HB3479 103RD GENERAL ASSEMBLY

LRB103 29212 BMS 55599 b

103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
HB3479

Introduced 2/17/2023, by Rep. Mark L. Walker

SYNOPSIS AS INTRODUCED:

See Index

Creates the Uniform Money Transmission Modernization Act. Provides that the provisions supersede the Transmitters of Money Act. Sets forth provisions concerning money transmission licenses; acquisition of control; reporting and records; authorized delegates; timely transmission, refunds, and disclosures; prudential standards; and enforcement. Creates the Digital Assets Regulation Act. Provides that the Department of Financial and Professional Regulation shall regulate digital asset business activity in the State. Sets forth provisions concerning customer protections; compliance; licensure; supervision; general restrictions and prohibitions; confidentiality; and rulemaking authority. Amends the Corporate Fiduciary Act to create the Special Purpose Trust Company Authority and Organization Article. Makes conforming changes in the Freedom of Information Act, the Illinois Banking Act, and the Consumer Fraud and Deceptive Business Practices Act. Provides that the Transmitters of Money Act is repealed on January 1, 2025. Makes other changes. Effective immediately, except that the changes to the Transmitters of Money Act take effect January 1, 2025.

A BILL FOR

AN ACT concerning regulation.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

ARTICLE I. Title & Purpose

Section 1-1. Short title; references. Articles 1 through 12 may be cited as the Uniform Money Transmission Modernization Act. In Articles 1 through 12, references to "this Act" mean Articles 1 through 12.

Section 1-2. Purpose.

(a) This Act is designed to replace existing state money transmission laws currently codified under the Transmitters of Money Act. It is the intent of the General Assembly that the provisions of this Act accomplish the following:

(1) ensure states can coordinate in all areas of regulation, licensing, and supervision to eliminate unnecessary regulatory burden and more effectively utilize regulator resources;

(2) protect the public from financial crime;

(3) standardize the types of activities that are subject to licensing or otherwise exempt from licensing; and

(4) modernize safety and soundness requirements to ensure customer funds are protected in an environment that supports innovative and competitive business practices.

(b) The provisions of this Act shall be liberally construed to effectuate its purposes.

ARTICLE II. Definitions

Section 2-1. Definitions. As used in this Act:

"Acting in concert" means persons knowingly acting together with a common goal of jointly acquiring control of a licensee whether or not pursuant to an express agreement.

"Authorized delegate" means a person a licensee designates to engage in money transmission on behalf of the licensee.

"Average daily money transmission liability" means the amount of the licensee's outstanding money transmission obligations in this State at the end of each day in a given period of time, added together, and divided by the total number of days in the given period of time. For purposes of calculating average daily money transmission liability under this Act for any licensee required to do so, the given period of time shall be the quarters ending March 31, June 30, September 30, and December 31.

"Bank Secrecy Act" means the Bank Secrecy Act, 31 U.S.C. 5311, et seq. and its implementing rules and regulations, as amended and recodified from time to time.

"Bill payment service" means the business of transmitting money on behalf of an Illinois person for the purposes of paying the person's bills.

"Closed loop stored value" means stored value that is redeemable by the issuer only for goods or services provided by the issuer or its affiliate or franchisees of the issuer or its affiliate, except to the extent required by applicable law to be redeemable in cash for its cash value.

"Control" means:

(1)(A) the power to vote, directly or indirectly, at least 25% of the outstanding voting shares or voting interests of a licensee or person in control of a licensee;

(B) the power to elect or appoint a majority of key individuals or executive officers, managers, directors, trustees, or other persons exercising managerial authority of a person in control of a licensee; or

(C) the power to exercise, directly or indirectly, a controlling influence over the management or policies of a licensee or person in control of a licensee.

(2) Rebuttable Presumption of Control.

(A) A person is presumed to exercise a controlling influence when the person holds the power to vote, directly or indirectly, at least 10% of the outstanding voting shares or voting interests of a licensee or person in control of a licensee.

(B) A person presumed to exercise a controlling influence as defined by this Section can rebut the presumption of control if the person is a passive investor.

(3) For purposes of determining the percentage of a person controlled by any other person, the person's interest shall be aggregated with the interest of any other immediate family member, including the person's spouse, parents, children, siblings, mothers-in-law and fathers-in-law, sons-in-law and daughters-in-law, brothers-in-law and sisters-in-law, and any other person who shares such person's home.

"Department" means the Department of Financial and Professional Regulation.

"Division" means the Division of Financial Institutions of the Department of Financial and Professional Regulation.

"Eligible rating" means a credit rating of any of the 3 highest rating categories provided by an eligible rating service, whereby each category may include rating category modifiers such as "plus" or "minus" for S&P, or the equivalent for any other eligible rating service. For purposes of this definition, long-term credit ratings are deemed eligible if the rating is equal to "A-" or higher by S&P, or the equivalent from any other eligible rating service; short-term credit ratings are deemed eligible if the rating is equal to or higher than "A-2" or "SP-2" by S&P, or the equivalent from any other eligible rating service; if ratings differ among eligible rating services, the highest rating shall apply when determining whether a security bears an eligible rating.

"Eligible rating service" means any nationally recognized statistical rating organization as defined by the U.S. Securities and Exchange Commission, and any other organization designated by the Secretary by rule or order.

"Federally insured depository financial institution" means a bank, credit union, savings and loan association, trust company, savings association, savings bank, industrial bank, or industrial loan company organized under the laws of the United States or any state of the United States, if the bank, credit union, savings and loan association, trust company, savings association, savings bank, industrial bank, or industrial loan company has federally insured deposits.

"In this State" means at a physical location within this State for a transaction requested in person. For a transaction requested electronically or by phone, the provider of money transmission may determine if the person requesting the transaction is in this State by relying on other information provided by the person regarding the location of the individual's residential address or a business entity's principal place of business or other physical address location, and any records associated with the person that the provider of money transmission may have that indicate such location, including, but not limited to, an address associated with an account.

"Individual" means a natural person.

"Key individual" means any individual ultimately responsible for establishing or directing policies and procedures of the licensee, such as an executive officer, manager, director, or trustee.

"Licensee" means a person licensed under this Act.

"Material litigation" means litigation, that according to United States generally accepted accounting principles, is significant to a person's financial health and would be required to be disclosed in the person's annual audited financial statements, report to shareholders, or similar records.

"Money" means a medium of exchange that is authorized or adopted by the United States or a foreign government as part of its currency and that is customarily used and accepted as a medium of exchange in the country of issuance. "Money" includes a monetary unit of account established by an intergovernmental organization or by agreement between 2 or more governments.

"Monetary value" means a medium of exchange, whether or not redeemable in money unless excluded by rule by the Secretary.

"Money transmission" means any of the following:

(1) Selling or issuing payment instruments to a person located in this State.

(2) Selling or issuing stored value to a person located in this State.

(3) Receiving money for transmission from a person located in this State or transmitting money in this State.

"Money transmission" includes bill payment services and payroll processing services. "Money transmission" does not include the provision solely of online or telecommunications services or network access.

"MSB accredited state agency" means a state agency that is accredited by the Conference of State Bank Supervisors and Money Transmitter Regulators Association for money transmission licensing and supervision.

"Multistate licensing process" means any agreement entered into by and among state regulators relating to coordinated processing of applications for money transmission licenses, applications for the acquisition of control of a licensee, control determinations, or notice and information requirements for a change of key individuals.

"NMLS" means the Nationwide Multistate Licensing System and Registry developed by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators and owned and operated by the State Regulatory Registry, LLC, or any successor or affiliated entity, for the licensing and registration of persons in financial services industries.

"Outstanding money transmission obligations" means any of the following:

(1) Any payment instrument or stored value issued or sold by the licensee to a person located in the United States or reported as sold by an authorized delegate of the licensee to a person that is located in the United States that has not yet been paid or refunded by or for the licensee or escheated in accordance with applicable abandoned property laws; or

(2) Any money received for transmission by the licensee or an authorized delegate in the United States from a person located in the United States that has not been received by the payee, refunded to the sender, or escheated in accordance with applicable abandoned property laws.

For purposes of this definition, "in the United States" includes, to the extent applicable, a person in any state, territory, or possession of the United States; the District of Columbia; the Commonwealth of Puerto Rico; or a U.S. military installation that is located in a foreign country.

"Passive investor" means a person that:

(1) does not have the power to elect a majority of key individuals or executive officers, managers, directors, trustees, or other persons exercising managerial authority of a person in control of a licensee;

(2) is not employed by and does not have any managerial duties of the licensee or person in control of a licensee;

(3) does not have the power to exercise, directly or indirectly, a controlling influence over the management or policies of a licensee or person in control of a licensee; and

(4) either:

(A) attests to items (1), (2), and (3), in a form and in a medium prescribed by the Secretary; or

(B)commits to the passivity characteristics of items (1), (2), and (3), in a written document.

"Payment instrument" means a written or electronic check, draft, money order, traveler's check, or other written or electronic instrument for the transmission or payment of money or monetary value, whether or not negotiable. "Payment instrument" does not include stored value or any instrument that (1) is redeemable by the issuer only for goods or services provided by the issuer or its affiliate or franchisees of the issuer or its affiliate, except to the extent required by applicable law to be redeemable in cash for its cash value; or (2) not sold to the public but issued and distributed as part of a loyalty, rewards, or promotional program.

"Payroll processing services" means receiving money for transmission pursuant to a contract with a person to deliver wages or salaries, make payment of payroll taxes to State and federal agencies, make payments relating to employee benefit plans, or make distributions of other authorized deductions from wages or salaries. "Payroll processing services" does not include an employer performing payroll processing services on its own behalf or on behalf of its affiliate.

"Person" means any individual, general partnership, limited partnership, limited liability company, corporation, trust, association, joint stock corporation, or other corporate entity identified by the Secretary.

"Receiving money for transmission" or "money received for transmission" means receiving money or monetary value in the United States for transmission within or outside the United States by electronic or other means.

"Secretary" means the Secretary of Financial and Professional Regulation, the acting Secretary, or a person authorized by the Secretary.

"Stored value" means monetary value representing a claim against the issuer evidenced by an electronic or digital record, and that is intended and accepted for use as a means of redemption for money or monetary value, or payment for goods or services. "Stored value" includes, but is not limited to, "prepaid access" as defined by 31 CFR Section 1010.100, as amended or recodified from time to time. Notwithstanding the foregoing, "stored value" does not include a payment instrument or closed loop stored value, or stored value not sold to the public but issued and distributed as part of a loyalty, rewards, or promotional program.

"Tangible net worth" means the aggregate assets of a licensee excluding all intangible assets, less liabilities, as determined in accordance with United States generally accepted accounting principles.

ARTICLE III. Exemptions

Section 3-1. Exemptions. This Act does not apply to:

(1) An operator of a payment system to the extent that it provides processing, clearing, or settlement services, between or among persons exempted by this Section or licensees, in connection with wire transfers, credit card transactions, debit card transactions, stored value transactions, automated clearinghouse transfers, or similar funds transfers.

(2) A person appointed as an agent of a payee to collect and process a payment from a payor to the payee for goods or services, other than money transmission itself, provided to the payor by the payee, if:

(A) there exists a written agreement between the payee and the agent directing the agent to collect and process payments from payors on the payee's behalf;

(B) the payee holds the agent out to the public as accepting payments for goods or services on the payee's behalf; and

(C) payment for the goods and services is treated as received by the payee upon receipt by the agent so that the payor's obligation is extinguished and there is no risk of loss to the payor if the agent fails to remit the funds to the payee.

(3) A person that acts as an intermediary by processing payments between an entity that has directly incurred an outstanding money transmission obligation to a sender, and the sender's designated recipient, if the entity:

(A) is properly licensed or exempt from licensing requirements under this Act;

(B) provides a receipt, electronic record, or other written confirmation to the sender identifying the entity as the provider of money transmission in the transaction; and

(C) bears sole responsibility to satisfy the outstanding money transmission obligation to the sender, including the obligation to make the sender whole in connection with any failure to transmit the funds to the sender's designated recipient.

(4) The United States or a department, agency, or instrumentality thereof, or its agent.

(5) Money transmission by the United States Postal Service or by an agent of the United States Postal Service.

(6) A State, county, city, or any other governmental agency or governmental subdivision or instrumentality of a State, or its agent.

(7) A federally insured depository financial institution, bank holding company, office of an international banking corporation, foreign bank that establishes a federal branch pursuant to the International Bank Act, 12 U.S.C. 3102, as amended or recodified from time to time, corporation organized pursuant to the Bank Service Corporation Act, 12 U.S.C. Sections 1861 through 1867, as amended or recodified from time to time, or corporation organized under the Edge Act, 12 U.S.C. Sections 611 through 633, as amended or recodified from time to time, under the laws of a state or the United States.

(8) Electronic funds transfer of governmental benefits for a federal, State, county, or governmental agency by a contractor on behalf of the United States or a department, agency, or instrumentality thereof, or on behalf of a State or governmental subdivision, agency, or instrumentality thereof.

(9) A board of trade designated as a contract market under the federal Commodity Exchange Act, 7 U.S.C. Sections 1 through 25, as amended or recodified from time to time, or a person that, in the ordinary course of business, provides clearance and settlement services for a board of trade to the extent of its operation as or for such a board.

(10) A registered futures commission merchant under the federal commodities laws to the extent of its operation as such a merchant.

(11) A person registered as a securities broker-dealer under federal or State securities laws to the extent of its operation as such a broker-dealer.

(12) An individual employed by a licensee, authorized delegate, or any person exempted from the licensing requirements of the Act when acting within the scope of employment and under the supervision of the licensee, authorized delegate, or exempted person as an employee and not as an independent contractor.

(13) A person expressly appointed as a third-party service provider to or agent of an entity exempt under paragraph (7), solely to the extent that:

(A) such service provider or agent is engaging in money transmission on behalf of and pursuant to a written agreement with the exempt entity that sets forth the specific functions that the service provider or agent is to perform; and

(B) the exempt entity assumes all risk of loss and all legal responsibility for satisfying the outstanding money transmission obligations owed to purchasers and holders of the outstanding money transmission obligations upon receipt of the purchaser's or holder's money or monetary value by the service provider or agent.

(14) Any other person, transaction, or class of persons or transactions exempted by rule or any other person or transaction exempted by the Secretary's order on a finding that the licensing of the person is not necessary to achieve the purposes of this Act.

(15) Currency exchanges licensed under the Currency Exchange Act to the extent of its operation as such a currency exchange.

(16) An insured depository credit union organized under the laws of the United States or any state of the United States with deposits insured by an insurer approved by the credit union's primary regulator.

(17) A person licensed as a digital asset business under the Digital Asset Regulation Act to the extent of its operation as such a digital asset business.

Section 3-2. Authority to require demonstration of exemption. The Secretary may require that any person or entity claiming to be exempt from licensing pursuant to Section 3-1 provide information and documentation to the Secretary demonstrating that it qualifies for any claimed exemption. The burden of proving the applicability of an exemption is upon the person claiming the exclusion or exception.

ARTICLE IV. Implementation, Confidentiality, Supervision &

Relationship to Federal Law

Section 4-1. Implementation.

(a) In order to carry out the purposes of this Act, the Secretary may, subject to the provisions of subsections (a) and (b) of Section 4-2:

(1) enter into agreements or relationships with other government officials or federal and State regulatory agencies and regulatory associations in order to improve efficiencies and reduce regulatory burden by standardizing methods or procedures, and sharing resources, records or related information obtained under this Act;

(2) use, hire, contract, or employ analytical systems, methods, or software to examine or investigate any person subject to this Act.

(3) accept, from other state or federal government agencies or officials, licensing, examination, or investigation reports made by such other state or federal government agencies or officials; and

(4) accept audit reports made by an independent certified public accountant or other qualified third-party auditor for an applicant or licensee and incorporate the audit report in any report of examination or investigation.

(b) The Department shall have the broad administrative authority to administer, interpret and enforce this Act, and adopt rules or regulations implementing this Act and to recover the cost of administering and enforcing this Act by imposing and collecting proportionate and equitable fees and costs associated with applications, examinations, investigations, and other actions required to achieve the purpose of this Act. The Department's rulemaking authority shall include, but not be limited to:

(1) such rules and regulations in connection with the activities of licensees as may be necessary and appropriate for the protection of consumers in this State;

(2) such rules and regulations as may be necessary and appropriate to define improper or fraudulent business practices in connection with the activities of licensees;

(3) such rules and regulations as may define the terms used in this Act and as may be necessary and appropriate to interpret and implement the provisions of this Act;

(4) such rules and regulations as may be necessary for the implementation or enforcement of this Act; and

(5) such rules and regulations establishing fees the Secretary deems necessary to cover the cost of administration of this Act.

Section 4-2. Confidentiality.

(a) Except as otherwise provided in this Section, all information or reports obtained by the Secretary from an applicant, licensee, or authorized delegate, and all information contained in or related to an examination, investigation, operating report, or condition report prepared by, on behalf of, or for the use of the Secretary, or financial statements, balance sheets, or authorized delegate information, are confidential and are not subject to disclosure under the Freedom of Information Act.

(b) The Secretary may disclose information not otherwise subject to disclosure under subsection (a) to representatives of State or federal agencies who promise in a record that they will maintain the confidentiality of the information or where the Secretary finds that the release is reasonably necessary for the protection and interest of the public.

(c) This Section does not prohibit the Secretary from disclosing to the public a list of all licensees or the aggregated financial or transactional data concerning those licensees.

(d) Information contained in the records of the Department that is not confidential and may be made available to the public either on the Department's website, upon receipt by the Department of a written request, or in NMLS shall include:

(1) the name, business address, telephone number, and unique identifier of a licensee;

(2) the business address of a licensee's registered agent for service;

(3) the name, business address, and telephone number of all authorized delegates;

(4) the terms of or a copy of any bond filed by a licensee, if confidential information, including, but not limited to, prices and fees, for such bond is redacted;

(5) copies of any final orders of the Department relating to any violation of this Act or regulations implementing this Act; and

(e) Imposition of an administrative action under this Act is not confidential.

(f) The Secretary, in his or her sole discretion, may disclose otherwise confidential information when he or she determines disclosure is in the public interest.

Section 4-3. Supervision.

(a) The Secretary may conduct an examination or investigation of a licensee or authorized delegate or otherwise take independent action authorized by this Act or by a rule adopted or order issued under this Act as reasonably necessary or appropriate to administer and enforce this Act, rules and regulations implementing this Act, and other applicable law, including the Bank Secrecy Act and the USA PATRIOT ACT. The Secretary may:

(1) conduct an examination either on-site or off-site as the Secretary may reasonably require;

(2) conduct an examination in conjunction with an examination conducted by representatives of other state agencies or agencies of another state or of the federal government;

(3) accept the examination report of another state agency or an agency of another state or of the federal government, or a report prepared by an independent accounting firm, which on being accepted is considered for all purposes as an official report of the Secretary; and

(4) summon and examine under oath a key individual or employee of a licensee or authorized delegate and require the person to produce records regarding any matter related to the condition and business of the licensee or authorized delegate.

(b) A licensee or authorized delegate shall provide, and the Secretary shall have full and complete access to, all records the Secretary may reasonably require to conduct a complete examination. The records must be provided at the location and in the format specified by the Secretary, however, the Secretary may utilize multistate record production standards and examination procedures when such standards will reasonably achieve the requirements of this subsection.

(c) Unless otherwise directed by the Secretary, a licensee shall pay all costs reasonably incurred in connection with an examination of the licensee or the licensee's authorized delegates.

Section 4-4. Networked supervision.

(a) To efficiently and effectively administer and enforce this Act and to minimize regulatory burden, the Secretary is authorized and encouraged to participate in multistate supervisory processes established between states and coordinated through the Conference of State Bank Supervisors, Money Transmitter Regulators Association, and affiliates and successors thereof for all licensees that hold licenses in this State and other states. As a participant in multistate supervision, the Secretary may:

(1) cooperate, coordinate, and share information with other state and federal regulators in accordance with Section 4-2;

(2) enter into written cooperation, coordination, or information-sharing contracts or agreements with organizations the membership of which is made up of state or federal governmental agencies; and

(3) cooperate, coordinate, and share information with organizations the membership of which is made up of state or federal governmental agencies, if the organizations agree in writing to maintain the confidentiality and security of the shared information in accordance with Section 4-2.

(b) The Secretary may not waive, and nothing in this Section constitutes a waiver of, the Secretary's authority to conduct an examination or investigation or otherwise take independent action authorized by this Act or a rule adopted or order issued under this Act to enforce compliance with applicable state or federal law.

(c) A joint examination or investigation, or acceptance of an examination or investigation report, does not waive an examination assessment provided for in this Act.

Section 4-5. Relationship to federal law.

(a) If state money transmission jurisdiction is conditioned on a federal law, any inconsistencies between a provision of this Act and the federal law governing money transmission shall be governed by the applicable federal law to the extent of the inconsistency.

(b) In the event of any inconsistencies between this Act and a federal law that governs pursuant to subsection (a), the Secretary may provide interpretive rule or guidance that:

(1) identifies the inconsistency; and

(2) identifies the appropriate means of compliance with federal law.

ARTICLE V. Money Transmission Licenses

Section 5-1. License required.

(a) A person may not engage in the business of money transmission or advertise, solicit, or hold oneself out as providing money transmission unless the person is licensed under this Act.

(b) Subsection (a) does not apply to:

(1) A person who is an authorized delegate of a person licensed under this Act acting within the scope of authority conferred by a written contract with the licensee; or

(2) A person who is exempt pursuant to Section 3-1 and does not engage in money transmission outside the scope of such exemption.

(c) A license issued under Section 5-5 that is not transferable or assignable.

Section 5-2. Consistent State licensing.

(a) To establish consistent licensing between this State and other states, the Secretary is authorized and encouraged to:

(1) implement all licensing provisions of this Act in a manner that is consistent with other states that have adopted this Act or multistate licensing processes; and

(2) participate in nationwide protocols for licensing cooperation and coordination among state regulators provided that such protocols are consistent with this Act.

(b) In order to fulfill the purposes of this Act, the Secretary is authorized and encouraged to establish relationships or contracts with NMLS or other entities designated by NMLS to enable the Secretary to:

(1) collect and maintain records;

(2) coordinate multistate licensing processes and supervision processes;

(3) process fees; and

(4) facilitate communication between this State and licensees or other persons subject to this Act.

(c) The Secretary is authorized and encouraged to utilize NMLS for all aspects of licensing in accordance with this Act, including, but not limited to, license applications, applications for acquisitions of control, surety bonds, reporting, criminal history background checks, credit checks, fee processing, and examinations.

(d) The Secretary is authorized and encouraged to utilize NMLS forms, processes, and functionalities in accordance with this Act. If NMLS does not provide functionality, forms, or processes for a provision of this Act, the Secretary is authorized and encouraged to strive to implement the requirements in a manner that facilitates uniformity with respect to licensing, supervision, reporting, and regulation of licensees which are licensed in multiple jurisdictions.

(e) For the purpose of participating in NMLS, the Secretary is authorized to waive or modify, in whole or in part, by rule, regulation or order, any or all of the requirements and to establish new requirements as reasonably necessary to participate in NMLS.

Section 5-3. Application for license.

(a) Applicants for a license shall apply in a form and in a medium as prescribed by the Secretary. Each such form shall contain content as set forth by rule, regulation, instruction or procedure of the Secretary and may be changed or updated by the Secretary in accordance with applicable law in order to carry out the purposes of this Act and maintain consistency with NMLS licensing standards and practices. The application must state or contain, as applicable:

(1) the legal name and residential and business addresses of the applicant and any fictitious or trade name used by the applicant in conducting its business;

(2) a list of any criminal convictions of the applicant and any material litigation in which the applicant has been involved in the 10-year period next preceding the submission of the application;

(3) a description of any money transmission previously provided by the applicant and the money transmission that the applicant seeks to provide in this State;

(4) a list of the applicant's proposed authorized delegates and the locations in this State where the applicant and its authorized delegates propose to engage in money transmission;

(5) a list of other states in which the applicant is licensed to engage in money transmission and any license revocations, suspensions, or other disciplinary action taken against the applicant in another state;

(6) information concerning any bankruptcy or receivership proceedings affecting the licensee or a person in control of a licensee;

(7) a sample form of contract for authorized delegates, if applicable;

(8) a sample form of payment instrument or stored value, as applicable;

(9) the name and address of any federally insured depository financial institution through which the applicant plans to conduct money transmission; and

(10) any other information the Secretary or NMLS reasonably requires with respect to the applicant.

