103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
SB3687

 

Introduced 2/9/2024, by Sen. David Koehler

 

SYNOPSIS AS INTRODUCED:
 
30 ILCS 105/5.1015 new
205 ILCS 305/2  from Ch. 17, par. 4403
205 ILCS 305/8  from Ch. 17, par. 4409
205 ILCS 305/9  from Ch. 17, par. 4410
205 ILCS 305/12.5 new
205 ILCS 305/13  from Ch. 17, par. 4414
205 ILCS 305/39  from Ch. 17, par. 4440
205 ILCS 305/59  from Ch. 17, par. 4460

    Amends the Illinois Credit Union Act. Provides that a credit union regulated by the Department of Financial and Professional Regulation that is a covered financial institution under the Illinois Community Reinvestment Act shall pay an examination fee to the Department subject to the adopted by the Department. Provides that the aggregate of all credit union examination fees collected by the Department under the Illinois Community Reinvestment Act shall be paid and transferred promptly, accompanied by a detailed statement, into the State Treasury and shall be set apart in the Credit Union Community Reinvestment Act Fund. Provides the limits to the amounts of funds that a credit union may invest in the purchase of an investment interest in a pool of loans when the investment is greater than the net worth of the credit union. Provides that credit unions may invest funds in derivatives transactions to aid in the credit union's management of interest rate risk if certain specified conditions are satisfied. Makes changes to provisions concerning conflicts between bylaws adopted by the subscribers of a credit union and the Act. Makes changes to provisions concerning rules adopted by the Secretary of Financial and Professional Regulation and the Act. Makes other changes. Amends the State Finance Act. Creates the Credit Union Community Reinvestment Act Fund. Effective immediately.


LRB103 38108 RTM 68240 b

 

 

A BILL FOR

 

SB3687LRB103 38108 RTM 68240 b

1    AN ACT concerning regulation.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The State Finance Act is amended by adding
5Section 5.1015 as follows:
 
6    (30 ILCS 105/5.1015 new)
7    Sec. 5.1015. The Credit Union Community Reinvestment Act
8Fund.
 
9    Section 10. The Illinois Credit Union Act is amended by
10changing Sections 2, 8, 9, 13, 39, and 59 and by adding Section
1112.5 as follows:
 
12    (205 ILCS 305/2)  (from Ch. 17, par. 4403)
13    Sec. 2. Organization procedure.
14    (1) Any 9 or more persons of legal age, the majority of
15whom shall be residents of the State of Illinois, who have a
16common bond referred to in Section 1.1 may organize a credit
17union or a central credit union by complying with this
18Section.
19    (2) The subscribers shall execute in duplicate Articles of
20Incorporation and agree to the terms thereof, which Articles
21shall state:

 

 

SB3687- 2 -LRB103 38108 RTM 68240 b

1        (a) The name, which shall include the words "credit
2    union" and which shall not be the same as that of any other
3    existing credit union in this state, and the location
4    where the proposed credit union is to have its principal
5    place of business;
6        (b) The common bond of the members of the credit
7    union;
8        (c) The par value of the shares of the credit union,
9    which must be at least $1;
10        (d) The names, addresses and Social Security numbers
11    of the subscribers to the Articles of Incorporation, and
12    the number and the value of shares subscribed to by each;
13        (e) That the credit union may exercise such incidental
14    powers as are necessary or requisite to enable it to carry
15    on effectively the purposes for which it is incorporated,
16    and those powers which are inherent in the credit union as
17    a legal entity;
18        (f) That the existence of the credit union shall be
19    perpetual.
20    (3) The subscribers shall prepare and adopt bylaws for the
21general governance government of the credit union, consistent
22with this Act, and execute same in duplicate. If there is a
23conflict, inconsistency, or variation between the terms of
24this Act and the provisions in the bylaws adopted by the credit
25union, the terms of this Act shall control. A conflict,
26inconsistency, or variation may not be deemed to exist if the

 

 

