CBA Publications >> CBA Regulatory Compliance Bulletin >> Vol 2000 No.24 November 1, 2004

Vol 2004 No.24 November 1, 2004

Records of Foreign Corporations and Financial Institutions

A new law, AB 1776, makes foreign (non-California) corporations subject to (1) obligations to produce records pursuant to a search warrant from both in-state and out-of-state locations, and (2) the same responsibilities as domestic corporations to produce certain records related to crimes committed on accounts. The bill also introduces new obligations related to the death of accountholders who receive certain retirement benefits.

Search warrants. Under existing Corporations Code Section 2105 a foreign corporation, as a condition of transacting intrastate business, must obtain a certificate of qualification from the Secretary of State. The certificate includes the designation of an agent for service of process in this state, including service of a search warrant issued under Section 1524.2 of the Penal Code. AB 1776 requires a foreign corporation to respond also to "any other validly issued and properly served search warrant," whether the target records or documents are located inside or outside of California.1

Warrants may be served by hand, or in a manner allowing for proof of delivery if delivered by mail, overnight delivery service, or facsimile to any person listed in Corporations Code Section 2110.2

1) Corporations Code Section 2105(a), as amended.
2) The listed persons are: (1) any officer of the corporation; (2) its general manager in California; (3) if the foreign corporation is a bank, to a cashier or an assistant cashier; (4) to any natural person designated by the corporation as agent for service of process; or (5), if the corporation has designated a corporate agent, to any person named in the latest certificate filed under Corporations Code Section 1505.

Crime reports. A non-California depository financial institution must comply with Government Code Section 7480(b) in the same manner as domestic corporations, but subject to the consent of the victim accountholder. Thus, new Section 7480(c) provides that certain law enforcement agencies, upon certifying that a crime report has been filed involving an instrument drawn upon the foreign institution, the institution must furnish a statement containing information relating to the customer account for a period from 30 days prior to, and up to 30 days following, the date of the alleged illegal act.

Consent is obtained if the accountholder provides to the institution and the certifying party a signed and dated statement containing:

• authorization of the disclosure for the period stated above,
  

• the name of the agency or department to which disclosure is authorized and, if applicable, the statutory purpose for which the information is to be obtained, and
  

• a description of the financial records that are authorized to be disclosed.

Death of retirement benefits recipients. When a financial institution receives a written certification from the Public Employees Retirement System, the State Teachers' Retirement System, or a retirement system established under the County Employees Retirement Law of 1937 that a benefits recipient has died and that transfers to the recipient's account occurred after the recipient's death, the institution must furnish the name and address of any co-owner, cosigner, or any other person who had access to the funds in the account after the benefit recipient's death, or if the account had been closed, the name and address of the person who closed the account.

AB 1776 is effective on January 1, 2004. For further information, contact Kevin Gould, CBA's lobbyist on this bill, at kgould@calbankers.com.

The information contained in this CBA Regulatory Compliance Bulletin is not intended to constitute, and should not be received as, legal advice. Please consult with your counsel for more detailed information applicable to your institution.