(b) If an applicant is a corporation, limited liability company, partnership, or other legal entity, the applicant shall also provide:

(1) the date of the applicant's incorporation or formation and State or country of incorporation or formation;

(2) if applicable, a certificate of good standing from the State or country in which the applicant is incorporated or formed;

(3) a brief description of the structure or organization of the applicant, including any parents or subsidiaries of the applicant, and whether any parents or subsidiaries are publicly traded;

(4) the legal name, any fictitious or trade name, all business and residential addresses, and the employment, as applicable, in the 10-year period next preceding the submission of the application of each key individual and person in control of the applicant;

(5) a list of any criminal convictions and material litigation in which a person in control of the applicant that is not an individual has been involved in the 10-year period preceding the submission of the application;

(6) a copy of audited financial statements of the applicant for the most recent fiscal year and for the 2-year period preceding the submission of the application or, if determined to be acceptable to the Secretary;

(7) a certified copy of unaudited financial statements of the applicant for the most recent fiscal quarter;

(8) if the applicant is a publicly traded corporation, a copy of the most recent report filed with the United States Securities and Exchange Commission under Section 13 of the federal Securities Exchange Act of 1934, 15 U.S.C. 78m, as amended or recodified from time to time;

(9) if the applicant is a wholly owned subsidiary of:

(A) a corporation publicly traded in the United States, a copy of audited financial statements for the parent corporation for the most recent fiscal year or a copy of the parent corporation's most recent report filed under Section 13 of the federal Securities Exchange Act of 1934, 15 U.S.C. 78m, as amended or recodified from time to time; or

(B) a corporation publicly traded outside the United States, a copy of similar documentation filed with the regulator of the parent corporation's domicile outside the United States;

(10) the name and address of the applicant's registered agent in this State; and

(11) any other information the Secretary reasonably requires with respect to the applicant.

A nonrefundable application fee must accompany an application for a license under this Section in accordance with 38 Ill. Adm. Code 205.35, as amended or recodified from time to time.

(c) The Secretary may waive one or more requirements of subsections (a) and (b) or permit an applicant to submit other information instead of the required information.

Section 5-4. Information requirements for certain individuals.

(a) Any individual in control of a licensee or applicant, any individual that seeks to acquire control of a licensee, and each key individual shall furnish to the Secretary through NMLS the following items:

(1) The individual's fingerprints for submission to the Federal Bureau of Investigation and the Secretary for purposes of a national criminal history background check unless the person currently resides outside of the United States and has resided outside of the United States for the last 10 years.

(2) Personal history and experience in a form and in a medium prescribed by the Secretary, to obtain the following:

(A) an independent credit report from a consumer reporting agency unless the individual does not have a social security number, in which case, this requirement shall be waived;

(B) information related to any criminal convictions or pending charges; and

(C) information related to any regulatory or administrative action and any civil litigation involving claims of fraud, misrepresentation, conversion, mismanagement of funds, breach of fiduciary duty, or breach of contract.

(b) If the individual has resided outside of the United States at any time in the last 10 years, the individual shall also provide an investigative background report prepared by an independent search firm that meets the following requirements:

(1) At a minimum, the search firm shall:

(A) demonstrate that it has sufficient knowledge, resources, and employs accepted and reasonable methodologies to conduct the research of the background report; and

(B) not be affiliated with or have an interest with the individual it is researching.

(2) At a minimum, the investigative background report shall be written in the English language and shall contain the following:

(A) if available in the individual's current jurisdiction of residency, a comprehensive credit report, or any equivalent information obtained or generated by the independent search firm to accomplish such report, including a search of the court data in the countries, provinces, states, cities, towns, and contiguous areas where the individual resided and worked;

(B) criminal records information for the past 10 years, including, but not limited to, felonies, misdemeanors, or similar convictions for violations of law in the countries, provinces, states, cities, towns, and contiguous areas where the individual resided and worked;

(C) employment history;

(D) media history, including an electronic search of national and local publications, wire services, and business applications; and

(E) financial services-related regulatory history, including, but not limited to, money transmission, securities, banking, insurance, and mortgage related industries.

Section 5-5. Issuance of license.

(a) When an application for an original license under this Act appears to include all the items and addresses of all of the matters that are required, the application is complete and the Secretary shall promptly notify the applicant in a record of the date on which the application is determined to be complete, and:

(1) unless extended by the Secretary pursuant to the Secretary's discretion, the Secretary shall approve or deny the application within 120 days after the completion date; or

(2) if the application is not approved or denied within 120 days after the completion date or any extension thereof:

(A) the application is approved; and

(B) the license takes effect as of the first business day after expiration of the 120-day period.

(b) A determination by the Secretary that an application is complete and is accepted for processing means only that the application, on its face, appears to include all of the items, including the Criminal Background Check response from the FBI, and address all of the matters that are required, and is not an assessment of the substance of the application or of the sufficiency of the information provided.

(c) When an application is filed and considered complete under this Section, the Secretary shall investigate the applicant's financial condition and responsibility, financial and business experience, character, and general fitness. The Secretary may conduct an on-site investigation of the applicant, the reasonable cost of which the applicant must pay. The Secretary shall issue a license to an applicant under this Section if the Secretary finds that all of the following conditions have been fulfilled:

(1) the applicant has complied with Sections 5-3 and 5-4; and

(2) the financial condition and responsibility, financial and business experience, competence, character, and general fitness of the applicant and the competence, experience, character, and general fitness of the key individuals and persons in control of the applicant indicate that it is in the interest of the public to permit the applicant to engage in money transmission.

(d) If an applicant avails itself or is otherwise subject to a multistate licensing process:

(1) the Secretary is authorized and encouraged to accept the investigation results of a lead investigative state for the purpose of subsection (c) if the lead investigative state has sufficient staffing, expertise, and minimum standards; or

(2) if Illinois is a lead investigative state, the Secretary is authorized and encouraged to investigate the applicant pursuant to subsection (c) and the timeframes established by agreement through the multistate licensing process, however, in no case shall such timeframe be noncompliant with the application period in paragraph (1) of subsection (a).

(e) The Secretary shall issue a formal written notice of the denial of a license application within 30 days after the decision to deny the application. The Secretary shall set forth the specific reasons for the denial of the application in the notice of denial and serve the applicant, either personally or by certified mail. Service by certified mail shall be deemed completed when the notice is deposited into the U.S. Mail. An applicant whose application is denied by the Secretary under this Section may submit a written request for a hearing that shall include the particular reasons why the applicant believes that the decision to deny the application was incorrect, within 10 days after service of the notice of the denial. If an applicant submits a timely request for a hearing, the Secretary shall schedule a hearing after the request for a hearing unless otherwise agreed to by the parties. The Secretary shall conduct hearings pursuant to this Section and in accordance with 38 Ill. Adm. Code 100, as amended or recodified from time to time.

(f) The initial license term shall begin on the day that the application is approved. The license shall expire on December 31 of the year in which the license term began, unless the initial license date is between November 1 and December 31, in which instance the initial license term shall run through December 31 of the following year.

Section 5-6. Renewal of license.

(a) A license under this Act shall be renewed annually.

(b) An annual renewal fee in accordance with 38 Ill. Adm. Code 205.35 as amended or recodified from time to time shall be paid to the Department. The renewal term shall be for a period of one year and shall begin on January 1 of each year after the initial license term and shall expire on December 31 of the year the renewal term begins.

(c) A licensee shall submit a renewal report, in a form and in a medium prescribed by the Secretary by December 1 of each year. The form requires any information deemed necessary by the Secretary to review a renewal application. At a minimum, the renewal report must state or contain a description of each material change in information submitted by the licensee in its original license application which has not been reported to the Secretary and a statement of the dollar amount and number of money transmissions and payment instruments sold, issued, exchanged, or transmitted in this State by the licensee and its authorized delegate for the past 4 completed calendar quarters.

(d) The Secretary, in his or her discretion, may grant an extension of the renewal date.

(e) The Secretary is authorized and encouraged to utilize NMLS to process license renewals if such functionality is consistent with this Section.

(f) The Secretary shall issue a formal written notice of the denial of renewal within 30 days after the decision to deny the renewal. The Secretary shall set forth the specific reasons for denying the renewal in the notice of denial and serve the licensee, either personally or by certified mail. Service by certified mail shall be deemed completed when the notice is deposited into the U.S. Mail. A licensee whose renewal is denied by the Secretary under this Section may submit a written request for a hearing that shall include the particular reasons why the licensee believes that the decision to deny the renewal was incorrect within 10 days after service of the notice of the denial. If a licensee submits a timely request for a hearing, the Secretary shall schedule a hearing unless otherwise agreed to by the parties. The Secretary shall conduct hearings pursuant to this Section and in accordance with 38 Ill. Adm. Code 100, as amended or recodified from time to time. The expiring license shall be deemed to continue in force until 10 days after the service of the notice of denial or, if a timely hearing is requested during that period, until a final order is entered pursuant to a hearing.

Section 5-7. Maintenance of license.

(a) If a licensee does not continue to meet the qualifications or satisfy the requirements that apply to an applicant for a new money transmission license, the Secretary may suspend or revoke the licensee's license in accordance with the procedures established by this Act or other applicable State law for such suspension or revocation.

(b) An applicant for a money transmission license must demonstrate that it meets or will meet, and a money transmission licensee must at all times meet, the requirements in Article X of this Act.

Section 5-8. Fees.

The expenses of administering this Act, including investigations and examinations provided for in this Act, shall be borne by and assessed against entities regulated by this Act. The Department may establish fees by rule, including in the following categories:

(1) investigation of licensees and license applicant fees;

(2) examination fees;

(3) contingent fees; and

(4) such other categories as may be required to administer this Act.

(b) The Secretary shall charge and collect fees, which shall be nonrefundable unless otherwise indicated, in accordance with 38 Ill. Adm. Code 205.35.

(c) All fees currently assessed in accordance with 38 Ill. Adm. Code 205.35, as amended or recodified from time to time, shall remain in effect. Except for money required to be deposited into the TOMA Consumer Protection Fund pursuant to this Act, all moneys received by the Department shall be deposited into the Financial Institution Fund. Failure to pay any required fee by the due date shall subject the licensee to a penalty fee of $25 per day and disciplinary action.

Section 5-9. Liability of licensees. A licensee is liable for the payment of all moneys covered by payment instruments that it sells or issues in any form in this State through its authorized delegate and all moneys it receives itself or through its authorized delegate for transmission by any means whether or not any instrument is a negotiable instrument under the laws of this State.

ARTICLE VI. Acquisition of Control and Change of Key

Individual

Section 6-1. Acquisition of control.

(a) Any person, or group of persons acting in concert, seeking to acquire control of a licensee shall obtain the written approval of the Secretary before acquiring control. An individual is not deemed to acquire control of a licensee and is not subject to this Section when that individual becomes a key individual in the ordinary course of business.

(b) A person, or group of persons acting in concert, seeking to acquire control of a licensee shall, in cooperation with the licensee:

(1) submit an application in a form and in a medium prescribed by the Secretary; and

(2) submit a nonrefundable fee of $1,000 with the request for approval.

(c) Upon request, the Secretary may permit a licensee or the person, or group of persons acting in concert, to submit some or all information required by the Secretary pursuant to subsection (b) without using NMLS.

(d) The application required by subsection (b) shall include information required by Section 5-4 for any new key individuals that have not previously completed the requirements of Section 5-4 for a licensee.

(e) When an application for acquisition of control under this Section appears to include all the items and address all of the matters that are required, the application shall be considered complete and:

(1) unless extended by the Secretary pursuant to the Secretary's discretion, the Secretary shall approve or deny the application within 60 days after the completion date; or

(2) if the application is not approved or denied within 60 days after the completion date or any extension thereof:

(A) the application is approved; and

(B) the person, or group of persons acting in concert, are not prohibited from acquiring control.

(f) A determination by the Secretary that an application is complete and is accepted for processing means only that the application, on its face, appears to include all of the items and address all of the matters that are required, and is not an assessment of the substance of the application or of the sufficiency of the information provided.

(g) When an application is filed and considered complete under subsection (e), the Secretary shall investigate the financial condition and responsibility, financial and business experience, character, and general fitness of the person, or group of persons acting in concert, seeking to acquire control. The Secretary shall approve an acquisition of control pursuant to this Section if the Secretary finds that all of the following conditions have been fulfilled:

(1) The requirements of subsections (b) and (d) have been met, as applicable; and

(2) the financial condition and responsibility, financial and business experience, competence, character, and general fitness of the person, or group of persons acting in concert, seeking to acquire control; and the competence, experience, character, and general fitness of the key individuals and persons that would be in control of the licensee after the acquisition of control indicate that it is in the interest of the public to permit the person, or group of persons acting in concert, to control the licensee.

(h) If an applicant avails itself or is otherwise subject to a multistate licensing process:

(1) the Secretary is authorized and encouraged to accept the investigation results of a lead investigative state for the purpose of subsection (g) if the lead investigative state has sufficient staffing, expertise, and minimum standards; or

(2) if the Department is a lead investigative state, the Secretary is authorized and encouraged to investigate the applicant pursuant to subsection (g) and the timeframes established by agreement through the multistate licensing process.

(i) The Secretary shall issue a formal written notice of the denial of an application to acquire control within 30 days after the decision to deny the application. The Secretary shall set forth the specific reasons for the denial of the application in the notice of denial and serve the applicant, either personally or by certified mail. Service by certified mail shall be deemed completed when the notice is deposited into the U.S. mail. An applicant whose application is denied by the Secretary under this subsection (i) may submit a written request for hearing which shall include the particular reasons why the applicant believes that the decision to deny the application was incorrect, within 10 days after service of the notice of denial. If an applicant submits a timely request for a hearing, the Secretary shall schedule a hearing unless otherwise agreed to by the parties. The Secretary shall conduct hearings pursuant to this Section and in accordance with 38 Ill. Adm. Code 100, as amended or recodified from time to time.

(j) The requirements of subsections (a) and (b) do not apply to any of the following:

(1) a person that acts as a proxy for the sole purpose of voting at a designated meeting of the shareholders or holders of voting shares or voting interests of a licensee or a person in control of a licensee;

(2) a person that acquires control of a licensee by devise or descent;

(3) a person that acquires control of a licensee as a personal representative, custodian, guardian, conservator, or trustee, or as an officer appointed by a court of competent jurisdiction or by operation of law;

(4) a person that is exempt under subsection (g) of Section 3-1;

(5) A person that the Secretary determines is not subject to subsection (a) based on the public interest;

(6) A public offering of securities of a licensee or a person in control of a licensee; or

(7) An internal reorganization of a person in control of the licensee where the ultimate person in control of the licensee remains the same.

(k) Persons in paragraphs (2), (3), (4), (6), and (7) of subsection (j) in cooperation with the licensee shall notify the Secretary within 15 days after the acquisition of control.

(l) Streamlined acquisition of control.

(1) The requirements of subsections (a) and (b) do not apply to a person that has complied with and received approval to engage in money transmission under this Act or was identified as a person in control in a prior application filed with and approved by the Secretary or by an MSB accredited state agency pursuant to a multistate licensing process, if:

(A) the person has not had a license revoked or suspended or controlled a licensee that has had a license revoked or suspended while the person was in control of the licensee in the previous 5 years;

(B) if the person is a licensee, the person is well managed and has received at least a satisfactory rating for compliance at its most recent examination by an MSB accredited state agency if such rating was given;

(C) the licensee to be acquired is projected to meet the requirements of Article X of this Act after the acquisition of control is completed, and if the person acquiring control is a licensee, that licensee is also projected to meet the requirements of Article X of this Act after the acquisition of control is completed;

(D) the licensee to be acquired will not implement any material changes to its business plan as a result of the acquisition of control, and if the person acquiring control is a licensee, that licensee also will not implement any material changes to its business plan as a result of the acquisition of control; and

(E) the person provides notice of the acquisition in cooperation with the licensee and attests to this subsection in a form and in a medium prescribed by the Secretary.

(2) If the notice is not denied within 30 days after the date on which the notice was determined to be complete, the notice is deemed approved.

(m) Before filing an application for approval to acquire control of a licensee a person may request in writing a determination from the Secretary as to whether the person would be considered a person in control of a licensee upon consummation of a proposed transaction. If the Secretary determines that the person would not be a person in control of a licensee, the proposed person and transaction is not subject to the requirements of subsections (a) and (b).

(n) If a multistate licensing process includes a determination pursuant to subsection (m) and an applicant avails itself or is otherwise subject to the multistate licensing process:

(1) The Secretary is authorized and encouraged to accept the control determination of a lead investigative state with sufficient staffing, expertise, and minimum standards for the purpose of subsection (m); or

(2) If the Department is a lead investigative state, the Secretary is authorized and encouraged to investigate the applicant pursuant to subsection (m) and the timeframes established by agreement through the multistate licensing process.

Section 6-2. Notice and information requirements for a change of key individuals.

(a) A licensee adding or replacing any key individual shall:

(1) provide notice in a manner prescribed by the Secretary within 15 days after the effective date of the key individual's appointment; and

(2) provide information as required by Section 5-4 within 45 days after the effective date.

(b) The Secretary may issue a formal written notice of denial of key individual within 90 days after the date on which the notice provided pursuant to subsection (a) was determined to be complete if the competence, experience, character, or integrity of the individual would not be in the best interests of the public or the customers of the licensee to permit the individual to be a key individual of such licensee.

(c) The Secretary shall set forth the specific reasons for the denial in the notice of denial and serve the licensee and the denied individual, either personally, or by certified mail. Service by certified mail shall be deemed completed when the notice is deposited into the U.S. Mail. A licensee who has been denied by the Secretary under this subsection (c) may submit a written request for hearing which shall include the particular reasons why the licensee believes that the decision to deny was incorrect, within 10 days after service of the notice of the denial. If a licensee submits a timely request for a hearing, the Secretary shall schedule a hearing after the request for a hearing unless otherwise agreed to by the parties. The Secretary shall conduct hearings pursuant to this Section and in accordance with 38 Ill. Adm. Code 100.

(d) If the notice provided pursuant to subsection (a) is not denied within 90 days after the date on which the notice was determined to be complete, or any extension thereof, the key individual is deemed approved.

(e) If a multistate licensing process includes a key individual notice review and denial process pursuant to this Section and the licensee avails itself or is otherwise subject to the multistate licensing process:

(1) the Secretary is authorized and encouraged to accept the determination of another state;

(2) if the investigating state has sufficient staffing, expertise, and minimum standards for the purpose of this Section; or

(3) if the Department is a lead investigative state, the Secretary is authorized and encouraged to investigate the applicant pursuant to subsection (b) and the timeframes established by agreement through the multistate licensing process.

ARTICLE VII. Reporting and Records

Section 7-1. Report of condition.

(a) Each licensee, under penalty of perjury, shall submit a report of condition within 45 days of the end of the calendar quarter, or within any extended time as the Secretary may prescribe.

(b) The report of condition shall include:

(1) financial information at the licensee level;

(2) nationwide and state-specific money transmission transaction information in every jurisdiction in the United States where the licensee is licensed to engage in money transmission;

(3) permissible investments report;

(4) transaction destination country reporting for money received for transmission, if applicable; and

(5) any other information the Secretary reasonably requires with respect to the licensee. The Secretary is authorized and encouraged to utilize NMLS for the submission of the report required by subsection (a) and is authorized to change or update as necessary the requirements of this Section to carry out the purposes of this Act and maintain consistency with NMLS reporting.

(c) The information required by paragraph (4) of subsection (b) shall only be included in a report of condition submitted within 45 days of the end of the fourth calendar quarter.

Section 7-2. Audited financials.

(a) Each licensee shall, within 90 days after the end of each fiscal year, or within any extended time as the Secretary may prescribe, file with the Secretary:

(1) an audited financial statement of the licensee for the fiscal year prepared in accordance with United States generally accepted accounting principles; and

(2) any other information as the Secretary may reasonably require.

(b) The audited financial statements shall be prepared by an independent certified public accountant or independent public accountant who is satisfactory to the Secretary;

(c) The audited financial statements shall include or be accompanied by a certificate of opinion of the independent certified public accountant or independent public accountant that is satisfactory in form and content to the Secretary. If the opinion or certificate is qualified, the licensee must make a separate report to the Secretary notifying them of the qualified opinion or certification. If the certificate or opinion is qualified, the Secretary may order the licensee to take any action as the Secretary may find necessary to enable the certified public accountant or independent public accountant to remove the qualification.

Section 7-3. Authorized delegate reporting.

(a) Each licensee shall submit a report of authorized delegates within 45 days of the end of the calendar quarter. The Secretary is authorized and encouraged to utilize NMLS for the submission of the report required by this Section provided that such functionality is consistent with the requirements of this Section.

(b) The authorized delegate report shall include, at a minimum, each authorized delegate's:

(1) company legal name;

(2) taxpayer employer identification number;

(3) principal provider identifier;

(4) physical address;

(5) mailing address;

(6) any business conducted in other states;

(7) any fictitious or trade name;

(8) contact person name, phone number, and email;

(9) start date as licensee's authorized delegate;

(10) end date acting as licensee's authorized delegate, if applicable;

(11) court orders pursuant to Section 8-3; and

(12) Any other information the Secretary reasonably requires with respect to the authorized delegate.

Section 7-4. Reports of certain events.

(a) A licensee shall file a report with the Secretary within one business day after the licensee has reason to know of the occurrence of any of the following events:

(1) the filing of a petition by or against the licensee under the United States Bankruptcy Code, 11 U.S.C. Sections 101 through 110, as amended or recodified from time to time, for bankruptcy or reorganization;

(2) the filing of a petition by or against the licensee for receivership, the commencement of any other judicial or administrative proceeding for its dissolution or reorganization, or the making of a general assignment for the benefit of its creditors; or

(3) the commencement of a proceeding to revoke or suspend its license in a state or country in which the licensee engages in business or is licensed.

(b) A licensee shall file a report with the Secretary within 3 business days after the licensee has reason to know of the occurrence of any of the following events:

(1) a charge or conviction of the licensee or of a key individual or person in control of the licensee for a felony; or

(2) a charge or conviction of an authorized delegate for a felony.

Section 7-5. Bank Secrecy Act reports. A licensee and an authorized delegate shall file all reports required by federal currency reporting, record keeping, and suspicious activity reporting requirements as set forth in the Bank Secrecy Act and other federal and State laws pertaining to money laundering. The timely filing of a complete and accurate report required under this Section with the appropriate federal agency is deemed compliant with the requirements of this Section.

Section 7-6. Records.

(a) Licensee shall maintain the following records, for determining its compliance with this Act, for at least 3 years:

(1) a record of each outstanding money transmission obligation sold;

(2) a general ledger posted at least monthly containing all asset, liability, capital, income, and expense accounts;

(3) bank statements and bank reconciliation records;

(4) records of outstanding money transmission obligations;

(5) records of each outstanding money transmission obligation paid within the 3-year period;

(6) a list of the last known names and addresses of all of the licensee's authorized delegates; and

(7) any other records the Secretary reasonably requires by rule.

(b) The records specified in subsection (a) may be maintained in electronic or other retrievable form of record.

(c) The records specified in subsection (a) shall be maintained at the licensee's principal place of business or, with notice to the Secretary, at another location designated by the licensee. If the records are maintained outside this State, the licensee shall make them accessible to the Secretary on 7 business-days' notice.

(d) All records maintained by the licensee as required in subsections (a) through (c) are open to inspection by the Secretary pursuant to subsection (a) of Section 4-3.

(e) A licensee shall require and its authorized sellers must preserve for at least 3 years all documents relating to money transmission activities, unless the data embodied in those documents has been transmitted for recordation by the licensee.

ARTICLE VIII. Authorized Delegates

Section 8-1. Relationship Between licensee and authorized delegate.

(a) As used in this Section, "remit" means to make direct payments of money to a licensee or its representative authorized to receive money or to deposit money in a bank in an account specified by the licensee.

