S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   9561
 
                           I N  A S S E M B L Y
 
                              March 20, 2024
                                ___________
 
 Introduced by M. of A. KIM -- read once and referred to the Committee on
   Banks
 
 AN  ACT  to  amend the state finance law, the financial services law and
   the New York state urban development corporation act, in  relation  to
   establishing the empire state enhanced public payment system act
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. This act shall be known and may be cited as  the  "enhanced
 public payment system act".
   §  2.  Legislative intent. Many New York residents, including individ-
 uals who receive public benefits and payments related to  nutrition  and
 social  services, are targets of identity and consumer theft. Similarly,
 many New York residents who rely on Medicaid  home  and  community  care
 services  are  victims  of  exploitation  by private intermediaries that
 manage public payments.
   A system of individual digital wallets or payment accounts, linked  to
 a single master account that enables payments to move between such indi-
 vidual  wallets or payment accounts, is now easy to construct and admin-
 ister with the use of secure digital payment technologies. The state  of
 New  York  annually disburses more than thirty billion dollars of social
 and health  benefits,  including  home  care  services,  and  fifty-five
 billion  dollars  in  the  form  of  tax  credits, procurement payments,
 pension payouts, and other program dispersals, all of which can  readily
 be  disbursed via a system of individual wallets or accounts linked to a
 master account. The state of New York also receives more than fifty-five
 billion dollars annually in the form of service  payments,  tax  monies,
 licensing  fees,  civil fines and other remittances, all of which can be
 readily paid into a master account from individual wallets  or  accounts
 of the kind just described.
   A system of individual digital wallets or payment accounts linked to a
 master account could accordingly function as a state-provided and admin-
 istered  payment  infrastructure,  in  and  through which value could be
 accumulated, stored, grown and exchanged in 'real-time,'  with  no  need
 for fees or other forms of exploitative value extraction, thereby assur-
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD14884-01-4
 A. 9561                             2
 
 ing  that  all  New  York  residents  are: (a) able to receive real-time
 payments; (b) able to create, receive and grow wealth; and (c) empowered
 to participate fully in a growing state economy suffering no shortage of
 currency or forgoing of commerce.
   §  3.  The state finance law is amended by adding a new section 4-b to
 read as follows:
   § 4-B. EMPIRE STATE ENHANCED PUBLIC PAYMENT SYSTEM.   1.  DEFINITIONS.
 AS  USED  IN  THIS SECTION, THE FOLLOWING TERMS SHALL HAVE THE FOLLOWING
 MEANINGS:
   (A) "MASTER ACCOUNT" MEANS A DIGITAL ACCOUNT WHICH ENABLES PAYMENTS TO
 BE TRANSFERRED BETWEEN INDIVIDUAL WALLETS;
   (B) "INDIVIDUAL WALLET" MEANS A DIGITAL ACCOUNT WHICH:
   (I) IS LINKED TO A MASTER ACCOUNT;
   (II) ENABLES A RESIDENT TO SEND OR RECEIVE PAYMENT TO  ANY  ENTITY  OF
 THE STATE OR TO ANOTHER RESIDENT;
   (III) ALLOWS VALUE TO BE ACCUMULATED, STORED, GROWN AND EXCHANGED; AND
   (IV)  IS  NOT SUBJECT TO FEES OR OTHER VALUE EXTRACTION FOR USE OF THE
 INDIVIDUAL WALLET;
   (C) "RESIDENT" MEANS  AN  INDIVIDUAL  OR  A  DOMESTIC  CORPORATION  OR
 FOREIGN CORPORATION AUTHORIZED TO DO BUSINESS IN THE STATE;
   (D)  "PUBLIC  PAYMENT  SYSTEM"  MEANS THE EMPIRE STATE ENHANCED PUBLIC
 PAYMENT SYSTEM ESTABLISHED PURSUANT TO SUBDIVISION TWO OF THIS SECTION;
   (E) "STATE ENTITY" MEANS  ANY  DEPARTMENT,  BOARD,  BUREAU,  DIVISION,
 COMMISSION,  COMMITTEE,  COUNCIL,  OFFICE OF THE STATE, OR OTHER GOVERN-
 MENTAL ENTITY WITH STATEWIDE JURISDICTION;
   (F) "PAYMENT SERVICE PROVIDER" MEANS AN ENTITY WHICH  PROVIDES  ONLINE
 SERVICES  FOR  ACCEPTING  ELECTRONIC  PAYMENTS  BY A VARIETY OF METHODS,
 INCLUDING, BUT NOT LIMITED TO,  CREDIT  CARD,  DIRECT  DEBIT,  AND  BANK
 TRANSFER; AND
   (G)  "BANKED"  MEANS  A  PAYMENT NETWORK MAKING REAL-TIME PAYMENTS FOR
 CONSUMERS, BUSINESSES AND BANKS.
