7 LONG TITLE
8 General Description:
9 This bill modifies the Financial Institutions Act.
10 Highlighted Provisions:
11 This bill:
12 ▸ modifies the definition provisions;
13 ▸ addresses persons or institutions subject to the jurisdiction of the department;
14 ▸ clarifies extent of regulation of technology service providers;
15 ▸ authorizes the commission to share information from certain examination reports
16 with a depository institution receiving services from a technology service provider;
18 ▸ makes technical changes.
19 Money Appropriated in this Bill:
21 Other Special Clauses:
23 Utah Code Sections Affected:
25 7-1-103, as last amended by Laws of Utah 2014, Chapter 189
26 7-1-501, as last amended by Laws of Utah 2008, Chapter 96
27 7-1-802, as last amended by Laws of Utah 2014, Chapter 189
29 Be it enacted by the Legislature of the state of Utah:
30 Section 1. Section 7-1-103 is amended to read:
31 7-1-103. Definitions.
32 As used in this title:
33 (1) (a) "Bank" means a person authorized under the laws of this state, another state, or
34 the United States to accept deposits from the public.
35 (b) "Bank" does not include:
36 (i) a federal savings and loan association or federal savings bank;
37 (ii) an industrial bank subject to Chapter 8, Industrial Banks;
38 (iii) a federally chartered credit union; or
39 (iv) a credit union subject to Chapter 9, Utah Credit Union Act.
40 (2) "Banking business" means the offering of deposit accounts to the public and the
41 conduct of such other business activities as may be authorized by this title.
42 (3) (a) "Branch" means a place of business of a financial institution, other than its main
43 office, at which deposits are received and paid.
44 (b) "Branch" does not include:
45 (i) an automated teller machine, as defined in Section 7-16a-102;
46 (ii) a point-of-sale terminal, as defined in Section 7-16a-102; or
47 (iii) a loan production office under Section 7-1-715.
48 (4) "Commissioner" means the Commissioner of Financial Institutions.
49 (5) "Control" means the power, directly or indirectly, to:
50 (a) direct or exercise a controlling influence over:
51 (i) the management or policies of a financial institution; or
52 (ii) the election of a majority of the directors or trustees of an institution;
53 (b) vote 20% or more of any class of voting securities of a financial institution by an
54 individual; or
55 (c) vote more than 10% of any class of voting securities of a financial institution by a
56 person other than an individual.
57 (6) "Credit union" means a cooperative, nonprofit association incorporated under:
58 (a) Chapter 9, Utah Credit Union Act; or
59 (b) 12 U.S.C. Sec. 1751 et seq., Federal Credit Union Act, as amended.
60 (7) "Department" means the Department of Financial Institutions.
61 (8) "Depository institution" means a bank, savings and loan association, savings bank,
62 industrial bank, credit union, or other institution that:
63 (a) holds or receives deposits, savings, or share accounts;
64 (b) issues certificates of deposit; or
65 (c) provides to its customers other depository accounts that are subject to withdrawal
66 by checks, drafts, or other instruments or by electronic means to effect third party payments.
67 (9) (a) "Depository institution holding company" means:
68 (i) a person other than an individual that:
69 (A) has control over any depository institution; or
70 (B) becomes a holding company of a depository institution under Section 7-1-703; or
71 (ii) a person other than an individual that the commissioner finds, after considering the
72 specific circumstances, is exercising or is capable of exercising a controlling influence over a
73 depository institution by means other than those specifically described in this section.
74 (b) Except as provided in Section 7-1-703, a person is not a depository institution
75 holding company solely because it owns or controls shares acquired in securing or collecting a
76 debt previously contracted in good faith.
77 (10) "Financial institution" means any institution subject to the jurisdiction of the
78 department because of this title.
79 (11) (a) "Financial institution holding company" means a person, other than an
80 individual that has control over any financial institution or any person that becomes a financial
81 institution holding company under this chapter, including an out-of-state or foreign depository
82 institution holding company.
83 (b) Ownership of a service corporation or service organization by a depository
84 institution does not make that institution a financial institution holding company.
