State of Illinois
2017 and 2018


Introduced , by Rep. Lou Lang


205 ILCS 305/10  from Ch. 17, par. 4411
205 ILCS 305/34  from Ch. 17, par. 4435
205 ILCS 305/59  from Ch. 17, par. 4460

    Amends the Illinois Credit Union Act. Provides that a credit union may furnish the financial records of a member to an appropriate law enforcement authority upon written request from the law enforcement authority explaining a reasonable suspicion of an imminent threat to the personal security and safety of a member exists. Provides that a supervisory committee of a credit union with assets of $10,000,000 or more shall engage a certified public accountant or certified public accounting firm licensed by the Department of Financial and Professional Regulation to perform an annual external independent audit. Provides that a supervisory committee of a credit union with assets of $5,000,000 or more but less than $10,000,000 shall engage a certified public accountant or certified public accounting firm licensed by the Department to perform an annual external independent audit or an agreed-upon procedures report. Provides that the external independent audit report or agreed upon procedures report shall be delivered to the Secretary of Financial and Professional Regulation no later than 120 days after the end of the calendar or fiscal year. Provides that funds not used in loans to the credit union's members may be invested to aid in the credit union's management or in the purchase and assumption of assets held by other financial institutions. Makes other changes. Effective immediately.

LRB100 20610 LNS 36026 b






HB5497LRB100 20610 LNS 36026 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 5. The Illinois Credit Union Act is amended by
5changing Sections 10, 34, and 59 as follows:
6    (205 ILCS 305/10)  (from Ch. 17, par. 4411)
7    Sec. 10. Credit union records; member financial records.
8    (1) A credit union shall establish and maintain books,
9records, accounting systems and procedures which accurately
10reflect its operations and which enable the Department to
11readily ascertain the true financial condition of the credit
12union and whether it is complying with this Act.
13    (2) A photostatic or photographic reproduction of any
14credit union records shall be admissible as evidence of
15transactions with the credit union.
16    (3)(a) For the purpose of this Section, the term "financial
17records" means any original, any copy, or any summary of (1) a
18document granting signature authority over an account, (2) a
19statement, ledger card or other record on any account which
20shows each transaction in or with respect to that account, (3)
21a check, draft or money order drawn on a financial institution
22or other entity or issued and payable by or through a financial
23institution or other entity, or (4) any other item containing



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1information pertaining to any relationship established in the
2ordinary course of business between a credit union and its
3member, including financial statements or other financial
4information provided by the member.
5    (b) This Section does not prohibit:
6        (1) The preparation, examination, handling or
7    maintenance of any financial records by any officer,
8    employee or agent of a credit union having custody of such
9    records, or the examination of such records by a certified
10    public accountant engaged by the credit union to perform an
11    independent audit.
12        (2) The examination of any financial records by or the
13    furnishing of financial records by a credit union to any
14    officer, employee or agent of the Department, the National
15    Credit Union Administration, Federal Reserve board or any
16    insurer of share accounts for use solely in the exercise of
17    his duties as an officer, employee or agent.
18        (3) The publication of data furnished from financial
19    records relating to members where the data cannot be
20    identified to any particular customer of account.
21        (4) The making of reports or returns required under
22    Chapter 61 of the Internal Revenue Code of 1954.
23        (5) Furnishing information concerning the dishonor of
24    any negotiable instrument permitted to be disclosed under
25    the Uniform Commercial Code.
26        (6) The exchange in the regular course of business of



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1    (i) credit information between a credit union and other
2    credit unions or financial institutions or commercial
3    enterprises, directly or through a consumer reporting
4    agency or (ii) financial records or information derived
5    from financial records between a credit union and other
6    credit unions or financial institutions or commercial
7    enterprises for the purpose of conducting due diligence
8    pursuant to a merger or a purchase or sale of assets or
9    liabilities of the credit union.
10        (7) The furnishing of information to the appropriate
11    law enforcement authorities where the credit union
12    reasonably believes it has been the victim of a crime.
13        (8) The furnishing of information pursuant to the
14    Revised Uniform Unclaimed Property Act.
15        (9) The furnishing of information pursuant to the
16    Illinois Income Tax Act and the Illinois Estate and
17    Generation-Skipping Transfer Tax Act.
18        (10) The furnishing of information pursuant to the
19    federal "Currency and Foreign Transactions Reporting Act",
20    Title 31, United States Code, Section 1051 et sequentia.
21        (11) The furnishing of information pursuant to any
22    other statute which by its terms or by regulations
23    promulgated thereunder requires the disclosure of
24    financial records other than by subpoena, summons, warrant
25    or court order.
26        (12) The furnishing of information in accordance with