(b) Before a licensee is authorized to conduct business through an authorized delegate or allows a person to act as the licensee's authorized delegate, the licensee must:

(1) adopt, and update as necessary, written policies and procedures reasonably designed to ensure that the licensee's authorized delegates comply with applicable State and federal law;

(2) enter into a written contract that complies with subsection (d); and

(3) conduct a reasonable risk-based background investigation sufficient for the licensee to determine whether the authorized delegate has complied and will likely comply with applicable state and federal law.

(c) An authorized delegate must operate in full compliance with this Act.

(d) The written contract required by subsection (b) must be signed by the licensee and the authorized delegate and, at a minimum, must:

(1) expressly appoint the person signing the contract as the licensee's authorized delegate with the authority to conduct money transmission on behalf of the licensee;

(2) set forth the nature and scope of the relationship between the licensee and the authorized delegate and the respective rights and responsibilities of the parties;

(3) require the authorized delegate to agree to fully comply with all applicable State and federal laws, rules, and regulations pertaining to money transmission, including this Act and regulations implementing this Act, relevant provisions of the Bank Secrecy Act, and the USA PATRIOT ACT;

(4) require the authorized delegate to remit and handle money and monetary value in accordance with the terms of the contract between the licensee and the authorized delegate;

(5) impose a trust on money and monetary value net of fees received for money transmission for the benefit of the licensee;

(6) require the authorized delegate to prepare and maintain records as required by this Act or regulations implementing this Act, or as reasonably requested by the Secretary;

(7) acknowledge that the authorized delegate consents to examination or investigation by the Secretary;

(8) state that the licensee is subject to regulation by the Secretary and that, as part of that regulation, the Secretary may suspend or revoke an authorized delegate designation or require the licensee to terminate an authorized delegate designation; and

(9) acknowledge receipt of the written policies and procedures required under paragraph (1) of subsection (b).

(e) If the licensee's license is suspended, revoked, surrendered, or expired, the licensee must, within 5 business days, provide documentation to the Secretary that the licensee has notified all applicable authorized delegates of the licensee whose names are in a record filed with the Secretary of the suspension, revocation, surrender, or expiration of a license. Upon suspension, revocation, surrender, or expiration of a license, applicable authorized delegates shall immediately cease to provide money transmission as an authorized delegate of the licensee.

(f) An authorized delegate of a licensee holds in trust for the benefit of the licensee all money net of fees received from money transmission. If any authorized delegate commingles any funds received from money transmission with any other funds or property owned or controlled by the authorized delegate, all commingled funds and other property shall be considered held in trust in favor of the licensee in an amount equal to the amount of money net of fees received from money transmission.

(g) An authorized delegate may not use a subdelegate to conduct money transmission on behalf of a licensee.

Section 8-2. Unauthorized activities. A person shall not engage in the business of money transmission on behalf of a person not licensed under this Act or not exempt pursuant to Article III of this Act. A person that engages in such activity provides money transmission to the same extent as if the person were a licensee, and shall be jointly and severally liable with the unlicensed or nonexempt person.

Section 8-3. Prohibited authorized delegates.

(a) The circuit court in an action brought by a licensee shall have jurisdiction to grant appropriate equitable or legal relief, including, without limitation, prohibiting the authorized delegate from directly or indirectly acting as an authorized delegate for any licensee in this State and the payment of restitution, damages or other monetary relief, if the circuit court finds that an authorized delegate failed to remit money in accordance with the written contract required by subsection (b) of Section 8-1 or as otherwise directed by the licensee or required by law.

(b) If the circuit court issues an order prohibiting a person from acting as an authorized delegate for any licensee pursuant to subsection (a), the licensee that brought the action shall report the order to the Secretary within 30 days and shall report the order through NMLS within 90 days.

(c) An authorized delegate who holds money in trust for the benefit of a licensee and knowingly fails to remit more than $1,000 of such money is guilty of a Class 3 felony.

(d) An authorized delegate who holds money in trust for the benefit of a licensee and knowingly fails to remit no more than $999 of such money is guilty of a Class A misdemeanor.

ARTICLE IX. Timely Transmission, Refunds, and Disclosures

Section 9-1. Timely transmission.

(a) Every licensee shall forward all money received for transmission in accordance with the terms of the agreement between the licensee and the sender, which shall be no more than 3 business days after the receipt of the money to be transmitted, unless the licensee has a reasonable belief or a reasonable basis to believe that the sender may be a victim of fraud or that a crime or violation of law, rule, or regulation has occurred, is occurring, or may occur.

(b) If a licensee fails to forward money received for transmission in accordance with this Section, the licensee must respond to inquiries by the sender with the reason for the failure unless providing a response would violate a State or federal law, rule, or regulation.

Section 9-2. Refunds.

(a) This Section does not apply to:

(1) money received for transmission subject to the federal Remittance Rule, 12 CFR Part 1005, Subpart B, as amended or recodified from time to time; or

(2) money received for transmission pursuant to a written agreement between the licensee and payee to process payments for goods or services provided by the payee.

(b) Every licensee shall refund to the sender within 10 days after receipt of the sender's written request for a refund of any and all money received for transmission unless any of the following occurs:

(1) the money has been forwarded within 10 days after the date on which the money was received for transmission;

(2) instructions have been given committing an equivalent amount of money to the person designated by the sender within 10 days after the date on which the money was received for transmission;

(3) the agreement between the licensee and the sender instructs the licensee to forward the money at a time that is beyond 10 days after the date on which the money was received for transmission; if funds have not yet been forwarded in accordance with the terms of the agreement between the licensee and the sender, the licensee shall issue a refund in accordance with the other provisions of this Section; or

(4) the refund is requested for a transaction that the licensee has not completed based on a reasonable belief or a reasonable basis to believe that a crime or violation of law, rule, or regulation has occurred, is occurring, or may occur.

(5) the refund request does not enable the licensee to:

(A) identify the sender's name and address or telephone number; or

(B) identify the particular transaction to be refunded if the sender has multiple transactions outstanding.

Section 9-3. Receipts.

(a) As used in this Section, "receipt" means a paper receipt, electronic record, or other written confirmation. For a transaction conducted in person, the receipt may be provided electronically if the sender requests or agrees to receive an electronic receipt. For a transaction conducted electronically or by phone, a receipt may be provided electronically. All electronic receipts shall be provided in a retainable form.

(b) This Section does not apply to:

(1) Money received for transmission subject to the federal Remittance Rule, 12 CFR Part 1005, Subpart B, as amended or recodified from time to time;

(2) money received for transmission pursuant to a written agreement between the licensee and payee to process payments for goods or services provided by the payee;

(3) payroll processing services; or

(4) as authorized in the Secretary's sole discretion.

(c) Every licensee or its authorized delegate shall provide the sender a receipt for money received for transmission.

(1) The receipt shall contain the following information, as applicable:

(A) the name of the sender;

(B) the name of the designated recipient;

(C) the date of the transaction;

(D) the unique transaction or identification number;

(E) the name of the licensee, NMLS Unique ID, the licensee's business address, and the licensee's customer service telephone number;

(F) the amount of the transaction in United States dollars;

(G) any fee charged by the licensee to the sender for the transaction; and

(H) any taxes collected by the licensee from the sender for the transaction.

(2) The receipt required by this Section shall be in English and in the language principally used by the licensee or authorized delegate to advertise, solicit, or negotiate, either orally or in writing, for a transaction conducted in person, electronically or by phone, if other than English.

Section 9-4. Notice. Every licensee or authorized delegate shall include on a receipt or disclose on the licensee's website or mobile application the name and phone number of the Department and a statement that the licensee's customers can contact the Department with questions or complaints about the licensee's money transmission services.

Section 9-5. Disclosures for payroll processing services.

(a) A licensee that provides payroll processing services shall:

(1) issue reports to clients detailing client payroll obligations in advance of the payroll funds being deducted from an account; and

(2) make worker paystubs or an equivalent statement available to workers.

(b) Subsection (a) does not apply to a licensee providing payroll processing services where the licensee's client designates the intended recipients to the licensee and is responsible for providing the disclosures required by paragraph (2) of subsection (a).

ARTICLE X. Prudential Standards

Section 10-1. Net worth.

(a) A licensee under this Act shall maintain at all times a tangible net worth of the greater of $100,000 or 3% of total assets for the first $100,000,000, 2% of additional assets for $100,000,000 to $1,000,000,000, and 0.5% of additional assets for over $1,000,000,000.

(b) Tangible net worth must be demonstrated at initial application by the applicant's most recent audited or unaudited financial statements pursuant to paragraph (6) of subsection (b) of Section 5-3.

(c) Notwithstanding the provisions of this Section, the Secretary shall have discretionary authority to exempt, in part or in whole, from the requirements of this Section any applicant or licensee.

Section 10-2. Surety bond.

(a) An applicant for a money transmission license must provide, and a licensee at all times must maintain, security consisting of a surety bond in a form satisfactory to the Secretary. The bond shall run to the State of Illinois for the benefit of any claimant against the applicant or licensee with respect to the receipt, handling, transmission, and payment of money by the licensee or authorized delegate in connection with the licensed operations. A claimant damaged by a breach of the conditions of a bond shall have a right to action upon the bond for damages suffered thereby and may bring suit directly on the bond, or the Secretary may bring suit on behalf of the claimant.

(b) The amount of the required security shall be the greater of $1,000,000 or an amount equal to 100% of the licensee's average daily money transmission liability in this State calculated for the most recently completed quarter, up to a maximum of $2,000,000;

(c) A licensee that maintains a bond in the maximum amount provided for in subsection (b) is not required to calculate its average daily money transmission liability in this State for purposes of this Section.

(d) A licensee may exceed the maximum required bond amount pursuant to paragraph (5) of subsection (a) of Section 10-4.

(e) After receiving a license, the licensee must maintain the required bond plus net worth until 3 years after it ceases to do business in this State unless all outstanding payment instruments are eliminated or the provisions under the Revised Uniform Unclaimed Property Act have become operative and are adhered to by the licensee. Notwithstanding this provision, however, the amount required to be maintained may be reduced to the extent that the amount of the licensee's payment instruments outstanding in this State are reduced.

(f) Instead of a paper surety bond, each licensee and applicant shall file and maintain an electronic surety bond in NMLS or in a manner otherwise authorized by the Secretary.

Section 10-3. Maintenance of permissible investments.

(a) A licensee shall maintain at all times permissible investments that have a market value computed in accordance with United States generally accepted accounting principles of not less than the aggregate amount of all of its outstanding money transmission obligations.

(b) Except for permissible investments enumerated in subsection (a) of Section 10-4, the Secretary, with respect to any licensee, may by rule or order limit the extent to which a specific investment maintained by a licensee within a class of permissible investments may be considered a permissible investment, if the specific investment represents undue risk to customers, not reflected in the market value of investments.

(c) Permissible investments, even if commingled with other assets of the licensee, are held in trust for the benefit of the purchasers and holders of the licensee's outstanding money transmission obligations in the event of insolvency, the filing of a petition by or against the licensee under the United States Bankruptcy Code, 11 U.S.C. Sections 101 through 110, as amended or recodified from time to time, for bankruptcy or reorganization, the filing of a petition by or against the licensee for receivership, the commencement of any other judicial or administrative proceeding for its dissolution or reorganization, or in the event of an action by a creditor against the licensee who is not a beneficiary of this statutory trust. No permissible investments impressed with a trust pursuant to this subsection shall be subject to attachment, levy of execution, or sequestration by order of any court, except for a beneficiary of this statutory trust.

(d) Upon the establishment of a statutory trust in accordance with subsection (c) or when any funds are drawn on a letter of credit pursuant to paragraph (4) of subsection (a) of Section 10-4, the Secretary shall notify the applicable regulator of each state in which the licensee is licensed to engage in money transmission, if any, of the establishment of the trust or the funds drawn on the letter of credit, as applicable. Notice shall be deemed satisfied if performed pursuant to a multistate agreement or through NMLS. Funds drawn on a letter of credit, and any other permissible investments held in trust for the benefit of the purchasers and holders of the licensee's outstanding money transmission obligations, are deemed held in trust for the benefit of such purchasers and holders on a pro rata and equitable basis in accordance with statutes pursuant to which permissible investments are required to be held in this State, and other states, as applicable. Any statutory trust established hereunder shall be terminated upon extinguishment of all of the licensee's outstanding money transmission obligations.

(e) The Secretary by rule or by order may allow other types of investments that the Secretary determines are of sufficient liquidity and quality to be a permissible investment. The Secretary is authorized to participate in efforts with other state regulators to determine that other types of investments are of sufficient liquidity and quality to be a permissible investment.

Section 10-4. Types of permissible investments.

(a) The following investments are permissible under Section 10-3:

(1) Cash, including demand deposits, savings deposits, and funds in such accounts held for the benefit of the licensee's customers in an insured depository financial institution, and cash equivalents including ACH items in transit to the licensee and ACH items or international wires in transit to a payee, cash in transit via armored car, cash in smart safes, cash in licensee-owned locations, debit card or credit card-funded transmission receivables owed by any bank, or money market mutual funds rated "AAA" by S&P, or the equivalent from any eligible rating service;

(2) certificates of deposit or senior debt obligations of an insured depository institution, as defined in Section 3 of the Federal Deposit Insurance Act, 12 U.S.C. 1813, as amended or recodified from time to time, or as defined under the federal Credit Union Act, 12 U.S.C. 1781, as amended or recodified from time to time;

(3) an obligation of the United States or a commission, agency, or instrumentality thereof; an obligation that is guaranteed fully as to principal and interest by the United States; or an obligation of a State or a governmental subdivision, agency, or instrumentality thereof;

(4) the full drawable amount of an irrevocable standby letter of credit for which the stated beneficiary is the Secretary that stipulates that the beneficiary need only draw a sight draft under the letter of credit and present it to obtain funds up to the letter of credit amount within 7 days of presentation of the items required by subparagraph (C) of this paragraph.

(A) The letter of credit must:

(i) be issued by an insured depository financial institution, a foreign bank that is authorized under federal law to maintain a federal agency or federal branch office in a State or states, or a foreign bank that is authorized under State law to maintain a branch in a State that (I) bears an eligible rating or whose parent company bears an eligible rating; and (II) is regulated, supervised, and examined by United States federal or State authorities having regulatory authority over banks, credit unions, and trust companies;

(ii) be irrevocable, unconditional, and indicate that it is not subject to any condition or qualifications outside of the letter of credit;

(iii) not contain reference to any other agreements, documents, or entities, or otherwise provide for any security interest in the licensee; and

(iv) contain an issue date and expiration date and expressly provide for automatic extension, without a written amendment, for an additional period of one year from the present or each future expiration date, unless the issuer of the letter of credit notifies the Secretary in writing by certified or registered mail or courier mail or other receipted means, at least 60 days before any expiration date, that the irrevocable letter of credit will not be extended.

(B) If any notice of expiration or nonextension of a letter of credit issued under subdivision (iv) of subparagraph (A), the licensee shall be required to demonstrate to the satisfaction of the Secretary, 15 days before expiration, that the licensee maintains and will maintain permissible investments in accordance with subsection (a) of Section 10-3 upon the expiration of the letter of credit. If the licensee is not able to do so, the Secretary may draw on the letter of credit in an amount up to the amount necessary to meet the licensee's requirements to maintain permissible investments in accordance with subsection (a) of Section 10-3. Any such draw shall be offset against the licensee's outstanding money transmission obligations. The drawn funds shall be held in trust by the Secretary or the Secretary's designated agent, to the extent authorized by law, as agent for the benefit of the purchasers and holders of the licensee's outstanding money transmission obligations.

(C) The letter of credit shall provide that the issuer of the letter of credit will honor, at sight, a presentation made by the beneficiary to the issuer of the following documents on or before the expiration date of the letter of credit:

(i) the filing of a petition by or against the licensee under the United States Bankruptcy Code, 11 U.S.C. Sections 101 through 110, as amended or recodified from time to time, for bankruptcy or reorganization;

(ii) the filing of a petition by or against the licensee for receivership, or the commencement of any other judicial or administrative proceeding for its dissolution or reorganization;

(iii) the seizure of assets of a licensee by a Secretary pursuant to an emergency order issued in accordance with applicable law, on the basis of an action, violation, or condition that has caused or is likely to cause the insolvency of the licensee; or

(iv) the beneficiary has received notice of expiration or nonextension of a letter of credit and the licensee failed to demonstrate to the satisfaction of the beneficiary that the licensee will maintain permissible investments in accordance with subsection (a) of Section 10-3 upon the expiration or nonextension of the letter of credit.

(D) The Secretary may designate an agent to serve on the Secretary's behalf as beneficiary to a letter of credit so long as the agent and letter of credit meet requirements established by the Secretary. The Secretary's agent may serve as agent for multiple licensing authorities for a single irrevocable letter of credit if the proceeds of the drawable amount for the purposes of this Section are assigned to the Secretary.

(E) The Secretary is authorized and encouraged to participate in multistate processes designed to facilitate the issuance and administration of letters of credit, including, but not limited to, services provided by the NMLS and State Regulatory Registry, LLC.

(5) 100% of the surety bond or deposit provided for under Section 10-2 that exceeds the average daily money transmission liability in this State.

(b) Unless permitted by the Secretary by rule or by order to exceed the limit as set forth herein, the following investments are permissible under Section 10-3 to the extent specified:

(1) receivables that are payable to a licensee from its authorized delegates in the ordinary course of business that are less than 7 days old, up to 50% of the aggregate value of the licensee's total permissible investments;

(2) of the receivables permissible under paragraph (1) of this subsection (b), receivables that are payable to a licensee from a single authorized delegate in the ordinary course of business may not exceed 10% of the aggregate value of the licensee's total permissible investments.

(3) the following investments are permissible up to 20% per category and combined up to 50% of the aggregate value of the licensee's total permissible investments:

(A) a short-term, of up to 6 months, investment bearing an eligible rating;

(B) commercial paper bearing an eligible rating;

(C) a bill, note, bond, or debenture bearing an eligible rating;

(D) U.S. tri-party repurchase agreements collateralized at 100% or more with U.S. government or agency securities, municipal bonds, or other securities bearing an eligible rating;

(E) money market mutual funds rated less than "AAA" and equal to or higher than "A-" by S&P, or the equivalent from any other eligible rating service; and

(F) a mutual fund or other investment fund composed solely and exclusively of one or more permissible investments listed in paragraphs (1) through (3) of subsection (a).

(4) cash, including demand deposits, savings deposits, and funds in such accounts held for the benefit of the licensee's customers, at foreign depository institutions are permissible up to 10% of the aggregate value of the licensee's total permissible investments if the licensee has received a satisfactory rating in its most recent examination and the foreign depository institution:

(A) has an eligible rating;

(B) is registered under the Foreign Account Tax Compliance Act;

(C) is not located in any country subject to sanctions from the Office of Foreign Asset Control; and

(D) is not located in a high-risk or non-cooperative jurisdiction as designated by the Financial Action Task Force.

ARTICLE XI. Enforcement

Section 11-1. Prohibited acts and practices for licensees. It is a violation of this Act for a licensee, or other person subject to this Act to:

(1) directly or indirectly employ any scheme, device, or artifice to defraud or mislead any person, including, but not limited to, engaging in bait and switch advertising or sales practices;

(2) directly or indirectly engage in any unfair or deceptive act or practice toward any person, including, but not limited to, any false or deceptive statement about fees or other terms of a money transmission or currency exchange;

(3) directly or indirectly obtain property by fraud or misrepresentation;

(4) knowingly make, publish, or disseminate any false, deceptive, or misleading information in the provision of money services;

(5) knowingly receive or take possession for personal use of any property of any money services business, other than in payment for services rendered, and with intent to defraud, omit to make, or cause or direct to omit to make, a full and true entry thereof in the books and accounts of the business;

(6) make or concur in making any false entry, or omit or concur in omitting any material entry, in the books or accounts of the business;

(7) knowingly make or publish to the Director or the Director's designee, or concur in making or publishing to the Director or the Director's designee any written report, exhibit, or statement of its affairs or pecuniary condition containing any material statement which is false, or omit or concur in omitting any statement required by law to be contained therein;

(8) fail to make any report or statement lawfully required by the Director or other public official.

(9) demonstrate by course of conduct, negligence or incompetence in performing any act directly or indirectly relating to licensed activity;

(10) engage in unsafe and unsound practices directly or indirectly relating to licensed activity; or

(11) fail to comply with the provisions of this Act or with any lawful order or agreement, rule, or regulations made or issued under the provisions of this Act.

Section 11-2. Suspension and revocation of licenses.

(a) The Secretary may issue an order to suspend or revoke a license of a licensee or order a licensee to revoke the designation of an authorized delegate if:

(1) the licensee has failed to comply with any provision of this Act, or any order, decision, finding, rule, regulation or direction of the Secretary lawfully made pursuant to the authority of this Act;

(2) the licensee does not cooperate with an examination or investigation by the Secretary;

(3) the licensee engages in fraud, intentional misrepresentation, or gross negligence;

(4) an authorized delegate is convicted of a violation of a State or federal anti-money laundering statute, or violates a rule adopted or an order issued under this Act, as a result of the licensee's willful misconduct or willful blindness;

(5) the competence, experience, character, or general fitness of the licensee, authorized delegate, person in control of a licensee, key individual, or responsible person of the authorized delegate indicates that it is not in the public interest to permit the person to provide money transmission;

(6) the licensee engages in an unsafe or unsound practice;

(7) the licensee is insolvent, suspends payment of its obligations, or makes a general assignment for the benefit of its creditors;

(8) the licensee does not remove an authorized delegate after the Secretary issues and serves upon the licensee a final order including a finding that the authorized delegate has violated this Act;

(9) a fact or condition exists that, if it had existed or had been known at the time the licensee applied for its license, would have been ground for denying the application;

(10) the licensee knowingly fails to make a report required by this Act;

(11) the licensee fails to pay a judgment entered in favor of a claimant, plaintiff, or credit in an action arising out of the licensee's business regulated under this Act within 30 days after the judgment becomes final or within 30 days after the expiration or termination of a stay of execution;

(12) the licensee has been convicted under the laws of this State, another state, or the United States of a felony or of a crime involving breach of trust or dishonesty; or

(13) the licensee violates the Illinois Uniform Revised Unclaimed Property Act.

(b) In determining whether a licensee is engaging in an unsafe or unsound practice, the Secretary may consider the size and condition of the licensee's money transmission, the magnitude of the loss, the gravity of the violation of this Act, and the previous conduct of the person involved.

(c) In every case in which a license is suspended or revoked, the Secretary shall issue a formal written notice of the suspension or revocation, setting forth the specific reasons for the suspension or revocation of the license and serve the licensee, either personally or by certified mail. Service by certified mail shall be deemed completed when the notice is deposited into U.S. Mail and the order of suspension or revocation of a license shall take effect upon service of the order.

(d) A licensee whose license has been suspended or revoked by the Secretary under this Section may request a hearing, in writing, within 10 days after the date of service. If a licensee submits a timely request for a hearing, the order shall be stayed until a final administrative order is entered and the Secretary shall schedule a hearing unless otherwise agreed to by the parties.

(e) The Secretary shall conduct hearings pursuant to this Section and in accordance with 38 Ill. Adm. Code 100, as amended or recodified from time to time.

Section 11-3. Suspension and revocation of authorized delegates.

(a) The Secretary may issue an order to suspend or revoke the designation of an authorized delegate, if the Secretary finds that:

(1) the authorized delegate has failed to comply with any provision of this Act or any order, decision, finding, rule, regulation, or direction of the Secretary lawfully made pursuant to the authority of this Act;

(2) the authorized delegate does not cooperate with an examination or investigation by the Secretary;

(3) the authorized delegate engages in fraud, intentional misrepresentation, or gross negligence;

(4) the authorized delegate is convicted of a violation of a State or federal anti-money laundering statute;

(5) the competence, experience, character, or general fitness of the authorized delegate or a person in control of the authorized delegate indicates that it is not in the public interest to permit the authorized delegate to provide money transmission; or

(6) the authorized delegate engages in an unsafe or unsound practice.

(b) In determining whether an authorized delegate is engaging in an unsafe or unsound practice, the Secretary may consider the size and condition of the authorized delegate's provision of money transmission, the magnitude of the loss, the gravity of the violation of this Act or a rule adopted or order issued under this Act, and the previous conduct of the authorized delegate.

