REPORT TITLE:
Foreign Capital Depositories


DESCRIPTION:
Authorizes the chartering of foreign capital depositories in the
State.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        
THE SENATE                              S.B. NO.           9
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO FOREIGN CAPITAL DEPOSITORIES.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  Chapter 412, Hawaii Revised Statutes, is amended
 
 2 by adding a new part to article 13 to be appropriately designated
 
 3 and to read as follows:
 
 4             "PART    .  FOREIGN CAPITAL DEPOSITORIES
 
 5      §412:13-A  Purpose.  The legislature finds that it is in the
 
 6 public interest to attract legally derived foreign capital for
 
 7 investment, revenue enhancement, and other economic development
 
 8 purposes as well as to facilitate tax abatement for residents and
 
 9 businesses.
 
10      A prudent blend of financial privacy, asset protection, and
 
11 profitability may offer foreign depositors unique opportunities
 
12 to build and preserve their wealth in Hawaii.  The purpose of
 
13 this part is to authorize the chartering of foreign capital
 
14 depositories in the State.
 
15      §412:13-B  Short title.  This Act may be cited as the
 
16 "Hawaii Foreign Capital Depository Act".
 
17      §412:13-C  Definitions.  As used in this part, unless the
 
18 context requires otherwise, the following definitions apply:
 

 
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                                     S.B. NO.           9
                                                        
                                                        

 
 1      "Capital" means currency that is convertible to United
 
 2 States dollars or personal property, including tangible personal
 
 3 property.
 
 4      "Cash" means currency, cashier's checks, money orders, and
 
 5 other monetary instruments as defined in the Bank Secrecy Act
 
 6 (Public Law 91-508).
 
 7      "Charter" means a license issued by the division to a
 
 8 corporation verifying that the corporation is authorized to
 
 9 conduct business in Hawaii as a foreign capital depository.
 
10      "Comity" means the recognition of judicial acts that one
 
11 country extends to another as a matter of custom, convenience,
 
12 and expediency.
 
13      "Commissioner" means the commissioner of financial
 
14 institutions of the State.
 
15      "Controlling person" means a person who has "control" as the
 
16 term is defined under section 412:13-102.
 
17      "Customer" means a person who is using or has used the
 
18 services of a foreign capital depository or for whom a foreign
 
19 capital depository has acted as a fiduciary.
 
20      "Department" means the department of commerce and consumer
 
21 affairs.
 
22      "Division" means the division of financial institutions of
 

 
 
 
Page 3                                                     
                                     S.B. NO.           9
                                                        
                                                        

 
 1 the department of commerce and consumer affairs.
 
 2      "Financial institution" has the same meaning as used in
 
 3 section 412:1-109.
 
 4      "Financial record" means:
 
 5      (1)  An original or copy of a record or document held by a
 
 6           foreign capital depository that directly or indirectly
 
 7           pertains to a customer of the depository;
 
 8      (2)  Information contained in the original or copy of the
 
 9           record or document; or
 
10      (3)  The name of a customer.
 
11      A record or document may be in a paper, electronic, or other
 
12 format.
 
13      "Foreign capital depository" or "depository" means a
 
14 financial institution incorporated in the State and chartered by
 
15 the division to conduct business as a foreign financial
 
16 institution and foreign capital depository in accordance with
 
17 this part.
 
18      "Foreign judgment" means a judgment rendered in a foreign
 
19 state.
 
20      "Foreign state" means a country or state other than Hawaii.
 
21      "Investigation" includes an inquiry by a police officer, a
 
22 sheriff, the attorney general, or a prosecuting attorney or an
 

 
 
 
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                                     S.B. NO.           9
                                                        
                                                        

 
 1 inquiry made for the purpose of determining whether there has
 
 2 been a violation of a law enforceable by imprisonment, fine, or
 
 3 monetary liability.
 
 4      "Local agency" includes a state, county, or other local
 
 5 government entity.
 
 6      "Money laundering" is the process through which the
 
 7 existence, illegal source, true ownership, or unlawful
 
 8 application of illicitly derived funds is concealed or disguised
 
 9 to make the funds appear legitimate, thereby helping to evade
 
10 detection, prosecution, seizure, or taxation.
 
11      "Nonresident alien" means a person who is not a citizen or a
 
12 resident of the United States.
 
13      "Person" has the same meaning as "person" under section
 
14 412:1-109.
 
15      "Precious metals account" is a depository account in which
 
16 the depository, upon instructions of a customer, exchanges cash
 
17 for a commensurately valued amount of platinum, palladium, gold,
 
18 or silver bullion procured by the depository for the primary
 
19 purpose of safekeeping over an extended period of time.
 
20      "State agency" means an office, department, division,
 
21 bureau, board, or commission of state government that is not a
 
22 supervisory agency, including the legislature.
 

 
 
 
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                                     S.B. NO.           9
                                                        
                                                        

 
 1      "Subpoena" includes subpoena duces tecum.
 
 2      "Supervisory agency" means any of the following:
 
 3      (1)  The attorney general, for the purpose of the
 
 4           enforcement of all criminal laws of the State;
 
 5      (2)  The division, for the purposes of the administration
 
 6           and enforcement of the state laws relating to the
 
 7           examination and supervision of a foreign capital
 
 8           depository;
 
 9      (3)  The commissioner, for the purposes of the
 
10           administration and enforcement of the state laws
 
11           relating to the chartering and supervision of a foreign
 
12           capital depository;
 
13      (4)  The federal reserve system, when the chartered
 
14           depository is a subsidiary of a financial institution
 
15           domiciled outside the jurisdiction of the United
 
16           States, for the purposes of examining a foreign capital
 
17           depository;
 
18      (5)  The auditor, for the purposes of the administration of
 
19           state laws relating to the audit of state agencies and
 
20           the collection and disbursement of public funds;
 
21      (6)  The department of taxation, for the purposes of the
 
22           administration and enforcement of laws relating to the
 

 
 
 
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                                     S.B. NO.           9
                                                        
                                                        

 
 1           collection of taxes from a foreign capital depository;
 
 2      (7)  The insurance division and the insurance commissioner,
 
 3           for the purpose of the administration and enforcement
 
 4           of state laws relating to the regulation of an insurer
 
 5           of accounts in a foreign capital depository.
 
 6      "Tangible personal property" includes platinum, palladium,
 
 7 gold, or silver bullion or coins, precious stones, jewelry, works
 
 8 of art, furnishings, and other objects of value that are not
 
 9 legal tender.
 
10      §412:13-D  Charter required, misrepresentation cause for
 
11 disqualification.  A person may not operate or conduct business
 
12 as a depository in this State without a charter issued by the
 
13 division.
 
14      A depository shall post the charter certificate in a
 
15 conspicuous place.
 
16      A person who is found by the division to have falsely
 
17 represented to a customer that a charter had been obtained is
 
18 permanently disqualified from obtaining a charter.
 
19      §412:13-E  Protection of appellation.  A corporation that
 
20 has not been issued a charter under section 412:13-H may not
 
21 transact business under a name or title that contains the words
 
22 "foreign", "capital", and "depository" in any combination.
 

 
 
 
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                                     S.B. NO.           9
                                                        
                                                        

 
 1      §412:13-F  Applicability of banking laws.  Chapter 412 shall
 
 2 apply to a foreign capital depository unless provided otherwise
 
 3 by this part or a rule or order issued under this part.
 
 4      §412:13-G  Rulemaking authority.  The division shall adopt
 
 5 rules pursuant to chapter 91 necessary for the purposes of this
 
 6 part.
 
 7      §412:13-H  Charter eligibility and application requirements.
 
 8 (a)  In order to lawfully conduct business in the State as a
 
 9 foreign capital depository, a person intending to own and operate
 
10 a depository shall:
 
11      (1)  Obtain a state charter from the division through an
 
12           application process established and administered by the
 
13           division;
 
14      (2)  Make and file articles of incorporation in accordance
 
15           with applicable law;
 
16      (3)  Submit an application to the division on a form
 
17           prepared and provided by the division.  An application
 
18           shall be accompanied by:
 
19           (A)  Documents certifying that the identity of each
 
20                director, executive officer, and controlling
 
21                person of the proposed depository has been
 
22                verified by means of a background check;
 

 
 
 
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                                     S.B. NO.           9
                                                        
                                                        

 
 1           (B)  A written copy of the applicant's "know your
 
 2                customer" policy and a written description of the
 
 3                implementation method for the policy;
 
 4           (C)  A detailed written description of the applicant's
 
 5                personnel training and preemployment screening
 
 6                programs, physical and technological security
 
 7                systems, and methods of compliance with applicable
 
 8                federal recordkeeping and reporting laws;
 
 9           (D)  A business plan that includes projections of
 
10                costs, profitability, and relevant changes in
 
11                financial markets;
 
12           (E)  The intended location of each depository office in
 
13                the State;
 
14           (F)  A document from a certified public accountant
 
15                confirming that the applicant has financial assets
 
16                in excess of liabilities in an amount established
 
17                by division rule;
 
18           (G)  A nonrefundable charter application fee set by the
 
19                division under section 412:13-L to be paid into
 
20                the foreign capital depository account established
 
21                in section 412:13-Q.
 
