Bill Text: NH HB559 | 2013 | Regular Session | Amended
Bill Title: Relative to the general banking laws of the state and relative to electronic funds transfers.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Passed) 2013-07-16 - II. Remainder Effective 09/13/2013 [HB559 Detail]
Download: New_Hampshire-2013-HB559-Amended.html
HB 559 – AS AMENDED BY THE HOUSE
13Mar2013… 0587h
2013 SESSION
08/04
HOUSE BILL 559
AN ACT relative to the general banking laws of the state.
COMMITTEE: Commerce and Consumer Affairs
This bill:
I. Requires financial institutions to file notice of security breaches with the banking commissioner.
II. Defines “qualified institutions” and details how such institutions are to be audited and inspected.
III. Requires criminal background checks for persons seeking to form a financial institution.
This bill is a request of the banking department.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
13Mar2013… 0587h
13-0809
08/04
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Thirteen
AN ACT relative to the general banking laws of the state.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 New Section; Privileges Not Affected by Disclosure. Amend RSA 383 by inserting after section 10-f the following new section:
383:10-g Privileges Not Affected by Disclosure. Notwithstanding the exceptions to confidentiality in RSA 383:10-b, the submission of any information to any federal banking agency, state banking department, or foreign banking authority for any purpose in the course of any supervisory or regulatory process shall not be construed as waiving, destroying, or otherwise affecting any privilege such person may claim with regard to any information under federal or state law as to any person other than such agency, department, or authority.
2 Annual Audits. Amend RSA 384:43 to read as follows:
384:43 Annual Audits.
I. The board of trustees or directors of every financial institution[, except credit unions,] under the supervision of the bank commissioner and subject to the exemptions in RSA 384:43-a, shall [employ] engage a certified public accountant [or public accountant], at least annually, to serve as its auditor. Each financial institution shall give written notice to the bank commissioner of its engagement of an auditor at the time of its engagement and shall require its auditor to confirm the engagement in writing to the commissioner within 30 days of such engagement. Each financial institution shall give written notice to the bank commissioner of the termination of the engagement of an auditor at the time of such termination and shall require the auditor to confirm the termination in writing to the commissioner within 30 days of such termination.
II. [The auditors selected in] Any auditor engaged pursuant to paragraph I, shall examine the books, accounts, and operating systems of the institution in such a manner as in [their] his or her judgment will result in an audit that is in agreement with generally accepted accounting standards.
III. [Institutions subject to this section may satisfy the requirements of paragraphs I and II by:
(a) Engaging an independent external accounting firm which renders an audit report and opinion consistent with the duties of the auditor described in paragraph II; or
(b) Employing an internal audit staff which conducts a continuing internal audit program, provided an independent external auditor reviews the internal audit procedures and reports to the board annually; or
(c) Entering into an arrangement with the bank commissioner, approved by the directors by duly recorded vote and by the commissioner in writing, under which the commissioner makes one examination each year of the affairs of the institution. The expense of such examination shall be chargeable to and paid by the institution. The procedure for such payment shall be the same as for payments by institutions for cost of examinations under RSA 383:11. Sums collected under this section shall be payable to the state treasurer as restricted revenue and credited to the appropriation for the bank commissioner. Any such arrangement may be terminated by either party upon at least 30 days notice in writing.
IV.] Each financial institution shall direct its auditor to provide, and the auditor shall provide, the bank commissioner with a copy of its audit report, within 60 days after each is made available to the financial institution. [Reports on the review of internal audit program shall be submitted in a format prescribed by the commissioner in a rule adopted pursuant to RSA 541-A.] All such reports, memoranda, and correspondence remain the property of the individual financial institution.
[V.] IV. The bank commissioner shall, in the course of his or her regular official examination of the institution and at such other times that he or she considers advisable, review and analyze the work and reports of such accountants and auditors. The auditors shall provide the commissioner with such work and reports as the commissioner may reasonably request provided such request is limited to matters that relate to the safety and soundness of the institution. If the commissioner determines that any audit is inadequate or substantially violates the provisions of this section, he or she shall report his or her findings with instructions in writing to the trustees or directors, who shall, within 30 days after receiving such report, cause the institution to comply with the report and instructions.
3 New Section; Exemption to Annual Audit Requirement. Amend RSA 384 by inserting after section 43 the following new section:
384:43-a Exemption to Annual Audit Requirement.
