Relates to the preservation of books and records of banking institutions

BILL NUMBER:S6952A

Title of bill

An act to amend the banking law, in relation to electronic preservation of banking records

Purpose

This bill would update some sections of the Banking Law in order to reflect and keep pace with changes in technology and practices.

Summary of provisions

Section 1 of this bill adds a new section 36-b to the Banking Law to clarify the ability of regulated entities to preserve their books and records through the use of electronic storage media.

Section 2 of this bill amends section 75-g of the Banking Law to clarify that the Superintendent may require banking institutions to file their annual ATM reports electronically.

Section 3 of this bill amends section 576 of the Banking Law to clarify the ability of insurance premium finance agencies to provide notice by electronic means.

Justification

This bill contains some amendments recommended by the Department of Financial Services to update the Banking Law in order to reflect changes in technology. These amendments will clarify the ability to use more modem and efficient methods of record keeping and communication.

The activities and operations of various types of banking institutions and non-bank financial service companies are governed by different articles of the Banking Law govern. Each of these articles generally requires the regulated entities to preserve books and records for a specified number of years. However, these sections of law have been enacted or amended at different times, and may not have been updated to reflect new recordkeeping technologies. For example, some sections refer to the maintenance of records through photographic reproduction, while others include references to optical disk technology.

This bill would enact a new section 36-b in the Banking Law to allow all regulated entities to utilize electronic storage media in preserving their records. The bill specifies certain standards that must be met. This legislation will clarify the ability of financial institutions to use current technology and best practices to preserve records in a cost-effective and practical way.

The bill also amends the ATM Safety Act in regard to the submission of reports. Currently, banking institutions must submit annual written reports to the Department of Financial Services regarding their compliance with this article. This can be costly for both the institutions submitting such reports and for the Department to process such written reports. The proposed amendment to Section 75-g

of the Banking Law would automate this process by authorizing the Superintendent to require such reports to be submitted electronically.

Section 576 of the Banking Law currently specifies the process for cancelling an insurance premium finance contract upon default, and the mailing of notices to the insured and insurer. This new section provides that, in addition to mailing, notice may be delivered by other means, including electronic means, provided that such delivery method includes evidence of receipt, including a receipt created and maintained in electronic form.

Fiscal implications

None.

Local fiscal implications

None.

Effective date

The ninetieth day after it shall have become law.