22      (b)  A foreign capital depository may be a subsidiary of a
 

 
 
 
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                                     S.B. NO.           9
                                                        
                                                        

 
 1 foreign bank that has obtained approval from the federal reserve
 
 2 system to operate in the United States in accordance with the
 
 3 Foreign Bank Supervision Enhancement Act of 1991.
 
 4      §412:13-I  Charter application, grounds for denial.(a)
 
 5 The division shall deny a charter application if it finds that
 
 6 the applicant planning to operate the depository is not of good
 
 7 character or that the applicant is not financially sound.
 
 8      The division may find that the person planning to own,
 
 9 operate, or manage the depository is not of good character or
 
10 financial integrity if a director, an executive officer, or a
 
11 controlling person of the applicant has:
 
12      (1)  Been convicted of or has pleaded guilty or nolo
 
13           contendere to any crime involving fraud, theft,
 
14           conspiracy, racketeering, or money laundering;
 
15      (2)  Had a professional or occupational license suspended or
 
16           revoked based on conduct involving an act of fraud or
 
17           dishonesty;
 
18      (3)  Wilfully made or caused to be made false or misleading
 
19           statements in an application or report to the
 
20           commissioner or has wilfully omitted facts required in
 
21           the report;
 
22      (4)  Intentionally or knowingly violated a provision of
 

 
 
 
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                                     S.B. NO.           9
                                                        
                                                        

 
 1           section 412:13-D or 412:13-H or aided, abetted,
 
 2           counseled, commanded, induced, or procured the
 
 3           violation by another person of a provision of section
 
 4           412:13-D or 412:13-H.
 
 5 This section is not exclusive of other grounds on which the
 
 6 division may determine that an applicant for a depository charter
 
 7 is not of good character and therefore may not receive a charter.
 
 8      (b)  The division shall adopt rules concerning the method
 
 9 and process for determining whether an applicant for a charter is
 
10 financially sound.
 
11      §412:13-J  Suspension, revocation, and restoration of
 
12 charter.(a)  The division may suspend or revoke the charter of
 
13 a depository if the division finds that the depository or any
 
14 director, executive officer, or controlling person of the
 
15 depository has:
 
16      (1)  Violated this part, a rule of the department or
 
17           division, the Bank Secrecy Act, or any implementing
 
18           regulation of the Bank Secrecy Act;
 
19      (2)  Failed to comply with an order of the commissioner;
 
20      (3)  Operated in a manner or condition that is unsafe or
 
21           unsound;
 
22      (4)  Become insolvent in that the depository:
 

 
 
 
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                                     S.B. NO.           9
                                                        
                                                        

 
 1           (A)  Has ceased to pay its debts in the ordinary course
 
 2                of business;
 
 3           (B)  Is unable to pay debts as they come due; or
 
 4           (C)  Has liabilities that exceed its assets;
 
 5      (5)  Filed a petition for an adjudication of bankruptcy;
 
 6      (6)  Knowingly made a false statement or report to the
 
 7           department or division;
 
 8      (7)  Failed to pay the department of taxation the fee,
 
 9           penalty, or interest owed pursuant to this part; or
 
10      (8)  If the depository is a subsidiary of a foreign bank
 
11           holding company or another type of financial
 
12           institution, had its operating license suspended or
 
13           revoked in the country where the parent company is
 
14           domiciled.
 
15      (b)  Before suspending or revoking a charter, the division
 
16 shall conduct a hearing in accordance with chapter 91 relating to
 
17 a contested case.
 
18      (c)  At no time during or following the suspension,
 
19 revocation, or reinstatement of a charter may a financial record
 
20 pertaining to an individual account be disclosed except in
 
21 accordance with rules for the conduct of examinations under this
 
22 part.
 

 
 
 
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                                     S.B. NO.           9
                                                        
                                                        

 
 1      §412:13-K  Administrative orders by division.(a)  In
 
 2 addition to or in lieu of the division's suspending or revoking
 
 3 the charter issued to a foreign capital depository, the division
 
 4 may:
 
 5      (1)  Issue a cease and desist order that specifies the
 
 6           activity that the depository may not undertake for the
 
 7           duration of the order;
 
 8      (2)  Require a depository to take action as determined by
 
 9           the division; or
 
10      (3)  Order the depository to pay a civil penalty in an
 
11           amount not to exceed $        for each violation or, in
 
12           the case of a continuing violation, $        for each
 
13           day during which the violation continues.
 
14      (b)  Orders issued by the division pursuant to this section
 
15 must be issued in compliance with the contested case procedure
 
16 under chapter 91.
 
17      §412:13-L  Application, charter, and renewal fee.(a)  An
 
18 applicant for a state charter shall pay a fee established by the
 
19 division by rule.  The application fee must be commensurate with
 
20 the cost of conducting a background check on the person applying
 
21 for the charter.
 
22      (b)  A successful applicant for a state charter shall pay to
 

 
 
 
Page 13                                                    
                                     S.B. NO.           9
                                                        
                                                        

 
 1 the division an initial charter fee of $        , less the amount
 
 2 paid for the application fee pursuant to subsection (a).
 
 3      (c)  A depository shall pay an annual charter renewal fee in
 
 4 an amount set by the division by rule but not to exceed $       .
 
 5      (d)  Fees collected pursuant to this section must be
 
 6 deposited in the foreign capital depository account established
 
 7 in section 412:13-Q.
 
 8      §412:13-M  Regulation and supervision, rules.(a)  To
 
 9 ensure that the division meets its responsibility for the
 
10 prudential supervision of a foreign capital depository, the
 
11 division shall adopt rules that:
 
12      (1)  Determine the processes and procedures necessary to
 
13           ensure that the controlling persons and employees and
 
14           the procedures of a depository are in compliance with
 
15           this part;
 
16      (2)  Establish the procedures for the conduct of
 
17           examinations of a depository by the division, including
 
18           the means by which the division will verify that the
 
19           depository's "know your customer" policy has been
 
20           implemented;
 
21      (3)  Establish the form of "suspicious activity reports" and
 
22           the conditions under which a suspicious activity report
 

 
 
 
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                                     S.B. NO.           9
                                                        
                                                        

 
 1           must be filed with the division;
 
 2      (4)  Require a depository to submit to the division on
 
 3           request a written or electronic record of any transfer
 
 4           or withdrawal of cash from the depository in an amount
 
 5           not less than $        ;
 
 6      (5)  Require a depository to file an annual report with the
 
 7           division detailing the depository's:
 
 8           (A)  Security measures designed to deter and prevent
 
 9                theft, fraud, and corruption;
 
10           (B)  Procedures for filing suspicious activity reports
 
11                with the United States Department of the Treasury
 
12                and for keeping records and filing reports of
 
13                transactions as required by federal law and
 
14                regulation to combat money laundering and other
 
15                criminal activities;
 
16           (C)  Employee training programs regarding disclosure
 
17                and other aspects of customer financial privacy;
 
18                and
 
19           (D)  Fulfillment of the "know your customer" policy
 
20                recommended by the American Bankers Association or
 
21                prescribed by federal regulation.
 
22      (b)  With respect to an action concerning the issuance,
 

 
 
 
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                                     S.B. NO.           9
                                                        
                                                        

 
 1 suspension, or revocation of a charter or an action pursuant to
 
 2 enforcement under this part, the division shall adopt rules to
 
 3 determine prehearing discovery procedures, including the taking
 
 4 of depositions and the production of documents.
 
 5      (c)  In adopting rules for hearings, the division shall
 
 6 provide for the issuance of subpoenas and for the administration
 
 7 of oaths to witnesses and parties or their representatives to
 
 8 apply both to discovery procedures and to hearings.
 
 9      §412:13-N  Costs of regulation.  A depository shall pay to
 
10 the division an annual fee established by rule that is
 
11 commensurate with the cost of conducting examinations of a
 
12 depository by the division.  The proceeds of the fee established
 
13 by the division must be deposited in the foreign capital
 
14 depository account created under section 412:13-Q.
 
15      §412:13-O  Examinations.(a)  Except as provided in
 
16 subsection (e), the division shall examine, at least annually,
 
17 each depository to:
 
18      (1)  Verify the depository's assets and liabilities;
 
19      (2)  Ascertain the accuracy of the depository's books and
 
20           records; and
 
21      (3)  Determine whether the depository's methods of operation
 
22           and conduct of business are in compliance with
 

 
 
 
Page 16                                                    
                                     S.B. NO.           9
                                                        
                                                        

 
 1           applicable laws and rules.
 