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1    the federal Personal Responsibility and Work Opportunity
2    Reconciliation Act of 1996. Any credit union governed by
3    this Act shall enter into an agreement for data exchanges
4    with a State agency provided the State agency pays to the
5    credit union a reasonable fee not to exceed its actual cost
6    incurred. A credit union providing information in
7    accordance with this item shall not be liable to any
8    account holder or other person for any disclosure of
9    information to a State agency, for encumbering or
10    surrendering any assets held by the credit union in
11    response to a lien or order to withhold and deliver issued
12    by a State agency, or for any other action taken pursuant
13    to this item, including individual or mechanical errors,
14    provided the action does not constitute gross negligence or
15    willful misconduct. A credit union shall have no obligation
16    to hold, encumber, or surrender assets until it has been
17    served with a subpoena, summons, warrant, court or
18    administrative order, lien, or levy.
19        (13) The furnishing of information to law enforcement
20    authorities, the Illinois Department on Aging and its
21    regional administrative and provider agencies, the
22    Department of Human Services Office of Inspector General,
23    or public guardians: (i) upon subpoena by the investigatory
24    entity or the guardian, or (ii) if there is suspicion by
25    the credit union that a member who is an elderly person or
26    person with a disability has been or may become the victim



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1    of financial exploitation. For the purposes of this item
2    (13), the term: (i) "elderly person" means a person who is
3    60 or more years of age, (ii) "person with a disability"
4    means a person who has or reasonably appears to the credit
5    union to have a physical or mental disability that impairs
6    his or her ability to seek or obtain protection from or
7    prevent financial exploitation, and (iii) "financial
8    exploitation" means tortious or illegal use of the assets
9    or resources of an elderly person or person with a
10    disability, and includes, without limitation,
11    misappropriation of the elderly or disabled person's
12    assets or resources by undue influence, breach of fiduciary
13    relationship, intimidation, fraud, deception, extortion,
14    or the use of assets or resources in any manner contrary to
15    law. A credit union or person furnishing information
16    pursuant to this item (13) shall be entitled to the same
17    rights and protections as a person furnishing information
18    under the Adult Protective Services Act and the Illinois
19    Domestic Violence Act of 1986.
20        (14) The disclosure of financial records or
21    information as necessary to effect, administer, or enforce
22    a transaction requested or authorized by the member, or in
23    connection with:
24            (A) servicing or processing a financial product or
25        service requested or authorized by the member;
26            (B) maintaining or servicing a member's account



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1        with the credit union; or
2            (C) a proposed or actual securitization or
3        secondary market sale (including sales of servicing
4        rights) related to a transaction of a member.
5        Nothing in this item (14), however, authorizes the sale
6    of the financial records or information of a member without
7    the consent of the member.
8        (15) The disclosure of financial records or
9    information as necessary to protect against or prevent
10    actual or potential fraud, unauthorized transactions,
11    claims, or other liability.
12        (16)(a) The disclosure of financial records or
13    information related to a private label credit program
14    between a financial institution and a private label party
15    in connection with that private label credit program. Such
16    information is limited to outstanding balance, available
17    credit, payment and performance and account history,
18    product references, purchase information, and information
19    related to the identity of the customer.
20        (b)(1) For purposes of this paragraph (16) of
21    subsection (b) of Section 10, a "private label credit
22    program" means a credit program involving a financial
23    institution and a private label party that is used by a
24    customer of the financial institution and the private label
25    party primarily for payment for goods or services sold,
26    manufactured, or distributed by a private label party.



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1        (2) For purposes of this paragraph (16) of subsection
2    (b) of Section 10, a "private label party" means, with
3    respect to a private label credit program, any of the
4    following: a retailer, a merchant, a manufacturer, a trade
5    group, or any such person's affiliate, subsidiary, member,
6    agent, or service provider.
7        (17) The furnishing of the financial records of a
8    member to an appropriate law enforcement authority,
9    without prior notice to or consent of the member, upon
10    written request of the law enforcement authority, when
11    reasonable suspicion of an imminent threat to the personal
12    security and safety of the member exists that necessitates
13    an expedited release of the member's financial records, as
14    determined by the law enforcement authority. The law
15    enforcement authority shall include a brief explanation of
16    the imminent threat to the member in its written request to
17    the credit union.
18    (c) Except as otherwise provided by this Act, a credit
19union may not disclose to any person, except to the member or
20his duly authorized agent, any financial records relating to
21that member of the credit union unless:
22        (1) the member has authorized disclosure to the person;
23        (2) the financial records are disclosed in response to
24    a lawful subpoena, summons, warrant, citation to discover
25    assets, or court order that meets the requirements of
26    subparagraph (d) of this Section; or