(c) In every case in which the designation of an authorized delegate is suspended or revoked, the Secretary shall issue a formal written notice of the suspension or revocation, setting forth the specific reasons for the suspension or revocation of the designation and serve the authorized delegate, either personally or by certified mail. Service by certified mail shall be deemed completed when the notice is deposited into U.S. Mail and the order of suspension or revocation of a license shall take effect upon service of the order.

(d) An authorized delegate whose designation has been suspended or revoked by the Secretary under this Section may request a hearing, in writing, within 10 days after the date of service. If an authorized delegate submits a timely request for a hearing, the order shall be stayed until a final administrative order is entered and the Secretary shall schedule a hearing unless otherwise agreed to by the parties.

(e) The Secretary shall conduct hearings pursuant to this Section and in accordance with 38 Ill. Adm. Code 100, as amended or recodified from time to time.

Section 11-5. Consent orders; settlements.

(a) The Secretary may enter into a consent order or settlement agreement at any time with a person to resolve a matter arising under this Act, the rules adopted under this Act, or order issued under this Act. A consent order or settlement agreement must be signed by the person to whom it is issued or by the person's authorized representative, and must indicate agreement with the terms contained in the order. A consent order or settlement agreement may provide that it does not constitute an admission by a person that this Act or a rule adopted or an order issued under this Act has been violated.

(b) Notwithstanding the issuance of a consent order or settlement agreement, the Secretary may seek civil or criminal penalties or compromise civil penalties concerning matter encompassed by the consent order unless the consent order by its terms expressly precludes the Secretary from doing so.

(c) The Secretary is authorized to compromise, settle, and collect civil penalties and administrative penalties, as set by rule, with any person for violations of this Act or of any rule or order issued or adopted under this Act.

Section 11-6. Criminal penalties. A person who engages in conduct requiring a license under this Act and fails to obtain a license from the Secretary or knowingly makes a false statement, misrepresentation, or false certification in an application, financial statement, account record, report, or other document filed or required to be maintained or filed under this Act or who knowingly makes a false entry or omits a material entry in a document is guilty of a Class 3 felony.

Section 11-7. Civil penalties. The Secretary may assess a civil penalty against a person that violates this Act, a rule adopted or an order issued under this Act in an amount not to exceed $1,000 per day for each day the violation is outstanding, plus this State's costs and expenses for the investigation and prosecution of the matter, including reasonable attorney's fees. Each transaction in violation of this Act or the rules adopted under this Act or issued under this Act, for each day that a violation continues shall be a separate offense.

Section 11-8. Unlicensed persons. Any person who, without the required license, engages in conduct requiring a license under this Act shall be liable to the Department in an amount equal to the greater of (1) $5,000 or (2) an amount of money accepted for transmission plus an amount equal to 3 times the amount accepted for transmission. The Department shall cause any funds so recovered to be deposited into the TOMA Consumer Protection Fund.

Section 11-9. Judicial review. All final administrative decisions of the Department under this Act are subject to judicial review under the Administrative Review Law and any rules adopted under the Administrative Review Law.

ARTICLE XII. Miscellaneous Provisions

Section 12-1. Uniformity of application and construction. In applying and construing this Act, consideration must be given to the need to promote uniformity of the law with respect to its subject matter among states that enact it.

Section 12-2. Severability. The provisions of this Act are severable under Section 1.31 of the Statute on Statutes.

Section 12-3. Transition period.

(a) Licensees pursuant to the Transmitters of Money Act in good standing on the effective date of this Act shall be licensed under this Act upon the filing of and approval by the Department of a renewal application in accordance with Section 5-6 and may continue to operate lawfully as a licensee in this State unless and until their next renewal application after the effective date is denied by the Department. An authorized seller of licensee pursuant to the Transmitters of Money Act in good standing as of the effective date shall become an authorized delegate of a licensee upon the filing of and approval by the Department of a renewal application by the licensee in accordance with Section 5-6 and may continue to operate lawfully in this State as an authorized delegate of a licensee unless and until the licensee's next renewal application after the effective date is denied by the Department.

(b) A person licensed in this State to engage in the business of money transmission and their authorized sellers shall not be subject to the provisions of this Act, to the extent that they conflict with the Transmitters of Money Act or establish new requirements not imposed under the Transmitters of Money Act, until the licensee renews its current license or for 6 months after the effective date of this Act, whichever is later, so long as they comply with the Transmitters of Money Act and its implementing rules.

(c) Notwithstanding subsection (a), a licensee shall only be required to amend its authorized delegate contracts for contracts entered into or amended after the effective date of this Act or the completion of any transition period contemplated under subsection (b). Nothing herein shall be construed as limiting an authorized delegate's obligations to operate in full compliance with this Act as required by subsection (c) of Section 8-1 after the time period set forth in subsection (b).

(d) A person not required to be licensed pursuant to the Transmitters of Money Act shall not be required to be licensed and comply with this Act until January 1, 2025, unless the Secretary extends the time by rule.

(e) Except as otherwise stated, this Act supersedes the Transmitters of Money Act.

Section 12-4. TOMA Consumer Protection Fund.

(a) The special income-earning fund in the State treasury is known as the TOMA Consumer Protection Fund.

(b) All moneys paid into the fund together with all accumulated undistributed income thereon shall be held as a special fund in the State treasury. The fund shall be used solely for the purpose of providing restitution to consumers who have suffered monetary loss arising out of a transaction regulated by this Act.

(c) The fund shall be applied only to restitution when restitution has been ordered by the Secretary. Restitution shall not exceed the amount actually lost by the consumer. The fund shall not be used for the payment of any attorney or other fees.

(d) The fund shall be subrogated to the amount of the restitution, and the Secretary shall request the Attorney General to engage in all reasonable collection steps to collect restitution from the party responsible for the loss and reimburse the fund.

(e) Notwithstanding any other provisions of this Section, the payment of restitution from the fund shall be a matter of grace and not of right, and no consumer shall have any vested rights in the fund as a beneficiary or otherwise. Before seeking restitution from the fund, the consumer or beneficiary seeking payment of restitution shall apply for restitution on a form provided by the Secretary. The form shall include any information the Secretary may reasonably require in order to determine that restitution is appropriate.

(f) Notwithstanding any other provision of this Section, moneys in the TOMA Consumer Protection Fund may be transferred to the Professions Indirect Cost Fund, as authorized under Section 2105-300 of the Department of Professional Regulation Law of the Civil Administrative Code of Illinois.

Article 101. General Provisions

Section 101-1. Short title; references. Articles 101 through 135 may be cited as the Digital Assets Regulation Act.

In Articles 101 through 135, references to "this Act" mean Articles 101 through 135.

Section 101-5. Definitions.

(a) As used in this Act:

"Affiliate" shall mean any person that controls, is controlled by, or is under common control with another person. For purposes of this definition, "control" means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person.

"Applicant" means a person that applies for a license under this Act.

"Bank" means a bank, savings banks, savings and loan association, savings association, or industrial loan company chartered under the laws of this State or any other state or under the laws of the United States.

"Confidential supervisory information" means that the record or information is exempt from public disclosure under any federal or State statute or rules and regulations implementing federal or State statute.

"Conflict of interest" means an interest that might incline a covered person or an individual who is an associated person of a covered person to make a recommendation that is not disinterested.

"Corporate fiduciary" shall mean a corporate fiduciary as defined by Section 1-5.05 of the Corporate Fiduciary Act.

"Covered person" means a licensee or person required to obtain a license pursuant to this Act.

"Covered exchange" means a covered person that exchanges or holds itself out as being able to exchange a digital asset for a resident.

"Credit union" means a credit union chartered under the laws of this State or any other state or under the laws of the United States.

"Department" means the Department of Financial and Professional Regulation.

"Digital asset" means a digital representation of value that is used as a medium of exchange, unit of account, or store of value, and that is not fiat currency, whether or not denominated in fiat currency. "Digital asset" does not include either of the following:

(1) A digital representation of value which a merchant grants, as part of an affinity or rewards program, and that cannot be taken from or exchanged with the merchant for fiat currency or a digital asset.

(2) A digital representation of value that is issued by or on behalf of a game publisher, used solely within a gaming platform, has no market or application outside of such gaming platform, and cannot be converted into, or redeemed for, fiat currency or digital assets.

"Digital asset administration" means controlling, administering, or issuing a digital asset, whether or not redeemable for fiat currency or another digital asset.

"Digital asset business activity" means any of the following:

(1) Exchanging, transferring, or storing a digital asset.

(2) Engaging in digital asset administration.

(3) Any other business activity involving digital assets designated by rule by the Department as may be necessary and appropriate for the protection of residents.

"Exchange", when used as a verb, means to exchange, buy, sell, trade, or convert, on behalf of a resident, either of the following:

(1) A digital asset for fiat currency or one or more forms of digital assets.

(2) Fiat currency for one or more forms of digital assets.

"Executive officer" includes, without limitation, an individual who is a director, officer, manager, managing member, partner, or trustee, or other functionally equivalent responsible individual, of a person.

"Federally insured depository institution" shall mean an insured depository institution as defined by Section 3(c)(2) of the Federal Deposit Insurance Act, 12 U.S.C. 1813(c)(2), as amended, or an insured credit union as defined by Section 101(7) of the Federal Credit Union Act, 12 U.S.C. 1752(7), as amended.

"Fiat currency" means:

(1) money that is authorized or adopted by the United States or a foreign government as part of its currency and that is customarily used and accepted as a medium of exchange in the country of issuance; and

(2) monetary value that is redeemable for such money.

"Insolvent" means any of the following:

(1) Having generally ceased to pay debts in the ordinary course of business other than as a result of a bona fide dispute.

(2) Being unable to pay debts as they become due.

(3) Being insolvent within the meaning of federal bankruptcy law.

"Licensee" means a person licensed under this Act.

"Person" includes, without limitation, any individual, corporation, business trust, estate, trust, partnership, proprietorship, syndicate, limited liability company, association, joint venture, government, governmental subsection, agency or instrumentality, public corporation or joint stock company, or any other organization or legal or commercial entity.

"Qualified custodian" means a bank, credit union, or trust company, subject to any rules adopted by the Department.

"Record" means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.

"Resident" means any of the following:

(1) A person who is domiciled in this State.

(2) A person who is physically located in this State for more than 183 days of the previous 365 days.

(3) A person who has a place of business in this State.

(4) A legal representative of a person that is domiciled in this State.

"Request for assistance" means all inquiries, complaints, account disputes, and requests for documentation a covered person receives from residents.

"Responsible individual" means an individual who has direct control over, or significant management, policy, or decision-making authority with respect to, a person's digital asset business activity in this State.

"Secretary" means the Secretary of Financial and Professional Regulation and any authorized representative of the Secretary.

"Service provider" means any person that provides a material service to a covered person in connection with the offering or provision by that covered person of a digital asset business activity in this State, including a person that either:

(1) Participates in designing, operating, or maintaining the digital asset business activity.

(2) Processes transactions relating to the digital asset business activity, other than unknowingly or incidentally transmitting or processing financial data in a manner that the data is undifferentiated from other types of data of the same form as the person transmits or processes.

"State" means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States.

"Store," "storage", and "storing", except in the phrase "store of value," means to store, hold, or maintain custody or control of a digital asset on behalf of a resident by a person other than the resident.

"Transfer" means to transfer or transmit a digital asset from or on behalf of a resident, including by doing any of the following:

(1) Crediting the digital asset to the account or storage of another person.

(2) Moving the digital asset from one account or storage of a resident to another account or storage of the same resident.

(3) Relinquishing custody or control of a digital asset to another person.

"United States dollar equivalent of digital assets" means the equivalent value of a particular digital asset in United States dollars shown on a covered exchange regulated in the United States for a particular date or period specified in this Act, subject to any rules adopted by the Department.

(b) Whenever the terms "include", "including" or terms of similar import appear in this Act, unless the context requires otherwise, such terms shall not be construed to imply the exclusion of any person, class, or thing not specifically included.

(c) A reference in this Act to any other law or statute of this State, or of any other jurisdiction, means such law or statute as amended to the effective date of this Act, and unless the context otherwise requires, as amended thereafter.

Section 101-10. Applicability.

(a) This Act governs the digital asset business activity of a person doing business in this State or, wherever located, who engages in or holds itself out as engaging in the activity with or on behalf of a resident, to the extent not preempted by federal law and except as otherwise provided in subsection (b) or (c).

(b) This Act does not apply to the exchange, transfer, or storage of a digital asset or to digital asset administration to the extent the Securities Exchange Act of 1934, 15 U.S.C. 78a et seq., or the Illinois Securities Law of 1953 govern the activity and the activity is actually regulated for the purpose of investor protection by the U.S. Securities and Exchange Commission or the Illinois Secretary of State.

(c) This Act does not apply to the following:

(1) The United States, a State, political subdivision of a State, agency, or instrumentality of federal, State, or local government, or a foreign government or a subdivision, department, agency, or instrumentality of a foreign government.

(2) A federally insured depository institution.

(3) A corporate fiduciary acting as a fiduciary or otherwise engaging in fiduciary activities.

(4) A merchant using digital assets solely for the purchase or sale of goods or services in the ordinary course of its business.

(5) A person using digital assets solely for the purchase or sale of goods or services for personal, family, or household purposes.

Section 101-15. General powers and duties.

(a) The Department shall regulate digital asset business activity in this State, unless it is exempt pursuant to Section 101-10. To the extent permissible under federal law, the Department shall exercise nonexclusive oversight and enforcement under any federal law applicable to digital asset business activity.

(b) The functions, powers, and duties conferred upon the Department by this Act are cumulative to any other functions, powers, and duties conferred upon the Department by other laws applicable to digital asset business activity.

(c) The Department shall have the following functions, powers, and duties in carrying out its responsibilities under this Act and any other law applicable to digital asset business activity in this State:

(1) to issue or refuse to issue any license or other authorization under this Act;

(2) to revoke or suspend for cause any license or other authorization under this Act;

(3) to keep records of all licenses or other authorizations under this Act;

(4) to receive, consider, investigate, and act upon complaints made by any person relating to any digital asset business activity in this State;

(5) to prescribe the forms of and receive:

(A) applications for licenses or other authorizations under this Act; and

(B) all reports and all books and records required to be made under this Act;

(6) to subpoena documents and witnesses and compel their attendance and production, to administer oaths, and to require the production of any books, papers, or other materials relevant to any inquiry authorized by this Act or other law applicable to digital asset business activity in this State;

(7) to issue orders against any person:

(A) if the Secretary has reasonable cause to believe that an unsafe, unsound, or unlawful practice has occurred, is occurring, or is about to occur;

(B) if any person has violated, is violating, or is about to violate any law, rule, or written agreement with the Secretary; or

(C) for the purpose of administering the provisions of this Act or other law applicable to digital asset business activity and any rule adopted in accordance with this Act or other law applicable to digital asset business activity;

(8) to address any inquiries to any covered person, or the directors, officers, or employees of the covered person, or the affiliates or service providers of the covered person, in relation to the covered person's activities and conditions or any other matter connected with its affairs, and it shall be the duty of any person so addressed to promptly reply in writing to those inquiries; the Secretary may also require reports from any covered person at any time the Secretary chooses;

(9) to examine the books and records of every covered person, affiliate, or service provider;

(10) to enforce the provisions of this Act and any state or federal law applicable to digital asset business activity;

(11) to levy fees, fines, and civil penalties, charges for services, and assessments to defray operating expenses, including direct and indirect costs, of administering this Act and other laws applicable to digital asset business activity;

(12) to appoint examiners, supervisors, experts, and special assistants as needed to effectively and efficiently administer this Act and other laws applicable to digital asset business activity;

(13) to conduct hearings for the purpose of carrying out the purposes of this Act;

(14) to exercise visitorial power over a covered person, affiliate, or service provider;

(15) to enter into cooperative agreements with federal and state regulatory authorities and to accept reports of examinations from federal and state regulatory authorities;

(16) to assign on an emergency basis an examiner or examiners to monitor the affairs of a covered person, affiliate, or service provider with whatever frequency the Secretary determines appropriate and to charge the covered person for reasonable and necessary expenses of the Secretary if in the opinion of the Secretary an emergency exists or appears likely to occur;

(17) to impose civil penalties against a covered person, affiliate, or service provider for failing to respond to a regulatory request or reporting requirement; and

(18) to conduct investigations, market surveillance, and research, studies, and analyses of matters affecting the interests of users of digital assets;

(19) to take such actions as the Secretary deems necessary to educate and protect users of digital assets;

(20) to develop and implement initiatives and programs to promote responsible innovation in digital asset business activity; and

(21) to perform any other lawful acts necessary or desirable to carry out the purposes and provisions of this Act and other laws applicable to digital asset business activity.

(d) The Department is authorized and encouraged to share any information obtained pursuant to this Act or any other law applicable to digital asset business activity with law enforcement officials or other regulatory agencies.

Section 101-20. Funds.

(a) All moneys collected or received by the Department under this Act shall be deposited into the Financial Protection Fund, which is hereby created. The amounts deposited into the Financial Protection Fund shall be used for the ordinary and contingent expenses of the Department in administering this Act and other financial laws; nothing in this Act shall prevent the continuation of the practice of paying expenses involving salaries, retirement, social security, and State-paid insurance of State officers and employees by appropriation from the General Revenue Fund or any other fund. Moneys deposited into the Financial Protection Fund may be transferred to the Professions Indirect Cost Fund or any other Department fund.

(b) The expenses of administering this Act, including investigations and examinations provided for in this Act, shall be borne by and assessed against persons regulated by this Act. The Department may establish fees by rule, including in the following categories:

(1) investigation of licensees and license applicant fees;

(2) examination fees;

(3) contingent fees; and

(4) such other categories as may be required to administer this Act.

Article 105. Customer Protections

Section 105-5. Customer disclosures.

(a) When engaging in digital asset business activity with a resident, a covered person shall provide to a resident the customer disclosures required by subsection (b) and any additional disclosures the Department by rule determines to be necessary and appropriate for the protection of residents. The Department may determine by rule the time and form required for disclosures. A disclosure required by this Section shall be made separately from any other information provided by the covered person and in a clear and conspicuous manner in a record the resident may keep.

(b) Before engaging in digital asset business activity with a resident, a covered person shall disclose, to the extent applicable to the digital asset business activity the covered person will undertake with the resident, subject to any rule or order issued by the Department, all of the following:

(1) A schedule of fees and charges the covered person may assess, the manner by which fees and charges will be calculated if they are not set in advance and disclosed, and the timing of the fees and charges.

(2) Whether the product or service provided by the covered person is covered by either of the following:

(A) A form of insurance or other guarantee against loss by an agency of the United States as follows:

(i) Up to the full United States dollar equivalent of digital assets placed under the custody or control of, or purchased from, the covered person as of the date of the placement or purchase, including the maximum amount provided by insurance under the Federal Deposit Insurance Corporation or National Credit Union Administration or otherwise available from the Securities Investor Protection Corporation.

(ii) If not provided at the full United States dollar equivalent of the digital assets placed under the custody or control of or purchased from the covered person, the maximum amount of coverage for each resident expressed in the United States dollar equivalent of the digital asset.

(iii) If not applicable to the product or service provided by the covered person, a clear and conspicuous statement that the product is not insured, as applicable, by the Federal Deposit Insurance Corporation, National Credit Union Administration, or the Securities Investor Protection Corporation.

(B)(i) Private insurance against loss or theft, including cybertheft or theft by other means.

(ii) A covered person shall disclose all material terms of the insurance policy to the resident in a manner that allows the resident to understand the specific insured risks and any maximum coverage amounts that may result in partial coverage of the resident's assets.

(3) The irrevocability of a transfer or exchange and any exception to irrevocability.

(4) A description of all of the following:

(A) The covered person's liability for an unauthorized, mistaken, or accidental transfer or exchange.

(B) The resident's responsibility to provide notice to the covered person of an unauthorized, mistaken, or accidental transfer or exchange.

(C) The basis for any recovery by the resident from the covered person in case of an unauthorized, mistaken, or accidental transfer or exchange.

(D) General error resolution rights applicable to an unauthorized, mistaken, or accidental transfer or exchange.

(E) The method for the resident to update the resident's contact information with the covered person.

(5) That the date or time when the transfer or exchange is made and the resident's account is debited may differ from the date or time when the resident initiates the instruction to make the transfer or exchange.

(6) Whether the resident has a right to stop a preauthorized payment or revoke authorization for a transfer and the procedure to initiate a stop-payment order or revoke authorization for a subsequent transfer.

(7) The resident's right to receive a receipt, trade ticket, or other evidence of the transfer or exchange.

(8) The resident's right to at least 14 days' prior notice of a change in the covered person's fee schedule, other terms and conditions that have a material impact on digital asset business activity with the resident, or the policies applicable to the resident's account.

(9) That no digital asset is currently recognized as legal tender by Illinois or the United States.

(10)(A) A list of instances in the past 12 months when the covered person's service was unavailable to customers seeking to engage in digital asset business activity due to a service outage on the part of the covered person and the causes of each identified service outage.

(B) As part of the disclosure required by this paragraph, the covered person may list any steps the covered person has taken to resolve underlying causes for those outages.

(c) Except as otherwise provided in subsection (d), at the conclusion of a digital asset transaction with, or on behalf of, a resident, a covered person shall provide the resident a confirmation in a record which contains all of the following:

(1) The name and contact information of the covered person, including the toll-free telephone number required under Section 105-20.

(2) The type, value, date, precise time, and amount of the transaction.

(3) The fee charged for the transaction, including any charge for conversion of a digital asset to fiat currency or other digital asset, as well as any indirect charges.

(d) If a covered person discloses that it will provide a daily confirmation in the initial disclosure under subsection (c), the covered person may elect to provide a single, daily confirmation for all transactions with or on behalf of a resident on that day instead of a per transaction confirmation.

Section 105-10. Custody and protection of customer assets.

(a) A covered person that stores, holds, or maintains custody or control of a digital asset for one or more persons shall at all times maintain an amount of each type of digital asset sufficient to satisfy the aggregate entitlements of the persons to the type of digital asset.

(b) The following provisions apply to a covered person that stores, holds, or maintains custody or control of a digital asset for one or more persons:

(1) If a covered person violates subsection (a), the property interests of the persons in the digital asset are pro rata property interests in the type of digital asset to which the persons are entitled without regard to the time the persons became entitled to the digital asset or the covered person obtained control of the digital asset.

(2) A digital asset maintained for purposes of compliance with this Section shall meet all of the following criteria:

(A) The digital asset shall be held for the persons entitled to the digital asset.

(B) The digital asset shall not be property of the covered person.

(C) The digital asset shall not be subject to the claims of creditors of the covered person.

(3) The Department may, by rule, amend the provisions of this subsection as may be necessary and appropriate for the protection of residents.

(c) The Department may adopt rules applicable to covered persons related to additional protections of customer assets, including, but not limited to:

(1) rules requiring that digital assets and funds controlled by the covered person on behalf of residents be held in accounts segregated from the covered person's own digital assets and funds;

(2) rules related to qualified custodians that may hold such segregated accounts;

(3) rules related to titling of such segregated accounts;

(4) rules related to audit requirements for customer assets;

(5) rules requiring compliance with specific provisions of the Uniform Commercial Code applicable to digital assets;

(6) rules restricting selling, transferring, assigning, lending, hypothecating, pledging, or otherwise using or encumbering customer assets; and

(7) any rules as may be as may be necessary and appropriate for the protection of residents or necessary to effectuate the purposes of this Section.

Section 105-15. Covered exchanges.

(a)(1) Except as provided for under paragraph (2) of this subsection, a covered exchange, before listing or offering a digital asset that the covered exchange can exchange on behalf of a resident, shall certify on a form provided by the Department that the covered exchange has done the following:

(A) Identified the risk that the digital asset would be deemed a security by federal or state regulators.

(B) Provided, in writing, full and fair disclosure of all material facts relating to conflicts of interest that are associated with the covered exchange and the digital asset.

(C) Conducted a comprehensive risk assessment designed to ensure consumers are adequately protected from cybersecurity risk, risk of malfeasance, including theft, risks related to code or protocol defects, market-related risks, including price manipulation and fraud, and any other material risks.

(D) Established policies and procedures to reevaluate the appropriateness of the continued listing or offering of the digital asset, including an evaluation of whether material changes have occurred.

(E) Established policies and procedures to cease listing or offering the digital asset, including notification to affected consumers and counterparties.