 2 The division shall also submit in writing to a depository
 
 3 examined in accordance with this subsection, a report of the
 
 4 examination's findings no later than sixty days after the
 
 5 completion of the examination.
 
 6      (b)  A controlling person or employee of a foreign capital
 
 7 depository shall exhibit to the division or an examiner from the
 
 8 federal reserve system on request, the books, records, and
 
 9 accounts of the depository, except that the identity of a
 
10 customer may not be disclosed to the division or any examiner
 
11 unless the disclosure is necessitated by the division's procedure
 
12 for verifying that the depository's "know your customer" policy
 
13 has been implemented effectively.
 
14      (c)  The division may issue subpoenas and administer oaths
 
15 to any director, executive officer, controlling person, or
 
16 employee of a foreign capital depository.  In case of a refusal
 
17 to obey a subpoena issued by the division, the refusal may be
 
18 reported to the district court of the district in which the
 
19 depository is located.  The court shall enforce obedience to the
 
20 subpoena in the manner provided by law for enforcing obedience to
 
21 the process of the court.
 
22      (d)  If a depository is chartered, the division may conduct
 

 
 
 
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                                     S.B. NO.           9
                                                        
                                                        

 
 1 an examination of the depository:
 
 2      (1)  In conjunction with supervisory personnel from the
 
 3           federal reserve system; or
 
 4      (2)  Without the assistance of federal reserve system
 
 5           personnel.
 
 6      (e)  The division may accept as the examination of a
 
 7 depository required by this section the findings or results of an
 
 8 examination conducted by the federal reserve system.
 
 9      (f)  A foreign capital depository shall keep its corporate
 
10 records, financial records, and books of account in words and
 
11 figures of the English language, in the State, and in a form
 
12 satisfactory to the division.
 
13      (g)  If a foreign capital depository is issued a charter to
 
14 maintain two or more offices in the State, the depository shall
 
15 designate one of its offices as its primary office for the
 
16 purposes of keeping consolidated records and facilitating
 
17 examinations by the division.
 
18      §412:13-P  Special examinations, costs.(a)  Whenever in
 
19 the judgment of the division the condition of a depository or the
 
20 actions of a customer necessitate an examination beyond that
 
21 required by this part, the division may conduct additional
 
22 examinations determined to be necessary and in connection with
 

 
 
 
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                                     S.B. NO.           9
                                                        
                                                        

 
 1 the additional examinations may charge the depository:
 
 2      (1)  An amount not to exceed $      a day for each examiner
 
 3           engaged in the examination of the depository;
 
 4      (2)  The actual cost of travel expenses of the examiner in
 
 5           the event that travel outside this State is determined
 
 6           necessary by the commissioner; and
 
 7      (3)  A reasonable amount to recover the actual costs of
 
 8           counsel and other department and division resources.
 
 9      (b)  The money collected by the division pursuant to
 
10 examination fees must be deposited in the foreign capital
 
11 depository account established in section 412:13-Q.
 
12      §412:13-Q  Foreign capital depository account.(a)  There
 
13 is established in the state treasury the foreign capital
 
14 depository account.  Except for revenue derived in accordance
 
15 with sections 412:13-XX through 412:13-ZZ, money from the foreign
 
16 capital depository shall be deposited in the account.
 
17      (b)  The money in the account may be appropriated by the
 
18 legislature to the department or division for the purposes of
 
19 this part.
 
20      §412:13-R  Reports, contents and restrictions.(a)  A
 
21 depository shall make a report to the division in the manner and
 
22 at the time required by the division.
 

 
 
 
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                                     S.B. NO.           9
                                                        
                                                        

 
 1      (b)  A report filed with the division shall:
 
 2      (1)  Contain the information required by rule; and
 
 3      (2)  Be verified by two of the depository's executive
 
 4           officers.  The verification must state that each of the
 
 5           officers making the verification has a personal
 
 6           knowledge of the matters in the report and that each of
 
 7           them believes that each statement in the report is
 
 8           true.
 
 9      (c)  A depository may not include any financial record, as
 
10 defined in this part, of any customer in the report.
 
11      (d)  The division may provide a copy of the report to
 
12 another supervisory agency.
 
13      §412:13-S  Recordkeeping and reporting, suspicious activity.
 
14 In addition to compliance with applicable provisions of the Bank
 
15 Secrecy Act, a foreign capital depository shall:
 
16      (1)  Keep a written or electronic record of each wire
 
17           transfer or other electronic means of transferring
 
18           capital to the depository for at least       years when
 
19           the transfer involves $          or more; and
 
20      (2)  Comply with federal regulation and rules of the
 
21           department and division concerning the form of a
 
22           suspicious activity report and the conditions under
 

 
 
 
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                                     S.B. NO.           9
                                                        
                                                        

 
 1           which a suspicious activity report is required to be
 
 2           reported to a supervisory agency or to the United
 
 3           States Department of the Treasury.
 
 4      §412:13-T  Sale or transfer of charter prohibited, penalty.
 
 5 (a)  A charter issued by the division may not be sold, traded,
 
 6 transferred, or otherwise assigned to another corporation.
 
 7      (b)  A person who attempts to sell, trade, or transfer a
 
 8 depository charter or who knowingly accepts a depository charter
 
 9 in violation of subsection (a) is subject to civil and criminal
 
10 penalties pursuant to this part and other applicable law.
 
11      §412:13-U  Dissolution, closing.(a)  The division, upon a
 
12 finding of negligence, misconduct, or any of the conditions
 
13 specified in section 412:13-I, may dissolve the charter of a
 
14 depository and remove any directors, executive officers, or
 
15 employees prior to the dissolution in accordance with applicable
 
16 law.
 
17      (b)  The department may close a depository and take
 
18 possession of the books, records, and assets of the depository
 
19 and hold them until the depository is authorized by the division
 
20 to resume business or until its affairs are liquidated in
 
21 accordance with applicable law.
 
22      (c)  Except as provided under this part, an individual
 

 
 
 
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                                     S.B. NO.           9
                                                        
                                                        

 
 1 financial record may not be disclosed in the process of
 
 2 dissolving or closing a depository, and the penalties for
 
 3 wrongful disclosure under this part shall apply to the division,
 
 4 commissioner, department, and the depository.
 
 5      (d)  A foreign capital depository may not close its primary
 
 6 office or cease operations without the written approval of the
 
 7 division.
 
 8      (e)  Voluntary dissolution of a depository must comply with
 
 9 applicable law.
 
10      §412:13-V  Depository services, allowed and mandated.(a)
 
11 A depository may:
 
12      (1)  Accept deposits in any currency or electronic form
 
13           convertible to United States dollars;
 
14      (2)  Provide safe deposit and other storage services for the
 
15           purpose of protecting the security of a customer's
 
16           tangible personal property;
 
17      (3)  Convert cash deposits to purchase orders for platinum,
 
18           palladium, gold, or silver bullion on behalf of or at
 
19           the direction of a customer;
 
20      (4)  Purchase, sell, and pay interest to the customer
 
21           derived from tax-exempt federal, state, county, or
 
22           municipal bonds on behalf of or at the direction of a
 

 
 
 
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                                     S.B. NO.           9
                                                        
                                                        

 
 1           customer;
 
 2      (5)  Provide a customer with foreign currency in exchange
 
 3           for United States dollars in an equivalent monetary
 
 4           amount;
 
 5      (6)  Perform trust and related fiduciary services, as
 
 6           provided under applicable law, but only if the
 
 7           depository has obtained a certificate from the
 
 8           department or division authorizing the depository to
 
 9           act as a trust company or the subsidiary of a trust
 
10           company prior to engaging in trust activities;
 
11      (7)  Issue a debit card or an automatic teller machine card
 
12           to a customer;
 
13      (8)  Charge interest in relation to a customer's use of a
 
14           debit or automatic teller machine card;
 
15      (9)  Establish different types of deposit accounts for
 
16           customers;
 
17     (10)  Offer deposit or safe deposit insurance provided under
 
18           contract with a financial guaranty insurer approved by
 
19           the State;
 
20     (11)  Charge fees related to the opening, management, and
 
21           insuring of deposit accounts, the storage and
 
22           maintenance of tangible personal property, the
 

 
 
 
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                                     S.B. NO.           9
                                                        
                                                        

 
 1           establishment and administration of trust accounts, and
 
 2           other lawful investment, legal, or financial services;
 
 3     (12)  Set underwriting standards for each type of account
 
 4           that it offers to a customer; and
 
 5     (13)  Establish a minimum deposit amount for any type of
 
 6           account as long as the minimum is not less than
 
 7           $200,000.
 
 8      (b)  A depository may in its discretion refuse an
 
 9 application for an account of any type.
 
