HB5497 EnrolledLRB100 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. The written request shall reflect that it
18    has been authorized by a supervisory or managerial official
19    of the law enforcement authority. The decision to furnish
20    the financial records of a member to a law enforcement
21    authority shall be made by a supervisory or managerial
22    official of the credit union. A credit union providing
23    information in accordance with this item (17) shall not be
24    liable to the member or any other person for the disclosure
25    of the information to the law enforcement authority.
26    (c) Except as otherwise provided by this Act, a credit



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1union may not disclose to any person, except to the member or
2his duly authorized agent, any financial records relating to
3that member of the credit union unless:
4        (1) the member has authorized disclosure to the person;
5        (2) the financial records are disclosed in response to
6    a lawful subpoena, summons, warrant, citation to discover
7    assets, or court order that meets the requirements of
8    subparagraph (d) of this Section; or
9        (3) the credit union is attempting to collect an
10    obligation owed to the credit union and the credit union
11    complies with the provisions of Section 2I of the Consumer
12    Fraud and Deceptive Business Practices Act.
13    (d) A credit union shall disclose financial records under
14subparagraph (c)(2) of this Section pursuant to a lawful
15subpoena, summons, warrant, citation to discover assets, or
16court order only after the credit union mails a copy of the
17subpoena, summons, warrant, citation to discover assets, or
18court order to the person establishing the relationship with
19the credit union, if living, and otherwise his personal
20representative, if known, at his last known address by first
21class mail, postage prepaid unless the credit union is
22specifically prohibited from notifying the person by order of
23court or by applicable State or federal law. In the case of a
24grand jury subpoena, a credit union shall not mail a copy of a
25subpoena to any person pursuant to this subsection if the
26subpoena was issued by a grand jury under the Statewide Grand



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1Jury Act or notifying the person would constitute a violation
2of the federal Right to Financial Privacy Act of 1978.
3    (e)(1) Any officer or employee of a credit union who
4knowingly and wilfully furnishes financial records in
5violation of this Section is guilty of a business offense and
6upon conviction thereof shall be fined not more than $1,000.
7    (2) Any person who knowingly and wilfully induces or
8attempts to induce any officer or employee of a credit union to
9disclose financial records in violation of this Section is
10guilty of a business offense and upon conviction thereof shall
11be fined not more than $1,000.
12    (f) A credit union shall be reimbursed for costs which are
13reasonably necessary and which have been directly incurred in
14searching for, reproducing or transporting books, papers,
15records or other data of a member required or requested to be
16produced pursuant to a lawful subpoena, summons, warrant,
17citation to discover assets, or court order. The Secretary and
18the Director may determine, by rule, the rates and conditions
19under which payment shall be made. Delivery of requested
20documents may be delayed until final reimbursement of all costs
21is received.
22(Source: P.A. 99-143, eff. 7-27-15; 100-22, eff. 1-1-18.)
23    (205 ILCS 305/34)  (from Ch. 17, par. 4435)
24    Sec. 34. Duties of supervisory committee.
25    (1) The supervisory committee shall make or cause to be



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1made an annual internal audit of the books and affairs of the
2credit union to determine that the credit union's accounting
3records and reports are prepared promptly and accurately
4reflect operations and results, that internal controls are
5established and effectively maintained to safeguard the assets
6of the credit union, and that the policies, procedures and
7practices established by the board of directors and management
8of the credit union are being properly administered. The
9supervisory committee shall submit a report of that audit to
10the board of directors and a summary of that report to the
11members at the next annual meeting of the credit union. It
12shall make or cause to be made such supplementary audits as it
13deems necessary or as are required by the Secretary or by the
14board of directors, and submit reports of these supplementary
15audits to the Secretary or board of directors as applicable. If
16the supervisory committee has not engaged a licensed certified
17public accountant or licensed certified public accounting firm
18registered by the Department of Financial and Professional
19Regulation to make the internal audit, the supervisory
20committee or other officials of the credit union shall not
21indicate or in any manner imply that such audit has been
22performed by a licensed certified public accountant or licensed
23certified public accounting firm or that the audit represents
24the independent opinion of a licensed certified public
25accountant or licensed certified public accounting firm. The
26supervisory committee must retain its tapes and working papers



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1of each internal audit for inspection by the Department. The
2report of this audit must be made on a form approved by the
3Secretary. A copy of the report must be promptly delivered
4mailed to the Secretary.
5    (2) The supervisory committee shall make or cause to be
6made at least once each year a reasonable percentage
7verification of members' share and loan accounts, consistent
8with rules promulgated by the Secretary.
9    (3) (A) The supervisory committee of a credit union with
10assets of $10,000,000 $5,000,000 or more shall engage a
11licensed certified public accountant or licensed certified
12public accounting firm registered by the Department of
13Financial and Professional Regulation to perform an annual
14external independent audit of the credit union's financial
15statements in accordance with generally accepted auditing
16standards and the financial statements shall be issued in
17accordance with accounting principles generally accepted in
18the United States of America.
19    (B) The supervisory committee of a credit union with assets
20of $5,000,000 $3,000,000 or more, but less than $10,000,000
21$5,000,000, shall engage a licensed certified public
22accountant or licensed certified public accounting firm
23registered by the Department of Financial and Professional
24Regulation to perform on an annual basis: (i) an agreed-upon
25procedures engagement under attestation standards established
26by the American Institute of Certified Public Accountants to



