Establishes standards for the closure of bank accounts in the state of New York to include providing notice of closure and the return of funds to account owners.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A5031A
SPONSOR: Jacobson TITLE OF BILL:
An act to amend the banking law, in relation to establishing criteria
for the closure of banking accounts in the state of New York
PURPOSE OR GENERAL IDEA OF BILL:
To give bank account customers notification on why their personal or
business bank account is closed by a bank and to ensure their checks are
honored and funds are returned.
SUMMARY OF PROVISIONS:
Section 1 amends the Banking Law by adding a new section 9-11, which
states that all banking organizations and out-of-state state banks
authorized to operate and maintain branches pursuant to article 5-c of
this chapter when closing the account of a customer shall:
(a) Provide 60 days' notice that such account is being closed, whether
for personal or business use, and provide the reason for such closure;
(b) Return any remaining funds from such account within 60 days after
the closure to such account to the owner.
Subdivision 2: Specifies that the provisions of the bill would not apply
where there are preexisting federal preemptions.
Section 2 sets forth the effective date which is immediately.
JUSTIFICATION:
Last year, 1.5 million bank customers had their checking or savings
accounts closed without prior notice-and for no apparent reason. Under
the guise of "suspicious activity," banks are closing accounts more out
of fear of upsetting regulators than actual proof of laundering and
other illegal activities. These unexpected account closings can wreak
havoc with one's credit rating, cause checks to bounce and create other
problems that did not exist before. Due to these unexpected bank account
closings, individuals and businesses have had their reputations, which
took years to build in their local community, severely damaged.
Unexpected bank account closings causes businesses to bounce checks to
employees and suppliers, which in turn causes the recipients of these
checks to bounce their own checks. By giving adequate notice, account
owners will have sufficient time to make arrangements with another bank,
avoiding disruptions to their financial well-being and to those they
deal with. This bill will help address problems from unexpected bank
account closings.
PRIOR LEGISLATIVE HISTORY:
2023-2024: A9210 - Passed Assembly
S9757 - Referred to Senate Banks Committee
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
None.
EFFECTIVE DATE:
This act shall take effect immediately
STATE OF NEW YORK
________________________________________________________________________
5031--A
2025-2026 Regular Sessions
IN ASSEMBLY
February 11, 2025
___________
Introduced by M. of A. JACOBSON, LUCAS, HYNDMAN, TAYLOR, SANTABARBARA,
GLICK, DILAN, SAYEGH, SEPTIMO, DAVILA, STECK, REYES, BURDICK,
SEAWRIGHT -- read once and referred to the Committee on Banks --
committee discharged, bill amended, ordered reprinted as amended and
recommitted to said committee
AN ACT to amend the banking law, in relation to establishing criteria
for the closure of banking accounts in the state of New York
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. The banking law is amended by adding a new section 9-ii to
2 read as follows:
3 § 9-ii. Closure of accounts. 1. All banking organizations and out-of-
4 state state banks authorized to operate and maintain branches pursuant
5 to article five-C of this chapter when closing the account of a customer
6 shall:
7 (a) provide sixty days' notice that such account is being closed,
8 whether for personal or business use, and provide the reason for such
9 closure, and
10 (b) return any remaining funds from such account within sixty days
11 after the closure of such account to the owner.
12 2. This section shall not apply to the extent that it is preempted by
13 federal law. Nothing in this section shall be construed to require any
14 act prohibited, or prohibit any act required, by federal law.
15 § 2. This act shall take effect immediately.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD03161-02-5