10      (c)  A depository shall:
 
11      (1)  Exercise extraordinary diligence in determining the
 
12           genuine identity of a customer;
 
13      (2)  Protect the privacy of each customer as provided
 
14           herein;
 
15      (3)  Provide legal defense of a customer at the customer's
 
16           request or on the request of the customer's legal
 
17           representative in the event a civil judgment rendered
 
18           against the depositor in a jurisdiction outside the
 
19           United States is registered in the State;
 
20      (4)  With respect to precious metals accounts, comply with
 
21           the statutory protections against securities fraud
 
22           under applicable law;
 

 
 
 
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                                     S.B. NO.           9
                                                        
                                                        

 
 1      (5)  Comply with federal reporting and recordkeeping
 
 2           requirements as provided in the Bank Secrecy Act, the
 
 3           Money Laundering Control Act of 1986, the Annunzio-
 
 4           Wylie Anti-Money Laundering Act, and implementing
 
 5           regulations of each of those acts concerning money
 
 6           laundering and other financial crimes.
 
 7      §412:13-W  Depository services, restrictions and
 
 8 prohibitions.(a)  A depository may not accept a deposit:
 
 9      (1)  From an individual who is a citizen or a resident of
 
10           the United States;
 
11      (2)  From a corporation, trust, or partnership if any
 
12           shareholder, settlor, member, beneficiary, or partner
 
13           is a citizen or a resident of the United States;
 
14      (3)  In an amount valued at less than $        in United
 
15           States dollars.
 
16      (b)  A depository may not:
 
17      (1)  Provide services to any customer who is not a
 
18           nonresident alien;
 
19      (2)  Engage in lending or any related commercial banking
 
20           services pursuant to applicable law, except:
 
21           (A)  In a case in which fiduciary lending is
 
22                necessitated by a trust obligation and the
 

 
 
 
Page 25                                                    
                                     S.B. NO.           9
                                                        
                                                        

 
 1                depository has obtained a certificate from the
 
 2                division authorizing the depository to act as a
 
 3                trust company or the subsidiary of a trust
 
 4                company; or
 
 5           (B)  In relation to a precious metals account;
 
 6      (3)  Transfer $       or more of a customer's cash on
 
 7           deposit to another financial institution inside or
 
 8           outside the jurisdiction of the United States without
 
 9           submitting a record of the transaction to the division
 
10           and the attorney general that includes the customer's
 
11           name, last-known address, and if the customer is an
 
12           individual, passport number;
 
13      (4)  Accept a deposit from a customer who has been convicted
 
14           of a state or federal felony in the United States or
 
15           from a corporation of which a controlling person has
 
16           been convicted of a state or federal felony in the
 
17           United States.
 
18      §412:13-X  Sale or trade of deposit accounts prohibited,
 
19 transfers allowed.(a)  Except for the condition set forth in
 
20 subsection (b), the sale or trade of a deposit account by a
 
21 depository is prohibited.
 
22      (b)  A depository may permit the legal transfer of a deposit
 

 
 
 
Page 26                                                    
                                     S.B. NO.           9
                                                        
                                                        

 
 1 account from a customer to the customer's heir, spouse, or
 
 2 designated next of kin for the purposes of estate preservation
 
 3 and maintenance.
 
 4      §412:13-Y  Account requirements, provisions.(a)  An
 
 5 agreement between the depository and a customer to establish a
 
 6 precious metals account shall include the following provisions:
 
 7      (1)  A term of maturity that is not less than thirty-six
 
 8           months;
 
 9      (2)  A penalty for early withdrawal of an amount of precious
 
10           metals that exceeds       per cent of the monetary
 
11           value of the total amount of precious metals in the
 
12           account, with the monetary value to be equivalent to
 
13           the spot market price of the precious metal listed in
 
14                          on the date of the withdrawal;
 
15      (3)  A requirement that the precious metals purchased by a
 
16           customer be delivered to the depository within seven
 
17           days of verified payment of any part of the purchase
 
18           price.
 
19      (b)  A precious metals account may provide for limited
 
20 withdrawal from the account by means of a debit card or an
 
21 automatic teller machine card provided the total amount withdrawn
 
22 from the account prior to the maturity date established in this
 

 
 
 
Page 27                                                    
                                     S.B. NO.           9
                                                        
                                                        

 
 1 subsection does not exceed         per cent of the total monetary
 
 2 value of the precious metals in the account.
 
 3      (c)  A depository may charge a customer interest and a fee
 
 4 in relation to a cash withdrawal made in accordance with
 
 5 subsection (b).
 
 6      §412:13-Z  Termination, settlement.  Upon termination of a
 
 7 precious metals account, whether at or before the date of
 
 8 maturity, the terms of settlement shall allow:
 
 9      (1)  The depository to convert the precious metals to
 
10           currency at the spot market rate on the day of
 
11           settlement; and
 
12      (2)  The depository's right to delay settlement for not more
 
13           than         business days.
 
14      §412:13-AA  Request or receipt of records and information
 
15 prohibited, exceptions, records to be maintained.  (a)  Except as
 
16 provided in sections 412:13-II and 412:13-JJ and this section, an
 
17 officer, employee, or agent of a state or local agency may not
 
18 request or receive a copy of a financial record from a foreign
 
19 capital depository unless the financial record is consistent with
 
20 the scope and purpose of the investigation by the state or local
 
21 agency, is described with particularity, and:
 
22      (1)  The customer has authorized disclosure of the financial
 

 
 
 
Page 28                                                    
                                     S.B. NO.           9
                                                        
                                                        

 
 1           record in accordance with section 412:13-DD;
 
 2      (2)  The financial record is disclosed in response to an
 
 3           administrative subpoena that meets the requirements of
 
 4           section 412:13-EE;
 
 5      (3)  The financial record is disclosed in response to a
 
 6           search warrant that meets the requirements of section
 
 7           412:13-FF; or
 
 8      (4)  The financial record is disclosed in response to a
 
 9           judicial subpoena that meets the requirements of
 
10           section 412:13-GG.
 
11      (b)  The burden of proving that a required disclosure of a
 
12 financial record is consistent with the scope and purpose of an
 
13 investigation is upon the state or local agency requiring
 
14 disclosure of the financial record.
 
15      (c)  Nothing in this part requires a foreign capital
 
16 depository to inquire or determine whether a person seeking
 
17 disclosure of a financial record has complied with the
 
18 requirements of those sections if the customer authorization,
 
19 administrative subpoena, search warrant, or judicial subpoena
 
20 served upon or delivered to the depository pursuant to any of
 
21 those sections shows compliance on its face.
 
22      (d)  A foreign capital depository shall maintain for a
 

 
 
 
Page 29                                                    
                                     S.B. NO.           9
                                                        
                                                        

 
 1 period of       years a record of all disclosures by a depository
 
 2 of the financial records of a customer pursuant to this part,
 
 3 including the identity of the person examining the financial
 
 4 records, the state or local agency that the person represents,
 
 5 and a copy of the customer authorization, administrative
 
 6 subpoena, search warrant, or judicial subpoena providing for
 
 7 examination or disclosure.  A record of disclosures maintained
 
 8 pursuant to this subsection shall be available, within       days
 
 9 of request, during normal business hours of the depository for
 
10 review by the customer at the office or branch of the depository
 
11 where the customer's account or safe deposit box was located when
 
12 examined.  A paper or electronic copy of the record of
 
13 disclosures shall be furnished by the depository to the customer
 
14 upon request by the customer.
 
15      (e)  This section does not prevent a state or local law
 
16 enforcement agency from initiating contact with a foreign capital
 
17 depository if there is reason to believe that the depository is a
 
18 victim of a crime perpetrated by a customer.  After contact by a
 
19 law enforcement agency, if the foreign capital depository
 
20 reasonably believes it is a victim of a crime, it may, in its
 
21 discretion, disclose relevant financial records pursuant to
 
22 section 412:13-BB.  Conviction of or admission by a customer of a
 

 
 
 
Page 30                                                    
                                     S.B. NO.           9
                                                        
                                                        

 
 1 crime against the depository is conclusive on the issue of the
 
 2 reasonable belief of the depository.
 
 3      §412:13-BB  Disclosure of record to agency prohibited,
 
 4 exceptions.(a)  Except as provided in section 412:13-JJ and
 
 5 this section, a foreign capital depository and a director,
 
 6 executive officer, controlling person, or employee of a foreign
 
 7 capital depository may not provide or authorize another person to
 
 8 provide a financial record to an officer, employee, or agent of a
 
 9 state or local agency.
 
10      (b)  This section does not preclude a foreign capital
 
11 depository, in its discretion, from initiating contact with and
 
12 disclosing a relevant financial record to a supervisory agency
 
13 concerning a suspected violation of state or federal law if the
 
14 depository reasonably believes that a violation of law has been
 
15 committed.  Conviction of or admission by a customer of a crime
 
16 is conclusive on the issue of the reasonable belief of the
 
17 depository.
 
