, in relation to money services busi- nesses THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Legislative intent. The legislature hereby finds and declares that money services businesses play a vital role in the economy of New York state and that access by the public to efficient, economical and safe money services businesses is a public good. Money services businesses recognize that protection of the financial system from abuse from money launderers and terrorist financiers is a paramount and compelling state interest and therefore comply with standards estab- lished by federal and state statutes and regulations, including the Bank Secrecy Act (Public Law 91-508 and 31 U.S.C. 5311 subchapter II) and the "Interagency Interpretative Guidance on Providing Banking Services to Money Services Businesses Operating in the United States" issued by the Financial Crimes Enforcement Network (FinCEN) of the U.S. treasury department. Furthermore, in ensuring that money services businesses are partners in our state's fight against money laundering and terrorist financing, money services businesses are subject to strict licensing and background verification requirements and, in many cases, bonding requirements by the superintendent of banks. Moreover, money services businesses are subject to constant supervision and examination by the superintendent of banks for safety and soundness, as well as compliance with the bank secrecy act and other anti-money laundering and anti-ter- rorist financing laws and regulations. Nevertheless, the legislature finds that banks in the state have closed accounts and refused to open accounts for money services businesses citing requirements of the bank secrecy act.EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD00088-05-0 S. 7732--A 2
Therefore, the legislature finds and declares that the systematic and unchecked closing of money services businesses runs counter to the goals of protecting the state and its financial system. S 2. The banking law is amended by adding a new section 9-v to read as follows: S 9-V. NEW YORK STATE LICENSED MONEY TRANSMITTER OR NEW YORK STATE LICENSED CHECK CASHER ACCOUNTS. 1. A STATE CHARTERED DEPOSITORY INSTI- TUTION SHALL HAVE NO OBLIGATION TO CONDUCT ANY DUE DILIGENCE OR REVIEW OF THE COMPLIANCE BY A NEW YORK STATE LICENSED MONEY TRANSMITTER OR NEW YORK STATE LICENSED CHECK CASHER WITH SUCH BUSINESS'S OBLIGATIONS UNDER CHAPTER 53 OF TITLE 31 OF THE UNITED STATES CODE, PROVIDED: (A) THE NEW YORK STATE LICENSED MONEY TRANSMITTER OR NEW YORK STATE LICENSED CHECK CASHER IS LICENSED OR APPROVED TO ENGAGE IN MONEY TRANS- MISSION OR CHECK CASHING UNDER THIS CHAPTER BY THE SUPERINTENDENT OF BANKS; AND (B) THE NEW YORK STATE LICENSED MONEY TRANSMITTER OR NEW YORK STATE LICENSED CHECK CASHER CERTIFIES TO THE STATE CHARTERED DEPOSITORY INSTI- TUTION THAT IT HAS A PROGRAM THAT FULFILLS THE REQUIREMENTS OF SUBSECTION (H)(1) OF 31 U.S.C. SECTION 5318 AND ITS IMPLEMENTING REGU- LATIONS. 2. A NEW YORK STATE LICENSED MONEY TRANSMITTER OR NEW YORK STATE LICENSED CHECK CASHER MAKING A MATERIAL MISREPRESENTATION IN A CERTIF- ICATION REQUIRED BY THIS SECTION SHALL BE SUBJECT TO THE CIVIL PENALTIES PRESCRIBED UNDER LAW. A PERSON WHO KNOWINGLY MAKES ANY SUCH MATERIAL MISREPRESENTATION OR OMISSION SHALL BE SUBJECT TO CRIMINAL PROSECUTION AND ALL PENALTIES AS OTHERWISE PROVIDED BY LAW. 3. NOTHING IN THIS SECTION SHALL BE CONSTRUED TO REQUIRE A STATE-CHAR- TERED DEPOSITORY INSTITUTION TO ESTABLISH, MAINTAIN, ADMINISTER OR MANAGE AN ACCOUNT FOR A NEW YORK STATE LICENSED MONEY TRANSMITTER OR NEW YORK STATE LICENSED CHECK CASHER. 4. A STATE CHARTERED DEPOSITORY INSTITUTION SHALL HAVE NO LIABILITY FOR THE FAILURE OF ANY NEW YORK STATE LICENSED MONEY TRANSMITTER OR NEW YORK STATE LICENSED CHECK CASHER TO FULFILL ITS OBLIGATIONS UNDER CHAP- TER 53 OF TITLE 31 OF THE UNITED STATES CODE. S 3. This act shall take effect immediately.