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Public Act 102-0858
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SB3787 Enrolled | LRB102 21295 BMS 30406 b |
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AN ACT concerning regulation.
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Be it enacted by the People of the State of Illinois,
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represented in the General Assembly:
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Section 5. The Illinois Credit Union Act is amended by |
changing Sections 8, 9, 20 and 59 as follows:
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(205 ILCS 305/8) (from Ch. 17, par. 4409)
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Sec. 8. Secretary's powers and duties. Credit unions are |
regulated by the
Department. The Secretary in executing the |
powers and discharging the duties
vested by law in the |
Department has the following powers and duties:
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(1) To exercise the rights, powers and duties set |
forth in this Act or
any related Act. The Director shall |
oversee the functions of the Division and report to the |
Secretary, with respect to the Director's exercise of any |
of the rights, powers, and duties vested by law in the |
Secretary under this Act. All references in this Act to |
the Secretary shall be deemed to include the Director, as |
a person authorized by the Secretary or this Act to assume |
responsibility for the oversight of the functions of the |
Department relating to the regulatory supervision of |
credit unions under this Act.
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(2) To prescribe rules and regulations for the |
administration of this
Act. The provisions of the Illinois |
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Administrative Procedure Act are hereby
expressly adopted |
and incorporated herein
as though a part of this Act, and |
shall apply to all administrative rules
and procedures of |
the Department under this Act.
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(3) To direct and supervise all the administrative and |
technical
activities
of the Department including the |
employment of a Credit Union Supervisor
who shall have |
knowledge in the theory and practice of, or experience in, |
the
operations or supervision of financial institutions, |
preferably credit unions,
and such other persons as are |
necessary to carry out his functions. The Secretary shall |
ensure that all examiners appointed or assigned to examine |
the affairs of State-chartered credit unions possess the |
necessary training and continuing education to effectively |
execute their jobs.
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(4) To issue cease and desist orders when in the |
opinion of the Secretary,
a credit union is engaged or has |
engaged, or the Secretary has reasonable
cause to believe |
the credit union is about to engage, in an unsafe or |
unsound
practice, or is violating or has violated or the |
Secretary has reasonable
cause to believe is about to |
violate a law, rule or regulation or any condition
imposed |
in writing by the Department.
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(5) To suspend from office and to prohibit from |
further participation
in any manner in the conduct of the |
affairs of any his credit union any director,
officer or |
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committee member who has committed any violation of a law, |
rule,
regulation or of a cease and desist order or who has |
engaged or participated
in any unsafe or unsound practice |
in connection with the credit union or
who has committed |
or engaged in any act, omission, or practice which
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constitutes a breach of his fiduciary duty as such |
director, officer or
committee member, when the Secretary |
has determined that such action or actions
have resulted |
or will result in substantial financial loss or other |
damage that
seriously prejudices the interests of the |
members.
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(6) To assess a civil penalty against a credit union |
provided that: |
(A) the Secretary reasonably determines, based on |
objective facts and an accurate assessment of |
applicable legal standards, that the credit union has: |
(i) committed a violation of this Act, any |
rule adopted in accordance with this Act, or any |
order of the Secretary issued pursuant to his or |
her authority under this Act; or |
(ii) engaged or participated in any unsafe or |
unsound practice; |
(B) before a civil penalty is assessed under this |
item (6), the Secretary must make the further |
reasonable determination, based on objective facts and |
an accurate assessment of applicable legal standards, |
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that the credit union's action constituting a |
violation under subparagraph (i) of paragraph (A) of |
item (6) or an unsafe and unsound practice under |
subparagraph (ii) of paragraph (A) of item (6): |
(i) directly resulted in a substantial and |
material financial loss or created a reasonable |
probability that a substantial and material |
financial loss will directly result; or |
(ii) constituted willful misconduct or a |
material breach of fiduciary duty of any director, |
officer, or committee member of the credit union; |
Material financial loss, as referenced in this |
paragraph (B), shall be assessed in light of |
surrounding circumstances and the relative size and |
nature of the financial loss or probable financial |
loss. Certain benchmarks shall be used in determining |
whether financial loss is material, such as a |
percentage of total assets or total gross income for |
the immediately preceding 12-month period. Absent |
compelling and extraordinary circumstances, no civil |
penalty shall be assessed, unless the financial loss |
or probable financial loss is equal to or greater than |
either 1% of the credit union's total assets for the |
immediately preceding 12-month period, or 1% of the |