I. The commissioner may exempt a financial institution from the annual audit requirement of RSA 384:43 if the institution demonstrates that:
(a) It can maintain its safety and soundness without the audit;
(b) The cost of an audit would be an undue financial burden on the institution; and
(c) It has an alternate audit arrangement in place that will assure the commissioner that its financial statements are true and accurate.
II. The commissioner may revoke any exemption granted if, in his or her judgment, the safety and soundness of the exempt institution requires it.
4 Preliminary Audit. Amend RSA 394-B:41 to read as follows:
394-B:41 Preliminary Audit. If the commissioner grants a credit union an exemption to the external audit requirement under RSA 354:43-a, the credit union’s supervisory committee shall at least semi-annually conduct or cause to be conducted an audit of the books and records and an examination of the business and affairs of the credit union[, or, with the approval of the bank commissioner, the credit union may engage an independent professional auditor to conduct such an audit and examination at least annually]. The supervisory committee [or such independent professional auditor] shall conduct a thorough audit of receipts, disbursements, assets, and liabilities. The supervisory committee [or such independent professional auditor] shall conduct verification not less than every 2 years.
5 Election; Oath. Amend RSA 384:5 to read as follows:
384:5 Election; Oath.
I. Officers, directors, [and] trustees, and managers in the case of a limited liability company shall be elected or appointed as frequently as the charter or bylaws of the bank or savings association may require, but not less than once every 3 years[, and they shall hold office until others are elected and qualified].
II. All officers, directors, [and] trustees, and managers in the case of a limited liability company upon election or appointment, shall be sworn to the faithful discharge of their duties[, except that they shall be required to take an oath of office only on the first occasion of their election or appointment and shall not be required to take any such oath thereafter].
6 Organization. Amend RSA 392:14 to read as follows:
392:14 Organization. The organizers shall adopt bylaws which may be incorporated in an operating agreement if the company is a limited liability company, and shall also elect, or cause to be elected, such directors or managers and officers as may be required by the organizational instrument or bylaws. All directors, managers, and officers so elected shall be sworn to the faithful performance of their duties in accordance with RSA 384:5. A temporary clerk or secretary shall make and attest a record of the proceedings until the clerk or secretary has been chosen and sworn, including a record of such choice and qualification.
7 Oath. Amend RSA 394-B:30 to read as follows:
394-B:30 Oath. All directors, [and] all members of the supervisory [and] or credit committees, [as well as] and all officers [whom such directors may elect] upon their election or appointment and at each re-election or re-appointment, shall be sworn to the faithful performance of their duties. A record of every such qualification shall be filed and preserved with the records of the corporation.
8 Duties; Commissioner. Amend RSA 383:9 to read as follows:
383:9 Duties.
I. The commissioner shall have general supervision of all banks (except national banks), trust companies, building and loan associations, credit unions, Morris plan banks, small loan companies, and other similar institutions in the state. Except as provided in RSA 383:9-d, he or she shall examine into the condition and management of all such institutions [at least] every 18 months [with the exception of highly rated institutions provided for in RSA 383:9-d], and more often when necessary in his or her judgment or when so directed by the governor. [He] The commissioner may regulate the buying or selling of securities by [savings] banks for officers, employees, or customers. He or she shall assign to the deputy commissioner and the assistants appointed under RSA 383:7 such of his or her duties as he or she sees fit. In accordance with RSA 383:9-d, qualified institutions under RSA 383:9-a may be examined less often, but at no time shall the commissioner examine the condition and management of any institution less than every 36 months.
II. [The commissioner shall adopt rules, pursuant to RSA 541-A, relative to the duties assigned him by paragraph I.] The commissioner may conduct an examination at any location of the institution’s operations, including any place where assets are located or where records are made, posted, or kept. The commissioner shall have the power to conduct such an examination outside the state of New Hampshire and outside the United States and its territories.
III. The commissioner may adopt rules, pursuant to RSA 541-A, relative to the duties assigned to him or her by this section.
9 Examination of Qualified Institutions; Nondepository Trust Companies. Amend RSA 383:9-d to read as follows:
383:9-d Examination of [Highly Rated] Qualified Institutions; Nondepository Trust Companies.
I. [The bank commissioner may, at his or her discretion, waive one 18-month examination requirement under RSA 383:9 every 6 years for institutions which have consistently been given high ratings in past examinations. The commissioner may also substitute for an 18-month examination once every 6 years a report of a federal institution examining agency whose reports regularly include a report on New Hampshire institutions.] Within any 6-year period in which 4 18-month examinations are required under RSA 383:9, the commissioner may for [highly rated] institution qualified under paragraph II:
(a) Waive one examination;
(b) Substitute for one examination a report of a federal bank examining agency whose reports regularly include a report on New Hampshire banks; and
(c) Perform 2 examinations as required by 383:9.
