Senate Bill No. 83

Introduced By sprague, ellingson, christiaens, stang, sliter, hertel, peck

By Request of the subcommittee on the Foreign Investment Depository



A Bill for an Act entitled: "An Act authorizing the chartering of foreign capital depositories; providing for the rights of financial privacy, asset protection, and specialized services to nonresident aliens who are depository customers; establishing the department of commerce as the regulating authority; mandating compliance with certain federal banking laws; providing for a new source of state revenue derived from an assessment based on the value of assets on deposit; and amending sections 15-1-501, 15-31-101, 15-31-102, 25-9-506, 25-9-603, 25-9-609, 32-1-101, 32-1-102, 32-1-202, 32-1-301, 32-1-446, 32-1-461, 32-1-462, 32-1-464, 32-1-468, 32-1-473, 32-1-491, 32-1-492, and 32-1-501, MCA; AND PROVIDING EFFECTIVE DATES AND A TERMINATION DATE."



STATEMENT OF INTENT

A statement of intent is required for this bill because the bill gives the state banking board and the department of commerce authority to adopt administrative rules to effectuate the purposes, policies, and provisions of this bill. The legislature intends that rules be adopted by the state banking board to govern the processes and procedures for both issuing a charter and for suspending or revoking a charter for a foreign capital depository. Because the department of commerce bears responsibility for the regulation and supervision of a foreign capital depository, the legislature finds it prudent to delegate rulemaking authority to that department with respect to the conduct of examinations and inspections, for mandatory reports, and for other related administrative matters. Because the financial privacy of depository customers must be afforded the highest protection possible within the parameters of state and federal law and because an applicant for a depository charter must be provided a readily discernable combination of certainty and flexibility with respect to the services provided by a depository, a blanket delegation of rulemaking authority is not granted to either the board or the department.



Be it enacted by the Legislature of the State of Montana:



NEW SECTION. Section 1.  Purpose. The legislature finds and declares that:

(1) political instability, economic insecurity, and financial risk outside the United States create incentives for the transfer and investment of foreign capital derived from legitimate estates and business activities to relatively safe places such as Montana;

(2) political conditions in some countries are contrary to the fundamental freedoms and individual liberties codified in international human rights law and contained in the Montana constitution;

(3) it is in the public interest of Montana to attract legally derived foreign capital for investment, revenue enhancement, and other economic development purposes as well as to facilitate tax abatement for residents and businesses in the state;

(4) the legislature has the authority, in connection with its effort to improve economic conditions in the state, to treat foreign persons differently than it does Montana citizens with respect to equal protection of the law;

(5) because the Internal Revenue Code prohibits Montana from offering the type of tax shelters to American citizens that are available to them in foreign jurisdictions and because few of the conditions prevalent in other countries that give rise to capital flight exist in the United States, Montana is both compelled and rationally motivated to offer specialized private financial services exclusively to foreign customers;

(6) the state has the competence, capacity, and legitimate authority to charter and regulate financial institutions under the dual banking system of the United States;

(7) a prudent blend of financial privacy, asset protection, and profitability may offer foreign depositors unique opportunities to build and preserve their wealth in Montana;

(8) it is the intent of the legislature to protect both state and national interests by promoting legal and technical standards and procedures to deter, prevent, and detect money laundering and other types of financial crime.



NEW SECTION. Section 2.  Short title and scope. (1) [Sections 1 through 46 and 65 through 67] may be cited as the "Montana Foreign Capital Depository Act".

(2) [Sections 1 through 46] set forth the terms and conditions under which a foreign or domestic financial institution may do business in Montana as a state-chartered foreign capital depository.



NEW SECTION. Section 3. Definitions. As used in [sections 1 through 46 and 65 through 67], unless the context requires otherwise, the following definitions apply:

(1) "Bank holding company" means a company registered under the federal Bank Holding Company Act of 1956, as amended.

(2) "Board" means the state banking board provided for in 2-15-1803.

(3) "Capital" means currency that is convertible to U.S. dollars or personal property, including tangible personal property.

(4) "Cash" means currency, cashier's checks, money orders, and other monetary instruments as defined in the Bank Secrecy Act (Public Law 91-508).

(5) "Charter" means a certificate issued by the state banking board through the commissioner to a corporation verifying that the corporation is authorized to conduct business in Montana as a foreign capital depository.

(6) "Commissioner" means the commissioner of banking and financial institutions provided for in 32-1-211.

(7) "Controlling person" means a person who holds 5% or more of the equity in a depository or who is otherwise determined by the board to exercise controlling authority over decisions affecting the management and operation of the depository.

(8) "Customer" means a person who is using or has used the services of a foreign capital depository or for whom a foreign capital depository has acted as a fiduciary.

(9) "Department" means the department of commerce established in 2-15-1801.

(10) "Foreign bank" means a bank that has its primary office outside the jurisdiction of the United States and is licensed under the laws of a foreign country or a political subdivision of a foreign country.

(11) "Foreign capital depository" or "depository" means a financial institution incorporated in Montana and chartered by the board to conduct business as a foreign capital depository in accordance with [sections 1 through 46].

(12) "Money laundering" is the process through which the existence, illegal source, true ownership, or unlawful application of illicitly derived funds is concealed or disguised to make the funds appear legitimate, thereby helping to evade detection, prosecution, seizure, or taxation.

(13) "Nonresident alien" means a person who is not a citizen or a resident of the United States.

(14) "Person" means an individual, partnership, corporation, limited liability company, association, trust, or other legal entity.

(15) "Supervisory agency" means any of the following:

(a) the attorney general and the department of justice, established by 2-15-2001, for the purpose of the enforcement of all criminal laws of the state;

(b) the department, for the purposes of the administration and enforcement of the state laws relating to the examination and supervision of a foreign capital depository;

(c) the commissioner, for the purposes of the administration and enforcement of the state laws relating to the chartering and supervision of a foreign capital depository;

(d) the board, for the purposes of chartering a foreign capital depository;

(e) the federal reserve system, when the chartered depository is a subsidiary of a financial institution domiciled outside the jurisdiction of the United States, for the purposes of examining a foreign capital depository;

(f) the legislative audit division, established by 5-13-301, for the purposes of the administration of state laws relating to the audit of state agencies and the collection and disbursement of public funds;

(g) the department of revenue, established by 2-15-1301, for the purposes of the administration and enforcement of laws relating to the collection of taxes or fees from a foreign capital depository;

(h) the insurance department, established by 2-15-1902, and the commissioner of insurance, established by 2-15-1903, for the purpose of the administration and enforcement of state laws relating to the regulation of an insurer of accounts in a foreign capital depository.

(16) "Tangible personal property" includes platinum, palladium, gold, or silver bullion or coins, precious stones, jewelry, works of art, furnishings, and other objects of value that are not legal tender.



NEW SECTION. Section 4.  Charter required -- misrepresentation cause for disqualification. (1) A person may not operate or conduct business as a depository in this state without a charter issued by the board.

(2) A depository shall post the charter certificate in a conspicuous place.

(3) A person who is found by the commissioner to have falsely represented to a customer that a charter had been obtained is permanently disqualified from obtaining a charter.



NEW SECTION. Section 5.  Protection of appellation. A corporation that has not been issued a charter under the provisions of [section 8] may not transact business under a name or title that contains the words "foreign", "capital", and "depository" in any combination.



NEW SECTION. Section 6.  Applicability of banking laws. The provisions of 32-1-301, 32-1-446, 32-1-461, 32-1-462, 32-1-464, 32-1-468, 32-1-473, 32-1-491, 32-1-492, part 5 (except 32-1-507), 32-1-901 through 32-1-912, and 32-1-921 apply to a foreign capital depository unless a section in [sections 1 through 46 and 65 through 67] or a rule or order issued under [sections 1 through 46 and 65 through 67] is inconsistent with any of the sections listed in this section.



NEW SECTION. Section 7. Rulemaking authority. (1) The board shall adopt rules to implement [sections 8, 9, and 12].

(2) The department shall adopt rules to implement [sections 13, 14, and 18] and to specify the conditions under which a depository may be found to be operating in a manner that is unsafe or unsound.



NEW SECTION. Section 8. Charter eligibility and application requirements. (1) In order to lawfully conduct business in Montana as a foreign capital depository, a person intending to own and operate a depository shall:

(a) obtain a state charter from the board through an application process established by the commissioner and administered by the department;

(b) make and file articles of incorporation in accordance with 32-1-301;

(c) submit an application to the board on a form provided by the commissioner. An application must be accompanied by:

(i) documents certifying that the identity of each director, executive officer, and controlling person of the proposed depository has been verified by means of a background check;

(ii) a written copy of the applicant's know your customer policy and a written description of the implementation method for the policy;

(iii) a detailed written description of the applicant's personnel training and preemployment screening programs, physical and technological security systems, and methods of compliance with applicable federal recordkeeping and reporting laws;

(iv) a business plan that includes projections of costs, profitability, and relevant changes in financial markets;

(v) the intended location of each depository office in the state;

(vi) a document from a certified public accountant confirming that the applicant has financial assets in excess of liabilities in an amount established by board rule;

(vii) a nonrefundable charter application fee of $5,000 SET BY THE BOARD UNDER [SECTION 12] to be paid into the foreign capital depository account established in [section 17].

(2) A foreign capital depository may be a subsidiary of a foreign bank that has obtained approval from the federal reserve system to operate in the United States in accordance with the Foreign Bank Supervision Enhancement Act of 1991.



NEW SECTION. Section 9.  Charter application -- grounds for denial. (1) To safeguard the interests and the reputation of the state, the board shall deny a charter application if it finds that the applicant planning to operate the depository is not of good character or that the applicant is not financially sound.

(2) The board may find that the person planning to own, operate, or manage the depository is not of good character or financial integrity if a director, an executive officer, or a controlling person of the applicant has:

(a) been convicted of or has pleaded guilty or nolo contendere to any crime involving fraud, theft, conspiracy, racketeering, or money laundering;

(b) had a professional or occupational license suspended or revoked based on conduct involving an act of fraud or dishonesty;

(c) willfully made or caused to be made false or misleading statements in an application or report to the commissioner or has willfully omitted facts required in the report;

(d) willfully violated a provision of [section 4 or 8] or aided, abetted, counseled, commanded, induced, or procured the violation by another person of a provision of [section 4 or 8].

(3) Subsections (1) and (2) are not exclusive of other grounds on which the board may determine that an applicant for a depository charter is not of good character and therefore may not receive a charter.

(4) The board may authorize the commissioner to conduct or obtain from a private investigative service a background check on any director, executive officer, or controlling person of the depository for the purposes of determining whether an applicant is of good character.

(5) The board shall adopt rules concerning the method and process for determining whether an applicant for a charter is financially sound.