credit union's total gross income for the immediately |
preceding 12-month period, whichever is less; |
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(C) before a civil penalty is assessed under this |
item (6), the credit union must be expressly advised |
in writing of the: |
(i) specific violation that could subject it |
to a penalty under this item (6); and |
(ii) specific remedial action to be taken |
within a specific and reasonable time frame to |
avoid imposition of the penalty; |
(D) Civil penalties assessed under this item (6) |
shall be remedial, not punitive, and reasonably |
tailored to ensure future compliance by the credit |
union with the provisions of this Act and any rules |
adopted pursuant to this Act; |
(E) a credit union's failure to take timely |
remedial action with respect to the specific violation |
may result in the issuance of an order assessing a |
civil penalty up to the following maximum amount, |
based upon the total assets of the credit union: |
(i) Credit unions with assets of less than $10 |
million ................................................$1,000 |
(ii) Credit unions with assets of at least $10 |
million and less than $50 million ......................$2,500 |
(iii) Credit unions with assets of at least |
$50 million and less than $100 million .................$5,000 |
(iv) Credit unions with assets of at least |
$100 million and less than $500 million ...............$10,000 |
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(v) Credit unions with assets of at least $500 |
million and less than $1 billion ......................$25,000 |
(vi) Credit unions with assets of $1 billion |
and greater .....................................$50,000; and |
(F) an order assessing a civil penalty under this |
item (6) shall take effect upon service of the order, |
unless the credit union makes a written request for a |
hearing under 38 IL. Adm. Code 190.20 of the |
Department's rules for credit unions within 90 days |
after issuance of the order; in that event, the order |
shall be stayed until a final administrative order is |
entered. |
This item (6) shall not apply to violations separately |
addressed in rules as authorized under item (7) of this |
Section. |
(7) Except for the fees established in this Act, to |
prescribe, by rule
and regulation, fees and penalties for |
preparing, approving, and filing
reports and other |
documents; furnishing
transcripts; holding hearings; |
investigating applications
for permission to
organize, |
merge, or convert; failure to maintain accurate books and |
records
to enable the Department to conduct an |
examination; and taking supervisory
actions.
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(8) To destroy, in his discretion, any or all books |
and records of any
credit union in his possession or under |
his control after the expiration
of three years from the |
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date of cancellation of the charter of such credit
unions.
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(9) To make investigations and to conduct research and |
studies and to
publish some of the problems of persons in |
obtaining credit at reasonable
rates of interest and of |
the methods and benefits of cooperative saving
and lending |
for such persons.
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(10) To authorize, foster or establish experimental, |
developmental,
demonstration or pilot projects by public |
or private organizations including
credit unions which:
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(a) promote more effective operation of credit |
unions so as to provide
members an opportunity to use |
and control their own money to improve their
economic |
and social conditions; or
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(b) are in the best interests of credit unions, |
their members and the
people of the State of Illinois.
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(11) To cooperate in studies, training or other |
administrative activities
with, but not limited to, the |
NCUA, other state credit union regulatory
agencies and |
industry trade associations in order to promote more |
effective
and efficient supervision of Illinois chartered |
credit unions.
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(12) Notwithstanding the provisions of this Section, |
the Secretary shall not: |
(1) issue an order against a credit union |
organized under this Act for unsafe or unsound banking |
practices solely because the entity provides or has |
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provided financial services to a cannabis-related |
legitimate business; |
(2) prohibit, penalize, or otherwise discourage a |
credit union from providing financial services to a |
cannabis-related legitimate business solely because |
the entity provides or has provided financial services |
to a cannabis-related legitimate business; |
(3) recommend, incentivize, or encourage a credit |
union not to offer financial services to an account |
holder or to downgrade or cancel the financial |
services offered to an account holder solely because: |
(A) the account holder is a manufacturer or |
producer, or is the owner, operator, or employee |
of a cannabis-related legitimate business; |
(B) the account holder later becomes an owner |
or operator of a cannabis-related legitimate |
business; or |
(C) the credit union was not aware that the |
account holder is the owner or operator of a |
cannabis-related legitimate business; and |
(4) take any adverse or corrective supervisory |
action on a loan made to an owner or operator of: |
(A) a cannabis-related legitimate business |
solely because the owner or operator owns or |
operates a cannabis-related legitimate business; |
or |
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(B) real estate or equipment that is leased to |
a cannabis-related legitimate business solely |
because the owner or operator of the real estate |
or equipment leased the equipment or real estate |
to a cannabis-related legitimate business. |
(Source: P.A. 101-27, eff. 6-25-19.)