18      §412:13-CC  Disclosure of record to private individual
 
19 prohibited, exceptions.(a)  Except as provided in section
 
20 412:13-JJ and this section, a foreign capital depository and a
 
21 director, executive officer, controlling person, or employee of a
 
22 foreign capital depository may not provide or authorize another
 

 
 
 
Page 31                                                    
                                     S.B. NO.           9
                                                        
                                                        

 
 1 person to provide a financial record to an individual who is not
 
 2 an officer, employee, or agent of a state or local agency acting
 
 3 pursuant to state law or local ordinance or to an officer,
 
 4 employee, or agent of the United States acting pursuant to
 
 5 federal law.
 
 6      (b)  This section does not preclude a foreign capital
 
 7 depository, in its discretion, from initiating contact with and
 
 8 disclosing a relevant financial record to an appropriate state,
 
 9 local, or federal agency concerning a suspected violation of
 
10 state or federal law if the depository reasonably believes that a
 
11 violation of law has been committed.  Conviction of or admission
 
12 by a customer of a crime is conclusive on the issue of the
 
13 reasonable belief of the depository.
 
14      §412:13-DD  Customer authorization, form, notice to
 
15 customer.(a)  A director, executive officer, controlling
 
16 person, or employee of a foreign capital depository may disclose
 
17 or authorize another to disclose a financial record and an
 
18 officer, employee, or agent of a supervisory, state, or local
 
19 agency may obtain a financial record if the customer to whom the
 
20 record relates has authorized disclosure of the record on a form
 
21 provided by the depository that:
 
22      (1)  Is signed and dated by the customer;
 

 
 
 
Page 32                                                    
                                     S.B. NO.           9
                                                        
                                                        

 
 1      (2)  Authorizes disclosure for a period set forth in the
 
 2           authorization statement;
 
 3      (3)  Specifies the name of the person, supervisory agency,
 
 4           state or local agency to whom or to which disclosure is
 
 5           authorized and, if applicable, the statutory purpose
 
 6           for which the information is to be obtained; and
 
 7      (4)  Identifies the financial record authorized to be
 
 8           disclosed.
 
 9      (b)  A foreign capital depository may not require a customer
 
10 authorization to be signed by a customer as a condition of doing
 
11 business with the depository.
 
12      (c)  A customer may revoke an authorization by written
 
13 notice to the foreign capital depository.  The notice shall
 
14 contain a copy of the authorization to which it relates or
 
15 contain the information originally required in the authorization
 
16 to which it relates, shall be signed and dated by the customer,
 
17 and shall contain a clear statement revoking the previous
 
18 authorization.
 
19      (d)  A supervisory, state, or local agency obtaining a
 
20 financial record pursuant to a customer authorization shall
 
21 notify the customer in writing of the receipt of the financial
 
22 record within       days of the agency's receipt of the financial
 

 
 
 
Page 33                                                    
                                     S.B. NO.           9
                                                        
                                                        

 
 1 record.  However, by application to a judge of a court of
 
 2 competent jurisdiction in the county in which the financial
 
 3 record is located and upon a showing of good cause to believe
 
 4 that disclosure would impede the investigation, the notification
 
 5 requirements of this subsection may be extended for up to two
 
 6 additional      -day periods.  Thereafter, by application to a
 
 7 court upon a showing of extreme necessity for nondisclosure, the
 
 8 notification requirements of this subsection may be extended for
 
 9 up to three additional      -day periods.  At the end of that
 
10 period or periods, the agency shall inform the customer that the
 
11 customer has the right to make a written request as to the reason
 
12 why the agency obtained the record.  The notice shall specify the
 
13 financial record that was obtained and, if requested, the reason
 
14 why the record was obtained.
 
15      (e)  Whenever practicable, an application for an additional
 
16 extension of the notification time provided in subsection (d)
 
17 shall be made to the judge who granted the first extension of
 
18 notification time.  In deciding whether to grant an extension of
 
19 the notification time, the judge shall provide the customer with
 
20 prompt notification, consistent with the purpose of this part.
 
21      §412:13-EE  Administrative subpoena.(a)  A director,
 
22 executive officer, controlling person, or employee of a foreign
 

 
 
 
Page 34                                                    
                                     S.B. NO.           9
                                                        
                                                        

 
 1 capital depository may disclose or authorize another to disclose
 
 2 a financial record and an officer, employee, or agent of a
 
 3 supervisory, state, or local agency may obtain a financial record
 
 4 under section 412:13-AA pursuant to an administrative subpoena
 
 5 otherwise authorized by law and served upon the foreign capital
 
 6 depository only if:
 
 7      (1)  The person issuing the administrative subpoena has
 
 8           served a copy of the subpoena on the customer pursuant
 
 9           to applicable law;
 
10      (2)  The subpoena includes the name of the agency in whose
 
11           name the subpoena is issued and the statutory purpose
 
12           for which the record is to be obtained; and
 
13      (3)       days have passed after service of the subpoena
 
14           without the foreign capital depository or the customer
 
15           moving to quash the subpoena.
 
16      (b)  The supervisory, state, or local agency issuing the
 
17 administrative subpoena may not shorten or waive the requirements
 
18 of subsection (a).  However, the agency may petition a court of
 
19 competent jurisdiction in the county in which the record is
 
20 located, and the court, upon a showing of a reasonable inference
 
21 that a law enforceable by the petitioning agency has been or is
 
22 about to be violated, may order that service upon the customer
 

 
 
 
Page 35                                                    
                                     S.B. NO.           9
                                                        
                                                        

 
 1 pursuant to subsection (a) or the     -day period provided for in
 
 2 subsection (a) be waived or shortened.
 
 3      (c)  For the purpose of this section, an "inference" is a
 
 4 deduction that may reasonably be drawn by the attorney general or
 
 5 a prosecuting attorney from facts relevant to the investigation.
 
 6      (d)  The petition may be presented to the court in person or
 
 7 by telephoned oral statement, which shall be recorded and
 
 8 transcribed.  In the case of a telephonic petition, the recording
 
 9 of the sworn oral statement and the transcribed statement shall
 
10 be certified by the judge receiving it and shall be filed with
 
11 the clerk of the court.
 
12      (e)  Except as provided in subsections (b), (c), and (d) and
 
13 this subsection, a foreign capital depository shall immediately
 
14 notify a customer of the receipt of an administrative subpoena
 
15 for a financial record of that customer.  A court may order a
 
16 depository to withhold notification to a customer of the receipt
 
17 of an administrative subpoena when the court issues an order
 
18 pursuant to subsection (b) and makes a finding that notice to the
 
19 customer by the financial institution would impede the
 
20 investigation.
 
21      §412:13-FF  Search warrants.  A director, executive officer,
 
22 controlling person, or employee of a foreign capital depository
 

 
 
 
Page 36                                                    
                                     S.B. NO.           9
                                                        
                                                        

 
 1 may disclose or authorize another to disclose a financial record
 
 2 and an officer, employee, or agent of a supervisory, state, or
 
 3 local agency may obtain a financial record under section
 
 4 412:13-AA only if the officer, employee, or agent obtains a
 
 5 search warrant pursuant to applicable law.  Examination of a
 
 6 financial record may occur as soon as the warrant is served upon
 
 7 the foreign capital depository.  A foreign capital depository
 
 8 shall notify a customer of the receipt of a search warrant unless
 
 9 a court orders the depository to withhold notification to the
 
10 customer upon a written finding that notice would impede the
 
11 investigation.
 
12      §412:13-GG  Judicial subpoena.(a)  A director, executive
 
13 officer, controlling person, or employee of a foreign capital
 
14 depository may disclose or authorize another to disclose a
 
15 financial record and an officer, employee, or agent of a
 
16 supervisory, state, or local agency may obtain a financial record
 
17 under section 412:13-AA pursuant to a judicial subpoena only if
 
18 one of the following has occurred:
 
19      (1)  The subpoena is issued and served as otherwise
 
20           authorized by law and the requirements of this
 
21           subsection.  In the event that actual service on the
 
22           customer is not prohibited but has not been made prior
 

 
 
 
Page 37                                                    
                                     S.B. NO.           9
                                                        
                                                        

 
 1           to the time the financial record is required to be
 
 2           produced in response to the subpoena, the court shall,
 
 3           prior to turning over a record to the agency and upon
 
 4           good cause shown, make a finding that due diligence has
 
 5           been exercised by the agency in its attempt to effect
 
 6           service upon the customer.
 
 7      (2)       days have passed after service of the subpoena on
 
 8           the customer and the depository without the customer or
 
 9           the depository having moved to quash the subpoena;
 
10      (3)  The subpoena has been served upon the customer and the
 
11           depository and a judge in a judicial proceeding to
 
12           which the customer or the depository is a party rules
 
13           that the subpoena should not be quashed.  This
 
14           subsection is not intended to preclude appellate
 
15           remedies that may be available under existing law.
 
