Bill Text: MS SB2594 | 2018 | Regular Session | Introduced
Bill Title: Commissioner of Banking; authorize to examine financial institutions service providers.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Failed) 2018-01-30 - Died In Committee [SB2594 Detail]
Download: Mississippi-2018-SB2594-Introduced.html
2018 Regular Session
To: Business and Financial Institutions
By: Senator(s) Parks
Senate Bill 2594
AN ACT TO CREATE NEW SECTION 81-1-139, MISSISSIPPI CODE OF 1972, TO AUTHORIZE THE COMMISSIONER OF BANKING AND CONSUMER FINANCE TO EXAMINE SERVICE PROVIDERS THAT PROVIDE CERTAIN SERVICES TO MISSISSIPPI FINANCIAL INSTITUTIONS; TO PROVIDE THAT THE TYPES OF SERVICES COVERED UNDER THIS SECTION ARE DATA PROCESSING SERVICES, ACTIVITIES THAT SUPPORT FINANCIAL SERVICES, INTERNET-RELATED SERVICES, AND ACTIVITIES RELATED TO THE BUSINESS OF BANKING; TO PROVIDE THAT ALL EXAMINATION REPORTS AND RELATED INFORMATION AUTHORIZED UNDER THIS SECTION ARE CONFIDENTIAL TO THE DEPARTMENT OF BANKING; TO AUTHORIZE THE COMMISSIONER TO TAKE ENFORCEMENT ACTIONS AGAINST SERVICE PROVIDERS IF THE COMMISSIONER CONSIDERS THE ACTIONS TO BE NECESSARY OR APPROPRIATE; TO PROVIDE THAT THE COST OF ANY EXAMINATION OF A SERVICE PROVIDER PERFORMED BY THE DEPARTMENT SHALL BE BORNE BY THE SERVICE PROVIDER; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. The following shall be codified as Section 81-1-139, Mississippi Code of 1972:
81-1-139. (1) The connections between financial depository institutions and their service providers create risks to the financial system, as institutions are increasingly reliant on third parties to provide or enable key functions and everyday services. In light of the vital role that service providers perform in the safety and soundness of institutions and the stability of the financial system, it is imperative for banking agencies to supervise and examine service providers. A significant disruption affecting a single service provider could have an adverse impact on a large number of depository institutions, so understanding the interconnectivity between institutions and service providers is crucial to avoiding such a situation. The purpose of this section is to provide the requisite legal authority for the Department of Banking and Consumer Finance to examine service providers that provide services to Mississippi financial institutions.
(2) For purposes of this section, the following terms shall be defined as provided in this section:
(a) "Depository institution" means a state-chartered financial institution that is legally allowed to accept insured monetary deposits from consumers and is subject to the authority of the Department of Banking and Consumer Finance.
(b) "Service provider" means any person, company, corporation, or other legal entity that provides a service listed in subsection (3) of this section to a depository institution.
(3) (a) Whenever a depository institution, or any subsidiary or affiliate of such depository institution that is subject to examination by the commissioner, causes to be performed for itself, by contract or otherwise, any of the services listed in paragraph (b) of this subsection, that performance shall be subject to regulation and examination by the commissioner to the same extent as if those services were being performed by the depository institution itself.
(b) The following shall be covered services for the purposes of this subsection:
(i) Data processing services;
(ii) Activities that support financial services, including, but not limited to, lending, funds transfer, fiduciary activities, trading activities, and deposit taking;
(iii) Internet-related services, including, but not limited to, web services and electronic bill payments, mobile applications, system and software development and maintenance, and security monitoring; and
(iv) Activities related to the business of banking.
(4) The commissioner may, in his or her discretion, accept examinations authorized or required to be conducted, that are performed by any other authorized federal or state regulatory agencies, in lieu of conducting an independent examination authorized by this section.
(5) (a) All examination reports and related information authorized under this section are confidential to the department and shall be maintained in the strictest confidence in the same manner as an examination of a depository institution under Title 81 of the Mississippi Code of 1972.
(b) Notwithstanding paragraph (a) of this subsection, the commissioner may furnish a copy of a report of any examination performed or relied upon by the commissioner, demonstrating the condition and affairs of any service provider to the depository institutions that use the service provider.
(6) (a) The commissioner may enter into agreements with any depository institution regulatory agency that has concurrent jurisdiction over a service provider to provide services in order to efficiently accomplish the requirements of this section.
(b) The commissioner may take enforcement actions against the service provider under the authority described in this chapter, if the commissioner considers the actions to be necessary or appropriate to carry out the department's responsibilities under this chapter or to ensure compliance with the laws of the state.
(c) The commissioner may enter into joint examinations or joint enforcement actions with other bank regulatory agencies having concurrent jurisdiction over a service provider.
(d) The cost of any examination performed by the department shall be borne by the service provider.
SECTION 2. This act shall take effect and be in force from and after July 1, 2018.