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(205 ILCS 305/9) (from Ch. 17, par. 4410)
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Sec. 9. Reports and examinations.
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(1) Credit unions shall report to
the Department on forms |
supplied by the Department, in accordance with a
schedule |
published by the Department. A recapitulation of the annual |
reports
shall be compiled and published annually by the |
Department, for the use
of the General Assembly, credit |
unions, various educational institutions
and other interested |
parties. A credit union which fails to file any report
when due |
shall pay to the Department a late filing fee for each
day the |
report is overdue as prescribed by rule. The Secretary may |
extend
the time for filing a
report.
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(2) The Secretary may require special examinations of and |
special
financial reports from a credit union or a credit
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union organization in which a credit union loans, invests, or |
delegates
substantially all
managerial duties and |
responsibilities when he determines that such
examinations
and |
reports are necessary to enable the Department
to determine |
the safety of a credit union's operation or its solvency.
The |
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cost to the Department of the aforesaid special examinations |
shall be
borne by the credit union being examined as |
prescribed by rule.
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(3) All credit unions incorporated under this Act shall be |
examined at
least biennially by the Department or, at the |
discretion of
the Secretary,
by a public accountant registered |
by the Department of Financial and Professional
Regulation. |
The costs of an examination shall be paid by the
credit union. |
The scope of all examinations by a public accountant shall
be |
at least equal to the examinations made by the Department. The |
examiners
shall have full access to, and may compel the |
production of, all the books,
papers, securities and accounts |
of any credit union. A special examination
shall be made by the |
Department or by a public accountant approved by the
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Department upon written request of 5 or more members, who |
guarantee the
expense of the same. Any credit union refusing |
to submit to an examination
when ordered by the Department |
shall be reported to the Attorney General,
who shall institute |
proceedings to have its charter revoked. If the Secretary
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determines that the examination of a credit
union is to be
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conducted by a public accountant registered by the Department |
of Financial and
Professional Regulation and the examination |
is
done in conjunction
with the credit union's external |
independent audit of financial
statements, the requirements of |
this Section and subsection (3) of Section
34 shall be deemed |
met.
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(3.5) Pursuant to Section 8, the Secretary shall adopt |
rules that ensure consistency and due process in the |
examination process. The Secretary may also establish |
guidelines that (i) define the scope of the examination |
process and (ii) clarify examination items to be resolved. The |
rules, formal guidance, interpretive letters, or opinions |
furnished to credit unions by the Secretary may be relied upon |
by the credit unions. |
(4) A copy of the completed report of examination and a |
review comment
letter, if any, citing exceptions revealed |
during the examination, shall
be submitted to the credit union |
by the Department. A detailed report stating
the corrective |
actions taken by the board of directors on each exception
set |
forth in the review comment letter shall be filed with the |
Department
within 40 days after the date of the review comment |
letter, or as otherwise
directed by the Department. Any credit |
union through its officers, directors,
committee members or |
employees, which willfully provides fraudulent or
misleading |
information regarding the corrective actions taken on |
exceptions
appearing in a review comment letter may have its |
operations restricted to
the collection of principal and |
interest on loans outstanding and the
payment of normal |
expenses and salaries until all exceptions are corrected
and |
accepted by the Department.
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(5) The Secretary may accept an examination from the |
National Credit Union Administration or a private insurer of |
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share deposits approved by the Secretary instead of an |
examination conducted by the Department or by a public |
accountant registered by the Department pursuant to subsection |
(3). Acceptance of an examination from the National Credit |
Union Administration or an approved private insurer of share |
deposits shall only be permitted on an alternating basis with |
examinations that the Department or a registered public |
accountant conducts. |
(Source: P.A. 102-558, eff. 8-20-21.)
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(205 ILCS 305/20) (from Ch. 17, par. 4421)
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Sec. 20. Election or appointment of officials.
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(1) The credit union shall
be directed by a board of |
directors consisting of no less than 7 in number,
to be elected |
at the annual meeting by and from the members. Directors shall
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hold office until the next annual meeting, unless their
terms |
are staggered. Upon amendment of its bylaws, a credit union |
may divide
the directors into 2 or 3 classes with each class as |
nearly equal in number as
possible. The term of office of the |
directors of the first class shall expire
at the first annual |
meeting after their election, that of the second class
shall
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expire at the second annual meeting after their election, and |
that of the third
class, if any, shall expire at the third |
annual meeting after their election.