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1        (3) the credit union is attempting to collect an
2    obligation owed to the credit union and the credit union
3    complies with the provisions of Section 2I of the Consumer
4    Fraud and Deceptive Business Practices Act.
5    (d) A credit union shall disclose financial records under
6subparagraph (c)(2) of this Section pursuant to a lawful
7subpoena, summons, warrant, citation to discover assets, or
8court order only after the credit union mails a copy of the
9subpoena, summons, warrant, citation to discover assets, or
10court order to the person establishing the relationship with
11the credit union, if living, and otherwise his personal
12representative, if known, at his last known address by first
13class mail, postage prepaid unless the credit union is
14specifically prohibited from notifying the person by order of
15court or by applicable State or federal law. In the case of a
16grand jury subpoena, a credit union shall not mail a copy of a
17subpoena to any person pursuant to this subsection if the
18subpoena was issued by a grand jury under the Statewide Grand
19Jury Act or notifying the person would constitute a violation
20of the federal Right to Financial Privacy Act of 1978.
21    (e)(1) Any officer or employee of a credit union who
22knowingly and wilfully furnishes financial records in
23violation of this Section is guilty of a business offense and
24upon conviction thereof shall be fined not more than $1,000.
25    (2) Any person who knowingly and wilfully induces or
26attempts to induce any officer or employee of a credit union to



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1disclose financial records in violation of this Section is
2guilty of a business offense and upon conviction thereof shall
3be fined not more than $1,000.
4    (f) A credit union shall be reimbursed for costs which are
5reasonably necessary and which have been directly incurred in
6searching for, reproducing or transporting books, papers,
7records or other data of a member required or requested to be
8produced pursuant to a lawful subpoena, summons, warrant,
9citation to discover assets, or court order. The Secretary and
10the Director may determine, by rule, the rates and conditions
11under which payment shall be made. Delivery of requested
12documents may be delayed until final reimbursement of all costs
13is received.
14(Source: P.A. 99-143, eff. 7-27-15; 100-22, eff. 1-1-18.)
15    (205 ILCS 305/34)  (from Ch. 17, par. 4435)
16    Sec. 34. Duties of supervisory committee.
17    (1) The supervisory committee shall make or cause to be
18made an annual internal audit of the books and affairs of the
19credit union to determine that the credit union's accounting
20records and reports are prepared promptly and accurately
21reflect operations and results, that internal controls are
22established and effectively maintained to safeguard the assets
23of the credit union, and that the policies, procedures and
24practices established by the board of directors and management
25of the credit union are being properly administered. The



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1supervisory committee shall submit a report of that audit to
2the board of directors and a summary of that report to the
3members at the next annual meeting of the credit union. It
4shall make or cause to be made such supplementary audits as it
5deems necessary or as are required by the Secretary or by the
6board of directors, and submit reports of these supplementary
7audits to the Secretary or board of directors as applicable. If
8the supervisory committee has not engaged a certified public
9accountant licensed by the Department or certified public
10accounting firm licensed registered by the Department of
11Financial and Professional Regulation to make the internal
12audit, the supervisory committee or other officials of the
13credit union shall not indicate or in any manner imply that
14such audit has been performed by a certified public accountant
15licensed by the Department or certified public accounting firm
16licensed by the Department or that the audit represents the
17independent opinion of a certified public accountant licensed
18by the Department or certified public accounting firm licensed
19by the Department. The supervisory committee must retain its
20tapes and working papers of each internal audit for inspection
21by the Department. The report of this audit must be made on a
22form approved by the Secretary. A copy of the report must be
23promptly delivered mailed to the Secretary.
24    (2) The supervisory committee shall make or cause to be
25made at least once each year a reasonable percentage
26verification of members' share and loan accounts, consistent