   2. THE DEPARTMENT OF  FINANCIAL  SERVICES,  IN  COOPERATION  WITH  THE
 DEPARTMENT  OF  TAXATION AND FINANCE, THE OFFICE OF THE COMPTROLLER, THE
 NEW YORK STATE AND LOCAL RETIREMENT SYSTEM, THE DEPARTMENT OF LABOR, THE
 DEPARTMENT OF HEALTH, THE DEPARTMENT OF SOCIAL SERVICES, AND OTHER STATE
 AGENCIES SHALL DEVELOP, ESTABLISH, AND  MAINTAIN  A  VALUE  STORAGE  AND
 PAYMENT PLATFORM TO BE KNOWN AS THE EMPIRE STATE ENHANCED PUBLIC PAYMENT
 SYSTEM. THE EMPIRE STATE ENHANCED PUBLIC PAYMENT SYSTEM SHALL CONSIST OF
 A  DIGITAL  MASTER ACCOUNT AND COORDINATE A SYSTEM OF INDIVIDUAL WALLETS
 WHICH SHALL BE MAINTAINED AND  ADMINISTERED  BY  THE  URBAN  DEVELOPMENT
 CORPORATION  AS  DESCRIBED  IN SUBDIVISION THIRTY-ONE OF SECTION FIVE OF
 SECTION ONE OF CHAPTER ONE HUNDRED SEVENTY-FOUR OF THE LAWS OF  NINETEEN
 HUNDRED  SIXTY-EIGHT,  CONSTITUTING THE NEW YORK STATE URBAN DEVELOPMENT
 CORPORATION ACT.
   3. ALL FUNDS DISBURSED TO RESIDENTS BY A STATE  ENTITY  OR  ANY  OTHER
 STATE  INSTRUMENTALITY  SHALL BE MADE OUT OF THE MASTER ACCOUNT TO INDI-
 VIDUAL WALLETS LINKED TO THE MASTER ACCOUNT VIA ENHANCED PUBLIC  PAYMENT
 SYSTEM  AND ANY REMITTANCE MADE TO A STATE ENTITY OR OTHER STATE INSTRU-
 MENTALITY BY A RESIDENT SHALL BE PERMITTED TO BE MADE, AT THE OPTION  OF
 THE  RESIDENT  MAKING  THE  REMITTANCE,  FROM  THE RESIDENT'S INDIVIDUAL
 WALLET.
   4. ALL RESIDENTS SHALL HAVE THE  ABILITY  TO  MAKE  PAYMENTS  TO,  AND
 RECEIVE  PAYMENTS  FROM,  OTHER RESIDENTS THROUGH LINKS AMONG INDIVIDUAL
 WALLETS ON THE VALUE LEDGER. EACH PAYMENT SHALL BE EFFECTED BY A  SIMUL-
 TANEOUS CREDITING OF THE PAYEE'S INDIVIDUAL WALLET AND AN EQUAL DEBITING
 OF  THE  PAYER'S  INDIVIDUAL  WALLET.  SUCH PAYMENTS SHALL BE ABLE TO BE
 A. 9561                             3
 
 DIRECTED BY THE MEANS OF  PAYMENT  CARDS,  WIRE  SERVICES,  SMART-DEVICE
 APPS, OR OTHER ELECTRONIC FUNDS TRANSFER.