NEW SECTION. Section 10.  Suspension, revocation, and restoration of charter. (1) The board may suspend or revoke the charter of a depository if the board finds that the depository or any director, executive officer, or controlling person of the depository has:

(a) violated a provision of [sections 1 through 46], a rule of the department established pursuant to [sections 1 through 46], the Bank Secrecy Act, or any implementing regulation of the Bank Secrecy Act;

(b) failed to comply with an order of the commissioner;

(c) operated in a manner or condition that is unsafe or unsound;

(d) become insolvent in that the depository has ceased to pay its debts in the ordinary course of business, it is unable to pay debts as they come due, or its liabilities exceed its assets;

(e) filed a petition for an adjudication of bankruptcy;

(f) knowingly made a false statement or report to the department;

(g) failed to pay the department of revenue the fee, penalty, or interest owed pursuant to [sections 58 through 60] before 5 p.m. on the last day of the 11th month after the date a deficiency assessment is mailed; or

(h) if the depository is a subsidiary of a foreign bank holding company or another type of financial institution, had its operating license suspended or revoked in the country where the parent company is domiciled.

(2) Before suspending or revoking a charter, the board shall conduct a hearing in accordance with the Montana Administrative Procedure Act relating to a contested case.

(3) On the recommendation of the department, the board may reinstate a charter that has been suspended or revoked if the board finds that the depository has restored its integrity and financial soundness.

(4) At no time during or following the suspension, revocation, or reinstatement of a charter may a financial record pertaining to an individual account be disclosed except in accordance with rules for the conduct of examinations in [section 15] or in accordance with [sections 29 through 46].



NEW SECTION. Section 11.  Administrative orders by commissioner. (1) In addition to or in lieu of the board's suspending or revoking the charter issued to a foreign capital depository, the commissioner may:

(a) issue a cease and desist order that specifies the activity that the depository may not undertake for the duration of the order;

(b) require a depository to take action as determined by the commissioner; or

(c) order the depository to pay a civil penalty in an amount not to exceed $10,000 for each violation or, in the case of a continuing violation, $10,000 for each day during which the violation continues.

(2) Orders issued by the commissioner pursuant to this section must be issued in compliance with the contested case procedure of the Montana Administrative Procedure Act.



NEW SECTION. Section 12.  Charter APPLICATION, CHARTER, and renewal fee. (1) AN APPLICANT FOR A STATE CHARTER SHALL PAY A FEE ESTABLISHED BY THE BOARD BY RULE. THE APPLICATION FEE MUST BE COMMENSURATE WITH THE COST OF CONDUCTING A BACKGROUND CHECK ON THE PERSON APPLYING FOR THE CHARTER.

(1)(2) A successful applicant for a state charter shall pay to the department an initial charter fee of $50,000, LESS THE AMOUNT PAID FOR THE APPLICATION FEE PURSUANT TO SUBSECTION (1).

(2)(3) A depository shall pay an annual charter renewal fee in an amount set by the board by rule but not to exceed $10,000.

(3)(4) Fees collected pursuant to subsections (1) and (2) THROUGH (3) must be deposited in the foreign capital depository account established in [section 17].



NEW SECTION. Section 13.  Regulation and supervision -- rules. (1) To ensure that the department meets its responsibility for the prudential supervision of a foreign capital depository, the department shall adopt rules that:

(a) determine the processes and procedures necessary to ensure that the controlling persons and employees and the procedures of a depository are in compliance with [sections 1 through 46 and 65 through 67];

(b) establish the procedures for the conduct of examinations of a depository by the department, including the means by which the commissioner will verify that the depository's know your customer policy has been implemented;

(c) establish the form of suspicious activity reports and the conditions under which a suspicious activity report must be filed with the department;

(d) require a depository to submit to the department on request a written or electronic record of any transfer or withdrawal of cash from the depository in an amount equal to or greater than $10,000;

(e) require a depository to file an annual report with the department detailing the depository's:

(i) security measures designed to deter and prevent theft, fraud, and corruption;

(ii) procedures for filing suspicious activity reports with the U.S. department of the treasury and for keeping records and filing reports of transactions as required by federal law and regulation to combat money laundering and other criminal activities;

(iii) employee training programs regarding disclosure and other aspects of customer financial privacy; and

(iv) fulfillment of the know your customer policy recommended by the American bankers association or prescribed by federal regulation.

(2) With respect to an action concerning the issuance, suspension, or revocation of a charter or an action pursuant to enforcement in [sections 65 through 67], the department shall adopt rules to determine prehearing discovery procedures, including the taking of depositions and the production of documents.

(3) In adopting rules for hearings, the department shall provide for the issuance of subpoenas and for the administration of oaths to witnesses and parties or their representatives to apply both to discovery procedures and to hearings.



NEW SECTION. Section 14.  Costs of regulation. A depository shall pay to the department an annual fee established by rule that is commensurate with the cost of conducting examinations of a depository by the department. The proceeds of the fee established by the department must be deposited in the foreign capital depository account created by [section 17].



NEW SECTION. Section 15.  Examinations. (1) Except as provided in subsection (5), the department shall:

(a) examine, at least once every 12 months, each depository to:

(i) verify the depository's assets and liabilities;

(ii) ascertain the accuracy of the depository's books and records; and

(iii) determine whether the depository's methods of operation and conduct of business are in compliance with applicable laws and rules; and

(b) submit in writing to a depository examined in accordance with subsection (1)(a) a report of the examination's findings no later than 60 days after the completion of the examination.

(2) A controlling person or employee of a foreign capital depository shall exhibit to the department or an examiner from the federal reserve system on request the books, records, and accounts of the depository, except that the identity of a customer may not be disclosed to the department or any examiner unless the disclosure is necessitated by the department's procedure for verifying that the depository's know your customer policy has been implemented effectively.

(3) The department may issue subpoenas and administer oaths to any director, executive officer, controlling person, or employee of a foreign capital depository. In case of a refusal to obey a subpoena issued by the department, the refusal may be reported to the district court of the district in which the depository is located. The court shall enforce obedience to the subpoena in the manner provided by law for enforcing obedience to the process of the court.

(4) If a depository charter is issued to a foreign bank, the department may conduct an examination of the depository:

(a) in conjunction with supervisory personnel from the federal reserve system, or;

(b) without the assistance of federal reserve system personnel.

(5) The department may accept as the examination of a depository required by this section the findings or results of an examination conducted by the federal reserve system.

(6) A foreign capital depository shall keep its corporate records, financial records, and books of account in words and figures of the English language, in Montana, and in a form satisfactory to the department.

(7) If a foreign capital depository is issued a charter to maintain two or more offices in the state, the depository shall designate one of its offices as its primary office for the purposes of keeping consolidated records and facilitating examinations by the department.



NEW SECTION. Section 16.  Special examinations -- costs. (1) Whenever in the judgment of the commissioner the condition of a depository or the actions of a customer necessitate an examination beyond that required by [section 15], the department may conduct additional examinations determined to be necessary and in connection with the additional examinations may charge the depository:

(a) an amount not to exceed $400 a day for each examiner engaged in the examination of the depository;

(b) the actual cost of travel expenses of the examiner in the event that travel outside this state is determined necessary by the commissioner; and

(c) a reasonable amount to recover the actual costs of counsel and other department resources.

(2) The money collected by the department pursuant to examination fees must be deposited in the foreign capital depository account established in [section 17].



NEW SECTION. Section 17.  Foreign capital depository account. (1) There is an account in the state special revenue fund. Except for revenue derived in accordance with [sections 58 through 60], money from the foreign capital depository must be deposited in the account.

(2) The money in the account may be appropriated by the legislature to the department solely for the department's use in meeting its supervisory and regulatory obligations established in [sections 12 through 16].



NEW SECTION. Section 18.  Reports -- contents and restrictions. (1) A depository shall make a report to the department in the manner and at the time required by the commissioner.

(2) A report filed with the department must:

(a) contain the information required by rule; and

(b) be verified by two of the depository's executive officers. The verification must state that each of the officers making the verification has a personal knowledge of the matters in the report and that each of them believes that each statement in the report is true.

(3) A depository may not include any financial record, as defined in [section 30], of any customer in the report.

(4) The department may provide a copy of the report to another supervisory agency.



NEW SECTION. Section 19.  Recordkeeping and reporting -- suspicious activity. In addition to compliance with applicable provisions of the Bank Secrecy Act, a foreign capital depository shall:

(1) keep a written or electronic record of each wire transfer or other electronic means of transferring capital to the depository for at least 5 years when the transfer involves $3,000 or more; and

(2) comply with federal regulation and rules of the department concerning the form of a suspicious activity report and the conditions under which a suspicious activity report is required to be reported to a supervisory agency or to the U.S. department of the treasury.



NEW SECTION. Section 20.  Sale or transfer of charter prohibited -- penalty. (1) A charter issued by the board may not be sold, traded, transferred, or otherwise assigned to another corporation.

(2) A person who attempts to sell, trade, or transfer a depository charter or who knowingly accepts a depository charter in violation of subsection (1) is subject to civil and criminal penalties pursuant to [sections 66 and 67].



NEW SECTION. Section 21.  Dissolution -- closing. (1) The board may, upon a finding of negligence, misconduct, or any of the conditions specified in [section 9] dissolve the charter of a depository and remove any directors, executive officers, or employees prior to the dissolution in accordance with the provisions of Title 32, chapter 1, part 9.

(2) The department may close a depository and take possession of the books, records, and assets of the depository and hold them until the depository is authorized by the board to resume business or until its affairs are liquidated in accordance with Title 32, chapter 1, part 5.

(3) Except in accordance with the provisions in [sections 29 through 46], an individual financial record may not be disclosed in the process of dissolving or closing a depository, and the penalties for wrongful disclosure in [sections 29 through 46] apply to the board, the department, and the depository.

(4) A foreign capital depository may not close its primary office or cease operations without the written approval of the department.

(5) Voluntary dissolution of a depository must comply with the provisions of 32-1-501.



NEW SECTION. Section 22. Depository services -- allowed and mandated. (1) A depository may:

(a) accept deposits in any currency or electronic form convertible to U.S. dollars;

(b) provide safe deposit and other storage services for the purpose of protecting the security of a customer's tangible personal property;

(c) convert cash deposits to purchase orders for platinum, palladium, gold, or silver bullion on behalf of or at the direction of a customer;

(d) purchase, sell, and pay interest to the customer derived from tax-exempt federal, state, county, or municipal bonds on behalf of or at the direction of a customer;

(e) provide a customer with foreign currency in exchange for U.S. dollars in an equivalent monetary amount;

(f) perform trust and related fiduciary services, as provided in 32-1-107, but only if the depository has obtained a certificate from the department authorizing the depository to act as a trust company or the subsidiary of a trust company prior to engaging in trust activities;

(g) issue a debit card or an automatic teller machine card to a customer;

(h) charge interest in relation to a customer's use of a debit or automatic teller machine card;

(i) establish different types of deposit accounts for customers;

(j) offer deposit or safe deposit insurance provided under contract with a financial guaranty insurer approved by the insurance commissioner;

(k) charge fees related to the opening, management, and insuring of deposit accounts, the storage and maintenance of tangible personal property, the establishment and administration of trust accounts, and other lawful investment, legal, or financial services;

(l) set underwriting standards for each type of account that it offers to a customer; and

(m) establish a minimum deposit amount for any type of account as long as the minimum is not less than $200,000.