(F) Any other requirement designated by rule by the Department as may be necessary and appropriate for the protection of residents.

(2) Certification by a covered exchange shall not be required for any digital asset approved for listing on or before January 1, 2023, by the New York Department of Financial Services pursuant to Part 200 of Title 23 of the New York Code of Rules and Regulations, if the covered exchange provides notification to the Department on a form provided by the Department.

(3) After a finding that a covered exchange has listed or offered a digital asset without appropriate certification or after a finding that misrepresentations were made in the certification process, the Department may require the covered exchange to cease listing or offering the digital asset and may take an enforcement action under Section 120-50 of this Act.

(b)(1) A covered exchange shall make every effort to execute a resident's request to exchange a digital asset that the covered exchange receives fully and promptly.

(2) A covered exchange shall use reasonable diligence to ascertain the best market for a digital asset and exchange it in that market so that the outcome to the resident is as favorable as possible under prevailing market conditions. Compliance with this paragraph shall be determined by factors, including, but not limited to, all of the following:

(A) The character of the market for the digital asset, including price and volatility.

(B) The size and type of transaction.

(C) The number of markets checked.

(D) Accessibility of appropriate pricing.

(E) Any other factor designated by rule by the Department as may be necessary and appropriate for the protection of residents.

(3) In a transaction for or with a resident, the covered exchange shall not interject a third party between the covered exchange and the best market for the digital asset in a manner inconsistent with this subsection.

(4) If a covered exchange cannot execute directly with a market and employs other means in order to ensure an execution advantageous to the resident, the burden of showing the acceptable circumstances for doing so is on the covered exchange.

Section 105-20. Customer service; requests for assistance.

(a) A covered person shall prominently display on its internet website a toll-free telephone number through which a resident can contact the covered person for requests for assistance and receive live customer assistance. The telephone line shall be operative 24 hours per day, Monday through Sunday, subject to any rules adopted by the Department.

(b) A covered person shall implement reasonable policies and procedures for accepting, processing, investigating, and responding to requests for assistance in a timely and effective manner. Such policies and procedures shall include all of the following:

(1) A procedure for resolving disputes between the covered person and a resident.

(2) A procedure for a resident to report an unauthorized, mistaken, or accidental digital asset business activity transaction.

(3) A procedure for a resident to file a complaint with the covered person and for the resolution of the complaint in a fair and timely manner with notice to the resident as soon as reasonably practical of the resolution and the reasons for the resolution.

(4) Any other procedure designated by rule by the Department as may be necessary and appropriate for the protection of residents.

Section 105-25. Collection of compensation. Unless exempt from licensure under this Act, no person engaged in or offering to engage in any act or service for which a license under this Act is required may bring or maintain any action in any court to collect compensation for the performance of the licensable services without alleging and proving that he or she was the holder of a valid license under this Act at all times during the performance of those services.

Article 110. Compliance

Section 110-5. General requirements.

(a) Each licensee is required to comply with the provisions of this Act, any lawful order, rule, or regulation made or issued under the provisions of this Act, and all applicable federal and State laws, rules, and regulations.

(b) Each licensee shall designate a qualified individual or individuals responsible for coordinating and monitoring compliance with subsection (a).

(c) Each licensee shall maintain, implement, update, and enforce written compliance policies and procedures, in accordance with Section 110-10 and subject to any rules adopted by the Department, which policies and procedures must be reviewed and approved by the licensee's board of directors or an equivalent governing body of the licensee.

Section 110-10. Required policies and procedures.

(a) An applicant, before submitting an application, shall create and a licensee, during licensure, shall maintain, implement, update, and enforce, written compliance policies and procedures for all of the following:

(1) A cybersecurity program.

(2) A business continuity program.

(3) A disaster recovery program.

(4) An anti-fraud program.

(5) An anti-money laundering and countering the financing of terrorism program.

(6) An operational security program.

(7)(A) A program designed to ensure compliance with this Act and other laws of this State or federal laws that are relevant to the digital asset business activity contemplated by the licensee with or on behalf of residents and to assist the licensee in achieving the purposes of other State laws and federal laws if violation of those laws has a remedy under this Act.

(B) At a minimum, the program described by this paragraph shall specify the policies and procedures that the licensee undertakes to minimize the risk that the licensee facilitates the exchange of unregistered securities.

(8) A conflict of interest program.

(9) A request for assistance program to comply with Section 105-20.

(10) Any other compliance program, policy, or procedure the Department establishes by rule as necessary for the protection of residents or for the safety and soundness of the licensee's business or to effectuate the purposes of this Act.

(b) A policy required by subsection (a) shall be maintained in a record and designed to be adequate for a licensee's contemplated digital asset business activity with or on behalf of residents, considering the circumstances of all participants and the safe operation of the activity. Any policy and implementing procedure shall be compatible with other policies and the procedures implementing them and not conflict with policies or procedures applicable to the licensee under other State law.

(c) A licensee's anti-fraud program shall include, at a minimum, all of the following:

(1) Identification and assessment of the material risks of its digital asset business activity related to fraud, which shall include any form of market manipulation and insider trading by the licensee, its employees, its associated persons, or its customers.

(2) Protection against any material risk related to fraud identified by the Department or the licensee.

(3) Periodic evaluation and revision of the anti-fraud program, policies, and procedures.

(d) A licensee's anti-money laundering and countering the financing of terrorism program shall include, at a minimum, all of the following:

(1) Identification and assessment of the material risks of its digital asset business activity related to money laundering and financing of terrorist activity.

(2) Procedures, in accordance with federal law or guidance published by federal agencies responsible for enforcing federal law, pertaining to money laundering and financing of terrorist activity.

(3) Filing reports under the Bank Secrecy Act, 31 U.S.C. 5311 et seq., or Chapter X of Title 31 of the Code of Federal Regulations and other federal or State law pertaining to the prevention or detection of money laundering or financing of terrorist activity.

(e) A licensee's operational security program shall include, at a minimum, reasonable and appropriate administrative, physical, and technical safeguards to protect the confidentiality, integrity, and availability of any nonpublic information or digital asset it receives, maintains, or transmits.

(f)(1) A licensee's cybersecurity program shall include, at a minimum, all of the following:

(A) Maintaining, updating, and enforcing policies and procedures designed to protect the confidentiality, integrity, and availability of the licensee's information systems and nonpublic information stored on those information systems.

(B) Implementing and maintaining a written policy or policies, approved at least annually by an executive officer or the licensee's board of directors, or an appropriate committee thereof, or equivalent governing body, setting forth the licensee's policies and procedures for the protection of its information systems and nonpublic information stored on those information systems.

(C) Designating a qualified individual responsible for overseeing and implementing the licensee's cybersecurity program and enforcing its cybersecurity policy. The individual must have adequate authority to ensure cybersecurity risks are appropriately managed, including the ability to direct sufficient resources to implement and maintain a cybersecurity program. The individual may be employed by the licensee, one of its affiliates, or a service provider.

(2) To assist in carrying out this subsection, the Department may adopt rules to define terms used in this subsection and to establish specific requirements for the required cybersecurity program, including, but not limited to, rules related to:

(A) penetration testing and vulnerability assessment;

(B) audit trails;

(C) access privileges;

(D) application security;

(E) risk assessment;

(F) cybersecurity personnel and intelligence;

(G) affiliates and service providers;

(H) authentication;

(I) data retention;

(J) training and monitoring;

(K) encryption;

(L) incident response;

(M) notice of cybersecurity events; and

(N) any other requirement necessary and appropriate for the protection of residents or for the safety and soundness of the licensee or to effectuate the purposes of this subsection.

(g) The Department may require a licensee to file with the Department a copy of any report it makes to a federal or State authority.

(h) After the policies and procedures required under this Article are created and approved by the licensee, the licensee shall engage a qualified individual or individuals with adequate authority and experience to monitor and implement each policy and procedure, publicize it as appropriate, recommend changes as necessary, and enforce it.

(i) Policies and procedures adopted under this Article shall be disclosed separately from other disclosures made available to a resident, in a clear and conspicuous manner and in the medium through which the resident contacted the licensee.

Article 115. Licensure

Section 115-5. License required. A person shall not engage in digital asset business activity, or hold itself out as being able to engage in digital asset business activity, with or on behalf of a resident unless the person is licensed in this State by the Department under this Article, or the person is exempt from licensure pursuant to Section 101-10.

Section 115-10. Application.

(a) An application for a license under this Act shall meet all of the following requirements:

(1) The application shall be in a form and medium prescribed by the Department. The Department may require the filing of the application through a multistate licensing system.

(2) The application shall provide all of the following information relevant to the applicant's proposed digital asset business activity:

(A) The legal name of the applicant, any current or proposed business United States Postal Service address of the applicant, and any fictitious or trade name the applicant uses or plans to use in conducting the applicant's digital asset business activity with or on behalf of a resident.

(B) The legal name, any former or fictitious name, and the residential and business United States Postal Service address of any executive officer and responsible individual of the applicant and any person that has control of the applicant.

(C) A description of the current and former business of the applicant and any affiliate of the applicant for the 5 years before the application is submitted, or, if the business has operated for less than 5 years, for the time the business has operated, including its products and services, associated internet website addresses and social media pages, principal place of business, projected user base, and specific marketing targets.

(D) A list of all of the following:

(i) Any digital asset, money service, or money transmitter license the applicant and any affiliates hold in another state or from an agency of the United States.

(ii) The date the licenses described in subdivision (i) expire.

(iii) Any license revocation, license suspension, or other disciplinary action taken against the applicant and any affiliates in any state or by an agency of the United States and any license applications rejected by any state or agency of the United States.

(E) A list of any criminal conviction, deferred prosecution agreement, and pending criminal proceeding in any jurisdiction against all of the following:

(i) The applicant.

(ii) Any executive officer of the applicant.

(iii) Any responsible individual of the applicant.

(iv) Any person that has control over the applicant.

(v) Any affiliate of the applicant.

(F) A list of any litigation, arbitration, or administrative proceeding in any jurisdiction in which the applicant or an executive officer, responsible individual, or affiliate of the applicant has been a party for the 10 years before the application is submitted determined to be material in accordance with generally accepted accounting principles and, to the extent the applicant or such other person would be required to disclose the litigation, arbitration, or administrative proceeding in the applicant's or such other person's audited financial statements, reports to equity owners, and similar statements or reports.

(G) A list of any bankruptcy or receivership proceeding in any jurisdiction for the 10 years before the application is submitted in which any of the following was a debtor:

(i) The applicant.

(ii) An executive officer of the applicant.

(iii) A responsible individual of the applicant.

(iv) A person that has control over the applicant.

(v) An affiliate of the applicant.

(H) The name and United States Postal Service address of any bank or credit union in which the applicant and any affiliates plan to deposit funds obtained by digital asset business activity.

(I) The source of funds and credit to be used by the applicant and any affiliate to conduct digital asset business activity with or on behalf of a resident.

(J) A current financial statement and other documentation satisfactory to the Department demonstrating that the applicant has the capital and liquidity required by Section 120-5.

(K) The United States Postal Service address and email address to which communications from the Department can be sent.

(L) The name, United States Postal Service address, and email address of the registered agent of the applicant in this State.

(M) A copy of the certificate, or a detailed summary acceptable to the Department, of coverage for any liability, casualty, business interruption, or cybersecurity insurance policy maintained by the applicant for itself, an executive officer, a responsible individual, an affiliate, or the applicant's users.

(N) If applicable, the date on which and the state in which the applicant is formed and a copy of a current certificate of good standing issued by that state.

(O) If a person has control of the applicant and the person's equity interests are publicly traded in the United States, a copy of the audited financial statement of the person for the most recent fiscal year or most recent report of the person filed under Section 13 of the Securities Exchange Act of 1934, 15 U.S.C. 78m.

(P) If a person has control of the applicant and the person's equity interests are publicly traded outside the United States, a copy of the audited financial statement of the person for the most recent fiscal year of the person or a copy of the most recent documentation similar to that required in subparagraph (N) filed with the foreign regulator in the domicile of the person.

(Q) If the applicant is a partnership or a member-managed limited liability company, the names and United States Postal Service addresses of any general partner or member.

(R) If the applicant is required to register with the Financial Crimes Enforcement Network of the United States Department of the Treasury as a money service business, evidence of the registration.

(S) A set of fingerprints for each executive officer and responsible individual of the applicant.

(T) If available, for any executive officer and responsible individual of the applicant, for the 10 years before the application is submitted, employment history and history of any investigation of the individual or legal proceeding to which the individual was a party.

(U) The plans through which the applicant will meet its obligations under Article 110.

(V) Any other information the Department requires by rule.

(3) The application shall be accompanied by a nonrefundable fee in the amount determined by the Department to cover the costs of regulation.

(b)(1) On receipt of a completed application, the Department shall investigate all of the following:

(A) The financial condition and responsibility of the applicant and any affiliate of the applicant.

(B) The relevant financial and business experience, character, and general fitness of the applicant and any affiliate of the applicant.

(C) The competence, experience, character, and general fitness of each executive officer and director, each responsible individual, and any person that has control of the applicant.

(2) On receipt of a completed application, the Department may investigate the business premises of an applicant or an affiliate of the applicant or require the submission of any other documents or information the Department deems relevant to the application.

(3) The investigation required by this subsection must allow the Secretary to issue positive findings stating that the financial condition, financial responsibility, competence, experience, character, and general fitness of the applicant, each executive officer and director, each responsible individual, any person that has control of the applicant, and any affiliate of the applicant are such as to command the confidence of the community and to warrant belief that the business will be operated honestly, fairly, and efficiently within the purpose of this Act; if the Secretary does not so find, he or she shall not issue the license, and he or she shall notify the license applicant of the denial.

(c)(1) After completing the investigation required by subsection (b), the Department shall send the applicant notice of its decision to approve, conditionally approve, or deny the application. If the Department does not receive notice from the applicant that the applicant accepts conditions specified by the Department within 31 days following the Department's notice of the conditions, the application shall be deemed withdrawn.

(2) The Secretary may impose conditions on a license if the Secretary determines that those conditions are necessary or appropriate. These conditions shall be imposed in writing and shall continue in effect for the period prescribed by the Secretary.

(d) A license issued pursuant to this Act shall take effect on the later of the following:

(1) The date the Department issues the license.

(2) The date the licensee provides the security required by Section 120-5.

(e) In addition to the fee required by paragraph (3) of subsection (a), an applicant shall pay the costs of the Department's investigation under subsection (b).

(f) A license issued pursuant to this Act shall remain in full force and effect until it expires without renewal, is surrendered by the licensee, or revoked or suspended as hereinafter provided.

(g)(1) The Department may issue a conditional license to an applicant who holds or maintains a license to conduct virtual currency business activity in the State of New York pursuant to Part 200 of Title 23 of the New York Code of Rules and Regulations, if the license was issued no later than January 1, 2023 and the applicant pays all appropriate fees and complies with the requirements of this Act.

(2) A conditional license issued pursuant to this subsection shall expire at the earliest of the following:

(A) upon issuance of an unconditional license;

(B) upon denial of a license application;

(C) upon revocation of a license issued pursuant to Part 200 of Title 23 of the New York Code of Rules and Regulations.

Section 115-15. Renewal.

(a) Licenses shall be subject to renewal every year using a common renewal period as established by the Department by rule. A licensee may apply for renewal of the license by submitting a renewal application under subsection (b) and paying a renewal fee determined by the Department, not to exceed the reasonable costs of regulation.

(b) A renewal application required by subsection (a) shall be submitted in a form and medium prescribed by the Department. The report shall contain all of the following:

(1) Either a copy of the licensee's most recent reviewed annual financial statement, if the gross revenue generated by the licensee's digital asset business activity in this State was not more than $2,000,000 for the fiscal year ending before the anniversary date of issuance of its license under this Act, or a copy of the licensee's most recent audited annual financial statement, if the licensee's digital asset business activity in this State amounted to more than $2,000,000, for the fiscal year ending before the anniversary date.

(2) If a person other than an individual has control of the licensee, a copy of either of the following:

(A) The person's most recent reviewed annual financial statement, if the person's gross revenue was not more than $2,000,000 in the previous fiscal year measured as of the anniversary date of issuance of its license under this Act.

(B) The person's most recent audited consolidated annual financial statement, if the person's gross revenue was more than $2,000,000 in the previous fiscal year measured as of the anniversary date of issuance of its license under this Act.

(3) A description of any of the following:

(A) Any material change in the financial condition of the licensee and any affiliate of the licensee.

(B) Any material litigation related to the licensee's digital asset business activity and involving the licensee or an executive officer, responsible individual, or affiliate of the licensee.

(C) Any federal, State, or foreign investigation involving the licensee or an executive officer, responsible individual, or affiliate of the licensee.

(D)(i) Any data security breach involving the licensee.

(ii) A description of a data security breach pursuant to this subparagraph does not constitute disclosure or notification of a security breach for purposes of any other law.

(4) Information or records required by Section 120-25 that the licensee has not reported to the Department.

(5) The number of digital asset business activity transactions with or on behalf of residents for the period since the later of the date the license was issued or the date the last renewal application was submitted.

(6)(A) The amount of United States dollar equivalent of digital assets in the custody or control of the licensee at the end of the last month that ends not later than 30 days before the date of the renewal report.

(B) The total number of residents for whom the licensee had custody or control of United States dollar equivalent of digital assets on that date.

(7) Evidence that the licensee is in compliance with Section 105-10.

(8) Evidence that the licensee is in compliance with Section 120-5.

(9) A list of any location where the licensee operates its digital asset business activity.

(10) Any other information the Department requires by rule.

(c) If a licensee does not timely comply with subsection (a), the Department may use enforcement actions provided under Section 120-50. Notice or hearing is not required for a suspension or revocation of a license under this Act for failure to pay a renewal fee or file a renewal application.

(d) Suspension or revocation of a license under this Section does not invalidate a transfer or exchange of digital assets for or on behalf of a resident made during the suspension or revocation and does not insulate the licensee from liability under this Act.

(e) For good cause, the Department, in its sole discretion, may extend a period under this Section.

(f) A licensee that does not comply with this Section shall cease digital asset business activities with or on behalf of a resident. A licensee ceasing an activity or activities regulated by this Act and desiring to no longer be licensed shall so inform the Department in writing and, at the same time, convey any license issued and all other symbols or indicia of licensure. The licensee shall include a plan for the withdrawal from regulated business, including a timetable for the disposition of the business, and comply with the surrender guidelines or requirements of the Department.

(g) A licensee shall pay the reasonable and necessary costs of the Department's investigation under this Section.

Section 115-20. Nontransferable license. A license under this Act is not transferable or assignable.

Article 120. Supervision

Section 120-5. Surety bond; capital and liquidity requirements.

(a)(1)(A) A licensee shall maintain a surety bond or trust account in United States dollars in a form and amount as determined by the Department for the protection of residents that engage in digital asset business activity with the licensee.

(B) If a licensee maintains a trust account pursuant to this Section, that trust account shall be maintained with a qualified custodian.

(2) Security deposited under this Section shall be for the benefit of a claim against the licensee on account of the licensee's digital asset business activity with or on behalf of a resident.

(3) Security deposited under this Section shall cover claims for the period the Department specifies by rule and for an additional period the Department specifies after the licensee ceases to engage in digital asset business activity with or on behalf of a resident.

(4) The Department may require the licensee to increase the amount of security deposited under this Section, and the licensee shall deposit the additional security not later than 15 days after the licensee receives notice in a record of the required increase.

(5) The Department may permit a licensee to substitute or deposit an alternate form of security satisfactory to the Department if the licensee at all times complies with this Section.

(b) In addition to the security required under subsection (a), a licensee shall maintain at all times capital and liquidity, each in an amount and form as the Department determines is sufficient to ensure the financial integrity of the licensee and its ongoing operations based on an assessment of the specific risks applicable to the licensee. In determining the minimum amount of capital and liquidity that shall be maintained by a licensee, the Department may consider factors, including, but not limited to, all of the following:

(1) The composition of the licensee's total assets, including the position, size, liquidity, risk exposure, and price volatility of each type of asset.

(2) The composition of the licensee's total liabilities, including the size and repayment timing of each type of liability.

(3) The actual and expected volume of the licensee's digital asset business activity.

(4) The amount of leverage employed by the licensee.

(5) The liquidity position of the licensee.

(6) The financial protection that the licensee provides pursuant to subsection (a).

(7) The types of entities to be serviced by the licensee.

(8) The types of products or services to be offered by the licensee.

(9) Arrangements adopted by the licensee for the protection of its customers in the event of the licensee's insolvency.

(c) A licensee shall hold liquidity required to be maintained in accordance with this Section in the form of cash or high-quality liquid assets, as defined by the Department and in proportions determined by the Department.

(d) The Department may require a licensee to increase the capital or liquidity required under this Section. A licensee shall submit evidence satisfactory to the Department that it has additional capital or liquidity required pursuant to this subsection not later than 15 days after the licensee receives notice in a record of the required increase.

Section 120-10. Examination.

(a)(1)(A) The Department may, at any time and from time to time, examine the business and any office, within or outside this State, of any covered person, or any agent of a covered person, in order to ascertain (i) the financial condition of the covered person, (ii) the safety and soundness of the conduct of its business, (iii) the policies of its management, (iv) whether the business is being conducted in a lawful manner, (v) whether all digital asset business activity is properly accounted for, and (vi) such other matters as the Department may determine, including, but not limited to, any activities of the covered person outside the State if in the Department's judgment such activities may affect the covered person's digital asset business activity.

(B) The directors, officers, and employees of a covered person, or agent of a covered person, being examined by the Department shall exhibit to the Department, on request, any or all of the covered person's accounts, books, correspondence, memoranda, papers, and other records and shall otherwise facilitate the examination so far as it may be in their power to do so.

(C) The covered person shall permit and assist the Department to examine an affiliate or service provider of the covered person when, in the Department's judgment, it is necessary or advisable to do so.

(2) The Department may examine a covered person, its affiliate, or service provider pursuant to this paragraph without prior notice to the covered person, affiliate, or service provider.

(b) A covered person shall pay the necessary costs of an examination under this Section.

Section 120-15. Books and records.

(a) A licensee shall maintain, for all digital asset business activity with or on behalf of a resident for 5 years after the date of the activity, a record of all of the following:

(1) Any transaction of the licensee with or on behalf of the resident or for the licensee's account in this State, including all of the following:

(A) The identity of the resident.

(B) The form of the transaction.

(C) The amount, date, and payment instructions given by the resident.

(D) The account number, name, and United States Postal Service address of the resident, and, to the extent feasible, other parties to the transaction.

(2) The aggregate number of transactions and aggregate value of transactions by the licensee with, or on behalf of, the resident and for the licensee's account in this State expressed in United States dollar equivalent of digital assets for the previous 12 calendar months.

(3) Any transaction in which the licensee exchanged one form of digital asset for fiat currency or another form of digital asset with or on behalf of the resident.

(4) A general ledger posted at least monthly that lists all assets, liabilities, capital, income, and expenses of the licensee.

(5) Any call report the licensee is required to create or provide to the Department.

(6) Bank statements and bank reconciliation records for the licensee and the name, account number, and United States Postal Service address of any bank or credit union the licensee uses in the conduct of its digital asset business activity with or on behalf of the resident.

(7) A report of any dispute with a resident.

(b) A licensee shall maintain records required by subsection (a) in a form that enables the Department to determine whether the licensee is in compliance with this Act, any court order, and the laws of this State.

(c) If a licensee maintains records outside this State that pertain to transactions with or on behalf of a resident, the licensee shall make the records available to the Department not later than 3 days after request, or, on a determination of good cause by the Department, in its sole discretion, at a later time.

(d) All records maintained by a licensee, any affiliate, or any service provider are subject to inspection by the Department.

Section 120-20. Regulatory cooperation. The Department may cooperate, coordinate, jointly examine, consult, and share records and other information with the appropriate regulatory agency of another state, a self-regulatory organization, federal or State regulator of banking or non-depository institutions, or a regulator of a jurisdiction outside the United States, concerning the affairs and conduct of a covered person, affiliate, or service provider in this State.

Section 120-25. Material business changes.

(a) A licensee shall file with the Department a report of the following, as may be applicable:

(1) A material change in information in the application for a license under this Act or the most recent renewal report of the licensee under this Act.