   5.  ANY  RESIDENT  MAKING  PAYMENT  TO, OR RECEIVING PAYMENT FROM, ANY
 OTHER RESIDENT MAY REQUIRE THAT  THE  PAYEE  OR  PAYER  ACCEPT  OR  MAKE
 PAYMENT  VIA  THE  SYSTEM  OF  INDIVIDUAL WALLETS ON THE ENHANCED PUBLIC
 PAYMENT SYSTEM; PROVIDED, HOWEVER, THAT RESIDENTS WHO MAKE PAYMENTS  TO,
 OR RECEIVE PAYMENTS FROM, OTHER RESIDENTS SHALL NOT BE REQUIRED TO TRAN-
 SACT  WITH  EACH OTHER ON THE PUBLIC PAYMENT SYSTEM IN THE EVENT THAT NO
 PARTY TO THE TRANSACTION OPTS TO DO SO  AND  FURTHER  PROVIDED  THAT  NO
 TRANSACTING  PARTY'S  OPTING NOT TO DO SO IS COERCED BY ANY OTHER TRANS-
 ACTING PARTY OR ASSOCIATES OF SUCH TRANSACTING PARTY.
   6. ANY  COMMERCIAL  BANK,  OTHER  FINANCIAL  INSTITUTION,  OR  PAYMENT
 SERVICE PROVIDER DOING BUSINESS IN THE STATE SHALL BE REQUIRED TO:
   (A)  PROVIDE  FOR  FULL INTEROPERABILITY BETWEEN INDIVIDUAL WALLETS ON
 THE ENHANCED PUBLIC PAYMENT SYSTEM AND ANY DEMAND DEPOSIT OR TRANSACTION
 ACCOUNT MAINTAINED BY THE COMMERCIAL BANK, OTHER FINANCIAL  INSTITUTION,
 OR  PAYMENT SERVICE PROVIDER FOR THE HOLDERS OF SUCH INDIVIDUAL WALLETS;
 AND
   (B) PERMIT ALL HOLDERS OF INDIVIDUAL WALLETS TO MAKE DEPOSITS INTO AND
 WITHDRAWALS  FROM  SUCH  INDIVIDUAL  WALLET  VIA  ANY  AUTOMATED  TELLER
 MACHINE,  TELLER  WINDOW,  OR  OTHER  DEPOSIT OR WITHDRAWAL FACILITY THE
 BANK, FINANCIAL INSTITUTION,  OR  PAYMENT  SERVICE  PROVIDER  OFFERS  TO
 CUSTOMERS.  THERE  SHALL  BE  NO  PECUNIARY OR OTHER CHARGE ASSESSED FOR
 ACCESS TO INDIVIDUAL WALLETS; ANY COSTS ASSOCIATED WITH  ACCESS  TO  AND
 USE  OF  INDIVIDUAL  WALLETS  SHALL  BE  CONSIDERED  AN INCIDENT OF SUCH
 COMMERCIAL BANK, OTHER FINANCIAL INSTITUTION, OR PAYMENT SERVICE PROVID-
 ER'S STATUS AS A PUBLICLY LICENSED FINANCIAL UTILITY.
   7. THE DEPARTMENT OF FINANCIAL SERVICES SHALL ALSO  DEVELOP  AND  MAKE
 AVAILABLE AT NO COST A DOWNLOADABLE SMART-DEVICE APPLICATION TO BE KNOWN
 AS  THE EMPIRE STATE ENHANCED PUBLIC PAYMENT APP THROUGH WHICH RESIDENTS
 CAN ACCESS AND RECEIVE AND MAKE PAYMENTS  INTO  AND  OUT  OF  INDIVIDUAL
 WALLETS.  ALL  ENTITIES  OPERATING IN THE STATE THAT ACCEPT PAYMENTS VIA
 SMART-DEVICE APPLICATIONS OF  ANY  KIND  SHALL  BE  REQUIRED  TO  ACCEPT
 PAYMENTS  VIA  THE  ENHANCED PUBLIC PAYMENT APPLICATION AT THE OPTION OF
 ANY PAYER WISHING TO PAY VIA SUCH ENHANCED PUBLIC PAYMENT APPLICATION.