II. An institution qualifies for examination treatment under paragraphs I and III if:
(a) It has consistently been given high ratings in past exams;
(b) It is not currently subject to an enforcement proceeding or order; and
(c) The commissioner has deemed it prudent to apply this provision.
III. The commissioner may, at his or her sole discretion, upon the written request of a [highly-rated] nondepository trust company qualified under paragraph II, satisfy the examination requirement of RSA 383:9, including modifications under paragraph I, for such trust company through an off-premises examination of:
(a) An audit report satisfying the requirements of RSA 384:43, I and II if it is prepared in accordance with RSA 384:43[, III(a) and (b)], and a fiduciary audit conforming to applicable generally accepted auditing standards; and
(b) Such other records and information of the institution as may be required by the commissioner.
10 New Sections; Affiliates of Institutions; Nondepositions; Criminal History Records Check. Amend RSA 383 by inserting after section 9-h the following new sections:
383:9-i Affiliates of Institutions.
I. For purposes of this section, “affiliate” shall have the same meaning as in the Federal Reserve Act, 12 U.S.C. section 371c(b), and the regulations adopted thereunder.
II. In the course of conducting any examination, special examination, investigation, or visitation of any institution under RSA 383:9, the commissioner shall, subject to the limitations of federal law, have the jurisdiction and power to examine any affiliate of such institution. Such an examination is limited to those issues which, in the determination of the commissioner, affect the safe and sound operation of the institution and the relationship between the institution and the affiliate.
383:9-j Nondepository Financial Institutions; Criminal History Records Check.
I. The department may complete a background investigation and criminal history records check on the person or group of persons acting in concert who acquire directly or indirectly 10 percent or more of the beneficial ownership or control of the voting shares of a nondepository financial institution, new officers, and directors and any person in a similar position or performing similar functions. If the acquirer is a subsidiary, the department may complete a background investigation and criminal history records check on the individuals who are the indirect owners, as defined in RSA 397-A:1, VIII-a.
II. If required by the department, the persons described in paragraph I shall submit to the department a notarized criminal history records release form, as provided by the New Hampshire department of safety, division of state police, which authorizes the release of the person’s criminal records, if any. The person shall submit with the release form a complete set of fingerprints taken by a qualified law enforcement agency or an authorized employee of the banking department. In the event that the first set of fingerprints is invalid due to insufficient pattern, a second set of fingerprints is necessary in order to complete the criminal history records check. If, after 2 attempts, a set of fingerprints is invalid due to insufficient pattern, the department may, in lieu of the criminal history records check, accept police clearances from every city, town, or county where the person has lived during the past 5 years.
III. The department shall submit the criminal history records release form to the division of state police which shall conduct a criminal history records check through its records and through the Federal Bureau of Investigation. Upon completion of the background investigation, the division of state police shall release copies of the criminal conviction records to the department. The department shall maintain the confidentiality of all criminal history records information received pursuant to this paragraph.
IV. The department may require the incorporators to pay the actual costs of each background investigation and criminal history records check.
11 Reports of Proscribed Activity. Amend RSA 384:36 to read as follows:
384:36 Reports of Proscribed Activity. Institutions subject to this chapter shall file with the bank commissioner copies of reports required by the provisions of section 208.62 of the Federal Reserve Board’s Regulation H (12 C.F.R. section 208.62), Federal Deposit Insurance Corporation regulations part 353 (12 C.F.R. section 353.1 et seq.), [and] National Credit Union Administration regulations section [Part] 748.1(c) (12 C.F.R. section 748.1(c)), and the Department of the Treasury, Financial Crimes Enforcement Networks’ Regulations, (31 C.F.R. chapter X) as may be amended from time to time. Reports required by this section shall be filed with the bank commissioner at the same time such reports are filed with the institution’s federal regulators. A financial institution subject to this section, and any director, officer, employee, or agent of such financial institution, that files a report pursuant to this section shall be protected from liability for any disclosure contained therein. All reports filed with the commissioner under this section shall be confidential and shall not be subject to subpoena or to the requirements of RSA 91-A, except that the commissioner shall provide copies of such reports upon request to the New Hampshire department of justice, criminal bureau.
