What This Bill Does
This bill sets rules for federal banking agencies (government offices that oversee banks) when they want banks to close customer accounts. It requires these agencies to have a real reason for closing accounts, not just to protect the bank's reputation. The bill also changes rules about how the federal government can request documents from banks during investigations.
##
Who It Affects
- Federal banking agencies (offices that regulate banks)
- Depository institutions (banks and credit unions that hold customer deposits)
- Bank customers whose accounts might be closed
- The National Credit Union Administration Board
- The Attorney General (head of the Department of Justice)
##
Key Provisions
- Federal banking agencies cannot request or order banks to close a customer's account unless they have a material reason (a real, solid reason) that is not based only on reputation risk to the bank (Sec. 2(b)(1))
- Agencies can close accounts if they believe a customer poses a threat to national security or is involved with terrorist financing, or is connected to Iran, North Korea, Syria, or countries on the terrorism sponsor list (Sec. 2(b)(2))
- Any request or order to close an account must be in writing and must include a written explanation of which law the customer is breaking (Sec. 2(c)(1))
- Banks must tell customers why their accounts are being closed, unless the closure is based on national security reasons (Sec. 2(d))
- Federal banking agencies must file a yearly report to Congress listing how many accounts they requested to be closed and what legal authority they used (Sec. 2(e))
- The Attorney General must get a court order or issue a signed subpoena (a formal demand for documents or testimony) that is supported by specific facts showing why the information is needed before summoning witnesses or requesting documents from banks (Sec. 3)
##
What Changes
If this law passes, federal banking agencies will no longer be able to quietly pressure banks into closing customer accounts. Banks will have to receive written orders with explanations. Customers will know why their accounts are being closed (unless national security is involved). Federal investigators will need to follow stricter rules about getting documents from banks, requiring either a court order or a signed subpoena from a high-ranking official with specific facts supporting the request.
##
Important Definitions
- **Appropriate Federal banking agency**: The offices that oversee banks, plus the National Credit Union Administration Board for credit unions
- **Depository institution**: Banks and credit unions that hold customer deposits
- **Insured credit union**: A credit union covered by federal insurance
- **Material reason**: A real, concrete reason (not vague or unclear)
- **Reputation risk**: The danger that a bank's image or standing could be damaged
##
Effective Date
Not specified in bill text
II
118TH CONGRESS
1ST SESSION
S. 245
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
FEBRUARY 2, 2023
Mr. CRUZ (for himself, 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 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
23:18 Feb 13, 2023
Jkt 039200
PO 00000
Frm 00001
Fmt 6652
Sfmt 6201
E:\BILLS\S245.IS
S245
kjohnson on DSK79L0C42PROD with BILLS
2
•S 245 IS
SECTION 1. SHORT TITLE.
1
This Act may be cited as the ‘‘Financial Institution
2
Customer Protection Act of 2023’’.
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
23:18 Feb 13, 2023
Jkt 039200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6201
E:\BILLS\S245.IS
S245
kjohnson on DSK79L0C42PROD with BILLS
3
•S 245 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
23:18 Feb 13, 2023
Jkt 039200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6201
E:\BILLS\S245.IS
S245
kjohnson on DSK79L0C42PROD with BILLS
4
•S 245 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
regulation), the agency believes that the cus-
18
tomer or group of customers is 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
23:18 Feb 13, 2023
Jkt 039200
PO 00000
Frm 00004
Fmt 6652
Sfmt 6201
E:\BILLS\S245.IS
S245
kjohnson on DSK79L0C42PROD with BILLS
5
•S 245 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
23:18 Feb 13, 2023
Jkt 039200
PO 00000
Frm 00005
Fmt 6652
Sfmt 6201
E:\BILLS\S245.IS
S245
kjohnson on DSK79L0C42PROD with BILLS
6
•S 245 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
23:18 Feb 13, 2023
Jkt 039200
PO 00000
Frm 00006
Fmt 6652
Sfmt 6201
E:\BILLS\S245.IS
S245
kjohnson on DSK79L0C42PROD with BILLS
7
•S 245 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
23:18 Feb 13, 2023
Jkt 039200
PO 00000
Frm 00007
Fmt 6652
Sfmt 6301
E:\BILLS\S245.IS
S245
kjohnson on DSK79L0C42PROD with BILLS