   8. THE DEPARTMENT OF TAXATION AND FINANCE,  THE  NEW  YORK  STATE  AND
 LOCAL  RETIREMENT SYSTEM, THE DEPARTMENT OF HEALTH AND THE DEPARTMENT OF
 SOCIAL SERVICES, AS THE STATE'S PRINCIPAL DISBURSERS  AND  RECEIVERS  OF
 FUNDS,  CREDITS, AND REMITTANCES, SHALL EXERCISE SPECIAL CARE IN ASSIST-
 ING WITH AND PROMOTING THE ESTABLISHMENT AND WIDE USE  OF  THE  ENHANCED
 PUBLIC PAYMENT SYSTEM, IN ORDER TO HASTEN BOTH:
   (A)  THE  FULL BANKING OF THE STATE'S UNBANKED AND VULNERABLE INDIVID-
 UALS; AND
   (B) INCLUSION OF THE STATE'S CURRENTLY MARGINALIZED RESIDENTS  IN  THE
 PROCESS OF VALUE CREATION, WEALTH ACCUMULATION, AND COMMERCIAL EXCHANGE.
   9. THE DEPARTMENT OF FINANCIAL SERVICES SHALL:
   (A)  ENSURE COMPLIANCE BY ALL BANKS, OTHER FINANCIAL INSTITUTIONS, AND
 PAYMENT SERVICE PROVIDERS WITH THE REQUIREMENTS OF THIS SECTION;
   (B) PROHIBIT AND PREVENT ANY OTHER PERSON OR COMPANY IN THE  FINANCIAL
 SERVICES  OR PAYMENTS INDUSTRIES FROM EXPLOITING ENHANCED PUBLIC PAYMENT
 WALLET HOLDERS OR OTHERWISE SUBVERTING THE VALUE-CREATING AND  COMMERCE-
 PROMOTING  PURPOSES  OF  THIS SECTION, INCLUDING BY OFFERING ADVANCES ON
 ANTICIPATED STATE REMITTANCES FOR FEES; AND
   (C) ENSURE COMPLIANCE WITH STATE BANKING, REGULATORY, AND DIGITAL  AND
 FINANCIAL  PRIVACY LAWS BY ALL ENTITIES THAT OVERSEE OR TRANSACT VIA THE
 ENHANCED PUBLIC PAYMENT SYSTEM. THE DEPARTMENT, IN COORDINATION WITH THE
 A. 9561                             4

 URBAN DEVELOPMENT CORPORATION, SHALL ALSO COORDINATE WITH  ANY  RELEVANT
 REGULATORY AGENCY OF THE UNITED STATES TO ENSURE COMPLIANCE WITH FEDERAL
 BANKING,  REGULATORY,  EMPLOYEE BENEFIT AND ANY OTHER APPLICABLE FEDERAL
 LAWS.
   10.  THE DEPARTMENT OF FINANCIAL SERVICES SHALL BE AUTHORIZED TO COOR-
 DINATE WITH ITS COUNTERPART AGENCIES IN OTHER STATES AND TERRITORIES  OF
 THE  UNITED STATES IN CONNECTION WITH ANY COMMON REGULATORY NEEDS IMPLI-
 CATED OR CHALLENGES RAISED BY STATE ENHANCED PUBLIC PAYMENT SYSTEMS.