At each annual meeting |
after the classification, the number of directors equal
to the |
number of directors whose terms expire at the time of the |
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meeting shall
be elected to hold office until the second |
succeeding annual meeting if there
are 2 classes or until the |
third succeeding annual meeting if there are 3
classes. A |
director shall hold office for the term for which he
or she is |
elected and until his or her
successor
is elected and |
qualified. |
(1.5) Except as provided in subsection (1.10), in all |
elections for directors, every member
has the right to vote, |
in person, by proxy, or by secure electronic record if |
approved by the board of directors, the number of shares owned
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by him, or in the case of a member other than a natural person, |
the member's
one vote, for as many persons as there are |
directors to be elected, or to
cumulate such shares, and give |
one candidate as many votes as the number
of directors |
multiplied by the number of his shares equals, or to |
distribute
them on
the same principle among as many candidates |
as he may desire and the directors
shall not be elected in any |
other manner. Shares held in a joint account
owned by more than |
one member may be voted by any one of the members, however,
the |
number of cumulative votes cast may not exceed a total equal to |
the number
of shares multiplied by the number of directors to |
be elected. A majority of
the shares entitled
to vote shall be |
represented either in person or by proxy for the election
of |
directors. Each director shall wholly take and subscribe to an |
oath
that he will diligently and honestly perform his duties |
in administering
the affairs of the credit union, that while |
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he may delegate to another the
performance of those |
administrative duties he is not thereby relieved from
his |
responsibility for their performance, that he will not |
knowingly violate
or permit to be violated any law applicable |
to the credit union,
and that he is the owner of at least one |
share of the credit union.
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(1.10) Upon amendment of a credit union's bylaws approved |
by the members , in all elections for directors, every member |
who is a natural person shall have the right to cast one vote, |
regardless of the number of his or her shares, in person, by |
proxy, or by secure electronic record if approved by the board |
of directors, for as many persons as there are directors to be |
elected.
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(1.15) If the board of directors has adopted a policy |
addressing age eligibility standards on voting, holding |
office, or petitioning the board, then a credit union may |
require (i) that members be at least 18 years of age by the |
date of the meeting in order to vote at meetings of the |
members, sign nominating petitions, or sign petitions |
requesting special meetings, and (ii) that members be at least |
18 years of age by the date of election or appointment in order |
to hold elective or appointive office. |
(2) The board of directors shall appoint from among the |
members of the
credit union, a supervisory committee of not |
less than 3 members at the
organization meeting and within 30 |
days following each annual meeting of
the members for such |
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terms as the bylaws provide. Members of the supervisory |
committee may, but need not be, on the board of directors, but |
shall not
be officers of the credit union, members of the |
credit committee,
or the
credit manager if no credit committee |
has been appointed.
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(3) The board of directors may appoint, from among the
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members of the
credit union, a credit committee consisting of |
an odd number, not less than
3 for such terms as the bylaws |
provide. Members of the credit committee
may, but need not be, |
directors or officers of the credit union, but shall
not be |
members of the supervisory committee.
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(4) The board of directors may appoint from among the |
members
of the
credit union a membership committee of one or |
more persons. If appointed,
the committee shall act
upon all |
applications for membership and submit a report of its actions
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to the board of directors at the next regular meeting for
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review.
If no membership committee is appointed, credit union |
management shall act
upon all applications for membership and |
submit a report of its actions to the board of directors
at the |
next regular meeting for review.
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(5) As used in this Section, "electronic" and "electronic |
record" have the meanings ascribed to those terms in the |
Uniform Electronic Transactions Act. As used in this Section, |
"secured electronic record" means an electronic record that |
meets the criteria set forth in the Uniform Electronic |
Transactions Act. |
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(Source: P.A. 102-38, eff. 6-25-21; revised 8-3-21.)
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(205 ILCS 305/59) (from Ch. 17, par. 4460)
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Sec. 59. Investment of funds.