16      (4)  The subpoena has been served upon the depository and a
 
17           court orders that service of the subpoena upon the
 
18           customer be delayed in accordance with this section.
 
19           Service may be delayed for up to      days from the
 
20           date of issuance of the judicial subpoena after the
 
21           court makes a finding upon a written showing that
 
22           service upon the customer would impede the
 

 
 
 
Page 38                                                    
                                     S.B. NO.           9
                                                        
                                                        

 
 1           investigation.  The withholding of notification may be
 
 2           extended for additional     -day periods if a court
 
 3           makes a finding upon a written showing, at the time of
 
 4           each extension, that service upon the customer would
 
 5           impede the investigation.  Whenever practicable, an
 
 6           application for an extension of time shall be made to
 
 7           the judge who issued the judicial subpoena.  In
 
 8           deciding whether to grant an extension of the
 
 9           notification time, the judge shall endeavor to provide
 
10           the customer with prompt notification, consistent with
 
11           the purpose of this part.
 
12      (b)  If testimony is to be taken concerning a financial
 
13 record or if a financial record is to be produced before a court,
 
14 the     -day period provided for in paragraph (2) may be
 
15 shortened by the court upon a showing of good cause.  The court
 
16 shall direct that all reasonable measures be taken to notify the
 
17 customer within the shortened time period.  The motion to quash
 
18 the subpoena shall be made, whenever practicable, in the judicial
 
19 proceeding pending before the court.
 
20      (c)  A grand jury, upon resolution adopted by a majority of
 
21 its members, may obtain financial records pursuant to a judicial
 
22 subpoena based upon a written showing to a judge that there
 

 
 
 
Page 39                                                    
                                     S.B. NO.           9
                                                        
                                                        

 
 1 exists a reasonable inference that a crime within the
 
 2 jurisdiction of the grand jury has been committed and that the
 
 3 financial record sought is reasonably necessary to the jury's
 
 4 investigation of that crime.  The judicial subpoena shall be
 
 5 personally signed and issued by a judge in accordance with
 
 6 applicable law and shall otherwise comply with the requirements
 
 7 of this section.
 
 8      (d)  For the purpose of this section, an "inference" is a
 
 9 deduction that may be reasonably drawn by the grand jury from
 
10 facts relevant to the investigation.
 
11      (e)  A showing required to be made pursuant to this section,
 
12 as well as the court record of any finding made pursuant to the
 
13 showing, shall be sealed until one person named in the indictment
 
14 to which the showing related has been arrested or until the end
 
15 of the term of the grand jury if no indictment to which the
 
16 showing relates has been returned.  However, a court may unseal
 
17 the showing and the court record relating to the showing on a
 
18 written showing of good cause.
 
19      §412:13-HH  Grounds for quashing subpoena, duty of
 
20 depository.(a)  A customer or a foreign capital depository has
 
21      days after service of an administrative or judicial subpoena
 
22 upon either of them to file a motion to quash the subpoena before
 

 
 
 
Page 40                                                    
                                     S.B. NO.           9
                                                        
                                                        

 
 1 the administrative agency issuing the subpoena or a court with
 
 2 jurisdiction over the subpoena.  The motion to quash may be based
 
 3 upon one or more of the following grounds:
 
 4      (1)  The financial record sought is incompetent, irrelevant,
 
 5           or immaterial for the purpose for which it is sought;
 
 6      (2)  The release of the financial record would cause an
 
 7           unreasonable burden or hardship under the circumstances
 
 8           upon the customer or the depository;
 
 9      (3)  The supervisory, state, or local agency or other person
 
10           seeking the financial record is attempting to harass
 
11           the customer or the depository;
 
12      (4)  There is no merit in the purpose for which the
 
13           financial record is sought; or
 
14      (5)  The supervisory, state, or local agency or other person
 
15           has not made a reasonable effort to first obtain the
 
16           financial record or the equivalent of the record from
 
17           some other source other than the depository, if some
 
18           other source exists.
 
19      (b)  A foreign capital depository shall move on the basis of
 
20 all appropriate grounds, including those set forth in subsection
 
21 (a), to quash an administrative or judicial subpoena if the
 
22 customer or the agent of the customer to whom the record relates
 

 
 
 
Page 41                                                    
                                     S.B. NO.           9
                                                        
                                                        

 
 1 has not received actual notice of the subpoena.  If a foreign
 
 2 capital depository cannot determine from the customer or the
 
 3 customer's agent whether the customer or the agent has received
 
 4 actual notice of the subpoena, the depository shall move to quash
 
 5 the subpoena unless the customer and the depository have agreed
 
 6 in writing to the contrary.
 
 7      (c)  Failure of the customer or the depository to file a
 
 8 motion to quash the subpoena before the time established for the
 
 9 return of the subpoena constitutes a waiver of the right to
 
10 object to the release or disclosure of the financial record.
 
11      (d)  During the period for the filing of a motion to quash
 
12 and continuing until a ruling is made upon a motion to quash, the
 
13 depository, unless prohibited by the court, shall make available
 
14 to its customer a copy of the subpoenaed financial record and
 
15 shall preserve the original record without alteration.
 
16      (e)  If a depository or a customer files a motion to quash
 
17 an administrative or judicial subpoena issued pursuant to section
 
18 412:13-EE or 412:13-GG, the proceeding shall be afforded priority
 
19 on the calendar of the agency or the court.
 
20      (f)  A depository may charge a customer a fee for the
 
21 reasonable cost of representing the interests of the customer
 
22 pursuant to this section.
 

 
 
 
Page 42                                                    
                                     S.B. NO.           9
                                                        
                                                        

 
 1      §412:13-II  Limitations on use of financial record.(a)
 
 2 The original or a copy of a financial record obtained by a state
 
 3 or local agency or another person pursuant to this part may not
 
 4 be used or retained in any form for a purpose other than the
 
 5 statutory purpose for which the record was originally obtained.
 
 6 The statutory purpose shall be determined with reference to the
 
 7 statute, rule, or other law sought to be enforced in the
 
 8 proceeding for which the record was obtained.
 
 9      (b)  A state or local agency may not provide a financial
 
10 record obtained pursuant to this part to another state or local
 
11 agency unless the other agency has independently obtained
 
12 authorization to receive the financial record pursuant to this
 
13 part.  This subsection does not prohibit:
 
14      (1)  The transfer by one supervisory agency that obtained a
 
15           financial record pursuant to section 412:13-JJ to
 
16           another supervisory agency or supervisory agencies if
 
17           that transfer otherwise complies with subsection (a);
 
18           or
 
19      (2)  The transfer of a financial record obtained pursuant to
 
20           section 412:13-FF by one criminal justice agency to
 
21           another criminal justice agency in accordance with
 
22           applicable law.
 

 
 
 
Page 43                                                    
                                     S.B. NO.           9
                                                        
                                                        

 
 1      (c)  A supervisory, state, or local agency or a court
 
 2 obtaining a financial record by administrative subpoena, search
 
 3 warrant, or judicial subpoena shall, at the request of a customer
 
 4 or foreign capital depository, provide for the in camera review
 
 5 of the record to determine whether the record contains material
 
 6 that is not expected to be the subject of the investigation,
 
 7 inquiry, or proceeding.  The supervisory, state, or local agency
 
 8 or the court shall liberally grant requests for in camera
 
 9 hearings, protective orders, and other appropriate processes to
 
10 protect the confidential nature of a financial record. The agency
 
11 or court may permit public disclosure of a financial record only
 
12 if it finds that disclosure is necessary for the fair resolution
 
13 of an issue before it.
 
14      (d)  Documents of a supervisory, state, or local agency and
 
15 documents produced in court containing a financial record shall
 
16 be sealed by the agency or court at the conclusion of the
 
17 proceedings in order to prevent access to the record and may be
 
18 opened only for good cause shown.
 
19      §412:13-JJ  Authorized disclosures of financial records.
 
20 (a)  This part does not prohibit:
 
21      (1)  Disclosure by a foreign capital depository of a
 
22           financial record that is not identified with or
 

 
 
 
Page 44                                                    
                                     S.B. NO.           9
                                                        
                                                        

 
 1           identifiable as being derived from a financial record
 
 2           of a particular customer by name;
 
 3      (2)  Disclosure by a foreign capital depository to a
 
 4           department, agency, office, bureau, or commission of
 
 5           the United States of a financial record when required
 
 6           by federal statute or regulation or when required
 
 7           pursuant to the terms of a treaty or other agreement
 
 8           between the United States and the government of a
 
 9           foreign country;
 
10      (3)  Disclosure of a financial record by a foreign capital
 
11           depository to a supervisory agency when the disclosure
 
12           is conducted in response to an exercise of the agency's
 
13           supervisory function.  The scope of an agency's
 
14           supervisory function shall be determined by reference
 
15           to statutes granting authority to examine, audit, or
 
16           require reports concerning a financial record of a
 
17           foreign capital depository.
 