   § 4. Section 301 of the financial services law is amended by adding  a
 new subsection (d) to read as follows:
   (D)  THE  SUPERINTENDENT SHALL HAVE THE POWER TO DIRECT THE DEPARTMENT
 TO DEVELOP, ESTABLISH, AND MAINTAIN THE  EMPIRE  STATE  ENHANCED  PUBLIC
 PAYMENT  SYSTEM  ESTABLISHED  PURSUANT  TO  SECTION  FOUR-B OF THE STATE
 FINANCE LAW. THE SUPERINTENDENT SHALL ALSO HAVE THE POWER TO DIRECT  THE
 DEPARTMENT  TO  COORDINATE WITH AGENCIES IN OTHER STATES AND TERRITORIES
 OF THE UNITED STATES THE REGULATORY NEEDS OR CHALLENGES RAISED BY  STATE
 ENHANCED PUBLIC PAYMENT SYSTEMS.
   §  5.  Section  5  of  section  1  of chapter 174 of the laws of 1968,
 constituting the New York state urban development  corporation  act,  is
 amended  by  adding  three  new  subdivisions  31,  32 and 33 to read as
 follows:
   (31) TO MAINTAIN AND ADMINISTER, IN CONSULTATION WITH  THE  DEPARTMENT
 OF FINANCIAL SERVICES, THE DEPARTMENT OF LABOR, THE DEPARTMENT OF HEALTH
 AND  THE DEPARTMENT OF SOCIAL SERVICES, THE EMPIRE STATE ENHANCED PUBLIC
 PAYMENT SYSTEM ESTABLISHED PURSUANT  TO  SECTION  FOUR-B  OF  THE  STATE
 FINANCE  LAW,  WITH  A VIEW TO ENCOURAGING THE EXPANSION OF COMMERCE AND
 THE BROAD GROWTH AND ACCUMULATION OF WEALTH IN  THE  STATE.  THE  CORPO-
 RATION,  IN  CONSULTATION AND COORDINATION WITH THE DEPARTMENT OF FINAN-
 CIAL SERVICES, THE DEPARTMENT OF LABOR, THE DEPARTMENT  OF  HEALTH,  THE
 DEPARTMENT  OF  SOCIAL  SERVICES, THE DEPARTMENT OF TAXATION AND FINANCE
 AND THE NEW YORK STATE AND LOCAL RETIREMENT SYSTEM,  SHALL  OBSERVE  AND
 BUILD  INTO  THE  EMPIRE  STATE  ENHANCED  PUBLIC  PAYMENT SYSTEM STRICT
 COMPLIANCE WITH THE HIGHEST STANDARDS OF COMMERCIAL AND  FINANCIAL  DATA
 PRIVACY.  SUCH STANDARDS SHALL ESTABLISH, AT A MINIMUM, THAT:
   (A) NO WEALTH ACCUMULATION OR SPENDING ACTIVITY OF ANY SORT THAT MAKES
 USE  OF  THE  ENHANCED PUBLIC PAYMENT SYSTEM SHALL BE SHARED WITH, INTI-
 MATED TO, OR SOLD TO ANY NON-GOVERNMENTAL PERSON OR ENTITY;
   (B) ANY SHARING OF INFORMATION WITH  GOVERNMENTAL  ENTITIES  SHALL  BE
 SOLELY  FOR  PURPOSES  OF  OPTIMIZING ADMINISTRATION OF THE EMPIRE STATE
 ENHANCED PUBLIC PAYMENT SYSTEM OR FOR LAW ENFORCEMENT PURPOSES;
   (C) ANY PERSONAL DATA THAT IS NOT BEING  USED  SOLELY  TO  ASSIST  THE
 PERSON  WHOSE DATA IS BEING ACCESSED AND THAT IS BEING USED FOR ADMINIS-
 TRATIVE PURPOSES SHALL BE CRYPTOGRAPHICALLY ANONYMIZED;
   (D) ANY PERSONAL DATA SHARED WITH LAW ENFORCEMENT AUTHORITIES SHALL BE
 SHARED SOLELY IN STRICT COMPLIANCE WITH  THE  FOURTH  AMENDMENT  TO  THE
 UNITED  STATES  CONSTITUTION  AND  ANY  AND ALL OTHER STATE, FEDERAL AND
 LOCAL LEGAL CONSTRAINTS THAT PROTECT THE RIGHTS OF SUSPECTED OR  ACCUSED
 PERSONS  AND  THE  EMPIRE STATE ENHANCED PUBLIC PAYMENT SYSTEM SHALL NOT
 LESSEN THE DEGREE OF LEGALLY ASSURED DATA PRIVACY OF NEW YORK RESIDENTS;
 AND
   (E) ANY AND ALL  PRACTICABLE  MEASURES  POSSIBLE  SHALL  BE  TAKEN  TO
 PREVENT  ACCIDENTAL DATA PRIVACY BREACHES STEMMING FROM OUTSIDE OR INAD-
 VERTENT DISCLOSURE.