(2) A depository may in its discretion refuse an application for an account of any type.

(3) A depository shall:

(a) exercise extraordinary diligence in determining the genuine identity of a customer;

(b) protect the privacy of each customer as provided in [sections 29 through 46];

(c) in accordance with [sections 47 through 55], provide legal defense of a customer at the customer's request or on the request of the customer's legal representative in the event a civil judgment rendered against the depositor in a jurisdiction outside the United States is registered in Montana;

(d) with respect to precious metals accounts in [sections 25 through 28], comply with the statutory protections against securities fraud under Title 30, chapter 10;

(e) comply with federal reporting and recordkeeping requirements as provided in the Bank Secrecy Act, the Money Laundering Control Act of 1986, the Annunzio-Wylie Anti-Money Laundering Act, and implementing regulations of each of those acts concerning money laundering and other financial crimes.



NEW SECTION. Section 23. Depository services -- restrictions and prohibitions. (1) A depository may not accept a deposit:

(a) from an individual who is a citizen or a resident of the United States;

(b) from a corporation, trust, or partnership if any shareholder, settlor, member, beneficiary, or partner is a citizen or a resident of the United States;

(c) in an amount valued at less than $200,000 in U.S. dollars.

(2) A depository may not:

(A) PROVIDE SERVICES TO ANY CUSTOMER WHO IS NOT A NONRESIDENT ALIEN;

(a)(B) engage in lending or any related commercial banking services as defined in the Bank Act, except:

(i) in a case in which fiduciary lending is necessitated by a trust obligation and the depository has obtained a certificate from the department authorizing the depository to act as a trust company or the subsidiary of a trust company; or

(ii) in relation to a precious metals account as provided in [sections 25 through 28];

(b)(C) transfer $10,000 or more of a customer's cash on deposit to another financial institution inside or outside the jurisdiction of the United States without submitting a record of the transaction to the commissioner and the attorney general that includes the customer's name, last-known address, and if the customer is an individual, passport number;

(c)(D) accept a deposit from a customer who has been convicted of a state or federal crime FELONY in the United States or from a corporation of which a controlling person has been convicted of a state or federal crime FELONY in the United States.



NEW SECTION. Section 24.  Sale or trade of deposit accounts prohibited -- transfers allowed. (1) The legislature does not intend to create or facilitate the creation of a secondary market for depository accounts. Therefore, except for the condition set forth in subsection (2), the sale or trade of a deposit account by a depository is prohibited.

(2) A depository may permit the legal transfer of a deposit account from a customer to the customer's heir, spouse, or designated next of kin for the purposes of estate preservation and maintenance.



NEW SECTION. Section 25.  Precious metals accounts -- purpose. (1) The legislature acknowledges that:

(a) Montana is both a major gold producer and the only domestic source of commercially significant amounts of platinum and palladium, precious metals that have diverse uses in addition to serving as a store of exchangeable value;

(b) many nonresident aliens and foreign corporations place great value in the security inherent in precious metals as a hedge against currency depreciation, currency devaluation, and general inflation and prefer precious metals over other types of investments that may offer a higher or more certain rate of return;

(c) the expansion of the processing and refining capacity of the platinum and palladium mining operations in Montana's Stillwater complex may provide unique investment opportunities for nonresident aliens and a significant stimulus for economic development in the state; and

(d) helping to establish financial links between customers of the depository and products of the precious metals depository is in the economic interest of the state.

(2) The legislature further recognizes its responsibility to help deter money laundering and other financial crime and therefore acknowledges that restricting the liquidity of a precious metals account will reduce significantly any incentive there may be for a person to use a precious metals account for illicit purposes.



NEW SECTION. Section 26.  Definition. For the purposes of [sections 1 through 46], a precious metals account is a depository account in which the depository, upon instructions of a customer, exchanges cash for a commensurately valued amount of platinum, palladium, gold, or silver bullion procured by the depository for the primary purpose of safekeeping over an extended period of time.



NEW SECTION. Section 27. Account requirements -- provisions. (1) An agreement between the depository and a customer to establish a precious metals account must include the following provisions:

(a) a term of maturity that is not less than 36 months;

(b) a penalty for early withdrawal of an amount of precious metals that exceeds 20% of the monetary value of the total amount of precious metals in the account, with the monetary value to be equivalent to the spot market price of the precious metal listed in The Wall Street Journal on the date of the withdrawal;

(c) a requirement that the precious metals purchased by a customer be delivered to the depository within 7 days of verified payment of any part of the purchase price.

(2) A precious metals account may provide for limited withdrawal from the account by means of a debit card or an automatic teller machine card as long as the total amount withdrawn from the account prior to the maturity date established in subsection (1)(a) does not exceed 20% of the total monetary value of the precious metals in the account.

(3) A depository may charge a customer interest and a fee in relation to a cash withdrawal made in accordance with subsection (2).



NEW SECTION. Section 28.  Termination -- settlement. (1) Upon termination of a precious metals account, whether at or before the date of maturity, the terms of settlement must allow:

(a) the depository to convert the precious metals to currency at the spot market rate on the day of settlement; and

(b) the depository's right to delay settlement for not more than 5 business days.



NEW SECTION. Section 29. Financial privacy -- purpose.  The legislature finds and declares that:

(1) the viability of one or more foreign capital depositories in Montana depends to a large extent upon both the secure nature of the depository and the confidential nature of customer accounts and safe deposits in the depository and upon the confidential nature of transactions between a customer and a depository. Therefore, the purpose of [sections 29 through 46] is to clarify and protect the confidential relationship between foreign capital depositories and their customers and to balance a customer's right of privacy with the governmental interest in obtaining information for specific purposes and by specified procedures as set forth in [sections 29 through 46]. The confidential relationship between a foreign capital depository and its customers is to be protected by restrictions on the disclosure of financial records to supervisory agencies and a prohibition against disclosure of financial records to other state and local agencies and to private individuals except under specified conditions.

(2) a state offering secure and confidential depository services to its customers must be mindful that significant amounts of capital are derived from or moved for illegal purposes and that the United States and other jurisdictions have passed laws and worked diligently to prevent money laundering and other offenses from being conducted as part of otherwise lawful transactions;

(3) in licensing and supervising the operation of one or more foreign capital depositories, Montana needs to enforce its own criminal laws vigorously. It is also imperative that Montana cooperate with United States law enforcement and other authorities to effectively deter and, when deterrence fails, detect, investigate, and prosecute perpetrators of financial crimes.

(4) the purpose of [sections 29 through 46] is not to avoid the application of the Bank Secrecy Act, the Right to Financial Privacy Act of 1978, the Money Laundering Control Act of 1986, and the Annunzio-Wylie Anti-Money Laundering Act, which are intended to prevent or deter money laundering and other financial crimes while maintaining a degree of secrecy of customer bank accounts from federal agencies, but rather to apply state law in those areas unregulated by these and other relevant federal laws. However, it is the intent of the legislature that if there is a clear and direct conflict between [sections 29 through 46] and applicable federal statutes, treaties, or regulations that cannot be resolved by other means, then the state law should be preempted in order to maintain the efficacy and integrity of United States laws intended to combat financial crimes.



NEW SECTION. Section 30.  Definitions. Unless the context requires otherwise, in [sections 29 through 46], the following definitions apply:

(1) "Financial institution" includes state and national banks, state and federal savings and loan associations, trust companies, investment companies, and state and federal credit unions. The term does not include a title insurer while engaging in the conduct of the business of title insurance, an underwritten title company, or an escrow company.

(2) (a) "Financial record" means:

(i) an original or copy of a record or document held by a foreign capital depository that directly or indirectly pertains to a customer of the depository;

(ii) information contained in the original or copy of the record or document; or

(iii) the name of a customer.

(b) A record or document may, for the purposes of this subsection (2), be in a paper, electronic, or other format.

(3) "Investigation" includes an inquiry by a peace officer, as defined by 46-1-202, a sheriff, or a county attorney or an inquiry made for the purpose of determining whether there has been a violation of a law enforceable by imprisonment, fine, or monetary liability.

(4) "Local agency" includes a county, city, town, or other local government entity.

(5) "State agency" means an office, department, division, bureau, board, or commission of state government that is not a supervisory agency, including the legislature.

(6) "Subpoena" includes subpoena duces tecum.



NEW SECTION. Section 31. Request or receipt of records and information prohibited -- exceptions -- records to be maintained. (1) Except as provided in [sections 39 and 40] and this section, an officer, employee, or agent of a state or local agency may not request or receive a copy of a financial record from a foreign capital depository unless the financial record is consistent with the scope and purpose of any investigation by the state or local agency, is described with particularity, and:

(a) the customer has authorized disclosure of the financial record in accordance with [section 34];

(b) the financial record is disclosed in response to an administrative subpoena that meets the requirements of [section 35];

(c) the financial record is disclosed in response to a search warrant that meets the requirements of [section 36]; or

(d) the financial record is disclosed in response to a judicial subpoena that meets the requirements of [section 37].

(2) The burden of proving that a required disclosure of a financial record is consistent with the scope and purpose of an investigation is upon the state agency or the local agency requiring disclosure of the financial record.

(3) Nothing in [sections 34, 35, 36, or 37] or this section requires a foreign capital depository to inquire or determine whether a person seeking disclosure of a financial record has complied with the requirements of those sections if the customer authorization, administrative subpoena, search warrant, or judicial subpoena served upon or delivered to the depository pursuant to any of those sections shows compliance on its face.

(4) A foreign capital depository shall maintain for a period of 5 years a record of all disclosures by a depository of the financial records of a customer pursuant to [sections 29 through 46], including the identity of the person examining the financial records, the state or local agency that the person represents, and a copy of the customer authorization, administrative subpoena, search warrant, or judicial subpoena providing for examination or disclosure. A record of disclosures maintained pursuant to this subsection must be available, within 5 days of request, during normal business hours of the depository for review by the customer at the office or branch of the depository where the customer's account or safe deposit box was located when examined. A paper or electronic copy of the record of disclosures must be furnished by the depository to the customer upon request by the customer.