18      (b)  Whenever the request, order, demand, or other
 
19 requirement for disclosure of a financial record prohibits the
 
20 release to a customer of the facts of a disclosure, a foreign
 
21 capital depository may not disclose either the fact or nature of
 
22 the request, order, demand, or other requirement for disclosure
 

 
 
 
Page 45                                                    
                                     S.B. NO.           9
                                                        
                                                        

 
 1 or the depository's response to a customer or to any other
 
 2 person, except the officers and employees of the depository who
 
 3 are involved in responding to the request and to attorneys,
 
 4 auditors, and regulatory authorities who have a need to know in
 
 5 order to perform their duties and except as disclosure may be
 
 6 required by legal process.
 
 7      §412:13-KK  Fee paid to foreign capital depository for
 
 8 disclosure of record.  Except for a supervisory agency, a state
 
 9 agency or local agency obtaining a financial record in accordance
 
10 with section 412:13-DD, 412:13-EE, 412:13-FF, or 412:13-GG shall
 
11 pay to the depository providing the financial record a reasonable
 
12 fee commensurate with the depository's costs of searching for,
 
13 assembling, copying, labeling, and transporting the financial
 
14 record in question.
 
15      §412:13-LL  Confidentiality, supervisory agency personnel,
 
16 penalty for violation.(a)  Except as required by judicial order
 
17 or as otherwise provided by this part, an employee of a
 
18 supervisory agency who conducts an examination, investigation, or
 
19 audit of a depository or who receives a report or another type of
 
20 information about a depository from another employee of a
 
21 supervisory agency may not disclose the identity of a customer to
 
22 another person who is not officially associated with an
 

 
 
 
Page 46                                                    
                                     S.B. NO.           9
                                                        
                                                        

 
 1 examination, investigation, or audit of a depository.
 
 2      (b)  A person who knowingly violates subsection (a) shall be
 
 3 removed from office and is guilty of a felony.  Upon conviction,
 
 4 the person shall be punished by a fine of $     , by imprisonment
 
 5 in the state prison for not more than      years, or by both fine
 
 6 and imprisonment.
 
 7      §412:13-MM  Civil liability for wrongful disclosure of
 
 8 financial record, damages and injunctive relief.(a)  A state or
 
 9 local agency that requests or receives a financial record in
 
10 violation of this part is liable to the customer to whom the
 
11 record relates in the amount of damages provided in subsection
 
12 (d).
 
13      (b)  A person who is not employed by a supervisory, state,
 
14 or local agency or by a foreign capital depository and who
 
15 requests or receives a financial record in violation of this part
 
16 is liable to the customer to whom the record relates in the
 
17 amount of damages provided in subsection (d).
 
18      (c)  A director, executive officer, controlling person, or
 
19 employee of a foreign capital depository who discloses or
 
20 authorizes another to disclose a financial record in violation of
 
21 this part is liable to the customer to whom the record relates in
 
22 an amount of damages provided in subsection (d).
 

 
 
 
Page 47                                                    
                                     S.B. NO.           9
                                                        
                                                        

 
 1      (d)  Damages are equal to the sum of the following:
 
 2      (1)  $      , without regard to the type or number of
 
 3           records involved;
 
 4      (2)  Actual damages sustained by the customer; and
 
 5      (3)  Costs incurred in the action to successfully enforce
 
 6           liability under this section, together with reasonable
 
 7           attorney fees.
 
 8      (e)  A foreign capital depository may exercise remedies
 
 9 provided in this section on behalf of a customer and in
 
10 connection with the exercise of those remedies, may act as the
 
11 real party in interest.  Damages recovered by the depository
 
12 shall be deposited in an account of the customer, but a
 
13 depository may retain amounts recovered for its costs and
 
14 reasonable attorney fees.
 
15      (f)  The remedies provided in this section are not exclusive
 
16 and do not prevent relief as otherwise provided by law.
 
17      §412:13-NN  Unlawful disclosure of financial record,
 
18 criminal penalties.(a)  A director, executive officer,
 
19 controlling person, or employee of a foreign capital depository
 
20 who discloses a financial record in violation of this part is
 
21 guilty of a misdemeanor and upon conviction shall be punished by
 
22 a fine of not more than $    , by imprisonment for not more than
 

 
 
 
Page 48                                                    
                                     S.B. NO.           9
                                                        
                                                        

 
 1      years, or by both fine and imprisonment.  This subsection
 
 2 imposes absolute liability.
 
 3      (b)  A director, executive officer, controlling person, or
 
 4 employee of a foreign capital depository or an officer, employee,
 
 5 or agent of a state or local agency who knowingly discloses a
 
 6 financial record in violation of this part is guilty of a felony
 
 7 and upon conviction shall be punished by a fine of $      , by
 
 8 imprisonment for not more than      years, or by both fine and
 
 9 imprisonment.
 
10      §412:13-OO  Customer waiver invalid.  A waiver by a customer
 
11 of a right that is not authorized to be waived by this part is
 
12 not valid whether granted with or without consideration.
 
13      §412:13-PP  Limitation of actions.  An action to enforce a
 
14 provision of this part shall be commenced within      years after
 
15 the date on which the violation occurred.
 
16      §412:13-QQ  Defense against enforcement of foreign
 
17 judgments, depository obligations.  A foreign capital depository,
 
18 unless relieved of the responsibility by a waiver signed by a
 
19 depository customer, shall provide a customer with competent
 
20 legal counsel and defense against:
 
21      (1)  The recognition of a foreign judgment rendered in a
 
22           foreign state; and
 

 
 
 
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 1      (2)  The execution of a foreign judgment but only to the
 
 2           extent that the execution would affect the customer's
 
 3           assets in the depository.
 
 4      §412:13-RR  Filing fee.  A person seeking recognition of a
 
 5 foreign judgment rendered in a foreign state against a customer
 
 6 of the foreign capital depository shall pay a filing fee of
 
 7 $      to the clerk of the court in which the judgment is filed.
 
 8      §412:13-SS  Burden of proof, financial liabilities.(a)  A
 
 9 person seeking recognition of a foreign judgment bears the burden
 
10 of proving that:
 
11      (1)  The judgment was rendered under a system that provides
 
12           impartial tribunals or procedures that are compatible
 
13           with the requirements of due process of law;
 
14      (2)  The foreign court had personal jurisdiction over the
 
15           customer when the judgment was rendered; and
 
16      (3)  The foreign court had jurisdiction over the subject
 
17           matter.
 
18      (b)  The customer or the foreign capital depository acting
 
19 on behalf of a customer bears the burden of proving
 
20 nonrecognition of the foreign judgment.
 
21      (c)  If the court finds that the person seeking recognition
 
22 of the foreign judgment has failed to prove the judgment valid in
 

 
 
 
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 1 accordance with subsection (a) or if the customer or the
 
 2 depository succeeds pursuant to subsection (b), the court may not
 
 3 recognize the foreign judgment.
 
 4      (d)  If the person seeking recognition of a judgment is
 
 5 unsuccessful in obtaining recognition of the judgment, that
 
 6 person shall pay the court costs and attorney fees for the
 
 7 parties opposing recognition or, if the customer has waived the
 
 8 depository's obligation provided for in section 412:13-QQ, for
 
 9 the customer.
 
10      §412:13-TT  Damages, in camera hearing.(a)  The court in
 
11 which recognition of a foreign judgment is sought may award
 
12 damages against the person seeking recognition of a foreign
 
13 judgment to compensate a customer for the customer's loss of
 
14 privacy.
 
15      (b)  The amount of the damages awarded pursuant to
 
16 subsection (a) shall bear a reasonable relationship to the
 
17 person's ability to pay and may not exceed $        .
 
18      (c)  Any part of a hearing necessary to determine the rights
 
19 and obligations of the parties pursuant to this part may be held
 
20 in camera to protect the privacy of any of the parties.
 
21      §412:13-UU  Contingency fee arrangements prohibited.  A
 
22 person seeking recognition of a foreign judgment against a
 

 
 
 
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 1 customer of a foreign capital depository may not engage legal
 
 2 counsel on a contingency fee basis for the purpose of attaining
 
 3 recognition of the same foreign judgment.
 
 4      §412:13-VV  Nonrecognition, procedures to protect privacy.
 
 5 (a)  The court, at the request of a customer or a foreign capital
 
 6 depository, shall provide for an in camera review of the
 
 7 pertinent documents to protect the confidential nature of
 
 8 financial records.
 
 9      (b)  The court may permit public disclosure of a financial
 
10 record or proceedings closed pursuant to subsection (a) only if
 
11 it finds that disclosure is necessary for the fair resolution of
 
12 an issue before it.
 
13      (c)  Documents produced in court containing a financial
 
14 record shall be sealed by the court at the conclusion of the
 
15 proceedings to prevent access to the record and may be opened
 
16 only for good cause shown.
 
