17:9A-316. Limitations on transaction of business by foreign banks in this State

316. A. Except as otherwise provided pursuant to section 1 of P.L.1989, c.245 (C.17:9A-19.2) and sections 37 through 86 of P.L.1996, c.17 (C.17:9A-418 through C.17:9A-467), no foreign bank organized under the laws of a foreign government shall transact any business in this State.

B. A foreign bank organized under the laws of the United States or another state may not transact business in this State other than a trust business. Before transacting trust business in this State, a foreign bank shall secure from the commissioner a certificate of authority to transact trust business. The commissioner shall not issue a certificate of authority to a foreign bank unless a qualified bank is permitted to transact trust business in the jurisdiction in which the foreign bank has its principal office without unduly burdensome conditions or restrictions.

C. Except as otherwise provided pursuant to P.L.1999, c.159 (C.17:9A-20.4 et al.), no foreign bank shall maintain an office in this State, except that a foreign bank may maintain one or more service facilities in this State, provided that the foreign bank performs only back office operations at the service facility and does not transact business with its customers or the public at the service facility. Prior to opening a service facility in this State, a foreign bank shall register the service facility with the commissioner, which registration shall include the address of the proposed service facility and the name and address of the foreign bank's agent in this State for service of process. No foreign bank organized under the laws of a foreign government which has an office licensed as a representative office pursuant to sections 55 and 56 of P.L.1996, c.17 (C.17:9A-436 and C.17:9A-437), shall be required to register under this subsection as a service facility. Each service facility shall comply with the requirements and pay the fees that the commissioner establishes by regulation. Each service facility shall be subject to examination by the department to determine whether the foreign bank has operated the service facility in accordance with the provisions of this subsection, the costs of which examination shall be paid by the foreign bank at the department's per diem rate for examinations of depository institutions. The commissioner may, upon notice and a hearing, order a foreign bank to close any trust office or service facility operated in violation of the provisions of this subsection or of other any law. Any entity acting as an agent pursuant to section 1 of P.L.1989, c.245 (C.17:9A-19.2) shall not be required to register and be regulated pursuant to this subsection C.

D. (1) For the purposes of this section, the term "transact business" shall not include back office operations and the term "back office operations" shall include the following activities: data processing, record-keeping, accounting, check and deposit sorting and posting, computation and posting of interest, other similar clerical and statistical functions, producing and mailing correspondence or documents and such other similar activities that the commissioner approves.

(2) For the purposes of this section, "trust business" means holding out to the public by advertising, solicitation or other means that a person or entity is available to perform any of the services of a trustee or fiduciary in this State or another state, and includes acting as a trustee, testamentary trustee, fiduciary, executor or guardian or exercising any of the powers specified in paragraphs (3) through (9) of section 28 of P.L.1948, c.67 (C.17:9A-28).

E. (1) For the purposes of Article 44 of "The Banking Act of 1948," P.L.1948, c.67 (C.17:9A-315 through 17:9A-332), a foreign bank, including one organized under the laws of a foreign country, shall not be deemed to transact business or maintain an office in this State by virtue of conducting business in this State through an agent in this State which is an insured depository institution affiliate or other agent.

(2) Nothing in this section or in "The Banking Act of 1948," P.L.1948, c.67 (C.17:9A-1 et seq.) shall prohibit a foreign bank, including one organized under the laws of a foreign country, from owning and operating in this State, as a subsidiary, a State or federally chartered bank and the ownership and operation of, and the sharing of directors, officers and employees with that subsidiary shall not constitute transacting business in this State.

L.1948,c.67,s.316; amended 1991, c.74, s.1; 1996, c.17, s.24; 1999, c.159, s.4.