P.R. Laws tit. 7, § 151
It is hereby declared that the public policy of the Government of Puerto Rico is the following:
(a) That the business of all banks and banking institutions organized under to the Laws of Puerto Rico, and of foreign banks operating in Puerto Rico, shall be examined and regulated by the Commissioner to insure the sound operation of said businesses and thus protect the public interest and the interests of the depositors, creditors and stockholders.
The Office of the Commissioner of Financial Institutions of Puerto Rico shall be in charge of implementing §§ 1 et seq. of this title and shall exercise all those powers and comply with all those duties conferred or imposed upon it by this or any other law applicable to banks in Puerto Rico.
(b) For the purpose of applying the policy stated in §§ 1 et seq. of this title, the Commissioner shall have the power to interpret §§ 1 et seq. of this title, including the power to define those terms and concepts needed to perform his/her function of implementing the same. The Commissioner may issue, alter and amend the orders, rules and regulations as consistent with the law and sound banking practices. Said orders, rules and regulations shall be brought to the attention of those who may be affected by them as prescribed by the Commissioner.
(c) In the absence of any specific provision under §§ 1 et seq. of this title, any violation of the rules and regulations thus prescribed by the Commissioner, shall entail the imposition of an administrative fine on the domestic or foreign bank guilty of said violation, which shall not exceed five thousand dollars ($5,000) for the first offense, and an administrative fine which shall not exceed ten thousand dollars ($10,000) for the second offense, imposed by the Commissioner. The cancellation of the license of the offending bank may be ordered by the Court of First Instance, San Juan Superior Part, if so determined by the Court at the request of the Commissioner, after an administrative hearing is held on its merits.
(d) The Commissioner shall have the power to cancel any authorization or license to operate a specific branch, office or service unit of a bank, after an administrative hearing is held on its merits. The decision of the Commissioner, once the administrative hearing has been held, shall be final and shall be subject to judicial review as provided in §§ 2101 et seq. of Title 3, known as the “Uniform Administrative Procedures Act of the Commonwealth of Puerto Rico”.
(e) When the Commissioner has reasonable grounds to believe that any director or official of any bank, or foreign bank, or of any subsidiary of any bank or foreign bank, or of any branch or office of a bank or foreign bank doing business in Puerto Rico has committed a violation of the provisions of §§ 1 et seq. of this title, of the rules and regulations approved pursuant to its provisions, or of a cease and desist order which is final, or has participated in acts contrary to sound banking practices in connection with the bank or its subsidiary, or has committed or participated in any act, omission or practice which constitutes a violation of its fiduciary duties as director or official of the bank or its subsidiary and the Commissioner determines that the bank or its subsidiary has suffered or would probably suffer a substantial financial loss or other damages due to such violation, practice or failure to fulfill its fiduciary responsibilities and that said violation or fault involves personal dishonesty by the director or official, the Commissioner may issue a written order suspending or removing him/her from his/her office in that bank or its subsidiary.
(f) Any bank or foreign bank and any branch or office of the bank or foreign bank doing business in Puerto Rico shall be subject to the examination and supervision of the Commissioner, who personally, or through any competent person or persons appointed by him/her, who shall be known as examiners, shall examine said bank or foreign bank or branches once a year or as provided by regulations duly adopted by the Commissioner. Travel and unforeseen expenses needed to conduct said examinations shall be paid from the item appropriated for that purpose in the regular budget.
(g)
(1) Said examinations shall be carried out to investigate the conditions and resources of the bank, the manner of conducting and managing its affairs, the actions of its directors, the investment of its funds, the security and soundness of its administration, the guarantees given to ensure compliance of the obligations contracted and whether the prescriptions of its franchise and the provisions of law have been met in the management of its affairs, as well as any other matter required by the Commissioner.
(2) The power of the Commissioner to supervise includes the faculty to require, whether by a voluntary resolution, a memorandum of understanding, or administrative orders, whether to cease and desist or of any other nature, that the banks or its subsidiaries comply with those terms and conditions which, in the judgment of the Commissioner, may be required due to the financial condition or the management of the bank or its subsidiary, or the public interest.
(h) The reports rendered by the examiners to the Commissioner with regard to the examination made of any bank or foreign bank, shall be of a confidential nature, except for the Legislature of Puerto Rico or a committee appointed by it, or for the other banking agencies which supervise said bank. Provided, furthermore, That the legal or financial advisors of the Board of Directors and the external auditors of a bank shall be excluded from the scope of said provision and shall be entitled to access said reports, subject to the same confidentiality requirements to which the members of the Board of Directors are subject.
(i) The Commissioner shall be empowered, among other things, to order any bank under his/her supervision to charge against its undistributed profits, reserve fund or capital account, any loan or part of a loan, assets, or part of the assets, which in his/her judgment constitute a possible loss for the bank under examination; and may also order the segregation of any portion of the future profits which he/she may deem convenient until said capital accounts and reserve funds are fully restored, and/or order that the asset valuation reserves be created as he/she may deem convenient.