12 Petition; Trust Companies; Criminal History Records Check. RSA 392:5, III is repealed and reenacted to read as follows:
III.(a) The department may complete a background investigation and criminal history records check on the petitioner’s organizers, officers, and directors or managers, and any person in a similar position or performing similar functions. The department may also complete a background investigation and criminal history records check on any person, including an individual, that owns, beneficially owns, has the right to vote, or has the power to sell or direct the sale of 10 percent or more of the petitioner. If the petitioner is a subsidiary, the department may complete a background investigation and criminal history records check on the individuals who are the indirect owners, as defined in RSA 397-A:1, VIII-a.
(b) If required by the department, the persons described in subparagraph (a) shall submit to the department a notarized criminal history records release form, as provided by the New Hampshire department of safety, division of state police, which authorizes the release of the person’s criminal records, if any. The person shall submit with the release form a complete set of fingerprints taken by a qualified law enforcement agency or an authorized employee of the banking department. In the event that the first set of fingerprints is invalid due to insufficient pattern, a second set of fingerprints is necessary in order to complete the criminal history records check. If, after 2 attempts, a set of fingerprints is invalid due to insufficient pattern, the department may, in lieu of the criminal history records check, accept police clearances from every city, town, or county where the person has lived during the past 5 years.
(c) The department shall submit the criminal history records release form to the division of state police which shall conduct a criminal history records check through its records and through the Federal Bureau of Investigation. Upon completion of the background investigation, the division of state police shall release copies of the criminal conviction records to the department. The department shall maintain the confidentiality of all criminal history records information received pursuant to this paragraph.
(d) The department may require the petitioner to pay the actual costs of each background investigation and criminal history records check.
IV. The failure of a petitioner to furnish required information, data, other material, or the required fee within 30 days after a request may be considered an abandonment of the petition.
13 Petition; Banks’ Criminal History Records Check. RSA 386-A:4, II is repealed and reenacted to read as follows:
II.(a) The department may complete a background investigation and criminal history records check on the petitioner’s organizers, officers, and directors, trustees, or managers and any person in a similar position or performing similar functions. The department may also complete a background investigation and criminal history records check on any person, including an individual, that owns, beneficially owns, has the right to vote, or has the power to sell or direct the sale of 10 percent or more of the petitioner. If the petitioner is a subsidiary, the department may complete a background investigation and criminal history records check on the individuals who are the indirect owners, as defined in RSA 397-A:1, VIII-a.
(b) If required by the department, the persons described in subparagraph (a) shall submit to the department a notarized criminal history records release form, as provided by the New Hampshire department of safety, division of state police, which authorizes the release of the person’s criminal records, if any. The person shall submit with the release form a complete set of fingerprints taken by a qualified law enforcement agency or an authorized employee of the banking department. In the event that the first set of fingerprints is invalid due to insufficient pattern, a second set of fingerprints is necessary in order to complete the criminal history records check. If, after 2 attempts, a set of fingerprints is invalid due to insufficient pattern, the department may, in lieu of the criminal history records check, accept police clearances from every city, town, or county where the person has lived during the past 5 years.
(c) The department shall submit the criminal history records release form to the division of state police which shall conduct a criminal history records check through its records and through the Federal Bureau of Investigation. Upon completion of the background investigation, the division of state police shall release copies of the criminal conviction records to the department. The department shall maintain the confidentiality of all criminal history records information received pursuant to this paragraph.
(d) The department may require the petitioner to pay the actual costs of each background investigation and criminal history records check.
III. The commissioner shall adopt rules, pursuant to RSA 541-A, relative to the petition required by paragraph I.
14 New Section; Savings Associations; Criminal History Records Check. Amend RSA 393 by inserting after section 1-b the following new section:
393:1-c Savings Associations; Criminal History Records Check.
I. The department may complete a background investigation and criminal history records check on the incorporators, officers and directors, and any person in a similar position or performing similar functions. The department may also complete a background investigation and criminal history records check on any person, including an individual, that owns, beneficially owns, has the right to vote, or has the power to sell or direct the sale of 10 percent or more of the petitioner. If the petitioner is a subsidiary, the department may complete a background investigation and criminal history records check on the individuals who are the indirect owners, as defined in RSA 397-A:1, VIII-a.
