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Joint committee report: TEFI pilot BFF remains sole charter, recommends statutory updates
Summary
Nicole Fielder of the Legislative Research Department told the Committee on Financial Institutions and Pensions that Beneficent Financial (BFF) remains the only TEFI chartered in Kansas and summarized committee recommendations to update the TEFI statute.
Nicole Fielder, a research analyst with the Legislative Research Department, briefed the Committee on Financial Institutions and Pensions on the joint committee report about the Technology‑Enabled Fiduciary Financial Institutions (TEFI) pilot program and the lone TEFI charter, Beneficent Financial (BFF).
Fielder said the TEFI Act was enacted in 2021 through Senate Substitute for House Bill 2074 and established a pilot chartering framework and an economic growth zone centered in Harvey County. “BFF is believed to be the only TEFI in the United States,” Fielder said.
The report summarized testimony from BFF, the Office of the State Bank Commissioner (OSBC) and the Department of Commerce. It described TEFIs as managers of professionally managed, non‑publicly traded alternative assets and explained that 2.5% of financing routed through certain TEFI trusts is directed to a Kansas TEFI Economic Growth Trust, which in turn splits funds between the TEFI Development and Expansion Fund at the Department of Commerce and the Beneficient Heartland Foundation.
Fielder reported that the TEFI statute requires each chartered TEFI to pay an annual assessment of at least $1,000,000 to the OSBC; the OSBC remits three‑quarters of those funds to the Bank Commissioner Fee Fund and one‑quarter to the TEFI Development and Expansion Fund. The Department of Commerce seed program (Strategic Economic Expansion and Development Grant Program) has used those receipts for grants supporting communities with populations under 5,000; Fielder said the first year’s funding to Commerce was $2,700,000 and the following two years were $270,000 each.
The OSBC reported it had completed two examinations of BFF in the prior 12 months and had started a third; the examinations covered IT, Bank Secrecy Act and anti‑money laundering compliance. The OSBC also told the committee it had not received any further inquiries from potential TEFI applicants. Brock Brailler, general counsel for the OSBC, told the committee the office had received no official inquiries since the last joint committee hearing.
The joint committee listed recommendations the interim report recorded: consider clarifying statutory provisions for voluntary and involuntary liquidation of Kansas TEFIs; reconsider the application fee and related barrier to entry; consider changes to daily statement and monthly trust statement requirements, call‑report cadence and lending limits for TEFIs; update definitions of alternative assets and custody accounts to reflect digital modernization; revisit SB 2204’s definition of charitable beneficiaries; and review OSBC authority to conduct meaningful safety‑and‑soundness examinations.
The committee also recommended outreach to other financial regulators to understand why the TEFI industry has not expanded nationally and suggested lawmakers evaluate whether the oversight committee remains necessary. Committee members asked for clarification about how the 2.5% allocation is split; Fielder said the Beneficient Heartland Foundation directs the portion that funds local projects such as a grocery store in Heston, and the Department of Commerce handles the seed grants.
The report concluded with the joint committee’s recommendations for statutory updates and directed continued monitoring and outreach.