85 (c) A person holding 10% or less of the voting securities of a financial institution is
86 rebuttably presumed not to have control of the institution.
87 (d) A trust company is not a holding company solely because it owns or holds 20% or
88 more of the voting securities of a financial institution in a fiduciary capacity, unless the trust
89 company exercises a controlling influence over the management or policies of the financial
91 (12) "Foreign depository institution" means a depository institution chartered or
92 authorized to transact business by a foreign government.
93 (13) "Foreign depository institution holding company" means the holding company of a
94 foreign depository institution.
95 (14) "Home state" means:
96 (a) for a state chartered depository institution, the state that charters the institution;
97 (b) for a federally chartered depository institution, the state where the institution's main
98 office is located; and
99 (c) for a depository institution holding company, the state in which the total deposits of
100 all depository institution subsidiaries are the largest.
101 (15) "Host state" means:
102 (a) for a depository institution, a state, other than the institution's home state, where the
103 institution maintains or seeks to establish a branch; and
104 (b) for a depository institution holding company, a state, other than the depository
105 institution holding company's home state, where the depository institution holding company
106 controls or seeks to control a depository institution subsidiary.
107 (16) "Industrial bank" means a corporation or limited liability company conducting the
108 business of an industrial bank under Chapter 8, Industrial Banks.
109 (17) "Industrial loan company" [
111 (18) "Insolvent" means the status of a financial institution that is unable to meet its
112 obligations as they mature.
113 (19) "Institution" means:
114 (a) a corporation;
115 (b) a limited liability company;
116 (c) a partnership;
117 (d) a trust;
118 (e) an association;
119 (f) a joint venture;
120 (g) a pool;
121 (h) a syndicate;
122 (i) an unincorporated organization; or
123 (j) any form of business entity.
124 (20) "Institution subject to the jurisdiction of the department" means an institution or
125 other person described in Section 7-1-501.
126 (21) "Liquidation" means the act or process of winding up the affairs of an institution
127 subject to the jurisdiction of the department by realizing upon assets, paying liabilities, and
128 appropriating profit or loss, as provided in Chapter 2, Possession of Depository Institution by
129 Commissioner, and Chapter 19, Acquisition of Failing Depository Institutions or Holding
131 (22) "Liquidator" means a person, agency, or instrumentality of this state or the United
132 States appointed to conduct a liquidation.
133 (23) (a) "Money services business" includes:
134 (i) a check casher;
135 (ii) a deferred deposit lender;
136 (iii) an issuer or seller of traveler's checks or money orders; and
137 (iv) a money transmitter.
138 (b) "Money services business" does not include:
139 (i) a bank;
140 (ii) a person registered with, and functionally regulated or examined by the Securities
141 Exchange Commission or the Commodity Futures Trading Commission, or a foreign financial
142 agency that engages in financial activities that, if conducted in the United States, would require
143 the foreign financial agency to be registered with the Securities Exchange Commission or the
144 Commodity Futures Trading Commission; or
145 (iii) an individual who engages in an activity described in Subsection (23)(a) on an
146 infrequent basis and not for gain or profit.
147 (24) "Negotiable order of withdrawal" means a draft drawn on a NOW account.
148 (25) (a) "NOW account" means a savings account from which the owner may make
149 withdrawals by negotiable or transferable instruments for the purpose of making transfers to
150 third parties.
151 (b) A "NOW account" is not a demand deposit.
152 (c) Neither the owner of a NOW account nor any third party holder of an instrument
153 requesting withdrawal from the account has a legal right to make withdrawal on demand.
154 (26) "Out-of-state" means, in reference to a depository institution or depository
155 institution holding company, an institution or company whose home state is not Utah.
156 (27) "Person" means:
157 (a) an individual;
158 (b) a corporation;
159 (c) a limited liability company;
160 (d) a partnership;
161 (e) a trust;
162 (f) an association;
163 (g) a joint venture;
164 (h) a pool;
165 (i) a syndicate;
166 (j) a sole proprietorship;
167 (k) an unincorporated organization; or
168 (l) any form of business entity.