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1with rules promulgated by the Secretary.
2    (3) (A) The supervisory committee of a credit union with
3assets of $10,000,000 $5,000,000 or more shall engage a
4certified public accountant licensed by the Department or
5certified public accounting firm licensed registered by the
6Department of Financial and Professional Regulation to perform
7an annual external independent audit of the credit union's
8financial statements in accordance with generally accepted
9auditing standards and the financial statements shall be issued
10in accordance with accounting principles generally accepted in
11the United States of America.
12    (B) The supervisory committee of a credit union with assets
13of $5,000,000 $3,000,000 or more, but less than $10,000,000
14$5,000,000, shall engage a certified public accountant
15licensed by the Department or certified public accounting firm
16licensed registered by the Department of Financial and
17Professional Regulation to perform on an annual basis: (i) an
18agreed-upon procedures engagement under attestation standards
19established by the American Institute of Certified Public
20Accountants to minimally satisfy the supervisory committee
21internal audit standards set forth in subsection (1); or (ii)
22an external independent audit of the credit union's financial
23statements pursuant to the standards set forth in paragraph (A)
24of subsection (3) an external independent audit of the credit
25union's financial statements in accordance with generally
26accepted auditing standards at least once every 3 years. A copy



HB5497- 12 -LRB100 20610 LNS 36026 b

1of an external independent audit shall be completed and mailed
2to the Secretary no later than 90 days after December 31 of
3each year; provided that a credit union or group of credit
4unions may obtain an extension of the due date upon application
5to and receipt of written approval from the Secretary. If the
6annual internal audit of such a credit union is conducted by a
7public accountant registered by the Department of Financial and
8Professional Regulation and the annual internal audit is done
9in conjunction with the credit union's annual external audit,
10the requirements of subsection (1) of this Section shall be
11deemed met.
12    (C) The external independent audit report or agreed upon
13procedures report shall be completed and a copy thereof
14delivered to the Secretary no later than 120 days after the end
15of the calendar or fiscal year under audit or fiscal period for
16which the agreed upon procedures are performed. A credit union
17or group of credit unions may obtain an extension of the due
18date upon application to and receipt of written approval from
19the Secretary.
20    (D) If the credit union engages a certified public
21accountant licensed by the Department or certified public
22accounting firm licensed by the Department to perform an annual
23external independent audit of the credit union's financial
24statements pursuant to the standards in paragraph (A) of
25subsection (3) or an annual agreed upon procedures engagement
26pursuant to the standards in paragraph (B) of subsection (3),



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1then the annual internal audit requirements of subsection (1)
2shall be deemed satisfied and met in all respects.
3    (4) In determining the appropriate balance in the allowance
4for loan losses account, a credit union may determine its
5historical loss rate using a defined period of time of less
6than 5 years, provided that:
7        (A) the methodology used to determine the defined
8    period of time is formally documented in the credit union's
9    policies and procedures and is appropriate to the credit
10    union's size, business strategy, and loan portfolio
11    characteristics and the economic environment of the areas
12    and employers served by the credit union;
13        (B) supporting documentation is maintained for the
14    technique used to develop the credit union loss rates,
15    including the period of time used to accumulate historical
16    loss data and the factors considered in establishing the
17    time frames; and
18        (C) the external auditor conducting the credit union's
19    financial statement audit has analyzed the methodology
20    employed by the credit union and concludes that the
21    financial statements, including the allowance for loan
22    losses, are fairly stated in all material respects in
23    accordance with U.S. Generally Accepted Accounting
24    Principles, as promulgated by the Financial Accounting
25    Standards Board.
26    (5) A majority of the members of the supervisory committee



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1shall constitute a quorum.
2    (6) On an annual basis commencing January 1, 2015, the
3members of the supervisory committee shall receive training
4related to their statutory duties. Supervisory committee
5members may receive the training through internal credit union
6training, external training offered by the credit union's
7retained auditors, trade associations, vendors, regulatory
8agencies, or any other sources or on-the-job experience, or a
9combination of those activities. The training may be received
10through any medium, including, but not limited to, conferences,
11workshops, audit closing meetings, seminars, teleconferences,
12webinars, and other Internet-based delivery channels.
13(Source: P.A. 97-133, eff. 1-1-12; 98-784, eff. 7-24-14.)
14    (205 ILCS 305/59)  (from Ch. 17, par. 4460)
15    Sec. 59. Investment of funds.
16    (a) Funds not used in loans to members may be invested,
17pursuant to subsection (7) of Section 30 of this Act, and
18subject to Departmental rules and regulations:
19        (1) In securities, obligations or other instruments of
20    or issued by or fully guaranteed as to principal and
21    interest by the United States of America or any agency
22    thereof or in any trust or trusts established for investing
23    directly or collectively in the same;
24        (2) In obligations of any state of the United States,
25    the District of Columbia, the Commonwealth of Puerto Rico,



