Sec. 707. Reputation risk; requirements for account termination requests and orders
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/bill/117/s/4356/is/section-707A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
An appropriate Federal banking agency may not formally or informally request or order a depository institution to terminate a specific customer account or group of customer accounts unless the agency has a valid reason for such request or order, consistent with subsections
(b)and (c). An appropriate Federal banking agency shall not restrict or discourage a depository institution from entering into or maintaining a banking relationship with a specific customer or group of customers based on reputation risk, including through the examinations and ratings of the depository institution. If an appropriate Federal banking agency believes a specific customer or group of customers is, or acting as a conduit for, an entity which— poses a threat to national security; is involved in terrorist financing; is an agency of the Government of Iran, North Korea, Syria, or any country listed from time to time on the State Sponsors of Terrorism list; is located in, or is subject to the jurisdiction of, any country specified in paragraph (3); or does business with any entity described in paragraph
(3)or (4), unless the appropriate Federal banking agency determines that the customer or group of customers has used due diligence to avoid doing business with that entity, such belief shall satisfy the requirement under subsection (a). If an appropriate Federal banking agency formally requests or orders a depository institution to terminate a specific customer account or a group of customer accounts, the agency shall— provide such request or order to the institution in writing; and accompany such request or order with a written justification for why such termination is needed, including any specific laws or rules the agency believes are being violated by the customer or group of customers. Consistent with subsection (b), the justification described in paragraph (1)(B) may not be based on reputation risk to the depository institution. Except as provided under paragraph
(2)or as otherwise prohibited from being disclosed by law, if an appropriate Federal banking agency orders a depository institution to terminate a specific customer account or a group of customer accounts, the depository institution shall inform the specific customer or group of customers of the justification for the customer’s account termination described under subsection (b). If an appropriate Federal banking agency requests or orders a depository institution to terminate a specific customer account or a group of customer accounts based on a belief that the customer or customers pose a threat to national security, or are otherwise described under subsection (a)(2), neither the depository institution nor the appropriate Federal banking agency may inform the customer or customers of the justification for the customer’s account termination. If an appropriate Federal banking agency determines that the notice required under paragraph
(1)may interfere with an authorized criminal investigation, neither the depository institution nor the appropriate Federal banking agency may inform the specific customer or group of customers of the justification for the customer’s account termination. Each appropriate Federal banking agency shall issue an annual report to Congress stating— the aggregate number of specific customer accounts that the agency requested or ordered a depository institution to terminate during the previous year; and the legal authority on which the agency relied in making such requests and orders and the frequency on which the agency relied on each such authority. In this section: The term appropriate Federal banking agency means— the appropriate Federal banking agency, as defined in section 3 of the Federal Deposit Insurance Act ( 12 U.S.C. 1813 ); and the National Credit Union Administration, in the case of an insured credit union. The term depository institution has the meaning given the term in section 19(b)(1) of the Federal Reserve Act ( 12 U.S.C. 461(b)(1)(A) ).
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Sec. 707
Reputation risk; requirements for account termination requests and orders
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