   (32) TO EXPLORE AND NEGOTIATE POSSIBLE  INTERSTATE  COMPACTS  ENABLING
 THE  GROWTH  OF  ENHANCED PUBLIC PAYMENT SYSTEMS ACROSS MULTIPLE STATES,
 REGIONS, AND TERRITORIES OF THE UNITED STATES. THE CORPORATION,  AS  THE
 A. 9561                             5
 
 PRINCIPAL  ADMINISTRATOR  OF  THE  ENHANCED PUBLIC PAYMENT SYSTEM, SHALL
 REACH OUT TO AND CONSULT WITH COUNTERPART AGENCIES IN OTHER STATES, WITH
 A VIEW TO ASSISTING WITH THE DEVELOPMENT OF SIMILAR  VALUE  STORAGE  AND
 PAYMENT  PLATFORMS  IN  SUCH  STATES  AND  WITH THE GOAL OF THE POSSIBLE
 INTEROPERABILITY OF SUCH PLATFORMS WITH THE EMPIRE STATE ENHANCED PUBLIC
 PAYMENT SYSTEM.
   (33) TO EXPLORE AND NEGOTIATE POSSIBLE  PILOT  PROGRAMS  ENABLING  THE
 GROWTH AND SPREAD OF AN ENHANCED PUBLIC PAYMENT SYSTEM ACROSS THE BROAD-
 ER  UNITED STATES. AS THE PRINCIPAL ADMINISTRATOR OF THE ENHANCED PUBLIC
 PAYMENT SYSTEM ESTABLISHED PURSUANT  TO  SECTION  FOUR-B  OF  THE  STATE
 FINANCE  LAW,  THE  CORPORATION  SHALL BE AUTHORIZED TO REACH OUT TO AND
 CONSULT WITH THE FEDERAL RESERVE BANK OF NEW YORK, THE  FEDERAL  RESERVE
 BOARD OF THE UNITED STATES, AND THE DEPARTMENT OF TREASURY OF THE UNITED
 STATES,  WITH A VIEW TO POSSIBLY ASSISTING SUCH ENTITIES WITH THE DEVEL-
 OPMENT OF A NATIONAL VALUE STORAGE AND PAYMENT PLATFORM SIMILAR  TO  THE
 ENHANCED PUBLIC PAYMENT SYSTEM.
   §  6.  Severability.  If any clause, sentence, paragraph, subdivision,
 section or part of this act shall be adjudged by any court of  competent
 jurisdiction  to  be invalid, such judgment shall not affect, impair, or
 invalidate the remainder thereof, but shall be confined in its operation
 to the clause, sentence, paragraph, subdivision, section or part thereof
 directly involved in the controversy in which such judgment  shall  have
 been rendered. It is hereby declared to be the intent of the legislature
 that  this  act  would have been enacted even if such invalid provisions
 had not been included herein.
   § 7. This act shall take effect  immediately.  Effective  immediately,
 the  addition,  amendment and/or repeal of any rule or regulation neces-
 sary for the implementation of  this  act  on  its  effective  date  are
 authorized to be made and completed on or before such effective date.