(2) A material change in the licensee's business for the conduct of its digital asset business activity with or on behalf of a resident.

(3) A change of an affiliate, executive officer, responsible individual, or person in control of the licensee.

(b) Absent good cause, as determined in the sole discretion of the Department, a report required by this Section shall be filed not later than 15 days after the change described in subsection (a).

Section 120-30. Change in control.

(a) As used in this Section, "proposed person to be in control" means the person that would control a licensee after a proposed transaction that would result in a change in control of the licensee.

(b) The following rules apply in determining whether a person has control over a licensee:

(1) There is a rebuttable presumption of control if the person's voting power in the licensee constitutes or will constitute at least 25% of the total voting power of the licensee.

(2) There is a rebuttable presumption of control if the person's voting power in another person constitutes or will constitute at least 10% of the total voting power of the other person and the other person's voting power in the licensee constitutes at least 25% of the total voting power of the licensee.

(3) There is no presumption of control solely because an individual is an executive officer of the licensee.

(c) At least 30 days before a proposed change in control of a licensee, the proposed person to be in control shall submit to the Department in a record all of the following:

(1) An application in a form and medium prescribed by the Department.

(2) The information and records that Section 115-10 would require if the proposed person to be in control already had control of the licensee.

(3) A license application under Section 115-10 by the proposed person to be in control.

(d) The Department, in accordance with Section 115-10, shall approve, approve with conditions, or deny an application for a change in control of a licensee. The Department, in a record, shall send notice of its decision to the licensee and the person that would be in control if the Department had approved the change in control. If the Department denies the application, the licensee shall abandon the proposed change in control or cease digital asset business activity with or on behalf of residents.

(e) If the Department applies a condition to approval of a change in control of a licensee, and the Department does not receive notice of the applicant's acceptance of the condition specified by the Department not later than 31 days after the Department sends notice of the condition, the application is deemed denied. If the application is deemed denied, the licensee shall abandon the proposed change in control or cease digital asset business activity with or on behalf of residents.

(f) The Department may revoke or modify a determination under subsection (d), after notice and opportunity to be heard, if, in its judgment, revocation or modification is consistent with this Act.

(g) If a change in control of a licensee requires approval of another regulatory agency, and the action of the other agency conflicts with that of the Department, the Department shall confer with the other agency. If the proposed change in control cannot be completed because the conflict cannot be resolved, the licensee shall abandon the change in control or cease digital asset business activity with or on behalf of residents.

Section 120-35. Mergers.

(a) At least 30 days before a proposed merger or consolidation of a licensee with another person, the licensee shall submit all of the following, as applicable, to the Department:

(1) An application in a form and medium prescribed by the Department.

(2) The plan of merger or consolidation in accordance with subsection (e).

(3) In the case of a licensee, the information required by Section 115-10 concerning the person that would be the surviving entity in the proposed merger or consolidation.

(b) If a proposed merger or consolidation would change the control of a licensee, the licensee shall comply with Section 120-30 and this Section.

(c) The Department, in accordance with Section 115-10, shall approve, conditionally approve, or deny an application for approval of a merger or consolidation of a licensee. The Department, in a record, shall send notice of its decision to the licensee and the person that would be the surviving entity. If the Department denies the application, the licensee shall abandon the merger or consolidation or cease digital asset business activity with or on behalf of residents.

(d) The Department may revoke or modify a determination under paragraph (c), after notice and opportunity to be heard, if, in its judgment, revocation or modification is consistent with this Act.

(e) A plan of merger or consolidation of a licensee with another person shall do all of the following:

(1) Describe the effect of the proposed transaction on the licensee's conduct of digital asset business activity with or on behalf of residents.

(2) Identify each person to be merged or consolidated and the person that would be the surviving entity.

(3) Describe the terms and conditions of the merger or consolidation and the mode of carrying it into effect.

(f) If a merger or consolidation of a licensee and another person requires approval of another regulatory agency, and the action of the other agency conflicts with that of the Department, the Department shall confer with the other agency. If the proposed merger or consolidation cannot be completed because the conflict cannot be resolved, the licensee shall abandon the merger or consolidation or cease digital asset business activity with or on behalf of residents.

(g) The Department may condition approval of an application under subsection (a). If the Department does not receive notice from the parties that the parties accept the Department's condition not later than 31 days after the Department sends notice in a record of the condition, the application is deemed denied. If the application is deemed denied, the licensee shall abandon the merger or consolidation or cease digital asset business activity with, or on behalf of, residents.

(h) If a licensee acquires substantially all of the assets of a person, whether or not the person's license was approved by the Department, the transaction is subject to this Section.

Section 120-40. Investigation of complaints. The Secretary shall be authorized at all times to maintain staff and facilities adequate to receive, record, and investigate complaints and inquiries made by any person concerning this Act and any covered persons, affiliates, and service providers under this Act. Each such person shall open their books, records, documents, and offices wherever situated to the Secretary or his or her appointees as needed to facilitate such investigations.

Section 120-45. Additional investigation and examination authority. In addition to any authority allowed under this Act or other applicable law, the Secretary shall have the authority to conduct investigations and examinations as follows:

(1) For purposes of initial licensing, license renewal, license suspension, license conditioning, license revocation or termination, or general or specific inquiry or investigation to determine compliance with this Act, the Secretary shall have the authority to access, receive, and use any books, accounts, records, files, documents, information, or evidence, including, but not limited to, the following:

(A) criminal, civil, and administrative history information, including nonconviction data as specified in the Criminal Code of 2012;

(B) personal history and experience information, including independent credit reports obtained from a consumer reporting agency described in Section 603(p) of the federal Fair Credit Reporting Act; and

(C) any other documents, information, or evidence the Secretary deems relevant to the inquiry or investigation, regardless of the location, possession, control, or custody of the documents, information, or evidence.

(2) For the purposes of investigating violations or complaints arising under this Act or for the purposes of examination, the Secretary may review, investigate, or examine any covered person, affiliate, service provider, individual, or person subject to this Act as often as necessary in order to carry out the purposes of this Act. The Secretary may direct, subpoena, or order the attendance of and examine under oath all persons whose testimony may be required about the transactions or the business or subject matter of any such examination or investigation, and may direct, subpoena, or order the person to produce books, accounts, records, files, and any other documents the Secretary deems relevant to the inquiry.

(3) Each covered person, affiliate, service provider, individual, or person subject to this Act shall make available to the Secretary upon request the books and records relating to the operations of the licensee, affiliate, individual, or person subject to this Act. The Secretary shall have access to those books and records and interview the officers, principals, employees, independent contractors, agents, and customers of the covered person, affiliate, service provider, individual, or person subject to this Act concerning their business.

(4) Each covered person, affiliate, service provider, individual, or person subject to this Act shall make or compile reports or prepare other information as directed by the Secretary in order to carry out the purposes of this Section, including, but not limited to:

(A) accounting compilations;

(B) information lists and data concerning transactions in a format prescribed by the Secretary; or

(C) other information deemed necessary to carry out the purposes of this Section.

(5) In making any examination or investigation authorized by this Act, the Secretary may control access to any documents and records of the covered person or person under examination or investigation. The Secretary may take possession of the documents and records or place a person in exclusive charge of the documents and records in the place where they are usually kept. During the period of control, no person shall remove or attempt to remove any of the documents or records, except pursuant to a court order or with the consent of the Secretary. Unless the Secretary has reasonable grounds to believe the documents or records of the covered person or person under examination or investigation have been or are at risk of being altered or destroyed for purposes of concealing a violation of this Act, the covered person or owner of the documents and records shall have access to the documents or records as necessary to conduct its ordinary business affairs.

(6) In order to carry out the purposes of this Section, the Secretary may:

(A) retain attorneys, accountants, or other professionals and specialists as examiners, auditors, or investigators to conduct or assist in the conduct of examinations or investigations;

(B) enter into agreements or relationships with other government officials, regulatory associations, or self-regulatory organizations in order to improve efficiencies and reduce regulatory burden by sharing resources, standardized or uniform methods or procedures, and documents, records, information, or evidence obtained under this Section;

(C) use, hire, contract, or employ public or privately available analytical systems, methods, or software to examine or investigate the covered person, affiliate, service provider, individual, or person subject to this Act;

(D) accept and rely on examination or investigation reports made by other government officials, within or outside this State; or

(E) accept audit reports made by an independent certified public accountant for the covered person, affiliate, service provider, individual, or person subject to this Act in the course of that part of the examination covering the same general subject matter as the audit and may incorporate the audit report in the report of the examination, report of investigation, or other writing of the Secretary.

(7) The authority of this Section shall remain in effect, whether such a covered person, affiliate, service provider, individual, or person subject to this Act acts or claims to act under any licensing or registration law of this State or claims to act without the authority.

(8) No covered person, affiliate, service provider, individual, or person subject to investigation or examination under this Section may knowingly withhold, abstract, remove, mutilate, destroy, or secrete any books, records, computer records, or other information.

Section 120-50. Enforcement actions.

(a) As used in this Article, "enforcement action" means an action including, but not limited to, all of the following:

(1) Suspending or revoking a license under this Act.

(2) Ordering a person to cease and desist from doing digital asset business activity with or on behalf of a resident.

(3) Requesting the court to appoint a receiver for the assets of a person doing digital asset business activity with or on behalf of a resident.

(4) Requesting the court to issue temporary, preliminary, or permanent injunctive relief against a person doing digital asset business activity with or on behalf of a resident.

(5) Assessing a civil penalty under Section 120-70.

(6) Recovering on the security under Section 120-5 and initiating a plan to distribute the proceeds for the benefit of a resident injured by a violation of this Act, or law of this State other than this Act that applies to digital asset business activity with or on behalf of a resident.

(7) Imposing necessary or appropriate conditions on the conduct of digital asset business activity with or on behalf of a resident.

(8) Seeking restitution on behalf of a resident if the Department shows economic injury due to a violation of this Act.

(b) The Department may enter into a consent order with a person regarding an enforcement action.

(c) This Article does not provide a private right of action to a resident, provided this Section does not preclude an action by a resident to enforce rights under Article 105 or subsection (a) of Section 120-5.

Section 120-55. Violations.

(a) The Department may take an enforcement action against a covered person or any person otherwise subject to this Act in any of the following instances:

(1) The covered person or person violates this Act, a rule adopted or order issued under this Act, or a State or federal law or regulation that applies to digital asset business activity of the violator with or on behalf of a resident.

(2) The covered person or person does not cooperate with an examination or investigation by the Department, fails to pay a fee, or fails to submit a report or documentation.

(3) The covered person or person, in the conduct of its digital asset business activity with or on behalf of a resident, engages in any of the following:

(A) An unsafe, unsound, or unlawful act or practice.

(B) An unfair, deceptive, or abusive act or practice.

(C) Fraud, misrepresentation, deceit, or negligence.

(D) Misappropriation of fiat currency, a digital asset, or other value.

(4) An agency of the United States or another state takes an action against the covered person or person that would constitute an enforcement action if the Department had taken the action.

(5) The covered person or person is convicted of a crime related to its digital asset business activity with or on behalf of a resident or involving fraud or felonious activity that, as determined by the Department, makes the covered person or person unsuitable to engage in digital asset business activity.

(6) Any of the following occurs:

(A) The covered person or person becomes insolvent.

(B) The covered person or person makes a general assignment for the benefit of its creditors.

(C) The covered person or person becomes the debtor, alleged debtor, respondent, or person in a similar capacity in a case or other proceeding under any bankruptcy, reorganization, arrangement, readjustment, insolvency, receivership, dissolution, liquidation, or similar law, and does not obtain from the court, within a reasonable time, confirmation of a plan or dismissal of the case or proceeding.

(D) The covered person or person applies for, or permits the appointment of, a receiver, trustee, or other agent of a court for itself or for a substantial part of its assets.

(7) The covered person or person makes a misrepresentation to the Department.

(b) If the Secretary finds, as the result of examination, investigation, or review of reports submitted by a licensee, that the business and affairs of a licensee are not being conducted in accordance with this Act, the Secretary may notify the licensee of the correction necessary. If a licensee fails to correct such violations, the Secretary may issue an order requiring immediate correction and compliance with this Act and may specify a reasonable date for performance.

Section 120-60. Hearings.

(a) Except as provided in subsection (b), the Department may take an enforcement action only after notice and opportunity for a hearing as appropriate in the circumstances. All hearings provided for in this Act shall be conducted in accordance with Title 38, Part 100 of the Illinois Administrative Code, and the Secretary shall have all the powers granted therein.

(b)(1)(A) The Department may take an enforcement action, other than the imposition of a civil penalty under Section 120-70, without notice if the circumstances require action before notice can be given.

(B) A person subject to an enforcement action pursuant to this subsection shall have the right to an expedited post-action hearing by the Department unless the person has waived the hearing.

(2)(A) The Department may take an enforcement action, other than the imposition of a civil penalty under Section 120-70, after notice and without a prior hearing if the circumstances require action before a hearing can be held.

(B) A person subject to an enforcement action pursuant to this subsection shall have the right to an expedited post-action hearing by the Department unless the person has waived the hearing.

(3) The Department may take an enforcement action after notice and without a hearing if the person subject to the enforcement action does not timely request a hearing.

Section 120-65. Hearing rules.

(a) The Department may, in accordance with the Illinois Administrative Procedure Act, adopt rules to provide for review within the Department of the Secretary's decisions affecting the rights of persons or entities under this Act. The review shall provide for, at a minimum:

(1) appointment of a hearing officer;

(2) appropriate procedural rules, specific deadlines for filings, and standards of evidence and of proof; and

(3) provision for apportioning costs among parties to the appeal.

(b) All final administrative decisions of the Department under this Act, all amendments and modifications of final administrative decisions, and any rules adopted by the Department pursuant to this Act shall be subject to judicial review pursuant to the provisions of the Administrative Review Law.

Section 120-70. Civil penalties.

(a) If a person other than a licensee engages in digital asset business activity with or on behalf of a resident in violation of this Act, the Department may assess a civil penalty against the person in an amount not to exceed $100,000 for each day the person is in violation of this Act.

(b) If a person violates a provision of this Act, the Department may assess a civil penalty in an amount not to exceed $25,000 for each day of violation or for each act or omission in violation, except that a fine may be imposed not to exceed $75,000 for each day of violation or for each act or omission in violation related to fraud, misrepresentation, deceit, or negligence.

(c) A civil penalty under this Section continues to accrue until the date the violation ceases.

(d) A civil penalty under Section is cumulative to any civil penalties enforceable by the Department under any other law.

Section 120-75. Subpoena power.

(a) The Secretary shall have the power to issue and to serve subpoenas and subpoenas duces tecum to compel the attendance of witnesses and the production of all books, accounts, records, and other documents and materials relevant to an examination or investigation. The Secretary, or his or her duly authorized representative, shall have power to administer oaths and affirmations to any person.

(b) In the event of noncompliance with a subpoena or subpoena duces tecum issued or caused to be issued by the Secretary, the Secretary may, through the Attorney General or the State's Attorney of the county in which the person subpoenaed resides or has its principal place of business, petition the circuit court of the county for an order requiring the subpoenaed person to appear and testify and to produce such books, accounts, records, and other documents as are specified in the subpoena duces tecum. The court may grant injunctive relief restraining the person from advertising, promoting, soliciting, entering into, offering to enter into, continuing, or completing any student loan servicing transaction. The court may grant other relief, including, but not limited to, the restraint, by injunction or appointment of a receiver, of any transfer, pledge, assignment, or other disposition of the person's assets or any concealment, alteration, destruction, or other disposition of books, accounts, records, or other documents and materials as the court deems appropriate, until the person has fully complied with the subpoena or subpoena duces tecum and the Secretary has completed an investigation or examination.

(c) If it appears to the Secretary that the compliance with a subpoena or subpoena duces tecum issued or caused to be issued by the Secretary pursuant to this Section is essential to an investigation or examination, the Secretary, in addition to the other remedies provided for in this Act, may, through the Attorney General or the State's Attorney of the county in which the subpoenaed person resides or has its principal place of business, apply for relief to the circuit court of the county. The court shall thereupon direct the issuance of an order against the subpoenaed person requiring sufficient bond conditioned on compliance with the subpoena or subpoena duces tecum. The court shall cause to be endorsed on the order a suitable amount of bond or payment pursuant to which the person named in the order shall be freed, having a due regard to the nature of the case.

(d) In addition, the Secretary may, through the Attorney General or the State's Attorney of the applicable county, seek a writ of attachment or an equivalent order from the circuit court having jurisdiction over the person who has refused to obey a subpoena, who has refused to give testimony, or who has refused to produce the matters described in the subpoena duces tecum.

Section 120-80. Civil actions.

(a) The Department may bring a civil action in accordance with the following:

(1) If a person violates any provision of this Act, a rule or final order, or condition imposed in writing by the Department, the Department through the Attorney General or the State's Attorney of the county in which any such violation occurs may bring an action in the circuit court to enjoin the acts or practices or to enforce compliance with this Act or any rule or order adopted pursuant to this Act. Upon a proper showing, a permanent or preliminary injunction, restraining order, or writ of mandate shall be granted and a receiver, monitor, conservator, or other designated fiduciary or officer of the court may be appointed for the defendant or the defendant's assets, or any other ancillary relief may be granted as appropriate. A receiver, monitor, conservator, or other designated fiduciary or officer of the court appointed by the circuit court pursuant to this Section may, with the approval of the court, exercise any or all of the powers of the defendant's officers, directors, partners, trustees, or persons who exercise similar powers and perform similar duties, including the filing of a petition for bankruptcy. No action at law or in equity may be maintained by any party against the Secretary, a receiver, monitor, conservator, or other designated fiduciary or officer of the court, by reason of their exercising these powers or performing these duties pursuant to the order of, or with the approval of, the circuit court.

(2) The Secretary may include in any action relief authorized by Section 120-50. The circuit court shall have jurisdiction to award additional relief.

(3) In any action brought by the Department, the Department may recover its costs and attorney's fees in connection with prosecuting the action if the Department is the prevailing party in the action.

(b) The Attorney General may enforce a violation of Article 105 as an unlawful practice under the Consumer Fraud and Deceptive Business Practices Act.

(c) A claim of violation of Article 105 may be asserted in a civil action. Additionally, a prevailing resident may be awarded reasonable attorney's fees and court costs.

Article 125. General Restrictions and Prohibitions

Section 125-5. Restricted stablecoin activities.

(a) As used in this Section:

"Reserve assets" means cash, central bank reserves, insured deposit accounts, short-term U.S. Treasury securities, short-term U.S. Treasury reverse repurchase agreements, or similar high-quality liquid assets, as defined by the Department and in proportions determined by the Department.

"Nominal redemption value" means the value at which a digital asset can be readily converted, on demand at the time of issuance, into United States dollars or any other national or state currency or a monetary equivalent or otherwise accepted in payment or to satisfy debts denominated in United States dollars or any national or state currency.

"Stablecoin" means a digital asset (A) that is denominated in United States dollars or pegged to the United States dollar or denominated in or pegged to another national or State currency and is issued with a fixed nominal redemption value with the intent of establishing a reasonable expectation or belief among the general public that the instrument will retain a nominal redemption value that is so stable as to render the nominal redemption effectively fixed and (B) that is not (i) a national or state currency or (ii) a security issued by an investment company registered under the Investment Company Act of 1940, 15 U.S.C. 80a et seq.

(b) Subject to any rules adopted by the Department, a covered person shall not exchange, transfer, or store a digital asset or engage in digital asset administration if that digital asset is a stablecoin unless both of the following are true:

(1) The issuer of the stablecoin is licensed pursuant to this Act or is a federally insured depository institution exempt from licensure under subsection (c) of Section 101-10.

(2) The issuer of the stablecoin at all times owns reserve assets having an aggregate market value computed in accordance with United States generally accepted accounting principles of not less than the aggregate amount of all of its outstanding stablecoins issued or sold.

(c) The Department may adopt rules to establish additional requirements for issuers of stablecoins, including, but not limited to, rules related to:

(1) reserve asset requirements;

(2) restrictions on pledging, rehypothecating, or reusing reserve assets;

(3) redemption requirements; or

(4) any requirement necessary and appropriate for the protection of residents, safety and soundness, or financial stability or to effectuate the purposes of this Section.

Section 125-10. No evasion.

(a) It shall be unlawful to engage in any device, subterfuge, or pretense to willfully evade or attempt to evade the requirements of this Act or any rule or order issued by the Department hereunder.

(b) Any financial product, service, or transaction that is willfully structured to evade or attempt to evade the definitions of digital asset or digital asset business activity shall be a digital asset or digital asset business activity, respectively, for purposes of this Act.

Article 130. Additional Procedural Provisions

Section 130-5. Confidential supervisory information.

(a) Information or documents obtained by employees, agents, or representatives of the Department in the course of any examination, investigation, audit, visit, registration, certification, review, licensing, investigation, or any other regulatory activity pursuant this Act and any record prepared or obtained by the Department to the extent that the record summarizes or contains information derived from any report, document, or record described in this Section shall, unless made a matter of public record, be deemed confidential and not subject to disclosure under the Freedom of Information Act, and only subject to disclosure pursuant to subpoena or court order as provided in subsection (e).

(b) All records of communications or summaries of communications between employees, agents, or representatives of the Department and employees, agents, or representatives of other governmental agencies, a provider of any multistate licensing system, or associations or organizations representing federal, State, or local law enforcement or regulatory agencies or providers of any multistate licensing system, pursuant to any regulatory or supervision activity under this Act and any other financial law administered by the Department, are confidential to the extent they contain confidential supervisory information and not subject to disclosure under the Freedom of Information Act.

(c) All confidential supervisory information received from other governmental agencies, a multistate licensing system provider, or associations or organizations consisting of employees, agents, or representatives of such agencies or providers, shall not be subject to disclosure under the Freedom of Information Act, and only subject to disclosure pursuant to subpoena or court order as provided in subsection (e).

(d) The sharing of any confidential supervisory information under this Act with governmental agencies, providers of any multistate licensing system, or associations or organizations consisting of employees, agents, or representatives of such federal, State, or local law enforcement or regulatory agencies, shall not result in the loss of privilege arising under federal or State law, or the loss of confidentiality protections provided by federal law or State law, and are only subject to disclosure pursuant to subpoena or court order as provided in subsection (e).

(e) Confidential supervisory information may not be disclosed to anyone other than the regulated person, law enforcement officials or other regulatory agencies that have an appropriate regulatory interest as determined by the Secretary, or to a party presenting a lawful subpoena, order, or other judicial or administrative process to the Secretary. The Secretary may immediately appeal to the court of jurisdiction the disclosure of such confidential supervisory information and seek a stay of the subpoena pending the outcome of the appeal. Reports required of regulated persons by the Secretary under this Act and results of examinations performed by the Secretary under this Act shall be the property of only the Secretary but may be shared with the regulated person. Access under this Act to the books and records of each regulated person shall be limited to the Secretary and his agents as provided in this Act and to the regulated person and its authorized agents and designees. No other person shall have access to the books and records of a regulated person under this Act. Any person upon whom a demand for production of confidential supervisory information is made, whether by subpoena, order, or other judicial or administrative process, must withhold production of the confidential supervisory information and must notify the Secretary of the demand, at which time the Secretary is authorized to intervene for the purpose of enforcing the limitations of this Section or seeking the withdrawal or termination of the attempt to compel production of the confidential supervisory information. The Secretary may impose any conditions and limitations on the disclosure of confidential supervisory information that are necessary to protect the confidentiality of such information. Except as authorized by the Secretary, no person obtaining access to confidential supervisory information may make a copy of the confidential supervisory information. The Secretary may condition a decision to disclose confidential supervisory information on entry of a protective order by the court or administrative tribunal presiding in the particular case or on a written agreement of confidentiality. In a case in which a protective order or agreement has already been entered between parties other than the Secretary, the Secretary may nevertheless condition approval for release of confidential supervisory information upon the inclusion of additional or amended provisions in the protective order. The Secretary may authorize a party who obtained the records for use in one case to provide them to another party in another case, subject to any conditions that the Secretary may impose on either or both parties. The requester shall promptly notify other parties to a case of the release of confidential supervisory information obtained and, upon entry of a protective order, shall provide copies of confidential supervisory information to the other parties.