(5) This section does not prevent a state or local law enforcement agency from initiating contact with a foreign capital depository if there is reason to believe that the depository is a victim of a crime perpetrated by a customer. After contact by a law enforcement agency, if the foreign capital depository reasonably believes it is a victim of a crime, it may, in its discretion, disclose relevant financial records pursuant to [section 32(2)]. Conviction of or admission by a customer of a crime against the depository is conclusive on the issue of the reasonable belief of the depository.



NEW SECTION. Section 32. Disclosure of record to agency prohibited -- exceptions. (1) Except as provided in [section 40] and this section, a foreign capital depository and a director, executive officer, controlling person, or employee of a foreign capital depository may not provide or authorize another person to provide a financial record to an officer, employee, or agent of a state or local agency.

(2) This section does not preclude a foreign capital depository, in its discretion, from initiating contact with and disclosing a relevant financial record to a supervisory agency concerning a suspected violation of state or federal law if the depository reasonably believes that a violation of law has been committed. Conviction of or admission by a customer of a crime is conclusive on the issue of the reasonable belief of the depository.



NEW SECTION. Section 33. Disclosure of record to private individual prohibited -- exceptions. (1) Except as provided in [section 40] and this section, a foreign capital depository and a director, executive officer, controlling person, or employee of a foreign capital depository may not provide or authorize another person to provide a financial record to an individual who is not an officer, employee, or agent of a state or local agency acting pursuant to Montana law or local ordinance or to an officer, employee, or agent of the United States acting pursuant to federal law.

(2) This section does not preclude a foreign capital depository, in its discretion, from initiating contact with and disclosing a relevant financial record to an appropriate state, local, or federal agency concerning a suspected violation of state or federal law if the depository reasonably believes that a violation of law has been committed. Conviction of or admission by a customer of a crime is conclusive on the issue of the reasonable belief of the depository.



NEW SECTION. Section 34. Customer authorization -- form -- notice to customer. (1) A director, executive officer, controlling person, or employee of a foreign capital depository may disclose or authorize another to disclose a financial record and an officer, employee, or agent of a supervisory, state, or local agency may obtain a financial record if the customer to whom the record relates has authorized disclosure of the record on a form provided by the depository that:

(a) is signed and dated by the customer;

(b) authorizes disclosure for a period set forth in the authorization statement;

(c) specifies the name of the person, supervisory agency, state agency, or local agency to whom or to which disclosure is authorized and, if applicable, the statutory purpose for which the information is to be obtained; and

(d) identifies the financial record authorized to be disclosed.

(2) A foreign capital depository may not require a customer authorization to be signed by a customer as a condition of doing business with the depository.

(3) A customer may revoke an authorization by written notice to the foreign capital depository. The notice must contain a copy of the authorization to which it relates or contain the information originally required in the authorization to which it relates, must be signed and dated by the customer, and must contain a clear statement revoking the previous authorization.

(4) (a) A supervisory, state, or local agency obtaining a financial record pursuant to a customer authorization shall notify the customer in writing of the receipt of the financial record within 30 days of the agency's receipt of the financial record. However, by application to a judge of a court of competent jurisdiction in the county in which the financial record is located and upon a showing of good cause to believe that disclosure would impede the investigation, the notification requirements of this subsection (4)(a) may be extended for up to two additional 30-day periods. Thereafter, by application to a court upon a showing of extreme necessity for nondisclosure, the notification requirements of this subsection (4)(a) may be extended for up to three additional 30-day periods. At the end of that period or periods, the agency shall inform the customer that the customer has the right to make a written request as to the reason why the agency obtained the record. The notice must specify the financial record that was obtained and, if requested, the reason why the record was obtained.

(b) Whenever practicable, an application for an additional extension of the notification time provided in subsection (4)(a) must be made to the judge who granted the first extension of notification time. In deciding whether to grant an extension of the notification time, the judge shall provide the customer with prompt notification, consistent with the purpose of [sections 29 through 46].



NEW SECTION. Section 35. Administrative subpoena. (1) A director, executive officer, controlling person, or employee of a foreign capital depository may disclose or authorize another to disclose a financial record and an officer, employee, or agent of a supervisory, state, or local agency may obtain a financial record under [section 31(1)(b)] pursuant to an administrative subpoena otherwise authorized by law and served upon the foreign capital depository only if:

(a) the person issuing the administrative subpoena has served a copy of the subpoena on the customer pursuant to Rule 4D of the Montana Rules of Civil Procedure;

(b) the subpoena includes the name of the agency in whose name the subpoena is issued and the statutory purpose for which the record is to be obtained; and

(c) 10 days have passed after service of the subpoena without the foreign capital depository or the customer moving to quash the subpoena.

(2) (a) The supervisory, state, or local agency issuing the administrative subpoena may not shorten or waive the requirements of subsection (1). However, the agency may petition a court of competent jurisdiction in the county in which the record is located, and the court, upon a showing of a reasonable inference that a law enforceable by the petitioning agency has been or is about to be violated, may order that service upon the customer pursuant to subsection (1)(a) or the 10-day period provided for in subsection (1)(c) be waived or shortened.

(b) For the purpose of this subsection (2), an "inference" is a deduction that may reasonably be drawn by the attorney general or the county attorney from facts relevant to the investigation.

(c) The petition may be presented to the court in person or by telephoned oral statement, which must be recorded and transcribed. In the case of telephonic petition, the recording of the sworn oral statement and the transcribed statement must be certified by the judge receiving it and must be filed with the clerk of the court.

(3) Except as provided in subsection (2) and this subsection, a foreign capital depository shall immediately notify a customer of the receipt of an administrative subpoena for a financial record of that customer. A court may order a depository to withhold notification to a customer of the receipt of an administrative subpoena when the court issues an order pursuant to subsection (2) and makes a finding that notice to the customer by the financial institution would impede the investigation.



NEW SECTION. Section 36. Search warrants. A director, executive officer, controlling person, or employee of a foreign capital depository may disclose or authorize another to disclose a financial record and an officer, employee, or agent of a supervisory, state, or local agency may obtain a financial record under [section 31(1)(c)] only if the officer, employee, or agent obtains a search warrant pursuant to Title 46, chapter 5, part 2. Examination of a financial record may occur as soon as the warrant is served upon the foreign capital depository. A foreign capital depository shall notify a customer of the receipt of a search warrant unless a court orders the depository to withhold notification to the customer upon a written finding that notice would impede the investigation.



NEW SECTION. Section 37. Judicial subpoena. (1) A director, executive officer, controlling person, or employee of a foreign capital depository may disclose or authorize another to disclose a financial record and an officer, employee, or agent of a supervisory, state, or local agency may obtain a financial record under [section 31(1)(d)] pursuant to a judicial subpoena only if one of the following has occurred:

(a) the subpoena is issued as otherwise authorized by law and served in compliance with Rule 4D of the Montana Rules of Civil Procedure and the requirements of subsections (1)(b), (1)(c), or (1)(d) have been met. In the event that actual service on the customer is not prohibited but has not been made prior to the time the financial record is required to be produced in response to the subpoena, the court shall, prior to turning over a record to the agency and upon good cause shown, make a finding that due diligence has been exercised by the agency in its attempt to effect service upon the customer.

(b) 10 days have passed after service of the subpoena on the customer and the depository without the customer or the depository having moved to quash the subpoena;

(c) the subpoena has been served upon the customer and the depository and a judge in a judicial proceeding to which the customer or the depository is a party rules that the subpoena should not be quashed. This subsection (1)(c) is not intended to preclude appellate remedies that may be available under existing law.

(d) the subpoena has been served upon the depository and a court orders that service of the subpoena upon the customer be delayed in accordance with this section. Service may be delayed for up to 30 days from the date of issuance of the judicial subpoena after the court makes a finding upon a written showing that service upon the customer would impede the investigation. The withholding of notification may be extended for additional 30-day periods if a court makes a finding upon a written showing, at the time of each extension, that service upon the customer would impede the investigation. Whenever practicable, an application for an extension of time must be made to the judge who issued the judicial subpoena. In deciding whether to grant an extension of the notification time, the judge shall endeavor to provide the customer with prompt notification, consistent with the purpose of [sections 29 through 46].

(2) If testimony is to be taken concerning a financial record or if a financial record is to be produced before a court, the 10-day period provided for in subsection (1)(b) may be shortened by the court upon a showing of good cause. The court shall direct that all reasonable measures be taken to notify the customer within the shortened time period. The motion to quash the subpoena must be made, whenever practicable, in the judicial proceeding pending before the court.

(3) (a) A grand jury, upon resolution adopted by a majority of its members, may obtain financial records pursuant to a judicial subpoena based upon a written showing to a judge that there exists a reasonable inference that a crime within the jurisdiction of the grand jury has been committed and that the financial record sought is reasonably necessary to the jury's investigation of that crime. The judicial subpoena must be is personally signed and issued by a judge in accordance with 46-4-301 and must otherwise comply with the requirements of this section.

(b) For the purpose of this subsection (3), an "inference" is a deduction that may be reasonably drawn by the grand jury from facts relevant to the investigation.

(4) A showing required to be made pursuant to this section, as well as the court record of any finding made pursuant to the showing, must be sealed until one person named in the indictment to which the showing related has been arrested or until the end of the term of the grand jury if no indictment to which the showing relates has been returned. However, a court may unseal the showing and the court record relating to the showing on a written showing of good cause.



NEW SECTION. Section 38.  Grounds for quashing subpoena -- duty of depository. (1) A customer or a foreign capital depository has 10 days after service of an administrative or judicial subpoena upon either of them to file a motion to quash the subpoena before the administrative agency issuing the subpoena or a court with jurisdiction over the subpoena. The motion to quash may be based upon one or more of the following grounds:

(a) the financial record sought is incompetent, irrelevant, or immaterial for the purpose for which it is sought;

(b) the release of the financial record would cause an unreasonable burden or hardship under the circumstances upon the customer or the depository;

(c) the supervisory, state, or local agency or other person seeking the financial record is attempting to harass the customer or the depository;

(d) there is no merit in the purpose for which the financial record is sought; or

(e) the supervisory, state, or local agency or other person has not made a reasonable effort to first obtain the financial record or the equivalent of the record from some other source other than the depository, if some other source exists.

(2) A foreign capital depository shall move on the basis of all appropriate grounds, including those set forth in subsection (1), to quash an administrative or judicial subpoena if the customer or the agent of the customer to whom the record relates has not received actual notice of the subpoena. If a foreign capital depository cannot determine from the customer or the customer's agent whether the customer or the agent has received actual notice of the subpoena, the depository shall move to quash the subpoena unless the customer and the depository have agreed in writing to the contrary.

(3) Failure of the customer or the depository to file a motion to quash the subpoena before the time established for the return of the subpoena constitutes a waiver of the right to object to the release or disclosure of the financial record.