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(a) Funds not used in loans to members may be
invested, |
pursuant to subsection (7) of Section 30 of this Act, and
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subject to Departmental rules and
regulations:
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(1) In securities, obligations or other instruments of |
or issued by or
fully guaranteed as to principal and |
interest by the United States of America
or any agency |
thereof or in any trust or trusts established for |
investing
directly or collectively in the same;
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(2) In obligations of any state of the United States, |
the District of
Columbia, the Commonwealth of Puerto Rico, |
and the several
territories organized
by Congress, or any |
political subdivision thereof; however, a credit union
may
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not invest more than 10% of its unimpaired capital and |
surplus in the
obligations of one issuer, exclusive of |
general obligations of the issuer, and
investments in |
municipal securities must be limited to securities rated |
in one
of the 4
highest rating investment grades |
categories by a nationally recognized statistical rating
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organization;
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(3) In certificates of deposit or passbook type |
accounts issued by a state
or national bank, mutual |
savings bank or savings and loan association; provided
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that such institutions have their accounts insured by the |
Federal Deposit
Insurance Corporation or the Federal |
Savings and Loan Insurance Corporation;
but provided, |
further, that a credit union's investment in an account in
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any one institution may exceed the insured limit on |
accounts;
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(4) In shares, classes of shares or share certificates |
of other credit
unions, including, but not limited to |
corporate credit unions; provided
that such credit unions |
have their members' accounts insured by the NCUA
or other |
approved insurers, and that if the members' accounts are |
so insured,
a credit union's investment may exceed the |
insured limit on accounts;
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(5) In shares of a cooperative society organized under |
the laws of this
State or the laws of the United States in |
the total amount not exceeding
10% of the unimpaired |
capital and surplus of the credit union; provided
that |
such investment shall first be approved by the Department;
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(6) In obligations of the State of Israel, or |
obligations fully guaranteed
by the State of Israel as to |
payment of principal and interest;
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(7) In shares, stocks or obligations of other |
financial institutions in
the total amount not exceeding |
5% of the unimpaired capital and surplus
of the credit |
union;
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(8) In federal funds and bankers' acceptances;
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(9) In shares or stocks of Credit Union Service |
Organizations in the
total amount not exceeding the |
greater of 6% of the unimpaired
capital and surplus of the
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credit union or the amount authorized for federal credit |
unions;
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(10) In corporate bonds identified as investment grade |
by at least one nationally recognized statistical rating |
organization, provided that: |
(i) the board of directors has established a |
written policy that addresses corporate bond |
investment procedures and how the credit union will |
manage credit risk, interest rate risk, liquidity |
risk, and concentration risk; and |
(ii) the credit union has documented in its |
records that a credit analysis of a particular |
investment and the issuing entity was conducted by the |
credit union, a third party on behalf of the credit |
union qualified by education or experience to assess |
the risk characteristics of corporate bonds, or a |
nationally recognized statistical rating agency before |
purchasing the investment and the analysis is updated |
at least annually for as long as it holds the |
investment; |
(11) To aid in the credit union's management of its |
assets, liabilities, and liquidity in the purchase of an |
investment interest in a pool of loans, in whole or in part |
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and without regard to the membership of the borrowers, |
from other depository institutions and financial type |
institutions, including mortgage banks, finance companies, |
insurance companies, and other loan sellers, subject to |
such safety and soundness standards, limitations, and |
qualifications as the Department may establish by rule or |
guidance from time to time; |
(12) To aid in the credit union's management of its |
assets, liabilities, and liquidity by receiving funds from |
another financial institution as evidenced by certificates |
of deposit, share certificates, or other classes of shares |
issued by the credit union to the financial institution; |
(13) In the purchase and assumption of assets held by |
other financial institutions, with approval of the |
Secretary and subject to any safety and soundness |
standards, limitations, and qualifications as the |
Department may establish by rule or guidance from time to |
time; and |
(14) In the shares, stocks, or obligations of |
community development financial institutions as defined in |
regulations issued by the U.S. Department of the Treasury |
and minority depository institutions as defined by the |
National Credit Union Administration; however the |
aggregate amount of all such investments shall not at any |
time exceed 5% of the paid-in and unimpaired capital and |
surplus of the credit union. |
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(b) As used in this Section: |
"Political subdivision" includes, but is not
limited to, |
counties,
townships, cities, villages, incorporated towns, |
school districts, educational
service regions, special road |
districts, public water supply districts, fire
protection |
districts, drainage districts, levee districts, sewer |
districts,
housing authorities, park districts, and any
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agency, corporation, or instrumentality of a state or its |
political
subdivisions, whether now or hereafter created and |
whether herein specifically
mentioned or not.
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"Financial institution" includes any bank, savings bank, |
savings and loan association, or credit union established |
under the laws of the United States, this State, or any other |
state. |
(c) A credit union investing to fund an employee benefit |
plan obligation is not subject to the investment limitations |
of this Act and this Section and may purchase an investment |
that would otherwise be impermissible if the investment is |
directly related to the credit union's obligation under the |
employee benefit plan and the credit union holds the |
investment only for so long as it has an actual or potential |
obligation under the employee benefit plan.
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(d) If a credit union acquires loans from another |
financial institution or financial-type institution pursuant |
to this Section, the credit union shall be authorized to |
provide loan servicing and collection services in connection |