(f) The Secretary is authorized to enter agreements or sharing arrangements with other governmental agencies, providers of any multistate licensing system, or associations or organizations representing governmental agencies or providers of any multistate licensing system. Notwithstanding the foregoing, the provisions of this Section shall apply regardless of the existence of any such agreement or sharing arrangement.

(g) This Section in no way limits any right, privilege, or authority that the Department has pursuant to any other applicable law. This Section does not in any way limit any privilege arising under federal or state law or other exemption from disclosure pursuant to the Freedom of Information Act.

(h) Notwithstanding the foregoing, whenever the Secretary determines, in his or her sole discretion, that it is in the public's interest, he or she may publicly disclose information or documents obtained under this Act and any other financial law administered by the Department, unless otherwise prohibited by law.

Section 130-10. Additional rulemaking authority.

(a) In addition to such powers and rulemaking authority as may be prescribed elsewhere in this Act or other financial laws administered by the Department, the Department is hereby authorized and empowered to adopt rules consistent with the purposes of this Act, including, but not limited to:

(1) rules in connection with the activities of covered persons, affiliates, and service providers as may be necessary and appropriate for the protection of residents;

(2) rules to define the terms used in this Act and as may be necessary and appropriate to interpret and implement the provisions of this Act;

(3) rules as may be necessary for the administration and enforcement of this Act;

(4) rules to set and collect fees necessary to administer and enforce this Act;

(5) rules in connection with the activities of covered persons, affiliates, and service providers as may be necessary and appropriate for the safety and soundness of such covered persons and affiliates and the stability of the financial system in this State.

(b) The Secretary is hereby authorized and empowered to make specific rulings, demands, and findings that he or she deems necessary for the proper conduct of the licensees and affiliates thereof.

Article 135. Miscellaneous Provisions

Section 135-5. Construction; severability; applicability.

(a) The provisions of this Act shall be liberally construed to effectuate its purposes.

(b) The provisions of this Act are severable under Section 1.31 of the Statute on Statutes.

(c) To the extent that any provision of this Act is preempted by federal law, the provision shall not apply and shall not be enforced solely as to the extent of the preemption and not as to other circumstances, persons, or applications.

(d) This Act applies to digital asset business activity with or on behalf of a resident on and after January 1, 2025, except that Article 5 applies to digital asset business activity with or on behalf of a resident on and after January 1, 2024. Notwithstanding the foregoing, the Department may adopt rules pursuant to this Act upon this Act becoming law with such rules not to take effect earlier than January 1, 2024.

Article 900. Amendatory provisions

Section 900-5. The Freedom of Information Act is amended by changing Section 7.5 as follows:

(5 ILCS 140/7.5)

Sec. 7.5. Statutory exemptions. To the extent provided for by the statutes referenced below, the following shall be exempt from inspection and copying:

(a) All information determined to be confidential under Section 4002 of the Technology Advancement and Development Act.

(b) Library circulation and order records identifying library users with specific materials under the Library Records Confidentiality Act.

(c) Applications, related documents, and medical records received by the Experimental Organ Transplantation Procedures Board and any and all documents or other records prepared by the Experimental Organ Transplantation Procedures Board or its staff relating to applications it has received.

(d) Information and records held by the Department of Public Health and its authorized representatives relating to known or suspected cases of sexually transmissible disease or any information the disclosure of which is restricted under the Illinois Sexually Transmissible Disease Control Act.

(e) Information the disclosure of which is exempted under Section 30 of the Radon Industry Licensing Act.

(f) Firm performance evaluations under Section 55 of the Architectural, Engineering, and Land Surveying Qualifications Based Selection Act.

(g) Information the disclosure of which is restricted and exempted under Section 50 of the Illinois Prepaid Tuition Act.

(h) Information the disclosure of which is exempted under the State Officials and Employees Ethics Act, and records of any lawfully created State or local inspector general's office that would be exempt if created or obtained by an Executive Inspector General's office under that Act.

(i) Information contained in a local emergency energy plan submitted to a municipality in accordance with a local emergency energy plan ordinance that is adopted under Section 11-21.5-5 of the Illinois Municipal Code.

(j) Information and data concerning the distribution of surcharge moneys collected and remitted by carriers under the Emergency Telephone System Act.

(k) Law enforcement officer identification information or driver identification information compiled by a law enforcement agency or the Department of Transportation under Section 11-212 of the Illinois Vehicle Code.

(l) Records and information provided to a residential health care facility resident sexual assault and death review team or the Executive Council under the Abuse Prevention Review Team Act.

(m) Information provided to the predatory lending database created pursuant to Article 3 of the Residential Real Property Disclosure Act, except to the extent authorized under that Article.

(n) Defense budgets and petitions for certification of compensation and expenses for court appointed trial counsel as provided under Sections 10 and 15 of the Capital Crimes Litigation Act. This subsection (n) shall apply until the conclusion of the trial of the case, even if the prosecution chooses not to pursue the death penalty prior to trial or sentencing.

(o) Information that is prohibited from being disclosed under Section 4 of the Illinois Health and Hazardous Substances Registry Act.

(p) Security portions of system safety program plans, investigation reports, surveys, schedules, lists, data, or information compiled, collected, or prepared by or for the Department of Transportation under Sections 2705-300 and 2705-616 of the Department of Transportation Law of the Civil Administrative Code of Illinois, the Regional Transportation Authority under Section 2.11 of the Regional Transportation Authority Act, or the St. Clair County Transit District under the Bi-State Transit Safety Act.

(q) Information prohibited from being disclosed by the Personnel Record Review Act.

(r) Information prohibited from being disclosed by the Illinois School Student Records Act.

(s) Information the disclosure of which is restricted under Section 5-108 of the Public Utilities Act.

(t) All identified or deidentified health information in the form of health data or medical records contained in, stored in, submitted to, transferred by, or released from the Illinois Health Information Exchange, and identified or deidentified health information in the form of health data and medical records of the Illinois Health Information Exchange in the possession of the Illinois Health Information Exchange Office due to its administration of the Illinois Health Information Exchange. The terms "identified" and "deidentified" shall be given the same meaning as in the Health Insurance Portability and Accountability Act of 1996, Public Law 104-191, or any subsequent amendments thereto, and any regulations promulgated thereunder.

(u) Records and information provided to an independent team of experts under the Developmental Disability and Mental Health Safety Act (also known as Brian's Law).

(v) Names and information of people who have applied for or received Firearm Owner's Identification Cards under the Firearm Owners Identification Card Act or applied for or received a concealed carry license under the Firearm Concealed Carry Act, unless otherwise authorized by the Firearm Concealed Carry Act; and databases under the Firearm Concealed Carry Act, records of the Concealed Carry Licensing Review Board under the Firearm Concealed Carry Act, and law enforcement agency objections under the Firearm Concealed Carry Act.

(v-5) Records of the Firearm Owner's Identification Card Review Board that are exempted from disclosure under Section 10 of the Firearm Owners Identification Card Act.

(w) Personally identifiable information which is exempted from disclosure under subsection (g) of Section 19.1 of the Toll Highway Act.

(x) Information which is exempted from disclosure under Section 5-1014.3 of the Counties Code or Section 8-11-21 of the Illinois Municipal Code.

(y) Confidential information under the Adult Protective Services Act and its predecessor enabling statute, the Elder Abuse and Neglect Act, including information about the identity and administrative finding against any caregiver of a verified and substantiated decision of abuse, neglect, or financial exploitation of an eligible adult maintained in the Registry established under Section 7.5 of the Adult Protective Services Act.

(z) Records and information provided to a fatality review team or the Illinois Fatality Review Team Advisory Council under Section 15 of the Adult Protective Services Act.

(aa) Information which is exempted from disclosure under Section 2.37 of the Wildlife Code.

(bb) Information which is or was prohibited from disclosure by the Juvenile Court Act of 1987.

(cc) Recordings made under the Law Enforcement Officer-Worn Body Camera Act, except to the extent authorized under that Act.

(dd) Information that is prohibited from being disclosed under Section 45 of the Condominium and Common Interest Community Ombudsperson Act.

(ee) Information that is exempted from disclosure under Section 30.1 of the Pharmacy Practice Act.

(ff) Information that is exempted from disclosure under the Revised Uniform Unclaimed Property Act.

(gg) Information that is prohibited from being disclosed under Section 7-603.5 of the Illinois Vehicle Code.

(hh) Records that are exempt from disclosure under Section 1A-16.7 of the Election Code.

(ii) Information which is exempted from disclosure under Section 2505-800 of the Department of Revenue Law of the Civil Administrative Code of Illinois.

(jj) Information and reports that are required to be submitted to the Department of Labor by registering day and temporary labor service agencies but are exempt from disclosure under subsection (a-1) of Section 45 of the Day and Temporary Labor Services Act.

(kk) Information prohibited from disclosure under the Seizure and Forfeiture Reporting Act.

(ll) Information the disclosure of which is restricted and exempted under Section 5-30.8 of the Illinois Public Aid Code.

(mm) Records that are exempt from disclosure under Section 4.2 of the Crime Victims Compensation Act.

(nn) Information that is exempt from disclosure under Section 70 of the Higher Education Student Assistance Act.

(oo) Communications, notes, records, and reports arising out of a peer support counseling session prohibited from disclosure under the First Responders Suicide Prevention Act.

(pp) Names and all identifying information relating to an employee of an emergency services provider or law enforcement agency under the First Responders Suicide Prevention Act.

(qq) Information and records held by the Department of Public Health and its authorized representatives collected under the Reproductive Health Act.

(rr) Information that is exempt from disclosure under the Cannabis Regulation and Tax Act.

(ss) Data reported by an employer to the Department of Human Rights pursuant to Section 2-108 of the Illinois Human Rights Act.

(tt) Recordings made under the Children's Advocacy Center Act, except to the extent authorized under that Act.

(uu) Information that is exempt from disclosure under Section 50 of the Sexual Assault Evidence Submission Act.

(vv) Information that is exempt from disclosure under subsections (f) and (j) of Section 5-36 of the Illinois Public Aid Code.

(ww) Information that is exempt from disclosure under Section 16.8 of the State Treasurer Act.

(xx) Information that is exempt from disclosure or information that shall not be made public under the Illinois Insurance Code.

(yy) Information prohibited from being disclosed under the Illinois Educational Labor Relations Act.

(zz) Information prohibited from being disclosed under the Illinois Public Labor Relations Act.

(aaa) Information prohibited from being disclosed under Section 1-167 of the Illinois Pension Code.

(bbb) Information that is prohibited from disclosure by the Illinois Police Training Act and the Illinois State Police Act.

(ccc) Records exempt from disclosure under Section 2605-304 of the Illinois State Police Law of the Civil Administrative Code of Illinois.

(ddd) Information prohibited from being disclosed under Section 35 of the Address Confidentiality for Victims of Domestic Violence, Sexual Assault, Human Trafficking, or Stalking Act.

(eee) Information prohibited from being disclosed under subsection (b) of Section 75 of the Domestic Violence Fatality Review Act.

(fff) Images from cameras under the Expressway Camera Act. This subsection (fff) is inoperative on and after July 1, 2023.

(ggg) Information prohibited from disclosure under paragraph (3) of subsection (a) of Section 14 of the Nurse Agency Licensing Act.

(hhh) Information submitted to the Illinois Department of State Police in an affidavit or application for an assault weapon endorsement, assault weapon attachment endorsement, .50 caliber rifle endorsement, or .50 caliber cartridge endorsement under the Firearm Owners Identification Card Act.

(iii) Information prohibited from being disclosed under Section 4-2 of the Uniform Money Transmission Modernization Act.

(jjj) Information prohibited from being disclosed under Section 130-5 of the Digital Assets Regulation Act.

(Source: P.A. 101-13, eff. 6-12-19; 101-27, eff. 6-25-19; 101-81, eff. 7-12-19; 101-221, eff. 1-1-20; 101-236, eff. 1-1-20; 101-375, eff. 8-16-19; 101-377, eff. 8-16-19; 101-452, eff. 1-1-20; 101-466, eff. 1-1-20; 101-600, eff. 12-6-19; 101-620, eff 12-20-19; 101-649, eff. 7-7-20; 101-652, eff. 1-1-22; 101-656, eff. 3-23-21; 102-36, eff. 6-25-21; 102-237, eff. 1-1-22; 102-292, eff. 1-1-22; 102-520, eff. 8-20-21; 102-559, eff. 8-20-21; 102-813, eff. 5-13-22; 102-946, eff. 7-1-22; 102-1042, eff. 6-3-22; 102-1116, eff. 1-10-23; revised 2-13-23.)

Section 900-10. The State Finance Act is amended by adding Sections 5.990 and 5.991 as follows:

(30 ILCS 105/5.990 new)

Sec. 5.990. The TOMA Consumer Protection Fund.

(30 ILCS 105/5.991 new)

Sec. 5.991. The Financial Protection Fund.

Section 900-15. The Illinois Banking Act is amended by changing Sections 2 and 30 as follows:

(205 ILCS 5/2) (from Ch. 17, par. 302)

Sec. 2. General definitions. In this Act, unless the context otherwise requires, the following words and phrases shall have the following meanings:

"Accommodation party" shall have the meaning ascribed to that term in Section 3-419 of the Uniform Commercial Code.

"Action" in the sense of a judicial proceeding includes recoupments, counterclaims, set-off, and any other proceeding in which rights are determined.

"Affiliate facility" of a bank means a main banking premises or branch of another commonly owned bank. The main banking premises or any branch of a bank may be an "affiliate facility" with respect to one or more other commonly owned banks.

"Appropriate federal banking agency" means the Federal Deposit Insurance Corporation, the Federal Reserve Bank of Chicago, or the Federal Reserve Bank of St. Louis, as determined by federal law.

"Bank" means any person doing a banking business whether subject to the laws of this or any other jurisdiction.

A "banking house", "branch", "branch bank" or "branch office" shall mean any place of business of a bank at which deposits are received, checks paid, or loans made, but shall not include any place at which only records thereof are made, posted, or kept. A place of business at which deposits are received, checks paid, or loans made shall not be deemed to be a branch, branch bank, or branch office if the place of business is adjacent to and connected with the main banking premises, or if it is separated from the main banking premises by not more than an alley; provided always that (i) if the place of business is separated by an alley from the main banking premises there is a connection between the two by public or private way or by subterranean or overhead passage, and (ii) if the place of business is in a building not wholly occupied by the bank, the place of business shall not be within any office or room in which any other business or service of any kind or nature other than the business of the bank is conducted or carried on. A place of business at which deposits are received, checks paid, or loans made shall not be deemed to be a branch, branch bank, or branch office (i) of any bank if the place is a terminal established and maintained in accordance with paragraph (17) of Section 5 of this Act, or (ii) of a commonly owned bank by virtue of transactions conducted at that place on behalf of the other commonly owned bank under paragraph (23) of Section 5 of this Act if the place is an affiliate facility with respect to the other bank.

"Branch of an out-of-state bank" means a branch established or maintained in Illinois by an out-of-state bank as a result of a merger between an Illinois bank and the out-of-state bank that occurs on or after May 31, 1997, or any branch established by the out-of-state bank following the merger.

"Bylaws" means the bylaws of a bank that are adopted by the bank's board of directors or shareholders for the regulation and management of the bank's affairs. If the bank operates as a limited liability company, however, "bylaws" means the operating agreement of the bank.

"Call report fee" means the fee to be paid to the Commissioner by each State bank pursuant to paragraph (a) of subsection (3) of Section 48 of this Act.

"Capital" includes the aggregate of outstanding capital stock and preferred stock.

"Cash flow reserve account" means the account within the books and records of the Commissioner of Banks and Real Estate used to record funds designated to maintain a reasonable Bank and Trust Company Fund operating balance to meet agency obligations on a timely basis.

"Charter" includes the original charter and all amendments thereto and articles of merger or consolidation.

"Commissioner" means the Commissioner of Banks and Real Estate, except that beginning on April 6, 2009 (the effective date of Public Act 95-1047), all references in this Act to the Commissioner of Banks and Real Estate are deemed, in appropriate contexts, to be references to the Secretary of Financial and Professional Regulation.

"Commonly owned banks" means 2 or more banks that each qualify as a bank subsidiary of the same bank holding company pursuant to Section 18 of the Federal Deposit Insurance Act; "commonly owned bank" refers to one of a group of commonly owned banks but only with respect to one or more of the other banks in the same group.

"Community" means a city, village, or incorporated town and also includes the area served by the banking offices of a bank, but need not be limited or expanded to conform to the geographic boundaries of units of local government.

"Company" means a corporation, limited liability company, partnership, business trust, association, or similar organization and, unless specifically excluded, includes a "State bank" and a "bank".

"Consolidating bank" means a party to a consolidation.

"Consolidation" takes place when 2 or more banks, or a trust company and a bank, are extinguished and by the same process a new bank is created, taking over the assets and assuming the liabilities of the banks or trust company passing out of existence.

"Continuing bank" means a merging bank, the charter of which becomes the charter of the resulting bank.

"Converting bank" means a State bank converting to become a national bank, or a national bank converting to become a State bank.

"Converting trust company" means a trust company converting to become a State bank.

"Court" means a court of competent jurisdiction.

"Director" means a member of the board of directors of a bank. In the case of a manager-managed limited liability company, however, "director" means a manager of the bank and, in the case of a member-managed limited liability company, "director" means a member of the bank. The term "director" does not include an advisory director, honorary director, director emeritus, or similar person, unless the person is otherwise performing functions similar to those of a member of the board of directors.

"Director of Banking" means the Director of the Division of Banking of the Department of Financial and Professional Regulation.

"Eligible depository institution" means an insured savings association that is in default, an insured savings association that is in danger of default, a State or national bank that is in default or a State or national bank that is in danger of default, as those terms are defined in this Section, or a new bank as that term defined in Section 11(m) of the Federal Deposit Insurance Act or a bridge bank as that term is defined in Section 11(n) of the Federal Deposit Insurance Act or a new federal savings association authorized under Section 11(d)(2)(f) of the Federal Deposit Insurance Act.

"Fiduciary" means trustee, agent, executor, administrator, committee, guardian for a minor or for a person under legal disability, receiver, trustee in bankruptcy, assignee for creditors, or any holder of similar position of trust.

"Financial institution" means a bank, savings bank, savings and loan association, credit union, or any licensee under the Consumer Installment Loan Act or the Sales Finance Agency Act and, for purposes of Section 48.3, any proprietary network, funds transfer corporation, or other entity providing electronic funds transfer services, or any corporate fiduciary, its subsidiaries, affiliates, parent company, or contractual service provider that is examined by the Commissioner. For purposes of Section 5c and subsection (b) of Section 13 of this Act, "financial institution" includes any proprietary network, funds transfer corporation, or other entity providing electronic funds transfer services, and any corporate fiduciary.

"Foundation" means the Illinois Bank Examiners' Education Foundation.

"General obligation" means a bond, note, debenture, security, or other instrument evidencing an obligation of the government entity that is the issuer that is supported by the full available resources of the issuer, the principal and interest of which is payable in whole or in part by taxation.

"Guarantee" means an undertaking or promise to answer for payment of another's debt or performance of another's duty, liability, or obligation whether "payment guaranteed" or "collection guaranteed".

"In danger of default" means a State or national bank, a federally chartered insured savings association or an Illinois state chartered insured savings association with respect to which the Commissioner or the appropriate federal banking agency has advised the Federal Deposit Insurance Corporation that:

(1) in the opinion of the Commissioner or the appropriate federal banking agency,

(A) the State or national bank or insured savings association is not likely to be able to meet the demands of the State or national bank's or savings association's obligations in the normal course of business; and

(B) there is no reasonable prospect that the State or national bank or insured savings association will be able to meet those demands or pay those obligations without federal assistance; or

(2) in the opinion of the Commissioner or the appropriate federal banking agency,

(A) the State or national bank or insured savings association has incurred or is likely to incur losses that will deplete all or substantially all of its capital; and

(B) there is no reasonable prospect that the capital of the State or national bank or insured savings association will be replenished without federal assistance.

"In default" means, with respect to a State or national bank or an insured savings association, any adjudication or other official determination by any court of competent jurisdiction, the Commissioner, the appropriate federal banking agency, or other public authority pursuant to which a conservator, receiver, or other legal custodian is appointed for a State or national bank or an insured savings association.

"Insured savings association" means any federal savings association chartered under Section 5 of the federal Home Owners' Loan Act and any State savings association chartered under the Illinois Savings and Loan Act of 1985 or a predecessor Illinois statute, the deposits of which are insured by the Federal Deposit Insurance Corporation. The term also includes a savings bank organized or operating under the Savings Bank Act.

"Insured savings association in recovery" means an insured savings association that is not an eligible depository institution and that does not meet the minimum capital requirements applicable with respect to the insured savings association.

"Issuer" means for purposes of Section 33 every person who shall have issued or proposed to issue any security; except that (1) with respect to certificates of deposit, voting trust certificates, collateral-trust certificates, and certificates of interest or shares in an unincorporated investment trust not having a board of directors (or persons performing similar functions), "issuer" means the person or persons performing the acts and assuming the duties of depositor or manager pursuant to the provisions of the trust, agreement, or instrument under which the securities are issued; (2) with respect to trusts other than those specified in clause (1) above, where the trustee is a corporation authorized to accept and execute trusts, "issuer" means the entrusters, depositors, or creators of the trust and any manager or committee charged with the general direction of the affairs of the trust pursuant to the provisions of the agreement or instrument creating the trust; and (3) with respect to equipment trust certificates or like securities, "issuer" means the person to whom the equipment or property is or is to be leased or conditionally sold.

"Letter of credit" and "customer" shall have the meanings ascribed to those terms in Section 5-102 of the Uniform Commercial Code.

"Main banking premises" means the location that is designated in a bank's charter as its main office.

"Maker or obligor" means for purposes of Section 33 the issuer of a security, the promisor in a debenture or other debt security, or the mortgagor or grantor of a trust deed or similar conveyance of a security interest in real or personal property.

"Merged bank" means a merging bank that is not the continuing, resulting, or surviving bank in a consolidation or merger.

"Merger" includes consolidation.

"Merging bank" means a party to a bank merger.

"Merging trust company" means a trust company party to a merger with a State bank.

"Mid-tier bank holding company" means a corporation that (a) owns 100% of the issued and outstanding shares of each class of stock of a State bank, (b) has no other subsidiaries, and (c) 100% of the issued and outstanding shares of the corporation are owned by a parent bank holding company.

"Municipality" means any municipality, political subdivision, school district, taxing district, or agency.

"National bank" means a national banking association located in this State and after May 31, 1997, means a national banking association without regard to its location.

"Out-of-state bank" means a bank chartered under the laws of a state other than Illinois, a territory of the United States, or the District of Columbia.

"Parent bank holding company" means a corporation that is a bank holding company as that term is defined in the Illinois Bank Holding Company Act of 1957 and owns 100% of the issued and outstanding shares of a mid-tier bank holding company.

"Person" means an individual, corporation, limited liability company, partnership, joint venture, trust, estate, or unincorporated association.

"Public agency" means the State of Illinois, the various counties, townships, cities, towns, villages, school districts, educational service regions, special road districts, public water supply districts, fire protection districts, drainage districts, levee districts, sewer districts, housing authorities, the Illinois Bank Examiners' Education Foundation, the Chicago Park District, and all other political corporations or subdivisions of the State of Illinois, whether now or hereafter created, whether herein specifically mentioned or not, and shall also include any other state or any political corporation or subdivision of another state.

"Public funds" or "public money" means current operating funds, special funds, interest and sinking funds, and funds of any kind or character belonging to, in the custody of, or subject to the control or regulation of the United States or a public agency. "Public funds" or "public money" shall include funds held by any of the officers, agents, or employees of the United States or of a public agency in the course of their official duties and, with respect to public money of the United States, shall include Postal Savings funds.

"Published" means, unless the context requires otherwise, the publishing of the notice or instrument referred to in some newspaper of general circulation in the community in which the bank is located at least once each week for 3 successive weeks. Publishing shall be accomplished by, and at the expense of, the bank required to publish. Where publishing is required, the bank shall submit to the Commissioner that evidence of the publication as the Commissioner shall deem appropriate.

