Senate Bill S4603

                                 
BILL NUMBER: S4603A

SPONSOR: SANDERS
 
TITLE OF BILL:

An act to amend the banking law, in relation to establishing criteria
for the closure of banking accounts in the state of New York

 
PURPOSE OR GENERAL IDEA OF BILL:

To give bank account customers notification on why their personal or
business bank account is closed by a bank and to ensure their checks are
honored and funds are returned.

 
SUMMARY OF PROVISIONS:

Section 1 amends the Banking Law by adding a new section 9-11, which
states that all banking organizations and out-of-state state banks
authorized to operate and maintain branches pursuant to article 5-c of
this chapter when closing the account of a customer shall:

(a) Provide 60 days' notice that such account is being closed, whether
              

for personal or business use, and provide the reason for such closure;

(b) Return any remaining funds from such account within 60 days after
the closure to such account to the owner.

Subdivision 2: Specifies that the provisions of the bill would not apply
where there are preexisting federal preemptions.

Section 2 sets forth the effective date which is immediately.

 
JUSTIFICATION:

Last year, 1.5 million bank customers had their checking or savings
accounts closed without prior notice-and for no apparent reason.  Under
the guise of "suspicious activity," banks are closing accounts more out
of fear of upsetting regulators than actual proof of laundering and
other illegal activities. These unexpected account closings can wreak
havoc with one's credit rating, cause checks to bounce and create other
problems that did not exist before. Due to these unexpected bank account
closings, individuals and businesses have had their reputations, which
took years to build in their local community, severely damaged.

Unexpected bank account closings causes businesses to bounce checks to
employees and suppliers, which in turn causes the recipients of these
checks to bounce their own checks. By giving adequate notice, account
owners will have sufficient time to make arrangements with another bank,
avoiding disruptions to their financial well-being and to those they
deal with. This bill will help address problems from unexpected bank
account closings.

 
PRIOR LEGISLATIVE HISTORY:

2023-2024: A9210 - Passed Assembly

S9757 - Referred to Senate Banks Committee

 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
None.

 
EFFECTIVE DATE:
This act shall take effect immediately