(4) During the period for the filing of a motion to quash and continuing until a ruling is made upon a motion to quash, the depository shall, unless prohibited by the court, make available to its customer a copy of the subpoenaed financial record and shall preserve the original record without alteration.

(5) If a depository or a customer files a motion to quash an administrative or judicial subpoena issued pursuant to [section 35 or 37], the proceeding must be afforded priority on the calendar of the agency or the court.

(6) A depository may charge a customer a fee for the reasonable cost of representing the interests of the customer pursuant to this section.



NEW SECTION. Section 39.  Limitations on use of financial record. (1) The original or a copy of a financial record obtained by a state or local agency or another person pursuant to [sections 29 through 46] may not be used or retained in any form for a purpose other than the statutory purpose for which the record was originally obtained. The statutory purpose must be determined with reference to the statute, rule, or other law sought to be enforced in the proceeding for which the record was obtained.

(2) A state or local agency may not provide a financial record obtained pursuant to [sections 29 through 46] to another state or local agency unless the other agency has independently obtained authorization to receive the financial record pursuant to [sections 29 through 46]. This subsection does not prohibit:

(a) the transfer by one supervisory agency that obtained a financial record pursuant to [section 40(1)(c)] to another supervisory agency or supervisory agencies if that transfer otherwise complies with subsection (1); or

(b) the transfer of a financial record obtained pursuant to [section 36] by one criminal justice agency to another criminal justice agency in accordance with the Montana Criminal Justice Information Act of 1979.

(3) A supervisory, state, or local agency or a court obtaining a financial record by administrative subpoena, search warrant, or judicial subpoena shall, at the request of a customer or foreign capital depository, provide for the in camera review of the record to determine whether the record contains material that is not expected to be the subject of the investigation, inquiry, or proceeding. The supervisory, state, or local agency or the court shall liberally grant requests for in camera hearings, protective orders, and other appropriate processes to protect the confidential nature of a financial record. The agency or court may permit public disclosure of a financial record only if it finds that disclosure is necessary for the fair resolution of an issue before it.

(4) Documents of a supervisory, state, or local agency and documents produced in court containing a financial record must be sealed by the agency or court at the conclusion of the proceedings in order to prevent access to the record and may be opened only for good cause shown.



NEW SECTION. Section 40. Authorized disclosures of financial records. (1) [Sections 29 through 46] do not prohibit:

(a) disclosure by a foreign capital depository of a financial record that is not identified with or identifiable as being derived from a financial record of a particular customer by name;

(b) disclosure by a foreign capital depository to a department, agency, office, bureau, or commission of the United States of a financial record when required by federal statute or regulation or when required pursuant to the terms of a treaty or other agreement between the United States and the government of a foreign country;

(c) disclosure of a financial record by a foreign capital depository to a supervisory agency when the disclosure is conducted in response to an exercise of the agency's supervisory function. The scope of an agency's supervisory function must be determined by reference to statutes granting authority to examine, audit, or require reports concerning a financial record or foreign capital depository.

(2) Whenever the request, order, demand, or other requirement for disclosure of a financial record prohibits the release to a customer of the facts of a disclosure, a foreign capital depository may not disclose either the fact or nature of the request, order, demand, or other requirement for disclosure or the depository's response to a customer or to any other person, except the officers and employees of the depository who are involved in responding to the request and to attorneys, auditors, and regulatory authorities who have a need to know in order to perform their duties and except as disclosure may be required by legal process.



NEW SECTION. Section 41.  Fee paid to foreign capital depository for disclosure of record. Except for a supervisory agency, a state agency or local agency obtaining a financial record in accordance with [section 34, 35, 36, or 37] shall pay to the depository providing the financial record a reasonable fee commensurate with the depository's costs of searching for, assembling, copying, labeling, and transporting the financial record in question.



NEW SECTION. Section 42.  Confidentiality -- supervisory agency personnel -- penalty for violation. (1) Except as required by judicial order or as otherwise provided by [section 13 and sections 29 through 46], an employee of a supervisory agency who conducts an examination, investigation, or audit of a depository or who receives a report or another type of information about a depository from another employee of a supervisory agency may not disclose the identity of a customer to another person who is not officially associated with an examination, investigation, or audit of a depository.

(2) A person who knowingly violates subsection (1) must be removed from office and is guilty of a felony. Upon conviction, the person shall be punished by a fine of $10,000, by imprisonment in the state prison for not more than 10 years, or by both fine and imprisonment.



NEW SECTION. Section 43.  Civil liability for wrongful disclosure of financial record -- damages and injunctive relief. (1) A state or local agency that requests or receives a financial record in violation of [sections 29 through 46] is liable to the customer to whom the record relates in the amount of damages provided in subsection (4).

(2) A person who is not employed by a supervisory, state, or local agency or by a foreign capital depository and who requests or receives a financial record in violation of [sections 29 through 46] is liable to the customer to whom the record relates in the amount of damages provided in subsection (4).

(3) A director, executive officer, controlling person, or employee of a foreign capital depository who discloses or authorizes another to disclose a financial record in violation of [sections 29 through 46] is liable to the customer to whom the record relates in an amount of damages provided in subsection (4).

(4) Damages are equal to the sum of the following:

(a) $10,000, without regard to the type or number of records involved;

(b) actual damages sustained by the customer; and

(c) costs incurred in the action to successfully enforce liability under this section, together with reasonable attorney fees.

(5) A foreign capital depository may exercise remedies provided in this section on behalf of a customer and in connection with the exercise of those remedies may act as the real party in interest. Damages recovered by the depository must be deposited in an account of the customer, but a depository may retain amounts recovered for its costs and reasonable attorney fees.

(6) The remedies provided in this section are not exclusive.

(7) In addition to any other remedy allowed by law, a customer may bring an action for injunctive relief under Title 27, chapter 19, to enforce the provisions of [sections 29 through 46].



NEW SECTION. Section 44.  Unlawful disclosure of financial record -- criminal penalties. (1) A director, executive officer, controlling person, or employee of a foreign capital depository who discloses a financial record in violation of [sections 29 through 46] is guilty of a misdemeanor and upon conviction shall be punished by a fine of not more than $5,000, by imprisonment in the state prison for not more than 1 year, or by both fine and imprisonment. This subsection imposes absolute liability.

(2) A director, executive officer, controlling person, or employee of a foreign capital depository or an officer, employee, or agent of a state or local agency who knowingly discloses a financial record in violation of [sections 29 through 46] is guilty of a felony and upon conviction shall be punished by a fine of $10,000, by imprisonment in the state prison for not more than 10 years, or by both fine and imprisonment.



NEW SECTION. Section 45. Customer waiver invalid. A waiver by a customer of a right that is not authorized to be waived by [sections 29 through 46] is not valid whether granted with or without consideration.



NEW SECTION. Section 46.  Limitation of actions. An action to enforce a provision of [sections 29 through 46] must be commenced within 3 years after the date on which the violation occurred.



NEW SECTION. Section 47.  Asset protection -- purpose and perspective. (1) The legislature understands that asset protection includes the ability to minimize or avoid both the potential financial impact and loss of privacy resulting from lawsuits. The legislature also recognizes that asset protection is a vital component of a foreign capital depository, as defined in [section 3], that is designed to serve the interests of high net worth individuals who are not U.S. citizens and do not reside in the United States.

(2) The legislature further acknowledges that foreign judgments rendered in a foreign state are, unlike judgments rendered in other states of the union under the United States constitution, not entitled by Montana courts to conclusive full faith and credit under common law and that the principle of comity that encourages one country to extend legal recognition to the judicial acts of another country does not apply to the relations between Montana and a foreign country.

(3) The Uniform Foreign Money-Judgments Recognition Act, Title 25, chapter 9, part 6, signifies a departure from comity because it codifies the principles of comity but with certain exceptions and modifications. [Sections 47 through 55] enact a further departure from comity that is intended to uphold the state's interest in extending to a customer of a foreign capital depository the maximum amount of privacy possible within prudential limits as well as state and federal law.

(4) [Sections 47 through 55] are not intended to circumscribe or conflict with the provisions of Title 25, chapter 9, part 5 or 6, except in a case in which a foreign judgment has been obtained against the customer of a foreign capital depository.



NEW SECTION. Section 48.  Definitions. Unless the context requires otherwise, in [sections 47 through 55], the following definitions apply:

(1) "Comity" means the recognition of judicial acts that one country extends to another as a matter of custom, convenience, and expediency.

(2) "Foreign judgment" has the same meaning as defined in 25-9-602.

(3) "Foreign state" has the same meaning as defined in 25-9-602.



NEW SECTION. Section 49. Defense against enforcement of foreign judgments -- depository obligations. A foreign capital depository shall, unless relieved of the responsibility by a waiver signed by a depository customer, provide a customer with competent legal counsel and defense against:

(1) the recognition in Montana of a foreign judgment rendered in a foreign state as provided in 25-9-605; and

(2) the execution of a foreign judgment in Montana pursuant to Title 25, chapter 13, or Title 25, chapter 14, but only to the extent that the execution would affect the customer's assets in the depository.



NEW SECTION. Section 50.  Filing fee. A person seeking recognition of a foreign judgment rendered in a foreign state against a customer of the foreign capital depository shall pay a filing fee of $2,500 to the clerk of the court in which the judgment is filed.



NEW SECTION. Section 51.  Policy statement. For the purposes of [sections 47 through 55], the legislature declares that the recognition of a foreign judgment pursuant to Title 25, chapter 9, part 6, and the execution of a foreign judgment against a customer of a foreign capital depository is repugnant to the public policy of the state if either would:

(1) facilitate the arbitrary or unlawful interference with an individual's privacy in contravention of international law;

(2) undermine the individual right of privacy and the right to private property provided for in the Montana constitution and state law;

(3) stimulate or engender lawsuits motivated by greed or pecuniary speculation and lacking a good faith argument or other legally sound purpose; OR

(4) facilitate civil prosecution arising from class or ethnic hatred and nurtured by a corrupt legal system; or AND

(5) threaten the financial stability of the depository or the state by discouraging foreign depositors and investors from becoming customers or by encouraging customers to withdraw their capital from the depository.



NEW SECTION. Section 52.  Burden of proof -- financial liabilities. (1) A person seeking recognition of a foreign judgment pursuant to part 6 bears the burden of proving that:

(a) the judgment was rendered under a system that provides impartial tribunals or procedures that are compatible with the requirements of due process of law;

(b) the foreign court had personal jurisdiction over the customer when the judgment was rendered; and

(c) the foreign court had jurisdiction over the subject matter.

(2) The customer or the foreign capital depository acting on behalf of a customer bears the burden of proving that any one of the grounds for nonrecognition provided for in 25-9-605(2) exist.

