HB5139 EngrossedLRB100 18454 XWW 33669 b

1    AN ACT concerning regulation.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 1. Short title. This Act may be cited as the
5Regulatory Sandbox Act.
 
6    Section 5. Definitions. As used in this Act:
7    "Consumer" means a person who purchases or otherwise enters
8into a transaction or agreement to receive an innovative
9financial product or service tested by a person participating
10in the regulatory sandbox.
11    "Department" means the Department of Financial and
12Professional Regulation.
13    "Division of Financial Institutions" means the Division of
14Financial Institutions of the Department of Financial and
15Professional Regulation.
16    "Financial institutions" means ambulatory and community
17currency exchanges, credit unions, guaranteed credit unions,
18persons engaged in the business of transmitting money to
19foreign countries or buying and selling foreign money, pawners'
20societies, title insuring or guaranteeing companies, and
21persons engaged in the business of making loans of $800 or
22less.
23    "Financial product or service" means a product or service

 

 

HB5139 Engrossed- 2 -LRB100 18454 XWW 33669 b

1regulated by the Department's Division of Financial
2Institutions or a product or service that includes elements
3that may otherwise require a license, certification, or
4recognition as a financial institution or enterprise regulated
5by the Department's Division of Financial Institutions.
6    "Innovation" means, with respect to a product or service,
7that which uses or incorporates new or emerging technology, or
8new uses for existing technology, to address a problem, provide
9a benefit, or otherwise offer a product, service, business
10model, or delivery mechanism that has no comparable widespread
11offering in the marketplace regulated by the Department's
12Division of Financial Institutions.
13    "Person" means an individual, partnership, joint venture,
14trust, estate, firm, corporation, association, or cooperative
15society or association.
16    "Regulatory sandbox" means the program established by this
17Act that allows a person to temporarily test innovative
18financial products, services, business models, or delivery
19mechanisms on a limited basis without being required to first
20obtain a license, certification, or recognition as a regulated
21financial institution or enterprise.
22    "Secretary" means the Secretary of Financial and
23Professional Regulation.
 
24    Section 10. Purpose. The purpose of the regulatory sandbox
25is to enable a person to obtain limited access to the Illinois

 

 

HB5139 Engrossed- 3 -LRB100 18454 XWW 33669 b

1marketplace in order to temporarily test innovations through
2the regulatory sandbox, including allowing the person to test
3innovations without first having to obtain licensure with the
4Department.
 
5    Section 15. Applications; review.
6    (a) A person may apply to the Department to enter the
7regulatory sandbox to temporarily test innovations before
8releasing the innovation to Illinois consumers.
9    (b) An application to enter the regulatory sandbox shall be
10in a form prescribed by the Secretary.
11    (c) At the time of application, an applicant shall provide
12the Department with an accurate and up-to-date email address.
13    (d) If an applicant is a corporation, the applicant must be
14in good standing and in statutory compliance with the state or
15country of its incorporation. If an applicant is an entity
16other than a corporation, the applicant must be properly
17registered under the laws of this State or another state or
18country. If required by the Department, the applicant must be
19authorized to do business in the State of Illinois.
20    (e) A financial institution already regulated by the
21Department's Division of Financial Institutions must file an
22application to test products or services that are outside the
23scope of its current license.
24    (f) The fee for an application to enter the regulatory
25sandbox is $500 per innovation.

 

 

HB5139 Engrossed- 4 -LRB100 18454 XWW 33669 b

1    (g) All moneys received by the Department under this Act
2shall be deposited in the Financial Institution Fund created
3under Section 6z-26 of the State Finance Act.
4    (h) The Department shall approve or deny an application
5within 90 days after the date of receipt of the application.
6The Department and the applicant may agree to extend the time
7beyond 90 days.
 
8    Section 20. Operation.
9    (a) An applicant approved for the regulatory sandbox has 12
10months from the date of approval to test the innovation.
11    (b) Consumers upon whom innovations are tested must be
12Illinois residents.
13    (c) No more than 5,000 Illinois consumers may transact
14through or enter into an agreement to use the innovation.
15    (d) At the end of the innovation's 12-month test period, a
16person testing an innovation must exit the regulatory sandbox
17and wind down the operation of the innovation within 60 days,
18except as otherwise provided in Section 25.
19    (e) Before temporarily testing an innovation, a person
20approved for the regulatory sandbox must disclose, in a clear
21and conspicuous form, to Illinois consumers:
22        (1) the name and contact information of the person
23    providing the innovation;
24        (2) that the innovation is authorized pursuant to the
25    regulatory sandbox and not pursuant to any license issued

 

 

HB5139 Engrossed- 5 -LRB100 18454 XWW 33669 b

1    by the Department;
2        (3) that the State of Illinois does not endorse or
3    recommend the innovation;
4        (4) that the innovation is a temporary test that may be
5    discontinued at the end of the test period, including the
6    expected end date of the test period; and
7        (5) the name and contact information for the
8    Department, including where a consumer may file a complaint
9    regarding the innovation.
10    These disclosures must be provided to the consumers before
11proceeding with the transaction.
12    (f) A person approved for the regulatory sandbox shall
13maintain books, accounts, and records for the innovation.
14    (g) The Department may inspect a person in the regulatory
15sandbox at any time. Unless it will interfere with the
16Department's duties under this Act, reasonable notice of the
17inspection shall be given to the person in the regulatory
18sandbox. The Secretary or appointed representative shall have
19full and free access to all the books, papers, and records that
20relate to the innovation.
21    (h) A person who winds down the operation of the innovation
22shall preserve books, accounts, and records, in any form, for
23the innovation for 5 years after the conclusion of the test
24period.
25    (i) The Department may suspend any person in the regulatory
26sandbox for failing to comply with this Act, including the

