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Senate Bill Report SB 5602

Summary

SENATE BILL REPORT SB 5602, as of January 6, 2022, concerns an act relating to service providers working with state-regulated financial institutions. The sponsor is Senator Mullet, by request of Department of Financial Institutions. The bill creates a regulatory framework giving the director of the Washington State Department of Financial Institutions (DFI) the authority to examine third party service providers that provide covered services to banks. The director is authorized to take enforcement action against a service provider that has violated or is violating state or federal law, or has engaged or is engaging in an unsafe or unsound practice. The report lists the appropriation as None.

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Issuer
Congressional materials
Document type
Report
Date
2022-01-11
Case
2022 01 11 A29378 D236801 Bill Report 5602 Sba Bfst 22

Cite this document

“Senate Bill Report SB 5602.” Original at app.leg.wa.gov, dated 2022-01-11. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2022-01-11-2022-01-11-a29378-d236801-bill-report-5602-sba-bfst-22/, SHA-256 74aaad4fdcc622a2c70755122055d915807ec9adee834dd12301190e51062736.

Full text

                            SENATE BILL REPORT
                                  SB 5602

                                      As of January 6, 2022

Title: An act relating to service providers working with state-regulated financial institutions.

Brief Description: Concerning service providers working with state-regulated financial
     institutions.

Sponsors: Senator Mullet; by request of Department of Financial Institutions.

Brief History:
     Committee Activity: Business, Financial Services & Trade: 1/11/22.


                                     Brief Summary of Bill
           • Authorizes the Department of Financial Services to examine third party
             service providers to banks and take enforcement actions against them
             under certain circumstances.


SENATE COMMITTEE ON BUSINESS, FINANCIAL SERVICES & TRADE

     Staff: Clinton McCarthy (786-7319)

     Background: The Washington State Department of Financial Institutions (DFI) regulates
     state chartered depository institutions, such as:
         • banks;
         • credit unions;
         • savings banks;
         • non-depository trust companies; and
         • foreign bank branches.

     Under current statute, DFI has limited ability to examine third party providers that contract
     with banks to provide a wide range of services. Banks rely on third party servicers to
     provide or enable key functions and services.



     This analysis was prepared by non-partisan legislative staff for the use of legislative
     members in their deliberations. This analysis is not part of the legislation nor does it
     constitute a statement of legislative intent.

Senate Bill Report                              -1-                                             SB 5602
     Summary of Bill: A regulatory framework that gives the director of DFI the authority to
     examine third party service providers that provide covered services to banks is created. The
     director can examine and regulate service providers to the same extent as if the covered
     service was performed by the bank itself. The director has rulemaking authority to
     implement its framework for examining third party providers.

     The director has broad discretion to enter into joint examinations or joint enforcement
     actions with other states or federal agencies. The director may also accept examinations
     made by other states or federal agencies, and has the authority to enter into information
     sharing agreements with any state or federal agency that has a joint or concurrent
     jurisdiction over a service provider.

     Examinations written by or received by the director are confidential and subject to
     applicable state and federal bank confidentiality laws. The director is authorized to take
     enforcement action against a service provider that:
        • has violated or is currently violating state or federal law; or
        • has engaged or is currently engaging in an unsafe or unsound practice.

     Appropriation: None.

     Fiscal Note: Requested on January 4, 2022.

     Creates Committee/Commission/Task Force that includes Legislative members: No.

     Effective Date: Ninety days after adjournment of session in which bill is passed.




Senate Bill Report                            -2-                                        SB 5602

File and source

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2022-01-11_a29378_d236801_bill-report-5602-sba-bfst-22.pdf
Size
7,042 bytes
SHA-256
74aaad4fdcc622a2c70755122055d915807ec9adee834dd12301190e51062736
Our copy
2022-01-11_a29378_d236801_bill-report-5602-sba-bfst-22.pdf
Original
app.leg.wa.gov
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