(3) If the court finds that the person seeking recognition of the foreign judgment has failed to prove the judgment valid in accordance with subsection (1) or if the customer or the depository succeeds pursuant to subsection (2), the court may not recognize the foreign judgment.

(4) If the person seeking recognition of a judgment under part 6 is unsuccessful in obtaining recognition of the judgment, that person shall pay the court costs and attorney fees for the parties opposing recognition or, if the customer has waived the depository's obligation provided for in [section 49], for the customer.



NEW SECTION. Section 53.  Damages -- in camera hearing. (1) The court in which recognition of a foreign judgment is sought may award damages against the person seeking recognition of a foreign judgment to compensate a customer for the customer's loss of privacy.

(2) The amount of the damages awarded pursuant to subsection (1) must bear a reasonable relationship to the person's ability to pay and may not exceed $1 million.

(3) Any part of a hearing necessary to determine the rights and obligations of the parties pursuant to [sections 47 through 55] and part 6 may be held in camera to protect the privacy of any of the parties.



NEW SECTION. Section 54.  Contingency fee arrangements prohibited. A person seeking recognition of a foreign judgment against a customer of a foreign capital depository may not engage legal counsel on a contingency fee basis for the purpose of attaining recognition of the same foreign judgment.



NEW SECTION. Section 55.  Nonrecognition -- procedures to protect privacy. (1) The court shall, at the request of a customer or a foreign capital depository, provide for an in camera review of the pertinent documents to protect the confidential nature of financial records.

(2) The court may permit public disclosure of a financial record or proceedings closed pursuant to subsection (1) only if it finds that disclosure is necessary for the fair resolution of an issue before it.

(3) Documents produced in court containing a financial record must be sealed by the court at the conclusion of the proceedings to prevent access to the record and may be opened only for good cause shown.



NEW SECTION. Section 56.  State revenue from depository -- purpose and preference. (1) The legislature recognizes that revenue gains to the state and the possibility of subsequent tax reduction for Montana taxpayers are among the most significant reasons for establishing a statutory framework for the foreign capital depository, as defined in [section 3], and that a relatively steady, predictable flow of revenue is preferable to a volatile one. The legislature also acknowledges that the depository is subject to competitive pressures in the international financial services market. It is therefore in the state's interest to balance revenue expectations with incentives that will enhance the commercial attractiveness and viability of a depository.

(2) The legislature recognizes the hazards of fortune that may be suffered by customers of a depository who are citizens or residents of countries with unstable or repressive governments and recognizes that capital in a depository may be abandoned as a consequence of a customer's disappearance or untimely death. It is in the state's interest to provide a decent interval of time before determining that capital is abandoned and, in keeping with subsection (1), to allow a depository to charge a reasonable fee for the maintenance of the abandoned capital prior to its escheatment to the state.



NEW SECTION. Section 57.  Tax status -- exemption guarantees. (1) A foreign capital depository is exempt from the corporation license tax as provided in 15-31-102 until October 1, 2012.

(2) A transaction between the depository and a customer that involves tangible personal property, as defined in [section 3], is exempt from all forms of tax.



NEW SECTION. Section 58.  State revenue -- assessment -- collection -- distribution. (1) A foreign capital depository shall pay to the department on June 15 and December 15 of each year a fee that is equal to 1.25% 0.625% 0.75% of the total value of assets on deposit or in a safe deposit box. The total annual rate of assessment is 2.5% 1.5%.

(2) The basis of the value ascribed to each asset is:

(a) the U.S. dollar exchange value of the currency on deposit on the date of assessment;

(b) the spot market price of the platinum, palladium, gold, or silver held in precious metals accounts, as defined in [section 26], as published in The Wall Street Journal on the date of assessment; or

(c) the market value of other tangible personal property held in safe deposit boxes or other accounts at the time of the assessment, as determined by the depository using a method approved by the department. The depository shall submit to the department within 60 days of the appraisal a report that documents the method and calculations of the appraisal.

(3) The semiannual assessment fee must be deposited into the general fund.



NEW SECTION. Section 59.  Revenue audits -- charges. (1) The department shall conduct an annual audit of a foreign capital depository to verify that internal financial records of the depository comply with state law and regulations pertaining to the depository and that fees owed to the state have been properly calculated and paid on time.

(2) A depository shall pay to the department the cost of an annual audit provided for in subsection (1).

(3) The department may charge the depository up to $400 a day for each auditor involved in the conduct of an audit.



NEW SECTION. Section 60.  Deficiency assessment -- notice -- penalty and interest. (1) If the department determines through an audit of a foreign capital depository that the amount collected pursuant to [section 59] is less than the amount owed by the depository, the department shall send by certified mail to the depository a notice of the deficiency and require payment of the amount owed plus a 10% penalty within 60 days of the depository's receipt of the notice.

(2) The depository must bear the interest charge on any deficiency assessment issued by the department in accordance with subsection (1). The rate of interest charged to the depository may not exceed 12% a year.



NEW SECTION. Section 61.  Right of appeal. A foreign capital depository that receives a notice of deficiency assessment may appeal the amount of the fee, penalty, or interest charged in accordance with 15-2-201.



NEW SECTION. Section 62.  Limitation on penalty and interest. An amount of penalty or interest owed by the depository pursuant to [section 60] may not be assessed or collected with respect to the year for which a semiannual fee is assessed unless the notice of the additional amount owed is mailed within 5 years from the date the fee was paid.



NEW SECTION. Section 63.  Action by attorney general. An action may be brought by the attorney general in the name of the state at the request of the department to recover the amount of any fees, penalties, and interest due under [sections 58 through 61].



NEW SECTION. Section 64.  Abandoned capital -- disposition -- escheatment. (1) A foreign capital depository, as defined in [section 3], shall presume that capital on deposit in a depository account is abandoned in accordance with the provisions of 70-9-201.

(2) A depository shall dispose of the abandoned capital in the manner provided for in this chapter, except that:

(a) a notice of the property presumed abandoned may not be published as prescribed in 70-9-302;

(b) the record of deposit required under 70-9-309 may not be made available for public inspection; and

(c) all money received by the department of revenue as a consequence of the abandonment of capital in a depository must be deposited in the general fund.

(3) A foreign capital depository may deduct from property that is presumed to be abandoned a charge imposed by reason of the owner's failure to claim the property within a specified time only if there is a valid and enforceable written contract between the depository and the owner under which the depository may impose the charge and if the depository regularly imposes the charge, which is not regularly reversed or otherwise canceled. The amount of the deduction is limited to an amount that is not unconscionable.



NEW SECTION. Section 65.  Injunctions. The department may institute and maintain in the name of the state actions for injunctive relief as provided in Title 27, chapter 19, to:

(1)  enjoin a violation of [sections 1 through 46], a rule adopted pursuant to [sections 1 through 46], the terms or conditions of a charter, or an order of the department or the board; or

(2)  require compliance with [sections 1 through 46], a rule adopted pursuant to [sections 1 through 46], the terms or conditions of a charter, or an order of the department or the board.



NEW SECTION. Section 66.  Civil penalties. (1) Except for the penalties for wrongful disclosure provided for in [section 43], a person who violates a provision of [sections 1 through 46], a rule adopted under [sections 1 through 46], the terms and conditions of a charter or an order of the department or the board is subject to a civil penalty not to exceed $10,000 for each day of violation. Each day of violation of [sections 1 through 46], a rule adopted under [sections 1 through 46], the terms or conditions of a charter, or an order constitutes a separate violation.

(2)  The department may institute and maintain in the name of the state any enforcement proceedings under this section. Upon request of the department, the attorney general or the county attorney of the county where the violation occurred shall petition the district court to impose, assess, and recover the civil penalty.

(3)  Action under this section does not bar:

(a)  enforcement of [sections 1 through 46], rules adopted under [sections 1 through 46], orders of the department or the board, or terms or conditions of a charter by injunction or other appropriate remedy; or

(b)  action under [section 67].



NEW SECTION. Section 67.  Criminal penalties. (1) Except for the penalties for wrongful disclosure provided for in [section 44], a person who knowingly operates a foreign capital depository without a charter, in violation of the terms or conditions of a charter, or in violation of [sections 1 through 46], a rule adopted pursuant to [sections 1 through 46], or an order of the department or board or a person who knowingly makes any false statements or representations in an application, report, or other document filed or maintained as required by [sections 1 through 46] or required by rules adopted under [sections 1 through 46] is subject to a fine not to exceed $10,000 for each violation or imprisonment not to exceed 6 months, or both. Each day of violation constitutes a separate violation.

(2)  A person convicted of a second or subsequent criminal violation is subject to a fine not to exceed $20,000 for each violation or imprisonment not to exceed 1 year, or both. Each day of a violation constitutes a separate violation.

(3)  Action under this section does not bar enforcement of [sections 1 through 46], rules adopted under [sections 1 through 46], orders of the department or the board, or terms or conditions of a charter by injunction or other appropriate remedy.



Section 68.  Section 15-1-501, MCA, is amended to read:

"15-1-501.   Disposition of money from certain designated license and other taxes. (1) The state treasurer shall deposit to the credit of the state general fund in accordance with the provisions of subsection (6) all money received from the collection of:

(a)  fees from driver's licenses, motorcycle endorsements, and duplicate driver's licenses as provided in 61-5-121;

(b)  electrical energy producer's license taxes under chapter 51;

(c)  liquor license taxes under Title 16;

(d)  telephone company license taxes under chapter 53; and

(e)  inheritance and estate taxes under Title 72, chapter 16; and

(f) fees based on the value of currency on deposit and tangible personal property held for safekeeping by a foreign capital depository as provided in [section 58].

(2)  All money received from the collection of income taxes under chapter 30 of this title must, in accordance with the provisions of subsection (6), be deposited as follows:

(a)  91.3% of the taxes to the credit of the state general fund;

(b)  8.7% of the taxes to the credit of the debt service account for long-range building program bonds as described in 17-5-408; and

(c)  all interest and penalties to the credit of the state general fund.

(3)  All money received from the collection of corporation license and income taxes under chapter 31 of this title, except as provided in 15-31-702, must, in accordance with the provisions of subsection (6), be deposited as follows:

(a)  89.5% of the taxes to the credit of the state general fund;

(b)  10.5% of the taxes to the credit of the debt service account for long-range building program bonds as described in 17-5-408; and

(c)  all interest and penalties to the credit of the state general fund.

(4)  The department of revenue shall also deposit to the credit of the state general fund all money received from the collection of license taxes and fees and all net revenue and receipts from all other sources under the operation of the Montana Alcoholic Beverage Code.

(5)  Oil and natural gas production taxes allocated under 15-36-324(7)(a) must be deposited in the general fund.