 

 

HB5139 Engrossed- 6 -LRB100 18454 XWW 33669 b

1failure to comply with the Department's request for books,
2accounts, records, or other relevant material.
3    (j) The Secretary may revoke or suspend admission to or
4refuse to admit a person to the regulatory sandbox if the
5Secretary finds that:
6        (1) the person has failed to pay the application fee;
7        (2) the person has violated a provision of this Act or
8    a rule adopted by the Secretary under the authority of this
9    Act;
10        (3) a fact or condition exists which, if it had existed
11    at the time of the original application for admission to
12    the regulatory sandbox, would have warranted the Secretary
13    in refusing initial admission to the regulatory sandbox; or
14        (4) the person has made a false statement or a false
15    representation to the Secretary in application for
16    admission to the regulatory sandbox.
17    When a person's admission to the regulatory sandbox is
18denied, suspended, or revoked, the Secretary shall serve the
19person with notice of his or her action, including a statement
20of the reasons for his or her action, personally, by electronic
21mail, or by regular mail. Service by mail is completed when the
22notice is deposited in the U.S. Mail. Service to the email
23address of record is completed when sent.
 
24    Section 25. Extension.
25    (a) A person in the regulatory sandbox may request a

 

 

HB5139 Engrossed- 7 -LRB100 18454 XWW 33669 b

1one-time extension of the regulatory sandbox test period. The
2request must be made no later than the end of the 11th month of
3the initial 12-month test period. The request for an extension
4must specify how long the requester believes will be necessary
5to produce a conclusive test and state specific reasons why an
6extension is necessary.
7    (b) The Department may grant a one-time test period
8extension of up to 6 months. The Department must grant or deny
9a request for a one-time test period extension before the end
10of the initial 12-month test period. A denial of an extension
11request is within the Department's sole discretion and any such
12denial is not appealable.
 
13    Section 30. Rules. The Secretary may adopt and enforce all
14reasonable rules necessary or appropriate for the
15administration of this Act. The rulemaking shall be subject to
16the provisions of the Illinois Administrative Procedure Act.
 
17    Section 35. Judicial review. All final administrative
18decisions of the Department under this Act shall be subject to
19judicial review pursuant to the provisions of the
20Administrative Review Law and any rules adopted pursuant to the
21Administrative Review Law.
 
22    Section 40. Remedies. Nothing in this Act shall be
23construed to limit the remedies provided under the Code of

 

 

HB5139 Engrossed- 8 -LRB100 18454 XWW 33669 b

1Civil Procedure.
 
2    Section 905. The State Finance Act is amended by changing
3Section 6z-26 as follows:
 
4    (30 ILCS 105/6z-26)
5    Sec. 6z-26. The Financial Institution Fund. All moneys
6received by the Department of Financial and Professional
7Regulation under the Safety Deposit License Act, the Foreign
8Exchange License Act, the Pawners Societies Act, the Sale of
9Exchange Act, the Currency Exchange Act, the Sales Finance
10Agency Act, the Debt Management Service Act, the Consumer
11Installment Loan Act, the Illinois Development Credit
12Corporation Act, the Title Insurance Act, the Debt Settlement
13Consumer Protection Act, the Debt Management Service Consumer
14Protection Fund, the Regulatory Sandbox Act, and any other Act
15administered by the Department of Financial and Professional
16Regulation as the successor of the Department of Financial
17Institutions now or in the future (unless an Act specifically
18provides otherwise) shall be deposited in the Financial
19Institution Fund (hereinafter "Fund"), a special fund that is
20hereby created in the State Treasury.
21    Moneys in the Fund shall be used by the Department, subject
22to appropriation, for expenses incurred in administering the
23above named and referenced Acts.
24    The Comptroller and the State Treasurer shall transfer from

 

 

HB5139 Engrossed- 9 -LRB100 18454 XWW 33669 b

1the General Revenue Fund to the Fund any monies received by the
2Department after June 30, 1993, under any of the above named
3and referenced Acts that have been deposited in the General
4Revenue Fund.
5    As soon as possible after the end of each calendar year,
6the Comptroller shall compare the balance in the Fund at the
7end of the calendar year with the amount appropriated from the
8Fund for the fiscal year beginning on July 1 of that calendar
9year. If the balance in the Fund exceeds the amount
10appropriated, the Comptroller and the State Treasurer shall
11transfer from the Fund to the General Revenue Fund an amount
12equal to the difference between the balance in the Fund and the
13amount appropriated.
14    Nothing in this Section shall be construed to prohibit
15appropriations from the General Revenue Fund for expenses
16incurred in the administration of the above named and
17referenced Acts.
18    Moneys in the Fund may be transferred to the Professions
19Indirect Cost Fund, as authorized under Section 2105-300 of the
20Department of Professional Regulation Law of the Civil
21Administrative Code of Illinois.
22(Source: P.A. 96-1420, eff. 8-3-10.)
 
23    Section 999. Effective date. This Act takes effect January
241, 2019.