169 (28) "Receiver" means a person, agency, or instrumentality of this state or the United
170 States appointed to administer and manage an institution subject to the jurisdiction of the
171 department in receivership, as provided in Chapter 2, Possession of Depository Institution by
172 Commissioner, and Chapter 19, Acquisition of Failing Depository Institutions or Holding
174 (29) "Receivership" means the administration and management of the affairs of an
175 institution subject to the jurisdiction of the department to conserve, preserve, and properly
176 dispose of the assets, liabilities, and revenues of an institution in possession, as provided in
177 Chapter 2, Possession of Depository Institution by Commissioner, and Chapter 19, Acquisition
178 of Failing Depository Institutions or Holding Companies.
179 (30) "Savings account" means any deposit or other account at a depository institution
180 that is not a transaction account.
181 (31) "Savings and loan association" means:
182 (a) a federal savings and loan association; and
183 (b) an out-of-state savings and loan association.
184 (32) "Service corporation" or "service organization" means a corporation or other
185 business entity owned or controlled by one or more financial institutions that is engaged or
186 proposes to engage in business activities related to the business of financial institutions.
187 (33) "State" means, unless the context demands otherwise:
188 (a) a state;
189 (b) the District of Columbia; or
190 (c) the territories of the United States.
191 (34) "Subsidiary" means a business entity under the control of an institution.
192 (35) "Technology service provider" means a person that provides a data processing
193 service or activity that supports the financial services or Internet related services of a depository
194 institution subject to the jurisdiction of the department, including supporting:
195 (a) lending;
196 (b) money transfers;
197 (c) fiduciary activities;
198 (d) trading activities;
199 (e) deposit taking;
200 (f) web services and electronic bill payments;
201 (g) mobile applications;
202 (h) system and software development and maintenance; and
203 (i) security monitoring.
205 arrangement in which a depositor, account holder, or other customer is permitted, directly or
206 indirectly, to make withdrawals by:
207 (i) check or other negotiable or transferable instrument;
208 (ii) payment order of withdrawal;
209 (iii) telephone transfer;
210 (iv) other electronic means; or
211 (v) any other means or device for the purpose of making payments or transfers to third
213 (b) "Transaction account" includes:
214 (i) demand deposits;
215 (ii) NOW accounts;
216 (iii) savings deposits subject to automatic transfers; and
217 (iv) share draft accounts.
219 provided in Chapter 5, Trust Business.
221 state is Utah.
223 institution holding company whose home state is Utah.
224 Section 2. Section 7-1-501 is amended to read:
225 7-1-501. Institutions and persons subject to jurisdiction of department.
226 (1) As provided in this title and the rules of the department, the persons and institutions
227 described in Subsection (2) are subject to:
228 (a) the jurisdiction of the department; and
229 (b) supervision and examination by the department.
230 (2) Subsection (1) applies to:
231 (a) [
232 state, including any out-of-state [
233 (b) [
234 federal government, but only to the extent the application of this title is authorized by:
235 (i) federal law; or
236 (ii) the appropriate federal regulatory agency;
237 (c) [
238 institution chartered under the laws of another state;
239 (d) [
240 institution chartered by the federal government, but only to the extent the application of this
241 title is authorized by:
242 (i) federal law; or
243 (ii) the appropriate federal regulatory agency;
244 (e) [
245 organization, including a credit union service [
247 (f) [
248 (g) [
249 (h) [
250 business of:
251 (i) guaranteeing or insuring deposits, savings accounts, share accounts, or other
252 accounts in depository institutions;
253 (ii) operating a loan production office for:
254 (A) a Utah depository institution;
255 (B) an out-of-state depository institution; or
256 (C) a foreign depository institution;
260 (iv) a title lender, as defined in Section 7-24-102; or
261 (v) money transmission, as defined in Section 7-25-102;
262 (i) [
263 controlling an institution subject to the jurisdiction of the department;
264 (j) subject to Subsection (3), a technology service provider that provides services to a
265 depository institution subject to the jurisdiction of the department;
267 (k) a subsidiary or affiliate of an institution subject to the jurisdiction of the
268 department; and
270 business as, or holds itself out as being, a depository institution, trust company, or any other
271 person or institution described in this section as being subject to the jurisdiction of the
273 (3) A technology service provider is subject to regulation and examination by the
274 commissioner to the same extent as if the service or activity of the technology service provider
275 were being performed by the depository institution itself.
