Financial Institution Customer Protection Act of 2021

II 117TH CONGRESS 1ST SESSION S. 1088 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 sub- poenas issued under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, and for other purposes. IN THE SENATE OF THE UNITED STATES APRIL 13, 2021 Mr. CRUZ (for himself, Mr. CORNYN, Mr. CRAMER, Mr. TILLIS, Mr. INHOFE, Mr. CRAPO, and Mr. BRAUN) 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 insti- tution to terminate a specific customer account, to pro- vide for additional requirements related to subpoenas issued under the Financial Institutions Reform, Recov- ery, and Enforcement Act of 1989, and for other pur- poses. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 VerDate Sep 11 2014 01:41 Apr 27, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1088.IS S1088 kjohnson on DSK79L0C42PROD with BILLS 2 •S 1088 IS SECTION 1. SHORT TITLE. 1 This Act may be cited as the ‘‘Financial Institution 2 Customer Protection Act of 2021’’. 3 SEC. 2. REQUIREMENTS FOR DEPOSIT ACCOUNT TERMI- 4 NATION REQUESTS AND ORDERS. 5 (a) DEFINITIONS.—In this section— 6 (1) the term ‘‘appropriate Federal banking 7 agency’’— 8 (A) has the meaning given the term in sec- 9 tion 3 of the Federal Deposit Insurance Act (12 10 U.S.C. 1813); and 11 (B) in the case of an insured credit union, 12 means the National Credit Union Administra- 13 tion Board; 14 (2) the term ‘‘depository institution’’— 15 (A) has the meaning given the term in sec- 16 tion 3 of the Federal Deposit Insurance Act (12 17 U.S.C. 1813); and 18 (B) includes an insured credit union; and 19 (3) the term ‘‘insured credit union’’ has the 20 meaning given the term in section 101 of the Fed- 21 eral Credit Union Act (12 U.S.C. 1752). 22 (b) TERMINATION REQUESTS OR ORDERS MUST BE 23 MATERIAL.— 24 (1) IN GENERAL.—The appropriate Federal 25 banking agency may not formally or informally re- 26 VerDate Sep 11 2014 01:41 Apr 27, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1088.IS S1088 kjohnson on DSK79L0C42PROD with BILLS 3 •S 1088 IS quest or order a depository institution to terminate 1 a specific customer account or group of customer ac- 2 counts or to otherwise restrict or discourage a de- 3 pository institution from entering into or maintain- 4 ing a banking relationship with a specific customer 5 or group of customers unless— 6 (A) the agency has a material reason for 7 the request or order; and 8 (B) that reason is not based solely on rep- 9 utation risk to the depository institution. 10 (2) TREATMENT OF NATIONAL SECURITY 11 THREATS.—The appropriate Federal banking agency 12 shall satisfy the requirement under paragraph (1) if 13 the agency believes a specific customer or group of 14 customers is, or is acting as a conduit for, an entity 15 that— 16 (A) poses a threat to national security; 17 (B) is involved in terrorist financing; 18 (C) is an agency of the Government of 19 Iran, North Korea, Syria, or any country listed 20 from time to time on the state sponsor of ter- 21 rorism list; 22 (D) is located in, or is subject to the juris- 23 diction of, any country described in subpara- 24 graph (C); or 25 VerDate Sep 11 2014 01:41 Apr 27, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1088.IS S1088 kjohnson on DSK79L0C42PROD with BILLS 4 •S 1088 IS (E) does business with any entity described 1 in subparagraph (C) or (D), unless the appro- 2 priate Federal banking agency determines that 3 the customer or group of customers has used 4 due diligence to avoid doing business with any 5 entity described in subparagraph (C) or (D). 6 (c) NOTICE REQUIREMENT.— 7 (1) IN GENERAL.—If the appropriate Federal 8 banking agency formally or informally requests or 9 orders a depository institution to terminate a spe- 10 cific customer account or a group of customer ac- 11 counts, the agency shall— 12 (A) provide the request or order to the in- 13 stitution in writing; and 14 (B) include with the request or order a 15 written justification for why the termination is 16 necessary, including any specific law (including 17 regulations), the agency believes that the cus- 18 tomer or group of customers are violating. 