Sec. 802. Interstate sandbox activities
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/bill/117/s/4356/is/section-802·A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
Chapter 99 of title 31, United States Code, as added by section 701 of this Act, is amended by adding at the end the following: In this section: The term Federal financial regulator means the Federal agency described in section 9901(a)(1) that would typically exercise jurisdiction over the product or service made available in the State financial regulatory sandbox, or the Department of the Treasury, in the case of a matter only within the jurisdiction of a State. The term financial company means a business entity primarily engaged in activities that are financial in nature, as described in section 4(k)(4) of the Bank Holding Company Act of 1956 ( 12 U.S.C. 1843(k)(4) ).
The term host State means a State in which a financial company is not operating in the State financial regulatory sandbox of that State. The term innovative means new or emerging technology, or new uses of existing technology, that— provides a financial product, service, business model, or delivery mechanism to the public; and has no substantially comparable, widely available analogue in common use in the United States. The term State financial regulator includes State agencies that regulate, supervise, or license banks, trust companies, credit unions, consumer credit, consumer protection, money transmission, securities, commodities, and similar areas.
The term State financial regulator sandbox means a program created under State law that allows a financial company to make an innovative financial product or service available to customers within that State during a defined period in order to permit regulatory dialogue, data sharing amongst regulators and financial companies, and to promote an assessment of potential changes in law, rule, or policy to facilitate the appropriate supervision of financial technology. Upon joint approval under subsection (d), a financial company in good standing in a State financial regulatory sandbox and operating for not less than 6 months in that sandbox program, may do business across State lines under the standards of this section.
If approved, the State financial regulator and the Federal financial regulator may agree upon reasonable adjustments to the number of customers that may be served, increased bonding or collateral requirements, and similar conditions which may be appropriate for conducting business nationally. A State financial regulatory sandbox shall contain the following components for financial companies to be eligible to do business across State lines under this section: A limited sandbox period of not more than 24 months.
Consumer protection requirements, which may include disclosures, bonding, insurance requirements, and financial literacy programs for specified consumers. Authority to conduct examinations of the financial company. A background investigation of the financial company and its officers, directors, members, managers and key employees, prior to commencing business. Upon submission of an application by a financial company to conduct business across State lines under subsection (b), the State financial regulator and Federal financial regulator shall jointly issue a decision within 120 days with respect to that application, irrespective of any supplemental information with respect to the application that may be requested after initial filing.
The Federal financial regulator shall have the authority to conduct a joint examination of any financial company doing business under this section. The State financial regulator and Federal financial regulator shall consider the following factors in rendering a decision on the application: Whether the product or service offered may be offered in a safe and sound manner across State lines. Whether the management and capital of the financial company is commensurate with the scale of the company.
Risk management plans of the financial company. Conduct of the financial company to date in the State regulatory sandbox, and any past regulatory actions, including actions against officers, directors, members, managers and key employees. Plans for consumer education and financial literacy, including partnerships with local educational institutions and community colleges to provide financial literacy classes or resources. Other factors determined by the State and Federal financial regulators to be material.
A host State may elect not to permit financial companies operating under this section to do business in their State through issuance of an executive order by the Governor of that State. A product or service made available under this section through a State financial regulatory sandbox shall be innovative. This section shall not be construed to extend to permit— a financial company to engage in any activities for which a charter, license, registration or for which permission would be required under Federal or State law but for the innovative financial product or service being offered by the company, except to the extent the financial company would be required to obtain a charter, license or other authorization required in a host State; failure to comply with any applicable portion of State law required by the State financial regulatory sandbox, or failure to comply with any applicable portion of Federal law, unless authorized on a limited basis by the Federal financial regulator to achieve the purposes of this section and the State financial regulatory sandbox; or lending activities in excess of the maximum statutory rate of interest permissible in a State. .
The table of contents for subtitle VI of title 31, United States Code, as amended by section 101(b) of this Act, is amended by adding at the end the following: 99. Responsible interagency coordination 9901 .
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Sec. 802
Interstate sandbox activities
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