Financial Institution Customer Protection Act of 2019

I 116TH CONGRESS 1ST SESSION H. R. 189 To provide requirements for the appropriate Federal banking agencies when requesting or ordering a depository institution to terminate a specific customer account, and for other purposes. IN THE HOUSE OF REPRESENTATIVES JANUARY 3, 2019 Mr. LUETKEMEYER introduced the following bill; which was referred to the Committee on Financial Services 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, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Financial Institution 4 Customer Protection Act of 2019’’. 5 VerDate Sep 11 2014 21:43 Jan 15, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H189.IH H189 kjohnson on DSK79L0C42 with BILLS 2 •HR 189 IH SEC. 2. REQUIREMENTS FOR DEPOSIT ACCOUNT TERMI- 1 NATION REQUESTS AND ORDERS. 2 (a) TERMINATION REQUESTS OR ORDERS MUST BE 3 VALID.— 4 (1) IN GENERAL.—An appropriate Federal 5 banking agency may not formally or informally re- 6 quest or order a depository institution to terminate 7 a specific customer account or group of customer ac- 8 counts or to otherwise restrict or discourage a de- 9 pository institution from entering into or maintain- 10 ing a banking relationship with a specific customer 11 or group of customers unless— 12 (A) the agency has a valid reason for such 13 request or order; and 14 (B) such reason is not based solely on rep- 15 utation risk. 16 (2) TREATMENT OF NATIONAL SECURITY 17 THREATS.—If an appropriate Federal banking agen- 18 cy believes a specific customer or group of customers 19 is, or is acting as a conduit for, an entity which— 20 (A) poses a threat to national security; 21 (B) is involved in terrorist financing; 22 (C) is an agency of the Government of 23 Iran, North Korea, Syria, or any country listed 24 from time to time on the State Sponsors of 25 Terrorism list; 26 VerDate Sep 11 2014 21:43 Jan 15, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H189.IH H189 kjohnson on DSK79L0C42 with BILLS 3 •HR 189 IH (D) is located in, or is subject to the juris- 1 diction of, any country specified in subpara- 2 graph (C); or 3 (E) does business with any entity described 4 in subparagraph (C) or (D), unless the appro- 5 priate Federal banking agency determines that 6 the customer or group of customers has used 7 due diligence to avoid doing business with any 8 entity described in subparagraph (C) or (D), 9 such belief shall satisfy the requirement under para- 10 graph (1). 11 (b) NOTICE REQUIREMENT.— 12 (1) IN GENERAL.—If an appropriate Federal 13 banking agency formally or informally requests or 14 orders a depository institution to terminate a spe- 15 cific customer account or a group of customer ac- 16 counts, the agency shall— 17 (A) provide such request or order to the 18 institution in writing; and 19 (B) accompany such request or order with 20 a written justification for why such termination 21 is needed, including any specific laws or regula- 22 tions the agency believes are being violated by 23 the customer or group of customers, if any. 24 VerDate Sep 11 2014 21:43 Jan 15, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H189.IH H189 kjohnson on DSK79L0C42 with BILLS 4 •HR 189 IH (2) JUSTIFICATION REQUIREMENT.—A jus- 1 tification described under paragraph (1)(B) may not 2 be based solely on the reputation risk to the deposi- 3 tory institution. 4 (c) CUSTOMER NOTICE.— 5 (1) NOTICE REQUIRED.—Except as provided 6 under paragraph (2) or as otherwise prohibited from 7 being disclosed by law, if an appropriate Federal 8 banking agency orders a depository institution to 9 terminate a specific customer account or a group of 10 customer accounts, the depository institution shall 11 inform the specific customer or group of customers 12 of the justification for the customer’s account termi- 13 nation described under subsection (b). 14 (2) NOTICE PROHIBITED.— 15 (A) NOTICE PROHIBITED IN CASES OF NA- 16 TIONAL SECURITY.—If an appropriate Federal 17 banking agency requests or orders a depository 18 institution to terminate a specific customer ac- 19 count or a group of customer accounts based on 20 a belief that the customer or customers pose a 21 threat to national security, or are otherwise de- 22 scribed under subsection (a)(2), neither the de- 23 pository institution nor the appropriate Federal 24 banking agency may inform the customer or 25 VerDate Sep 11 2014 21:43 Jan 15, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H189.IH H189 kjohnson on DSK79L0C42 with BILLS 5 •HR 189 IH customers of the justification for the customer’s 1 account termination. 2 (B) NOTICE PROHIBITED IN OTHER 3 CASES.—If an appropriate Federal banking 4 agency determines that the notice required 5 under paragraph (1) may interfere with an au- 6 thorized criminal investigation, neither the de- 7 pository institution nor the appropriate Federal 8 banking agency may inform the specific cus- 9 tomer or group of customers of the justification 10 for the customer’s account termination. 11 (d) REPORTING REQUIREMENT.—Each appropriate 12 Federal banking agency shall issue an annual report to 13 the Congress stating— 14 (1) the aggregate number of specific customer 15 accounts that the agency requested or ordered a de- 16 pository institution to terminate during the previous 17 year; and 18 (2) the legal authority on which the agency re- 19 lied in making such requests and orders and the fre- 20 quency on which the agency relied on each such au- 21 thority. 22 (e) DEFINITIONS.—For purposes of this section: 23 VerDate Sep 11 2014 21:43 Jan 15, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H189.IH H189 kjohnson on DSK79L0C42 with BILLS 6 •HR 189 IH (1) APPROPRIATE FEDERAL BANKING AGEN- 1 CY.—The term ‘‘appropriate Federal banking agen- 2 cy’’ means— 3 (A) the appropriate Federal banking agen- 4 cy, as defined under section 3 of the Federal 5 Deposit Insurance Act (12 U.S.C. 1813); and 6 (B) the National Credit Union Administra- 7 tion, in the case of an insured credit union. 8 (2) DEPOSITORY INSTITUTION.—The term ‘‘de- 9 pository institution’’ means— 10 (A) a depository institution, as defined 11 under section 3 of the Federal Deposit Insur- 12 ance Act (12 U.S.C. 1813); and 13 (B) an insured credit union, as defined 14 under section 101 of the Federal Credit Union 15 Act (12 U.S.C. 1752). 16 Æ VerDate Sep 11 2014 21:43 Jan 15, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6301 E:\BILLS\H189.IH H189 kjohnson on DSK79L0C42 with BILLS