276 Section 3. Section 7-1-802 is amended to read:
277 7-1-802. Confidentiality of information received by department -- Availability of
279 (1) The commissioner shall receive and place on file in the department's office all
280 reports required by law and shall certify all reports required to be published.
281 (2) Except as provided in this section, the following are confidential, not public
282 records, and not open to public inspection:
283 (a) all reports received or prepared by the department;
284 (b) all information obtained from an institution or person under the jurisdiction of the
285 department; and
286 (c) all orders and related records of the department.
287 (3) The following records and information are public and are open to public inspection:
288 (a) reports of condition required by Section 7-1-318;
289 (b) information that is otherwise generally available to the public; and
290 (c) information contained in, and final decisions on, an application filed under Sections
291 7-1-702, 7-1-703, 7-1-704, 7-1-705, 7-1-706, 7-1-708, 7-1-709, 7-1-712, 7-1-713, or Chapter
292 19, Acquisition of Failing Depository Institutions or Holding Companies, excluding:
293 (i) proprietary information, business plans, and personal financial information; and
294 (ii) information for which:
295 (A) the applicant requests confidentiality; and
296 (B) the commissioner grants the request for confidentiality.
297 (4) The department may disclose records and information that are not public to the
299 (a) to an agency or authority:
300 (i) that regulates:
301 (A) the subject of the record; or
302 (B) an affiliate of the subject of the record, as defined by the commissioner by rule; and
303 (ii) is of:
304 (A) the federal government;
305 (B) the state; or
306 (C) another state;
307 (b) to a federal deposit insurance agency;
308 (c) to an official legally authorized to investigate criminal charges in connection with
309 the affairs of the subject of the record, and to any tribunal conducting legal proceedings
310 resulting from such an investigation;
311 (d) to a person preparing a proposal for merging or acquiring an institution under
312 Chapter 2, Possession of Depository Institution by Commissioner, or Chapter 19, Acquisition
313 of Failing Depository Institutions or Holding Companies, but only after the department
314 provides notice of the disclosure to the institution;
315 (e) to any other person, if the commissioner determines, after notice to the institution
316 or person that is the subject of the record and opportunity for hearing, that the interests favoring
317 disclosure of the information outweigh the interests favoring confidentiality of the information;
319 (f) to any court in a proceeding under:
320 (i) Sections 7-1-304, 7-1-320, 7-1-322; or
321 (ii) a supervisory action under Chapter 2, Possession of Depository Institution by
322 Commissioner, or Chapter 19, Acquisition of Failing Depository Institutions or Holding
324 (5) The commissioner may limit the use and further disclosure of any information
325 disclosed under Subsection (4):
326 (a) to protect the business confidentiality interest of the subject of the record; and
327 (b) to protect the public interest, such as to avoid:
328 (i) a liquidity crisis in a depository institution; or
329 (ii) undue speculation in securities or currency markets.
330 (6) The department shall disclose information in the manner and to the extent directed
331 by a court order signed by a judge from a court of competent jurisdiction if:
332 (a) the disclosure does not violate applicable federal or state law;
333 (b) the information to be disclosed deals with a matter in controversy over which the
334 court has jurisdiction;
335 (c) the person requesting the order has provided reasonable prior written notice to the
337 (d) the court has considered the merits of the request for disclosure and has determined
338 that the interests favoring disclosure of the information outweigh the interests favoring
339 confidentiality of the information; and
340 (e) the court has appropriately limited the use and further disclosure of the information:
341 (i) to protect the business confidentiality interest of the subject of the record; and
342 (ii) to protect the public interest, such as to avoid:
343 (A) a liquidity crisis in a depository institution; or
344 (B) undue speculation in securities or currency markets.
345 (7) Notwithstanding the other provisions of this section, the commissioner may provide
346 information from a report of an examination performed by the commissioner of the condition
347 and affairs of a technology service provider to a depository institution serviced by the
348 technology service provider.