17      §412:13-WW  Tax status, exemption guarantees.  A transaction
 
18 between the depository and a customer that involves tangible
 
19 personal property, as defined in this part, is exempt from all
 
20 forms of tax.
 
21      §412:13-XX  State revenue, assessment, collection,
 
22 distribution.(a)  A foreign capital depository shall pay to the
 

 
 
 
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 1 department of taxation on           of each year a fee that is
 
 2 equal to         per cent of the total value of assets on deposit
 
 3 or in a safe deposit box.  The total annual rate of assessment is
 
 4         per cent.
 
 5      (b)  The basis of the value ascribed to each asset is:
 
 6      (1)  The United States dollar exchange value of the currency
 
 7           on deposit on the date of assessment;
 
 8      (2)  The spot market price of the platinum, palladium, gold,
 
 9           or silver held in precious metals accounts is as
 
10           published in The Wall Street Journal on the date of
 
11           assessment; or
 
12      (3)  The market value of other tangible personal property
 
13           held in safe deposit boxes or other accounts at the
 
14           time of the assessment, as determined by the depository
 
15           using a method approved by the division.  The
 
16           depository shall submit to the department within     
 
17           days of the appraisal a report that documents the
 
18           method and calculations of the appraisal.
 
19      (c)  The semiannual assessment fee shall be deposited into
 
20 the general fund.
 
21      §412:13-YY  Revenue audits, charges.(a)  The department
 
22 shall conduct an annual audit of a foreign capital depository to
 

 
 
 
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 1 verify that internal financial records of the depository comply
 
 2 with state law and regulations pertaining to the depository and
 
 3 that fees owed to the State have been properly calculated and
 
 4 paid on time.
 
 5      (b)  A depository shall pay to the department the cost of an
 
 6 annual audit provided for in subsection (a).
 
 7      (c)  The department may charge the depository up to $     a
 
 8 day for each auditor involved in the conduct of an audit.
 
 9      §412:13-ZZ  Deficiency assessment, notice, penalty and
 
10 interest.(a)  If the department determines through an audit of
 
11 a foreign capital depository that the amount collected pursuant
 
12 to section 412:13-YY is less than the amount owed by the
 
13 depository, the department shall send by certified mail to the
 
14 depository a notice of the deficiency and require payment of the
 
15 amount owed plus a       per cent penalty within       days of
 
16 the depository's receipt of the notice.
 
17      (b)  The depository shall bear the interest charge on any
 
18 deficiency assessment issued by the department in accordance with
 
19 subsection (a).  The rate of interest charged to the depository
 
20 may not exceed       per cent a year.
 
21      §412:13-AAA  Right of appeal.  A foreign capital depository
 
22 that receives a notice of deficiency assessment may appeal the
 

 
 
 
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 1 amount of the fee, penalty, or interest charged.
 
 2      §412:13-BBB  Limitation on penalty and interest.  An amount
 
 3 of penalty or interest owed by the depository pursuant to section
 
 4 412:13-ZZ may not be assessed or collected with respect to the
 
 5 year for which a semiannual fee is assessed unless the notice of
 
 6 the additional amount owed is mailed within      years from the
 
 7 date the fee was paid.
 
 8      §412:13-CCC  Action by attorney general.  An action may be
 
 9 brought by the attorney general in the name of the State at the
 
10 request of the department to recover the amount of any fees,
 
11 penalties, and interest due under this part.
 
12      §412:13-DDD  Abandoned capital, disposition, escheatment.
 
13 (a)  A foreign capital depository, as defined in this part, shall
 
14 presume that capital on deposit in a depository account is
 
15 abandoned.
 
16      (b)  A depository shall dispose of the abandoned capital in
 
17 the manner provided for by law, except that:
 
18      (1)  A notice of the property presumed abandoned may not be
 
19           published;
 
20      (2)  The record of deposit may not be made available for
 
21           public inspection; and
 
22      (3)  All money received by the department of taxation as a
 

 
 
 
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 1           consequence of the abandonment of capital in a
 
 2           depository shall be deposited in the general fund.
 
 3      (c)  A foreign capital depository may deduct from property
 
 4 that is presumed to be abandoned a charge imposed by reason of
 
 5 the owner's failure to claim the property within a specified time
 
 6 only if there is a valid and enforceable written contract between
 
 7 the depository and the owner under which the depository may
 
 8 impose the charge and if the depository regularly imposes the
 
 9 charge, which is not regularly reversed or otherwise canceled.
 
10 The amount of the deduction is limited to an amount that is not
 
11 unconscionable.
 
12      §412:13-EEE  Injunctions.  The department may institute and
 
13 maintain in the name of the State actions for injunctive relief
 
14 to:
 
15      (1)  Enjoin a violation of this part or, a rule adopted
 
16           pursuant to this part, the terms or conditions of a
 
17           charter, or an order of the department or the division;
 
18           or
 
19      (2)  Require compliance with this part or, a rule adopted
 
20           pursuant to this part, the terms or conditions of a
 
21           charter, or an order of the department or the division.
 
22      §412:13-FFF  Civil penalties.(a)  Except for the penalties
 

 
 
 
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 1 for wrongful disclosure provided for in section 412:13-MM, a
 
 2 person who violates a provision or, a rule adopted under this
 
 3 part, the terms and conditions of a charter or an order of the
 
 4 department or the division is subject to a civil penalty not to
 
 5 exceed $       for each day of violation.  Each day of violation
 
 6 of this part or, a rule adopted under this part, the terms or
 
 7 conditions of a charter, or an order constitutes a separate
 
 8 violation.
 
 9      (b)  The department or division may institute and maintain
 
10 in the name of the State any enforcement proceedings under this
 
11 section.  Upon request of the department or division, the
 
12 attorney general or the prosecuting attorney of the county where
 
13 the violation occurred shall petition the district court to
 
14 impose, assess, and recover the civil penalty.
 
15      (c)  Action under this section does not bar:
 
16      (1)  Enforcement of this part or, rules adopted under this
 
17           part, orders of the department or the division, or
 
18           terms or conditions of a charter by injunction or other
 
19           appropriate remedy; or
 
20      (2)  Action under section 412:13-GGG.
 
21      §412:13-GGG  Criminal penalties.(a)  Except for the
 
22 penalties for wrongful disclosure provided for in section
 

 
 
 
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 1 412:13-NN, a person who knowingly operates a foreign capital
 
 2 depository without a charter, in violation of the terms or
 
 3 conditions of a charter, or in violation of this part or, a rule
 
 4 adopted pursuant to this part, or an order of the department or
 
 5 division or a person who knowingly makes any false statements or
 
 6 representations in an application, report, or other document
 
 7 filed or maintained as required by this part or required by rules
 
 8 adopted under this part is subject to a fine not to exceed
 
 9 $       for each violation or imprisonment not to exceed      
 
10 months, or both.  Each day of violation constitutes a separate
 
11 violation.
 
12      (b)  A person convicted of a second or subsequent criminal
 
13 violation is subject to a fine not to exceed $       for each
 
14 violation or imprisonment not to exceed      year, or both.  Each
 
15 day of a violation constitutes a separate violation.
 
16      (c)  Action under this section does not bar enforcement of
 
17 any section in this part, rules adopted pursuant to this part,
 
18 orders of the department or the division, or terms or conditions
 
19 of a charter by injunction or other appropriate remedy."
 
20      SECTION 2.  Tax and fee exemption.  Foreign capital
 
21 depositories chartered under chapter 412 shall be exempt from:
 
22      (1)  The following provisions of chapter 412:   ,    ,    ,
 

 
 
 
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 1           and    ;
 
 2      (2)  Taxes assessed by the State under chapters    ,    ,
 
 3              , and    ;
 
 4      (3)  Licensing fees assessed by the State under sections
 
 5              ,    ,    , and    ;
 
 6      (4)  Fees assessed by the judiciary under sections    ,    ,
 
 7              , and    .
 
 8      SECTION 3.  The division of financial institutions shall
 
 9 adopt rules as necessary, pursuant to chapter 91, to effectuate
 
10 the purposes of this part.
 
11      SECTION 4.  If any provision of this part, or the
 
12 application thereof to any person or circumstance is held
 
13 invalid, the invalidity does not affect other provisions or
 
14 applications of the part which can be given effect without the
 
15 invalid provision or application, and to this end the provisions
 
16 of this part are severable.
 
17      SECTION 5.  In codifying the new part added to chapter 412,
 
18 article 13, Hawaii Revised Statutes, by section 1 of this part,
 
19 the revisor of statutes shall substitute appropriate section
 
20 numbers for the letters used in the new sections' designations in
 
21 this part.
 

 
 
 
 
 
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 1      SECTION 6.  This Act shall take effect upon its approval and
 
 2 shall be repealed on June 30,     .
 
 3 
 
 4                           INTRODUCED BY:  _______________________