(j) The Commissioner may impose an administrative fine that shall not exceed one thousand dollars ($1,000) for each day the bank fails to comply with the orders issued under the provisions of subsection (i). Should the bank or foreign bank on which an administrative fine is imposed by virtue of this subsection fail to pay the latter within the term of fifteen (15) days from the date of notice of the imposition of the administrative fine, the Commissioner may file a civil suit to collect said administrative fine with the Court of First Instance, San Juan Superior Part, which shall have exclusive jurisdiction in this proceeding.
(k) The bank examiner shall take an oath that he/she shall not disclose the results of his/her investigation and in case he/she should break his/her oath he/she shall be guilty of a misdemeanor and be punished by a fine that shall not exceed one thousand dollars ($1,000), or imprisonment for not more than six (6) months, or both penalties, at the discretion of the court.
(l) The Commissioner, his/her delegates and any of the examiners, shall be entitled to administer an oath to any person whose testimony is required in any of said examinations and to compel him/her to appear for the purposes of said examinations.
(m) The Commissioner shall issue a certificate to every bank or foreign bank or branch he/she examines, personally or through his/her employees or examiners, indicating the results of said examinations, which shall be presented to the directors at the first regular or special meeting held subsequent to the date on which the bank receives it.
(n) For the purposes of the examinations mentioned in this section, the Commissioner shall be empowered to appoint the bank examiners with the salary fixed by the “Budget Act” or those salaries fixed pursuant to § 2006 of this title. Said examiners shall be deemed as employees of the Office of the Commissioner of Financial Institutions and shall perform the duties assigned to them by the Commissioner.
(o) The Commissioner, his/her delegates, and the bank examiners shall not while in the discharge of their duties:
(1) Be officials, directors or employees of any bank or foreign bank or any entities affiliated thereto.
(2) Hold or negotiate, directly or indirectly, the securities or obligations of such a bank or foreign bank; Provided, That it shall not be understood that those securities or obligations that were in the power or possession, directly or indirectly, of the Commissioner, his/her delegates or the bank examiners, are held in contravention of the provisions of this chapter at the time said officials assumed their office. In such cases, the affected incumbents shall take the necessary measures, including the disposition of the securities, to prevent a situation of indirect possession or negotiation of such bank stock or obligations in contravention of the provisions of this chapter.
(3) Have an interest, or directly or indirectly receive from such a bank or foreign bank or from any of its officials, directors or employees, any salary, gratuity, compensation or any other thing of value as a gift, credit, compensation for services, or on any other account.
(4) Have an interest in, or be committed to, negotiate any loan, obligation or favor for another person in such a bank or foreign bank.
(p) The preceding provisions notwithstanding, the Commissioner, his/her delegates and the bank examiners of the Office of the Commissioner may have and hold one or more bank accounts, commercial as well as savings, in any bank or foreign bank doing business in Puerto Rico, and may obtain mortgage loans or car loans from any bank or foreign bank, secured by their own house or car, as the case may be. For those cases not covered by this subsection, prior authorization of the Commissioner must be obtained and the requirements established by the latter to preserve the purity and trustworthiness of the bank examination process must be complied with.
(q) The violation of these provisions by the Commissioner, his/her delegates or the bank examiners of the Office of the Commissioner shall be sufficient grounds for their removal.
(r) Every bank, foreign bank or branch of the bank or foreign bank shall be charged an examination fee which shall not exceed the amount of two dollars ($2.00) for each ten thousand dollars ($10,000) or fraction of the resources or assets, including the total assets of the Trust Department of said bank, foreign bank or branch of a bank or foreign bank, examined, excluding from such resources or assets any compensated account or control account, and the sums thus collected shall be covered into the Special State Fund for the Investigation of Financial Institutions and Gambling Casinos. The Commissioner is hereby empowered by this act to establish the sum of the examination fees, and for such purpose he/she shall adopt regulations to provide for the examination fees provided herein. The computation resulting from the provisions of this subsection shall constitute the maximum payment of the examination fees; Provided, That, the Commissioner may reduce said payment when the circumstances justify it.
(s) The fees collected for the examination shall in no case be less than one thousand dollars ($1,000) for each office or branch of the bank or foreign bank.
(t) The Commissioner shall have the power to permit a foreign bank operating in Puerto Rico to become a bank organized under §§ 1 et seq. of this title after determining that each branch of the foreign bank is operating legally, that the resulting bank would have an adequate capital structure, including superavit, in relation to its deposit obligations or and its other activities of not less than the capital structure required for a new bank, and that the officials and directors of the resulting bank are capable persons with sufficient banking and commercial experience to direct a bank. The foreign bank may apply for such a license under §§ 1 et seq. of this title by filing a certificate with the Commissioner signed by its president and treasurer and with the favorable vote of the majority of the full Board of Directors, indicating the corporate action taken in compliance with the provisions of the laws which govern the conversion of a bank organized under its jurisdiction to a bank organized under the laws of another jurisdiction. It shall also include the conversion plan and the proposed articles of incorporation approved by the stockholders for its operation as a bank under §§ 1 et seq. of this title.
History —May 12, 1933, No. 55, p. 322, § 28; May 12, 1936, No. 74, p. 374, § 11; May 11, 1942, No. 180, p. 912, § 1; May 12, 1943, No. 100, p. 272, § 1; May 15, 1950, No. 430, p. 1056, § 9; July 23, 1974, No. 165, Part 1, p. 767, § 8; Aug. 28, 1997, No. 108, § 31.