(6)  Notwithstanding any other provision of law, the distribution of tax revenue must be made according to the provisions of the law governing allocation of the tax that were in effect for the period in which the tax revenue was recorded for accounting purposes. Tax revenue must be recorded as prescribed by the department of administration, pursuant to 17-1-102(2) and (5), in accordance with generally accepted accounting principles.

(7)  All refunds of taxes must be attributed to the funds in which the taxes are currently being recorded. All refunds of interest and penalties must be attributed to the funds in which the interest and penalties are currently being recorded."



Section 69.  Section 15-31-101, MCA, is amended to read:

"15-31-101.   Organizations subject to tax. (1) The term "corporation" includes associations, joint-stock companies, common-law trusts and business trusts which do business in an organized capacity, and all other corporations whether created, organized, or existing under and pursuant to the laws, agreements, or declarations of trust of any state, country, or the United States.

(2)  The terms "engaged in business" and "doing business" both mean actively engaging in any transaction for the purpose of financial or pecuniary gain or profit.

(3)  Except as provided in 15-31-103 or 33-2-705(4) or as may be otherwise specifically provided, every corporation engaged in business in the state of Montana shall annually pay to the state treasurer as a license fee for the privilege of carrying on business in this state such the percentage or percentages of its total net income for the preceding taxable year at the rate hereinafter set forth in this chapter. In the case of corporations having income from business activity which is taxable both within and without outside of this state, the license fee shall must be measured by the net income derived from or attributable to Montana sources as determined under part 3. Except as provided in 15-31-502, this tax is due and payable on the 15th day of the 5th month following the close of the taxable year of the corporation; however. However, the tax becomes a lien as provided in this chapter on the last day of the taxable year in which the income was earned and is for the privilege of carrying on business in this state for the taxable year in which the income was earned.

(4)  Every bank organized under the laws of the state of Montana, of any other state, or of the United States and every savings and loan association organized under the laws of this state or of the United States is subject to the Montana corporation license tax provided for under this chapter. A foreign capital depository chartered under the laws of Montana is not subject to the Montana corporation license tax provided for under this chapter until October 1, 2012. For taxable years beginning on and after January 1, 1972, this subsection is effective in accordance with Public Law 91-156, section 2 (12 U.S.C. 548)."



Section 70.  Section 15-31-102, MCA, is amended to read:

"15-31-102.   Organizations exempt from tax -- unrelated business income not exempt. (1) Except as provided in subsection (3), there shall may not be taxed under this title any income received by any:

(a)  labor, agricultural, or horticultural organization;

(b)  fraternal beneficiary, society, order, or association operating under the lodge system or for the exclusive benefit of the members of a fraternity itself operating under the lodge system and providing for the payment of life, sick, accident, or other benefits to the members of such the society, order, or association or their dependents;

(c)  cemetery company owned and operated exclusively for the benefit of its members;

(d)  corporation or association organized and operated exclusively for religious, charitable, scientific, or educational purposes, no part of the net income of which inures to the benefit of any private stockholder or individual;

(e)  business league, chamber of commerce, or board of trade not organized for profit and no part of the net income of which inures to the benefit of any private stockholder or individual;

(f)  civic league or organization not organized for profit but operated exclusively for the promotion of social welfare;

(g)  club organized and operated exclusively for pleasure, recreation, and other nonprofitable purposes, no part of the net income of which inures to the benefit of any private stockholder or members;

(h)  farmers' or other mutual hail, cyclone, or fire insurance company, mutual ditch or irrigation company, mutual or cooperative telephone company, or like similar organization of a purely local character, the income of which consists solely of assessments, dues, and fees collected from members for the sole purpose of meeting its expenses;

(i)  cooperative association or corporation engaged in the business of operating a rural electrification system or systems for the transmission or distribution of electrical energy on a cooperative basis;

(j)  corporations or associations organized for the exclusive purpose of holding title to property, collecting income therefrom from property, and turning over the entire amount thereof of income, less expenses, to an organization which itself is exempt from the tax imposed by this title;

(k)  wool and sheep pool, which is an association owned and operated by agricultural producers organized to market association members' wool and sheep, the income of which consists solely of assessments, dues, and fees collected from members for the sole purpose of meeting its expenses. Income, for this purpose, does not include expenses and money distributed to members contributing wool and sheep;

(l)  corporation that qualifies as a domestic international sales corporation (DISC) under the provisions of section 991, et seq., of the Internal Revenue Code and that has in effect for the entire taxable year a valid election under federal law to be treated as a DISC. If a corporation makes such an election under federal law, each person who at any time is a shareholder of such the corporation is subject to taxation under Title 15, chapter 30, on the earnings and profits of this DISC in the same manner as provided by federal law for all periods for which the election is effective.

(m)  farmers' market association not organized for profit and no part of the net income of which inures to the benefit of any member, but is organized for the sole purpose of providing for retail distribution of homegrown vegetables, handicrafts, and other products either grown or manufactured by the seller;

(n) foreign capital depository chartered under the provisions of [sections 4, 8, and 9].

(2)  In determining the license fee to be paid under this part, there shall may not be included any earnings derived from any public utility managed or operated by any subdivision of the state or from the exercise of any governmental function.

(3)  Any unrelated business income, as defined by section 512 of the Internal Revenue Code, 1954, as amended, earned by any exempt corporation resulting in a federal unrelated business income tax liability of more than $100 shall must be taxed as other corporation income is taxed under this title. An exempt corporation subject to taxation on unrelated business income under this section must file a copy of its federal exempt organization business income tax return on which it reports its unrelated business income with the department of revenue."



Section 71.  Section 25-9-506, MCA, is amended to read:

"25-9-506.   Fees. (1) Except as provided for in subsection (2), Any a person filing a foreign judgment shall pay to the clerk of court a fee of $60.

(2) a person filing a judgment against a customer of a foreign capital depository, as defined in [section 3], shall pay to the clerk of court a fee of $2,500.

(3) Fees for docketing, transcription, or other enforcement proceedings must be as provided for judgments of the district court."



Section 72.  Section 25-9-603, MCA, is amended to read:

"25-9-603.   Applicability. This part applies to any foreign judgment, other than a judgment obtained against a customer of a foreign capital depository, as defined in [section 3], that is final and conclusive and enforceable where rendered even though an appeal from the judgment is pending or it is subject to appeal."



Section 73.  Section 25-9-609, MCA, is amended to read:

"25-9-609.   Uniformity of interpretation. This Except for the provisions in [sections 47 through 55] pertaining to a customer of a foreign capital depository, as defined in [section 3], this part must be construed to effectuate the general purpose to make uniform the law of those states that enact it."



Section 74.  Section 32-1-101, MCA, is amended to read:

"32-1-101.   Short title -- application -- purpose. (1) Parts 1 through 5 of this chapter shall may be known as the "Bank Act".

(2)  The bank act Bank Act is applicable to:

(a)  all corporations and persons specified in 32-1-102;

(b)  corporations that subject themselves to the bank act Bank Act; and

(c)  persons, partnerships, or corporations who by violating the bank act Bank Act become subject to the penalties provided in the bank act Bank Act; and

(d) foreign capital depositories, but only to the extent that the provisions of the Montana Foreign Capital Depository Act, [sections 1 through 46 and 65 through 67], specifically require foreign capital depositories to be subject to provisions of the Bank Act.

(3)  (a) The purpose of the bank act Bank Act is to provide Montana with a sound system of state-chartered banks by providing for and encouraging the development of state-chartered banks while restricting their activities to the extent necessary to protect the interests of depositors. The purpose includes:

(i)  the sound conduct of the business of banks;

(ii) the conservation of bank assets;

(iii) the maintenance of adequate reserves against deposits;

(iv) the opportunity for banks to compete with other businesses, including but not limited to other financial organizations existing under the laws of this state, other states, the United States, and foreign countries;

(v)  the opportunity for banks to serve the citizens of this state;

(vi) the opportunity for banks to participate in and promote the economic progress of Montana and the United States;

(vii) the opportunity for the management of banks to exercise business judgment in conducting the affairs of their institutions; and

(viii) modernization and simplification of the law governing banking by providing that banks have all the rights and powers granted corporations, except as otherwise provided in this chapter.

(b)  The bank act Bank Act does not restrict the activities of banks for the purpose of protecting any person from competition from banks and does not confer any right or cause of action upon any competitor.

(c)  The purpose contained in this subsection (3) constitutes the standards to be observed by the commissioner of banking and financial institutions in the exercise of authority under the bank act Bank Act and provides guidelines in the construction and application of the bank act Bank Act."



Section 75.  Section 32-1-102, MCA, is amended to read:

"32-1-102.   Institutions to which chapter is applicable. (1) The word "bank" as used in this chapter means any corporation, other than a foreign capital depository, as defined in [section 3], which that has been incorporated to conduct the business of receiving money on deposit or transacting a trust or investment business, as defined in this chapter.

(2)  The soliciting, receiving, or accepting of money or its equivalent on deposit as a regular business is doing a commercial or savings bank business, except for the operations of a foreign capital depository, whether such the deposit is made subject to check or is evidenced by a certificate of deposit, a passbook, a note, or other receipt, provided that nothing herein applies. This section does not apply to or includes include money or its equivalent left in escrow or left with an agent pending investment in real estate or securities for or on account of his the agent's principal.

(3)  It is unlawful for any corporation, partnership, firm, or individual to engage in or transact a banking business within this state except by means of a corporation duly organized for such that purpose.

(4)  Banks are divided into the following classes:

(a)  commercial banks;

(b)  savings banks;

(c)  trust companies;

(d)  investment companies.

(5)  This chapter does not apply to any investment company or corporation established prior to March 8, 1927, under authority of the law of Montana not accepting, receiving, or holding money on deposit.

(6) Except for the provisions listed in [section 6], this chapter does not apply to foreign capital depositories."



Section 76.  Section 32-1-202, MCA, is amended to read:

"32-1-202.   Powers and duties of board. The board shall:

(1)  make final determinations upon applications for certificates of authorization for foreign capital depositories, new banks, branch banks, sales of branch banks, mergers, consolidations, and relocations of banks and branch banks;

(2)  act in an advisory capacity with respect to the duties and powers given by statute or otherwise to the department as the duties and powers relate to banking and to the regulation of foreign capital depositories."



Section 77.  Section 32-1-301, MCA, is amended to read:

"32-1-301.   Organization and incorporation -- articles of incorporation. (1) A person desiring to organize a banking corporation or a foreign capital depository shall make and file articles of incorporation with the department and, upon approval by the department, may file the articles with the secretary of state as provided in Title 35, chapter 1. The articles of incorporation must set forth:

(a)  the information required by 35-1-216(1);

(b)  the name of the city or town and county in which the principal office of the corporation or foreign capital depository is to be located;

(c)  the names and places of residence of the initial shareholders and the number of shares subscribed by each;

(d)  the number of the board of directors and the names of those agreed upon for the first year; and

(e)  the purpose for which the banking corporation or foreign capital depository is formed, which may be set forth by the use of the general terms defined in this chapter, with reference to each line of business in which the proposed corporation or foreign capital depository desires to engage.