19 (2) JUSTIFICATION REQUIREMENT.—A written 20 justification under paragraph (1)(B) may not be 21 based solely on the reputation risk to the depository 22 institution. 23 (d) CUSTOMER NOTICE.— 24 VerDate Sep 11 2014 01:41 Apr 27, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1088.IS S1088 kjohnson on DSK79L0C42PROD with BILLS 5 •S 1088 IS (1) NOTICE REQUIRED.—Except as provided in 1 paragraph (2), if the appropriate Federal banking 2 agency orders a depository institution to terminate a 3 specific customer account or a group of customer ac- 4 counts, the depository institution shall inform the 5 customer or customers of the justification for the 6 termination of the account or accounts under sub- 7 section (c)(1)(B). 8 (2) NOTICE PROHIBITED IN CASES OF NA- 9 TIONAL SECURITY.—If the appropriate Federal 10 banking agency requests or orders a depository insti- 11 tution to terminate a specific customer account or a 12 group of customer accounts based on a belief that 13 the customer or customers pose a threat to national 14 security, or are otherwise described in subsection 15 (b)(2), neither the depository institution nor the ap- 16 propriate Federal banking agency may inform the 17 customer or customers of the justification for the 18 termination of the account or accounts. 19 (e) REPORTING REQUIREMENT.—Each appropriate 20 Federal banking agency shall issue an annual report to 21 Congress stating— 22 (1) the aggregate number of specific customer 23 accounts that the agency requested or ordered a de- 24 VerDate Sep 11 2014 01:41 Apr 27, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1088.IS S1088 kjohnson on DSK79L0C42PROD with BILLS 6 •S 1088 IS pository institution to terminate during the 1-year 1 period preceding the issuance of the report; 2 (2) the legal authority on which the agency re- 3 lied in making the requests and orders described in 4 paragraph (1); and 5 (3) the frequency with which the agency relied 6 on each authority described in paragraph (2). 7 SEC. 3. AMENDMENTS TO THE FINANCIAL INSTITUTIONS 8 REFORM, RECOVERY, AND ENFORCEMENT 9 ACT OF 1989. 10 Section 951 of the Financial Institutions Reform, Re- 11 covery, and Enforcement Act of 1989 (12 U.S.C. 1833a) 12 is amended— 13 (1) in subsection (c)(2)— 14 (A) by inserting a comma after ‘‘1341’’; 15 and 16 (B) by striking ‘‘affecting a federally in- 17 sured financial institution’’ and inserting 18 ‘‘against a federally insured financial institution 19 or by a federally insured financial institution 20 against an unaffiliated third person’’; and 21 (2) in subsection (g)— 22 (A) in the subsection heading, by striking 23 ‘‘SUBPOENAS’’ and inserting ‘‘INVESTIGA- 24 TIONS’’; and 25 VerDate Sep 11 2014 01:41 Apr 27, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1088.IS S1088 kjohnson on DSK79L0C42PROD with BILLS 7 •S 1088 IS (B) by striking paragraph (1)(C) and in- 1 serting the following: 2 ‘‘(C) summon witnesses and require the 3 production of any books, papers, correspond- 4 ence, memoranda, or other records which the 5 Attorney General deems relevant or material to 6 the inquiry, if the Attorney General— 7 ‘‘(i) requests a court order from a 8 court of competent jurisdiction for such ac- 9 tions and offers specific and articulable 10 facts showing that there are reasonable 11 grounds to believe that the information or 12 testimony sought is relevant and material 13 for conducting an investigation under this 14 section; or 15 ‘‘(ii) either personally or through dele- 16 gation no lower than the Deputy Attorney 17 General, issues and signs a subpoena for 18 such actions and such subpoena is sup- 19 ported by specific and articulable facts 20 showing that there are reasonable grounds 21 to believe that the information or testi- 22 mony sought is relevant for conducting an 23 investigation under this section.’’. 24 Æ VerDate Sep 11 2014 01:41 Apr 27, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6301 E:\BILLS\S1088.IS S1088 kjohnson on DSK79L0C42PROD with BILLS