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



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1    (D) If the credit union engages a licensed certified public
2accountant or licensed certified public accounting firm to
3perform an annual external independent audit of the credit
4union's financial statements pursuant to the standards in
5paragraph (A) of subsection (3) or an annual agreed upon
6procedures engagement pursuant to the standards in paragraph
7(B) of subsection (3), then the annual internal audit
8requirements of subsection (1) shall be deemed satisfied and
9met in all respects.
10    (4) In determining the appropriate balance in the allowance
11for loan losses account, a credit union may determine its
12historical loss rate using a defined period of time of less
13than 5 years, provided that:
14        (A) the methodology used to determine the defined
15    period of time is formally documented in the credit union's
16    policies and procedures and is appropriate to the credit
17    union's size, business strategy, and loan portfolio
18    characteristics and the economic environment of the areas
19    and employers served by the credit union;
20        (B) supporting documentation is maintained for the
21    technique used to develop the credit union loss rates,
22    including the period of time used to accumulate historical
23    loss data and the factors considered in establishing the
24    time frames; and
25        (C) the external auditor conducting the credit union's
26    financial statement audit has analyzed the methodology



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1    employed by the credit union and concludes that the
2    financial statements, including the allowance for loan
3    losses, are fairly stated in all material respects in
4    accordance with U.S. Generally Accepted Accounting
5    Principles, as promulgated by the Financial Accounting
6    Standards Board.
7    (5) A majority of the members of the supervisory committee
8shall constitute a quorum.
9    (6) On an annual basis commencing January 1, 2015, the
10members of the supervisory committee shall receive training
11related to their statutory duties. Supervisory committee
12members may receive the training through internal credit union
13training, external training offered by the credit union's
14retained auditors, trade associations, vendors, regulatory
15agencies, or any other sources or on-the-job experience, or a
16combination of those activities. The training may be received
17through any medium, including, but not limited to, conferences,
18workshops, audit closing meetings, seminars, teleconferences,
19webinars, and other Internet-based delivery channels.
20(Source: P.A. 97-133, eff. 1-1-12; 98-784, eff. 7-24-14.)
21    (205 ILCS 305/59)  (from Ch. 17, par. 4460)
22    Sec. 59. Investment of funds.
23    (a) Funds not used in loans to members may be invested,
24pursuant to subsection (7) of Section 30 of this Act, and
25subject to Departmental rules and regulations:



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1        (1) In securities, obligations or other instruments of
2    or issued by or fully guaranteed as to principal and
3    interest by the United States of America or any agency
4    thereof or in any trust or trusts established for investing
5    directly or collectively in the same;
6        (2) In obligations of any state of the United States,
7    the District of Columbia, the Commonwealth of Puerto Rico,
8    and the several territories organized by Congress, or any
9    political subdivision thereof; however, a credit union may
10    not invest more than 10% of its unimpaired capital and
11    surplus in the obligations of one issuer, exclusive of
12    general obligations of the issuer, and investments in
13    municipal securities must be limited to securities rated in
14    one of the 4 highest rating categories by a nationally
15    recognized statistical rating organization;
16        (3) In certificates of deposit or passbook type
17    accounts issued by a state or national bank, mutual savings
18    bank or savings and loan association; provided that such
19    institutions have their accounts insured by the Federal
20    Deposit Insurance Corporation or the Federal Savings and
21    Loan Insurance Corporation; but provided, further, that a
22    credit union's investment in an account in any one
23    institution may exceed the insured limit on accounts;
24        (4) In shares, classes of shares or share certificates
25    of other credit unions, including, but not limited to
26    corporate credit unions; provided that such credit unions



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1    have their members' accounts insured by the NCUA or other
2    approved insurers, and that if the members' accounts are so
3    insured, a credit union's investment may exceed the insured
4    limit on accounts;
5        (5) In shares of a cooperative society organized under
6    the laws of this State or the laws of the United States in
7    the total amount not exceeding 10% of the unimpaired
8    capital and surplus of the credit union; provided that such
9    investment shall first be approved by the Department;
10        (6) In obligations of the State of Israel, or
11    obligations fully guaranteed by the State of Israel as to
12    payment of principal and interest;
13        (7) In shares, stocks or obligations of other financial
14    institutions in the total amount not exceeding 5% of the
15    unimpaired capital and surplus of the credit union;
16        (8) In federal funds and bankers' acceptances;
17        (9) In shares or stocks of Credit Union Service
18    Organizations in the total amount not exceeding the greater
19    of 3% of the unimpaired capital and surplus of the credit
20    union or the amount authorized for federal credit unions;
21        (10) In corporate bonds identified as investment grade
22    by at least one nationally recognized statistical rating
23    organization, provided that:
24            (i) the board of directors has established a
25        written policy that addresses corporate bond
26        investment procedures and how the credit union will



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



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1    and
2        (13) In the purchase and assumption of assets held by
3    other financial institutions, with approval of the
4    Secretary and subject to any safety and soundness
5    standards, limitations, and qualifications as the
6    Department may establish by rule or guidance from time to
7    time.
8    (b) As used in this Section: ,
9    "Political political subdivision" includes, but is not
10limited to, counties, townships, cities, villages,
11incorporated towns, school districts, educational service
12regions, special road districts, public water supply
13districts, fire protection districts, drainage districts,
14levee districts, sewer districts, housing authorities, park
15districts, and any agency, corporation, or instrumentality of a
16state or its political subdivisions, whether now or hereafter
17created and whether herein specifically mentioned or not.
18    "Financial institution" includes any bank, savings bank,
19savings and loan association, or credit union established under
20the laws of the United States, this State, or any other state.
21    (c) A credit union investing to fund an employee benefit
22plan obligation is not subject to the investment limitations of
23this Act and this Section and may purchase an investment that
24would otherwise be impermissible if the investment is directly
25related to the credit union's obligation under the employee
26benefit plan and the credit union holds the investment only for



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1so long as it has an actual or potential obligation under the
2employee benefit plan.
3(Source: P.A. 100-361, eff. 8-25-17.)
4    Section 99. Effective date. This Act takes effect upon
5becoming law.