(2)  In addition to provisions required in subsection (1), the articles of incorporation may also contain provisions set forth in 35-1-216(2).

(3)  A banking corporation or foreign capital depository may not adopt or use the name of any other banking corporation or association or foreign capital depository, and the corporation name must comply with 35-1-308(2) through (4).

(4)  A banking corporation or a foreign capital depository may not be organized or incorporated until the articles of incorporation have been submitted to and have been approved by the department and until it has obtained a certificate from the board authorizing the proposed corporation or foreign capital depository to transact the business specified in the articles of incorporation within this state.

(5)  A banking corporation or a foreign capital depository may not amend or restate its articles of incorporation until its articles of amendment or articles of restatement have been submitted to and have been approved by the department and until it has obtained approval from the department authorizing the proposed amendment or restatement.

(6)  For banks organized before October 1, 1993, articles of agreement are considered articles of incorporation."



Section 78.  Section 32-1-446, MCA, is amended to read:

"32-1-446.   Safe deposit department. A bank or a foreign capital depository may conduct a safe deposit department. The liability of any bank or foreign capital depository for the safekeeping and protection of the contents of safety deposit boxes is determined by the contract endorsed on the receipt delivered to the renter of a box at the time of the rental, but in any event. However, the obligation of the bank or foreign capital depository is limited to the exercise of ordinary diligence and care to protect the contents of the box from loss or damage by fire, theft, or other causes."



Section 79.  Section 32-1-461, MCA, is amended to read:

"32-1-461.   Bonding of employees. (1) The board of directors of every a bank or foreign capital depository shall require that bonding for all officers and employees of banks the bank or foreign capital depository whose duty includes the handling of moneys money, notes, bonds, credits, and cash items and whose duties include bookkeeping or the making of entries in relation to the business of the bank and its customers be bonded.

(2)  The board of directors shall by order entered upon the minute books of the board designate the officers and employees to be bonded and the amount of bonds to be given. Such action Action as to the personnel, the amount of bonds, and the surety company or sureties is subject to approval by the department, and the bonds shall must be in such a form as is provided or approved by the department.

(3)  The bonds shall must be approved by the president of the bank or the chief executive officer of the foreign capital depository, and his the president's or executive officer's action must be reported to the board of directors.

(4)  All bonds required by this section shall must be kept in the custody of the bank or foreign capital depository subject to inspection by examiners from the department; provided,. However, as far as possible, they may not be placed in the custody of the officer or employee for whom the same bond is given."



Section 80.  Section 32-1-462, MCA, is amended to read:

"32-1-462.   Persons previously convicted under banking laws -- bank or depository employment. It shall be is unlawful for anyone having a person who has been convicted of the violations a violation of the banking laws of any state or nation to accept employment in a bank or a foreign capital depository in this state without first stating said the relevant facts to the directors of said the bank or foreign capital depository. No such person shall A person who has been convicted of a banking law violation may not be employed in any a bank or a foreign capital depository without the approval of the department, granted in writing after a full consideration of the facts."



Section 81.  Section 32-1-464, MCA, is amended to read:

"32-1-464.   Fraud by director, officer, agent, or employee. A director, executive officer, agent, or employee of a bank or a foreign capital depository is guilty of a felony if that person:

(1)  knowingly receives or possesses himself of any of its property, otherwise than takes possession of any bank or foreign capital depository property, except in payment for a just demand, and with intent to defraud:

(a)  omits fails to make or to cause or direct to be made a full and true entry of it the receipt or possession in its books and account; or

(b)  concurs in omitting failing to make any material entry thereof in its books and account;

(2)  knowingly concurs in making or publishing any written report, exhibit, or statement of its affairs or pecuniary condition containing any material statement which that is false; or

(3)  having the custody or control of its books, willfully refuses or neglects to make a proper entry in the books of that corporation bank or foreign capital depository as required by law, to exhibit them, or allow them to be inspected and extracts to be taken from them by the department."



Section 82.  Section 32-1-468, MCA, is amended to read:

"32-1-468.   Removal of directors, officers, or employees. Any A director, officer, or employee of any a bank or foreign capital depository who is found by the department, after examination, to be negligent, dishonest, reckless, or incompetent shall must be removed from office by the board of directors of such the bank or depository on the written order of the department, and if. If the directors neglect or refuse to remove such the director, officer, or employee, in event and any losses accrue to such the bank thereafter by reason of the negligence, dishonesty, recklessness, or incompetency of such the director, officer, or employee, such the written order of the department shall be deemed to be is conclusive evidence of the negligence of the directors failing to act upon the same as herein provided in this section in any action brought against them, or any of them, by a depositor or creditor for recovery of such losses."



Section 83.  Section 32-1-473, MCA, is amended to read:

"32-1-473.   Theft of bank funds by directors, officers, or employees. Any banker, officer, A director, officer, or employee of any a bank or foreign capital depository who fraudulently appropriates or abstracts or misapplies any of the moneys money, funds, credits, or property of the bank or depository when owned by it or held in trust, or who issues or puts forth any certificate of deposit, draws any order or bill of exchange, makes any acceptance, assigns any note, bond, draft, bill of exchange, mortgage, judgment, or decree with intent in any case to injure or defraud the bank or depository or any person or corporation or to deceive any officer of the bank or depository, or any other person, or anyone appointed to examine the affairs of the bank or depository or any other person who with like intent, aids or abets any director, officer, clerk, or employee in the violation of this section is guilty of theft and upon conviction thereof shall be imprisoned in the state prison for a period of not exceeding to exceed 20 years or be fined an amount not exceeding to exceed $50,000, or both."



Section 84.  Section 32-1-491, MCA, is amended to read:

"32-1-491.   Destruction of bank records. (1) Banks and foreign capital depositories are required to preserve or keep their records of customer accounts for at least 8 years next after January 1 of the year following the time of that the making of such records; provided, however, that are made. However, records showing unpaid balances in favor of depositors of any banks shall a bank or foreign capital depository may not be destroyed. No liability shall Liability may not accrue against any a bank or depository destroying any such records (except records the of which destruction of which is forbidden hereby by this section) after the expiration of the time provided in this section.

(2)  The department shall adopt rules providing for retention schedules for bank records other than those records listed in subsection (1)."



Section 85.  Section 32-1-492, MCA, is amended to read:

"32-1-492.   Reproduction of bank records -- admissibility in evidence. (1) Except as provided in subsection (5), Banks banks are hereby authorized to make, at any time, photographic or photostatic copies or microfilm reproductions of any records or documents, including photographic enlargements and prints of microfilms, and to preserve, store, use, and employ the same copies in carrying on business.

(2)  In any an action or proceedings proceeding in which any bank records may be called in question or be demanded of any a bank or any officer or employee thereof of a bank, a showing that such the records have been destroyed in the regular course of business shall be is a sufficient excuse for the failure to produce them.

(3)  Upon such sufficient showing, secondary evidence of the form, text, and contents of the original records, including photostatic, photographic, or microfilm reproductions thereof of the records (and photographic enlargements and prints of microfilm reproductions), when made in the regular course of business, shall be is admissible in evidence in any court of competent jurisdiction or in any administrative proceeding.

(4)  Any photostatic, photographic, or microfilm reproductions (including enlargements of the latter) made in the regular course of business of any original files, records, books, cards, tickets, deposit slips, or memoranda which that were in existence on July 1, 1951, shall be are admissible in evidence in proof of the form, text, and content of any said the originals which may be that were destroyed in the regular course of business after July 1, 1951.

(5) The reproduction of records of a foreign capital depository is subject to the provisions of [sections 29 through 46]."



Section 86.  Section 32-1-501, MCA, is amended to read:

"32-1-501.   Dissolution and disincorporation. Commercial banks, savings banks, trust companies, and investment companies, and foreign capital depositories may be dissolved in the manner provided by the laws of this state applicable to the dissolution of other corporations. However, a bank, or trust company, or foreign capital depository may, upon a vote of two-thirds of its stockholders at a special meeting called for that purpose in accordance with its bylaws, voluntarily quit business and liquidate upon the payment of its debts, exclusive of liability to stockholders, or upon agreement with all of its creditors to a plan of liquidation. A bank, or trust company, or foreign capital depository that wishes desiring to voluntarily liquidate shall apply to the department for permission to so liquidate and, in addition to complying with the laws of this state governing the liquidation of corporations, shall comply in all respects with the requirements or rules of the department governing voluntary dissolution. The board of directors of a bank, trust company, or foreign capital depository whose stockholders have voted to place it in voluntary liquidation shall appoint a liquidating agent to wind up the affairs of the bank, trust company, or foreign capital depository. The liquidating agent, on authority of the board of directors, may execute deeds for the transfer of real property and do all things necessary to carry out the proper liquidation of the bank, trust company, or foreign capital depository. Nothing in this section prevents the department from taking charge at any time when in its opinion the interest of creditors or stockholders is not being protected. The decision of the department in these matters is controlling."



NEW SECTION. Section 87.  Severability. If a part of [this act] is invalid, all valid parts that are severable from the invalid part remain in effect. If a part of [this act] is invalid in one or more of its applications, the part remains in effect in all valid applications that are severable from the invalid applications.



NEW SECTION. Section 88.  Codification instruction. (1) [Sections 1 through 46 and 65 through 67] are intended to be codified as an integral part of Title 32, and only those provisions of Title 32 identified in [sections 1 through 46 and 65 through 67] as applicable to [sections 1 through 46 and 65 through 67] apply to [sections 1 through 46 and 65 through 67].

(2) [Sections 47 through 55] are intended to be codified as an integral part of Title 25, chapter 9, and the provisions of Title 25, chapter 9, apply to [sections 47 through 55].

(3) [Sections 56 through 63] are intended to be codified as an integral part of Title 15, chapter 31, and the provisions of Title 15, chapter 31, apply to [sections 56 through 63].

(4) [Section 64] is intended to be codified as an integral part of Title 70, chapter 9, and the provisions of Title 70, chapter 9, apply to [section 64].



NEW SECTION. SECTION 89. EFFECTIVE DATES. (1) EXCEPT AS PROVIDED IN SUBSECTION (2), [THIS ACT] IS EFFECTIVE OCTOBER 1, 1997.

(2) [SECTION 7] IS EFFECTIVE ON PASSAGE AND APPROVAL.



NEW SECTION. Section 90.  Termination. [Sections 57 and 58] terminate September 30, 2012.

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