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1    and the several territories organized by Congress, or any
2    political subdivision thereof; however, a credit union may
3    not invest more than 10% of its unimpaired capital and
4    surplus in the obligations of one issuer, exclusive of
5    general obligations of the issuer, and investments in
6    municipal securities must be limited to securities rated in
7    one of the 4 highest rating categories by a nationally
8    recognized statistical rating organization;
9        (3) In certificates of deposit or passbook type
10    accounts issued by a state or national bank, mutual savings
11    bank or savings and loan association; provided that such
12    institutions have their accounts insured by the Federal
13    Deposit Insurance Corporation or the Federal Savings and
14    Loan Insurance Corporation; but provided, further, that a
15    credit union's investment in an account in any one
16    institution may exceed the insured limit on accounts;
17        (4) In shares, classes of shares or share certificates
18    of other credit unions, including, but not limited to
19    corporate credit unions; provided that such credit unions
20    have their members' accounts insured by the NCUA or other
21    approved insurers, and that if the members' accounts are so
22    insured, a credit union's investment may exceed the insured
23    limit on accounts;
24        (5) In shares of a cooperative society organized under
25    the laws of this State or the laws of the United States in
26    the total amount not exceeding 10% of the unimpaired



HB5497- 16 -LRB100 20610 LNS 36026 b

1    capital and surplus of the credit union; provided that such
2    investment shall first be approved by the Department;
3        (6) In obligations of the State of Israel, or
4    obligations fully guaranteed by the State of Israel as to
5    payment of principal and interest;
6        (7) In shares, stocks or obligations of other financial
7    institutions in the total amount not exceeding 5% of the
8    unimpaired capital and surplus of the credit union;
9        (8) In federal funds and bankers' acceptances;
10        (9) In shares or stocks of Credit Union Service
11    Organizations in the total amount not exceeding the greater
12    of 3% of the unimpaired capital and surplus of the credit
13    union or the amount authorized for federal credit unions;
14        (10) In corporate bonds identified as investment grade
15    by at least one nationally recognized statistical rating
16    organization, provided that:
17            (i) the board of directors has established a
18        written policy that addresses corporate bond
19        investment procedures and how the credit union will
20        manage credit risk, interest rate risk, liquidity
21        risk, and concentration risk; and
22            (ii) the credit union has documented in its records
23        that a credit analysis of a particular investment and
24        the issuing entity was conducted by the credit union, a
25        third party on behalf of the credit union qualified by
26        education or experience to assess the risk



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1        characteristics of corporate bonds, or a nationally
2        recognized statistical rating agency before purchasing
3        the investment and the analysis is updated at least
4        annually for as long as it holds the investment; and
5        (11) To aid in the credit union's management of its
6    assets, liabilities, and liquidity in the purchase of an
7    investment interest in a pool of loans, in whole or in part
8    and without regard to the membership of the borrowers, from
9    other depository institutions and financial type
10    institutions, including mortgage banks, finance companies,
11    insurance companies, and other loan sellers, subject to
12    such safety and soundness standards, limitations, and
13    qualifications as the Department may establish by rule or
14    guidance from time to time; .
15        (12) To aid in the credit union's management of its
16    assets, liabilities, and liquidity by receiving funds from
17    another financial institution as evidenced by certificates
18    of deposit, share certificates, or other classes of shares
19    issued by the credit union to the financial institution;
20    and
21        (13) In the purchase and assumption of assets held by
22    other financial institutions, with approval of the
23    Secretary and subject to any safety and soundness
24    standards, limitations, and qualifications as the
25    Department may establish by rule or guidance from time to
26    time.



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1    (b) As used in this Section: ,
2    "Political political subdivision" includes, but is not
3limited to, counties, townships, cities, villages,
4incorporated towns, school districts, educational service
5regions, special road districts, public water supply
6districts, fire protection districts, drainage districts,
7levee districts, sewer districts, housing authorities, park
8districts, and any agency, corporation, or instrumentality of a
9state or its political subdivisions, whether now or hereafter
10created and whether herein specifically mentioned or not.
11    "Financial institution" includes any bank, savings bank,
12savings and loan association, or credit union established under
13the laws of the United States, this State, or any other state.
14    (c) A credit union investing to fund an employee benefit
15plan obligation is not subject to the investment limitations of
16this Act and this Section and may purchase an investment that
17would otherwise be impermissible if the investment is directly
18related to the credit union's obligation under the employee
19benefit plan and the credit union holds the investment only for
20so long as it has an actual or potential obligation under the
21employee benefit plan.
22(Source: P.A. 100-361, eff. 8-25-17.)
23    Section 99. Effective date. This Act takes effect upon
24becoming law.