II. If required by the department, the persons described in paragraph I shall submit to the department a notarized criminal history records release form, as provided by the New Hampshire department of safety, division of state police, which authorizes the release of the person’s criminal records, if any. The person shall submit with the release form a complete set of fingerprints taken by a qualified law enforcement agency or an authorized employee of the banking department. In the event that the first set of fingerprints is invalid due to insufficient pattern, a second set of fingerprints is necessary in order to complete the criminal history records check. If, after 2 attempts, a set of fingerprints is invalid due to insufficient pattern, the department may, in lieu of the criminal history records check, accept police clearances from every city, town, or county where the person has lived during the past 5 years.
III. The department shall submit the criminal history records release form to the division of state police which shall conduct a criminal history records check through its records and through the Federal Bureau of Investigation. Upon completion of the background investigation, the division of state police shall release copies of the criminal conviction records to the department. The department shall maintain the confidentiality of all criminal history records information received pursuant to this paragraph.
IV. The department may require the incorporators to pay the actual costs of each background investigation and criminal history records check.
15 New Section; Credit Unions. Amend RSA 394-B by inserting after section 4 the following new section:
394-B:4-a Credit Unions; Criminal History Records Check.
I. The department may complete a background investigation and criminal history records check on the persons seeking to form a credit union, the proposed officers and directors of the credit union, and any person in a similar position or performing similar functions.
II. If required by the department, the persons described in paragraph I shall submit to the department a notarized criminal history records release form, as provided by the New Hampshire department of safety, division of state police, which authorizes the release of the person’s criminal records, if any. The person shall submit with the release form a complete set of fingerprints taken by a qualified law enforcement agency or an authorized employee of the banking department. In the event that the first set of fingerprints is invalid due to insufficient pattern, a second set of fingerprints is necessary in order to complete the criminal history records check. If, after 2 attempts, a set of fingerprints is invalid due to insufficient pattern, the department may, in lieu of the criminal history records check, accept police clearances from every city, town, or county where the person has lived during the past 5 years.
III. The department shall submit the criminal history records release form to the division of state police which shall conduct a criminal history records check through its records and through the Federal Bureau of Investigation. Upon completion of the background investigation, the division of state police shall release copies of the criminal conviction records to the department. The department shall maintain the confidentiality of all criminal history records information received pursuant to this paragraph.
IV. The department may require the incorporators to pay the actual costs of each background investigation and criminal history records check.
16 Credit Unions; Use of Funds. Amend RSA 394-B:16, I-II to read as follows:
I. It may deposit its money in any corporate credit union whose shares and deposits are insured by the National Credit Union Administration or other qualified share and deposit insurance fund deemed acceptable by the bank commissioner, and may deposit its money in any cooperative bank, building and loan association, savings bank, trust company, federal savings and loan association, or national bank in New England that is federally insured [by either the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation].
II. It may invest up to the insured amount in any cooperative bank, building and loan association, savings bank, trust company, federal savings and loan association, or national bank in the United States, [which] that is federally insured [by either the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation].
17 New Section; Merchant Banks; Criminal History Records Check. Amend RSA 392-A by inserting after section 6 the following new section:
392-A:6-a Merchant Bank; Criminal History Records Check.
I. The department may complete a background investigation and criminal history records check on the person or group of persons acting in concert who acquire directly or indirectly 10 percent or more of the beneficial ownership or control of the voting shares, new officers, and directors and any person in a similar position or performing similar functions. If the acquirer is a subsidiary, the department may complete a background investigation and criminal history records check on the individuals who are the indirect owners, as defined in RSA 397-A:1, VIII-a.
II. If required by the department, the persons described in paragraph I shall submit to the department a notarized criminal history records release form, as provided by the New Hampshire department of safety, division of state police, which authorizes the release of the person’s criminal records, if any. The person shall submit with the release form a complete set of fingerprints taken by a qualified law enforcement agency or an authorized employee of the banking department. In the event that the first set of fingerprints is invalid due to insufficient pattern, a second set of fingerprints is necessary in order to complete the criminal history records check. If, after 2 attempts, a set of fingerprints is invalid due to insufficient pattern, the department may, in lieu of the criminal history records check, accept police clearances from every city, town, or county where the person has lived during the past 5 years.
III. The department shall submit the criminal history records release form to the division of state police which shall conduct a criminal history records check through its records and through the Federal Bureau of Investigation. Upon completion of the background investigation, the division of state police shall release copies of the criminal conviction records to the department. The department shall maintain the confidentiality of all criminal history records information received pursuant to this paragraph.
IV. The department may require the incorporators to pay the actual costs of each background investigation and criminal history records check.
18 Effective Date. This act shall take effect 60 days after its passage.