"Qualified financial contract" means any security contract, commodity contract, forward contract, including spot and forward foreign exchange contracts, repurchase agreement, swap agreement, and any similar agreement, any option to enter into any such agreement, including any combination of the foregoing, and any master agreement for such agreements. A master agreement, together with all supplements thereto, shall be treated as one qualified financial contract. The contract, option, agreement, or combination of contracts, options, or agreements shall be reflected upon the books, accounts, or records of the bank, or a party to the contract shall provide documentary evidence of such agreement.

"Recorded" means the filing or recording of the notice or instrument referred to in the office of the Recorder of the county wherein the bank is located.

"Resulting bank" means the bank resulting from a merger or conversion.

"Secretary" means the Secretary of Financial and Professional Regulation, or a person authorized by the Secretary or by this Act to act in the Secretary's stead.

"Securities" means stocks, bonds, debentures, notes, or other similar obligations.

"Special purpose trust company" means a special purpose trust company under Article IIA of the Corporate Fiduciary Act.

"Stand-by letter of credit" means a letter of credit under which drafts are payable upon the condition the customer has defaulted in performance of a duty, liability, or obligation.

"State bank" means any banking corporation that has a banking charter issued by the Commissioner under this Act.

"State Banking Board" means the State Banking Board of Illinois.

"Subsidiary" with respect to a specified company means a company that is controlled by the specified company. For purposes of paragraphs (8) and (12) of Section 5 of this Act, "control" means the exercise of operational or managerial control of a corporation by the bank, either alone or together with other affiliates of the bank.

"Surplus" means the aggregate of (i) amounts paid in excess of the par value of capital stock and preferred stock; (ii) amounts contributed other than for capital stock and preferred stock and allocated to the surplus account; and (iii) amounts transferred from undivided profits.

"Tier 1 Capital" and "Tier 2 Capital" have the meanings assigned to those terms in regulations promulgated for the appropriate federal banking agency of a state bank, as those regulations are now or hereafter amended.

"Trust company" means a limited liability company or corporation incorporated in this State for the purpose of accepting and executing trusts.

"Undivided profits" means undistributed earnings less discretionary transfers to surplus.

"Unimpaired capital and unimpaired surplus", for the purposes of paragraph (21) of Section 5 and Sections 32, 33, 34, 35.1, 35.2, and 47 of this Act means the sum of the state bank's Tier 1 Capital and Tier 2 Capital plus such other shareholder equity as may be included by regulation of the Commissioner. Unimpaired capital and unimpaired surplus shall be calculated on the basis of the date of the last quarterly call report filed with the Commissioner preceding the date of the transaction for which the calculation is made, provided that: (i) when a material event occurs after the date of the last quarterly call report filed with the Commissioner that reduces or increases the bank's unimpaired capital and unimpaired surplus by 10% or more, then the unimpaired capital and unimpaired surplus shall be calculated from the date of the material event for a transaction conducted after the date of the material event; and (ii) if the Commissioner determines for safety and soundness reasons that a state bank should calculate unimpaired capital and unimpaired surplus more frequently than provided by this paragraph, the Commissioner may by written notice direct the bank to calculate unimpaired capital and unimpaired surplus at a more frequent interval. In the case of a state bank newly chartered under Section 13 or a state bank resulting from a merger, consolidation, or conversion under Sections 21 through 26 for which no preceding quarterly call report has been filed with the Commissioner, unimpaired capital and unimpaired surplus shall be calculated for the first calendar quarter on the basis of the effective date of the charter, merger, consolidation, or conversion.

(Source: P.A. 95-924, eff. 8-26-08; 95-1047, eff. 4-6-09; 96-1000, eff. 7-2-10; 96-1163, eff. 1-1-11.)

(205 ILCS 5/30) (from Ch. 17, par. 337)

Sec. 30. Conversion; merger with trust company or special purpose trust company. Upon approval by the Commissioner a trust company having power so to do under the law under which it is organized may convert into a state bank or may merge into a state bank as prescribed by this Act; except that the action by a trust company shall be taken in the manner prescribed by and shall be subject to limitations and requirements imposed by the law under which it is organized which law shall also govern the rights of its dissenting stockholders. The rights of dissenting stockholders of a state bank shall be governed by Section 29 of this Act. The conversion or merger procedure shall be:

(1) In the case of a merger, the board of directors of both the merging trust company and the merging bank by a majority of the entire board in each case shall approve a merger agreement which shall contain:

(a) The name and location of the merging bank and of the merging trust company and a list of the stockholders of each as of the date of the merger agreement;

(b) With respect to the resulting bank (i) its name and place of business; (ii) the amount of capital, surplus and reserve for operating expenses; (iii) the classes and the number of shares of stock and the par value of each share; (iv) the charter which is to be the charter of the resulting bank, together with the amendments to the continuing charter and to the continuing by-laws; and (v) a detailed financial statement showing the assets and liabilities after the proposed merger;

(c) Provisions governing the manner of converting the shares of the merging bank and of the merging trust company into shares of the resulting bank;

(d) A statement that the merger agreement is subject to approval by the Commissioner and by the stockholders of the merging bank and the merging trust company, and that whether approved or disapproved, the parties thereto will pay the Commissioner's expenses of examination;

(e) Provisions governing the manner of disposing of the shares of the resulting bank not taken by the dissenting stockholders of the merging trust company; and

(f) Such other provisions as the Commissioner may reasonably require to enable him to discharge his duties with respect to the merger.

(2) After approval by the board of directors of the merging bank and of the merging trust company, the merger agreement shall be submitted to the Commissioner for approval together with the certified copies of the authorizing resolution of each board of directors showing approval by a majority of each board.

(3) After receipt by the Commissioner of the papers specified in subsection (2), he shall approve or disapprove the merger agreement. The Commissioner shall not approve the agreement unless he shall be of the opinion and finds:

(a) That the resulting bank meets the requirements of this Act for the formation of a new bank at the proposed place of business of the resulting bank;

(b) That the same matters exist in respect of the resulting bank which would have been required under Section 10 of this Act for the organization of a new bank; and

(c) That the merger agreement is fair to all persons affected. If the Commissioner disapproves the merger agreement, he shall state his objections in writing and give an opportunity to the merging bank and the merging trust company to obviate such objections.

(4) To be effective, if approved by the Commissioner, a merger of a bank and a trust company where there is to be a resulting bank must be approved by the affirmative vote of the holders of at least two-thirds of the outstanding shares of stock of the merging bank entitled to vote at a meeting called to consider such action, unless holders of preferred stock are entitled to vote as a class in respect thereof, in which event the proposed merger shall be adopted upon receiving the affirmative vote of the holders of at least two-thirds of the outstanding shares of each class of shares entitled to vote as a class in respect thereof and of the total outstanding shares entitled to vote at such meeting and must be approved by the stockholders of the merging trust company as provided by the Act under which it is organized. The prescribed vote by the merging bank and the merging trust company shall constitute the adoption of the charter and by-laws of the continuing bank, including the amendments in the merger agreement, as the charter and by-laws of the resulting bank. Written or printed notice of the meeting of the stockholders of the merging bank shall be given to each stockholder of record entitled to vote at such meeting at least thirty days before such meeting and in the manner provided in this Act for the giving of notice of meetings of stockholders. The notice shall state that dissenting stockholders of the merging trust company will be entitled to payment of the value of those shares which are voted against approval of the merger, if a proper demand is made on the resulting bank and the requirements of the Act under which the merging trust company is organized are satisfied.

(5) Unless a later date is specified in the merger agreement, the merger shall become effective upon the filing with the Commissioner of the executed merger agreement, together with copies of the resolutions of the stockholders of the merging bank and the merging trust company approving it, certified by the president or a vice-president or, the cashier and also by the secretary or other officer charged with keeping the records. The charter of the merging trust company shall thereupon automatically terminate. The Commissioner shall thereupon issue to the continuing bank a certificate of merger which shall specify the name of the merging trust company, the name of the continuing bank and the amendments to the charter of the continuing bank provided for by the merger agreement. Such certificate shall be conclusive evidence of the merger and of the correctness of all proceedings therefor in all courts and places including the office of the Secretary of State, and said certificate shall be recorded.

(6) In the case of a conversion, a trust company shall apply for a charter by filing with the Commissioner:

(a) A certificate signed by its president, or a vice-president, and by a majority of the entire board of directors setting forth the corporate action taken in compliance with the provisions of the Act under which it is organized governing the conversion of a trust company to a bank or governing the merger of a trust company into another corporation;

(b) The plan of conversion and the proposed charter approved by the stockholders for the operation of the trust company as a bank. The plan of conversion shall contain (i) the name and location proposed for the converting trust company; (ii) a list of its stockholders as of the date of the stockholders' approval of the plan of conversion; (iii) the amount of its capital, surplus and reserve for operating expenses; (iv) the classes and the number of shares of stock and the par value of each share; (v) the charter which is to be the charter of the resulting bank; and (vi) a detailed financial statement showing the assets and liabilities of the converting trust company;

(c) A statement that the plan of conversion is subject to approval by the Commissioner and that, whether approved or disapproved, the converting trust company will pay the Commissioner's expenses of examination; and

(d) Such other instruments as the Commissioner may reasonably require to enable him to discharge his duties with respect to the conversion.

(7) After receipt by the Commissioner of the papers specified in subsection (6), he shall approve or disapprove the plan of conversion. The Commissioner shall not approve the plan of conversion unless he shall be of the opinion and finds:

(a) That the resulting bank meets the requirements of this Act for the formation of a new bank at the proposed place of business of the resulting bank;

(b) That the same matters exist in respect of the resulting bank which would have been required under Section 10 of this Act for the organization of a new bank; and

(c) That the plan of conversion is fair to all persons affected.

If the commissioner disapproves the plan of conversion, he shall state his objections in writing and give an opportunity to the converting trust company to obviate such objections.

(8) Unless a later date is specified in the plan of conversion, the conversion shall become effective upon the Commissioner's approval, and the charter proposed in the plan of conversion shall constitute the charter of the resulting bank. The Commissioner shall issue a certificate of conversion which shall specify the name of the converting trust company, the name of the resulting bank and the charter provided for by said plan of conversion. Such certificate shall be conclusive evidence of the conversion and of the correctness of all proceedings therefor in all courts and places including the office of the Secretary of State, and such certificate shall be recorded.

(8.5) A special purpose trust company under Article IIA of the Corporate Fiduciary Act may merge with a State bank or convert to a State bank as if the special purpose trust company were a trust company under Article II of the Corporate Fiduciary Act, subject to rules adopted by the Department.

(9) In the case of either a merger or a conversion under this Section 30, the resulting bank shall be considered the same business and corporate entity as each merging bank and merging trust company or as the converting trust company with all the property, rights, powers, duties and obligations of each as specified in Section 28 of this Act.

(Source: P.A. 91-357, eff. 7-29-99.)

Section 900-20. The Corporate Fiduciary Act is amended by changing Sections 1-5.08, 2-1, 4-1, 4-2, 4-5, 4A-15, and 5-1 and by adding Article IIA as follows:

(205 ILCS 620/1-5.08) (from Ch. 17, par. 1551-5.08)

Sec. 1-5.08. "Foreign corporation" means:

(a) any bank, savings and loan association, savings bank, or other corporation, limited liability company, or other entity now or hereafter organized under the laws of any state or territory of the United States of America, including the District of Columbia, other than the State of Illinois;

(b) any national banking association having its principal place of business in any state or territory of the United States of America, including the District of Columbia, other than the State of Illinois; and

(c) any federal savings and loan association or federal savings bank having its principal place of business in any state or territory of the United States of America, including the District of Columbia, other than the State of Illinois.

(Source: P.A. 91-97, eff. 7-9-99.)

(205 ILCS 620/2-1) (from Ch. 17, par. 1552-1)

Sec. 2-1. (a) Any corporation which has been or shall be incorporated under the general corporation laws of this State and any limited liability company established under the Limited Liability Company Act for the purpose of accepting and executing trusts, and any state bank, state savings and loan association, state savings bank, or other special corporation now or hereafter authorized by law to accept or execute trusts, may be appointed to act as a fiduciary in any capacity a natural person or corporation may act, and shall include, but not be limited to, acting as assignee or trustee by deed, and executor, guardian or trustee by will, custodian under the Illinois Uniform Transfers to Minors Act and such appointment shall be of like force as in case of appointment of a natural person and shall be designated a corporate fiduciary.

(b) No corporate fiduciary shall dissolve or cease its corporate existence without prior notice to and approval by the Commissioner and compliance with the requirements of Section 7-1 of this Act.

(Source: P.A. 100-863, eff. 8-14-18.)

(205 ILCS 620/Art. IIA heading new)

ARTICLE IIA. SPECIAL PURPOSE TRUST COMPANY

AUTHORITY AND ORGANIZATION

(205 ILCS 620/2A-1 new)

Sec. 2A-1. Purpose. The General Assembly finds that corporate fiduciaries perform a vital service in the custody, safekeeping, and management of physical assets, traditional electronic assets, and emerging digital assets for customers; that it is in the public interest that trust companies may be organized for the special purpose of providing fiduciary custodial services and related services to customers; that the operation of special purpose trust companies is impressed with a public interest such that it should be supervised as an activity under this Act; and that such special purpose trust companies should obtain their authority, conduct their operations, and be supervised as corporate fiduciaries as provided in this Act.

(205 ILCS 620/2A-2 new)

Sec. 2A-2. Special purpose trust company. Any corporation that has been or shall be incorporated under the general corporation laws of this State and any limited liability company established under the Limited Liability Company Act for the special purpose of providing fiduciary custodial services or providing other like or related services as specified by rule, consistent with this Article, may be appointed to act as a fiduciary with respect to such services and shall be designated a special purpose trust company.

(205 ILCS 620/2A-3 new)

Sec. 2A-3. Certificate of authority.

(a) It shall be lawful for any person to engage in the activity of a special purpose trust company after the effective date of this amendatory Act of the 103rd General Assembly upon filing an application for and procuring from the Secretary a certificate of authority stating that the person has complied with the requirements of this Act and is qualified to engage in the activity of a special purpose trust company.

(b) No natural person or natural persons, firm, partnership, or corporation not having been authorized under this Act shall transact in the activity of a special purpose trust company. A person who violates this Section is guilty of a Class A misdemeanor and the Attorney General or State's Attorney of the county in which the violation occurs may restrain the violation by a complaint for injunctive relief.

(c) Any entity that holds a certificate of authority under Article II of this Act may engage in the activity of a special purpose trust company without applying for or receiving a certificate of authority under this Article IIA.

(d) Nothing in this Section shall limit the authority of a depository institution to provide nonfiduciary custodial services consistent with its charter in accordance with applicable law and subject to any limitations and restrictions imposed by its chartering authority.

(205 ILCS 620/2A-4 new)

Sec. 2A-4. Rulemaking and organization.

(a) The Department shall adopt rules for the administration of this Article, including, but not limited to: rules for defining statutory terms; applying for a certificate of authority; review, investigation, and approval of application for certificate of authority; capital requirements; office location and name; collateralizing fiduciary assets; and general corporate powers. The authority of this subsection (a) is in addition to, and in no way limits, the authority of the Secretary under subsection (a) of Section 5-1.

(b) Articles III, V, VI, VII, VIII, and IX of this Act shall apply to a special purpose trust company under this Article as if the special purpose trust company were a trust company authorized under Article II of this Act, subject to any rules adopted by the Department.

(205 ILCS 620/4-1) (from Ch. 17, par. 1554-1)

Sec. 4-1. Foreign corporate fiduciary; certificate of authority. After July 13, 1953, no foreign corporation, including banks, savings banks, and savings and loan associations, now or hereafter organized under the laws of any other state or territory, and no national banking association having its principal place of business in any other state or territory or federal savings and loan association or federal savings bank having its principal place of business in any other state or territory, may procure a certificate of authority under Article II of this Act and any certificate of authority heretofore issued hereunder to any such foreign corporation or to any such national banking association shall become null and void on July 13, 1953, except that any such foreign corporation or any such national banking association actually acting as trustee, executor, administrator, administrator to collect, guardian, or in any other like fiduciary capacity in this State on July 13, 1953, may continue to act as such fiduciary in that particular trust or estate until such time as it has completed its duties thereunder. Such foreign corporation and such national banking association shall be subject to the provisions in this Article IV, regardless of whether its certificate of authority was obtained before July 13, 1953. The right and eligibility of any foreign corporation, any national banking association having its principal place of business in any other state or territory or any federal savings and loan association or federal savings bank having its principal place of business in any other state or territory hereafter to act as trustee, executor, administrator, administrator to collect, guardian, or in any other like fiduciary capacity in this State shall be governed solely by the provisions of this Act. Provided, however, that the Commissioner shall not be required to conduct an annual examination of such foreign corporation pursuant to Section 5-2 of this Act, but may examine such foreign corporation as the Commissioner deems appropriate. "Principal place of business" of any bank, federal savings and loan association or savings bank, for purposes of this Article IV, means the principal office as designated on the charter by its principal regulator.

(Source: P.A. 91-97, eff. 7-9-99.)

(205 ILCS 620/4-2) (from Ch. 17, par. 1554-2)

Sec. 4-2. Foreign corporation; eligibility. Any foreign corporation may act in this State as trustee, executor, administrator, administrator to collect, guardian, or in any other like fiduciary capacity, whether the appointment is by will, deed, court order or otherwise, without complying with any laws of this State relating to the qualification of corporations organized under the laws of this State to conduct a trust business or laws relating to the qualification of foreign corporations, provided only (1) such foreign corporation is authorized by the laws of the state of its organization or domicile to act as a fiduciary in that state, and (2) a corporation organized under the laws of this State, a national banking association having its principal place of business in this State, and a federal savings and loan association or federal savings bank having its principal place of business in this State and authorized to act as a fiduciary in this State, may, in such other state, act in a similar fiduciary capacity or capacities, as the case may be, upon conditions and qualifications which the Commissioner finds are not unduly restrictive when compared to those imposed by the laws of Illinois. Any foreign corporation eligible to act in a fiduciary capacity in this State pursuant to the provisions of this Act, shall be deemed qualified to accept and execute trusts in this State within the meaning of this Act and the Probate Act of 1975, approved August 7, 1975, as amended. No foreign corporation shall be permitted to act as trustee, executor, administrator, administrator to collect, guardian or in any other like fiduciary capacity in this State except as provided in Article IV of this Act; however, any foreign corporation actually acting in any such fiduciary capacity in this State on July 13, 1953, although not eligible to so act pursuant to the provisions of this Article IV, may continue to act as fiduciary in that particular trust or estate until such time as it has completed its duties thereunder.

(Source: P.A. 92-685, eff. 7-16-02.)

(205 ILCS 620/4-5) (from Ch. 17, par. 1554-5)

Sec. 4-5. Certificate of authority; fees; certificate of reciprocity.

(a) Prior to the time any foreign corporation acts in this State as testamentary trustee, trustee appointed by any court, trustee under any written agreement, declaration or instrument of trust, executor, administrator, administrator to collect, guardian or in any other like fiduciary capacity, such foreign corporation shall apply to the Commissioner of Banks and Real Estate for a certificate of authority with reference to the fiduciary capacity or capacities in which such foreign corporation proposes to act in this State, and the Commissioner of Banks and Real Estate shall issue a certificate of authority to such corporation concerning only the fiduciary capacity or such of the fiduciary capacities to which the application pertains and with respect to which he has been furnished satisfactory evidence that such foreign corporation meets the requirements of Section 4-2 of this Act. The certificate of authority shall set forth the fiduciary capacity or capacities, as the case may be, for which the certificate is issued, and shall recite and certify that such foreign corporation is eligible to act in this State in such fiduciary capacity or capacities, as the case may be, pursuant to the provisions of this Act. The certificate of authority shall remain in full force and effect until such time as such foreign corporation ceases to be eligible so to act under the provisions of this Act.

(b) Each foreign corporation making application for a certificate of authority shall pay reasonable fees to the Commissioner of Banks and Real Estate as determined by the Commissioner for the services of his office.

(c) Any foreign corporation holding a certificate of reciprocity which recites and certifies that such foreign corporation is eligible to act in this State in any such fiduciary capacity pursuant to the provisions of Article IV of this Act or any predecessor Act upon the same subject, issued prior to the effective date of this amendatory Act of 1987 may act in this State under such certificate of reciprocity in any such fiduciary capacity without applying for a new certificate of authority. Such certificate of reciprocity shall remain in full force and effect until such time as such foreign corporation ceases to be eligible so to act under the provisions of Article IV of this Act.

(d) Any foreign corporation acting in Illinois under a certificate of authority or a certificate of reciprocity shall report changes in its name or address to the Commissioner and shall notify the Commissioner when it is no longer serving as a corporate fiduciary in Illinois.

(e) The provisions of this Section shall not apply to a foreign corporation establishing or acquiring and maintaining a place of business in this State to conduct business as a fiduciary in accordance with Article IVA of this Act.

(Source: P.A. 92-483, eff. 8-23-01.)

(205 ILCS 620/4A-15)

Sec. 4A-15. Representative offices.

(a) A foreign corporation conducting fiduciary activities outside this State, but not conducting fiduciary activities in this State may establish a representative office under the Foreign Bank Representative Office Act. At these offices, the foreign corporation may market and solicit fiduciary services and provide back office and administrative support to the foreign corporation's fiduciary activities, but it may not engage in fiduciary activities.

(b) A foreign corporation invested with trust powers or authority to act as a fiduciary pursuant to the laws of its home state but not conducting fiduciary activities must apply for and procure a license under the Foreign Bank Representative Office Act before establishing an office in this State for the purpose of marketing, soliciting, or transacting any service or product, unless such office is otherwise established as permitted by and in accordance with this Act, the Illinois Banking Act, the Savings Bank Act, the Foreign Banking Office Act, or any Act specified by rules adopted under this Act.

(Source: P.A. 92-483, eff. 8-23-01; 92-811, eff. 8-21-02.)

(205 ILCS 620/5-1) (from Ch. 17, par. 1555-1)

Sec. 5-1. Commissioner's powers. The Commissioner of Banks and Real Estate shall have the following powers and authority and is charged with the duties and responsibilities designated in this Act:

(a) To promulgate, in accordance with the Illinois Administrative Procedure Act, reasonable rules for the purpose of administering the provisions of this Act, for the purpose of protecting consumers of this State as may be necessary and appropriate, and for the purpose of incorporating by reference rules promulgated by the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, or their successors that pertain to corporate fiduciaries, including, but not limited to, standards for the operation and conduct of the affairs of corporate fiduciaries;

(b) To issue orders for the purpose of administering the provisions of this Act and any rule promulgated in accordance with this Act;

(c) To appoint hearing officers to conduct hearings held pursuant to any of the powers granted to the Commissioner under this Section for the purpose of administering this Act and any rule promulgated in accordance with this Act;

(d) To subpoena witnesses, to compel their attendance, to administer an oath, to examine any person under oath and to require the production of any relevant books, papers, accounts and documents in the course of and pursuant to any investigation being conducted, or any action being taken, by the Commissioner in respect of any matter relating to the duties imposed upon, or the powers vested in, the Commissioner under the provisions of this Act, or any rule or regulation promulgated in accordance with this Act;

(e) To conduct hearings;

(f) To promulgate the form and content of any applications required under this Act;

(g) To impose civil penalties of up to $100,000 against any person or corporate fiduciary for each violation of any provision of this Act, any rule promulgated in accordance with this Act, any order of the Commissioner or any other action which, in the Commissioner's discretion, is a detriment or impediment to accepting or executing trusts; and

(h) To address any inquiries to any corporate fiduciary, or the officers thereof, in relation to its doings and conditions, or any other matter connected with its affairs, and it shall be the duty of any corporate fiduciary or person so addressed, to promptly reply in writing to such inquiries. The Commissioner may also require reports from any corporate fiduciary at any time he may deem desirable.

(Source: P.A. 96-1365, eff. 7-28-10.)

Section 900-25. The Consumer Fraud and Deceptive Business Practices Act is amended by adding Section 2BBBB as follows:

(815 ILCS 505/2BBBB new)

Sec. 2BBBB. Violations of the Digital Assets Regulation Act. Any person who violates Article 105 of the Digital Assets Regulation Act commits an unlawful practice within the meaning of this Act.

(205 ILCS 657/Act rep.)

Section 900-30. The Transmitters of Money Act is repealed.

Article 999.

Section 999-99. Effective date. This Act takes effect upon becoming law, except that the changes to the Transmitters of Money Act take effect January 1, 2025.