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Senate committee advances bill specifying reasons banks may close accounts, adds federal-law exceptions
Summary
The Senate Banks Committee reported out S.4603, which would set state criteria for closing customer accounts while explicitly exempting instances where federal law such as the Bank Secrecy Act or anti-money‑laundering rules control.
The Senate Banks Committee on Oct. 26 reported out S.4603, sponsored by Sen. Sanders, an act to amend the banking law to establish criteria for the closure of bank accounts in New York.
The bill would define state-level criteria banks must follow when closing accounts and clarifies that federal law controls in certain instances. Talia, counsel to Sen. Sanders, told the committee the draft was revised after “feedback from the industry” asking that the text explicitly note when federal requirements — including the Bank Secrecy Act and anti‑money‑laundering rules — would control.
Sen. George Burrell, the committee’s ranking member, expressed concern about requiring banks to return funds if those funds are subject to prosecution for fraud or other crimes. “If that money needs to be held for very good reason because there's prosecution for fraud … I wouldn't want to see that go back to the defendant,” Burrell said.
After discussion, the committee moved and seconded the bill and recorded at least one negative vote during the roll call. The chair announced the bill was reported out of committee.
The committee did not provide a detailed vote tally in the transcript; the record shows a motion, a second and the chair stating the bill was reported out.
The bill will proceed to the next legislative step for further consideration.