SB3687- 3 -LRB103 38108 RTM 68240 b

1Act specifically requires that a particular matter shall be
2adopted in the bylaws.
3    (4) The subscribers shall forward the articles of
4incorporation and the bylaws to the Secretary in duplicate,
5along with the required charter fee. If they conform to the
6law, and such rules and regulations as the Secretary and the
7Director may prescribe, if the Secretary determines that a
8common bond exists, and that it is economically advisable to
9organize the credit union, he or she shall within 60 days issue
10a certificate of approval attached to the articles of
11incorporation and return a copy of the bylaws and the articles
12of incorporation to the applicants or their representative,
13which shall be preserved in the permanent files of the credit
14union. The subscribers shall file the certificate of approval,
15with the articles of incorporation attached, in the office of
16the recorder (or, if there is no recorder, in the office of the
17county clerk) of the county in which the credit union is to
18locate its principal place of business. The recorder or the
19county clerk, as the case may be, shall accept and record the
20documents if they are accompanied by the proper fee. When the
21documents are so recorded, the credit union is incorporated
22under this Act.
23    (5) The subscribers for a credit union charter shall not
24transact any business until the certificate of approval has
25been received.
26(Source: P.A. 100-361, eff. 8-25-17.)
 

 

 

SB3687- 4 -LRB103 38108 RTM 68240 b

1    (205 ILCS 305/8)  (from Ch. 17, par. 4409)
2    Sec. 8. Secretary's powers and duties. Credit unions are
3regulated by the Department. The Secretary in executing the
4powers and discharging the duties vested by law in the
5Department has the following powers and duties:
6        (1) To exercise the rights, powers, and duties set
7    forth in this Act or any related Act. The Director shall
8    oversee the functions of the Division and report to the
9    Secretary, with respect to the Director's exercise of any
10    of the rights, powers, and duties vested by law in the
11    Secretary under this Act. All references in this Act to
12    the Secretary shall be deemed to include the Director, as
13    a person authorized by the Secretary or this Act to assume
14    responsibility for the oversight of the functions of the
15    Department relating to the regulatory supervision of
16    credit unions under this Act.
17        (2) To adopt prescribe rules and regulations for the
18    administration of this Act. The provisions of the Illinois
19    Administrative Procedure Act are hereby expressly adopted
20    and incorporated herein as though a part of this Act, and
21    shall apply to all administrative rules and procedures of
22    the Department under this Act. Rules adopted by the
23    Secretary shall be within the statutory authority upon
24    which they are based. If there is a conflict,
25    inconsistency, or variation between the terms of this Act

 

 

SB3687- 5 -LRB103 38108 RTM 68240 b

1    and the provisions in a rule adopted by the Secretary, the
2    terms of this Act shall control. A conflict,
3    inconsistency, or variation may not be deemed to exist if
4    the Act specifically delegates authority to the Secretary
5    to adopt by rule standards or limitations on a particular
6    matter, provided the rule is within the statutory
7    authority upon which it is based.
8        (3) To direct and supervise all the administrative and
9    technical activities of the Department including the
10    employment of a Credit Union Supervisor who shall have
11    knowledge in the theory and practice of, or experience in,
12    the operations or supervision of financial institutions,
13    preferably credit unions, and such other persons as are
14    necessary to carry out his functions. The Secretary shall
15    ensure that all examiners appointed or assigned to examine
16    the affairs of State-chartered credit unions possess the
17    necessary training and continuing education to effectively
18    execute their jobs.
19        (4) To issue cease and desist orders when in the
20    opinion of the Secretary, a credit union is engaged or has
21    engaged, or the Secretary has reasonable cause to believe
22    the credit union is about to engage, in an unsafe or
23    unsound practice, or is violating or has violated or the
24    Secretary has reasonable cause to believe is about to
25    violate a law, rule, or regulation or any condition
26    imposed in writing by the Department.

 

 

SB3687- 6 -LRB103 38108 RTM 68240 b

1        (5) To suspend from office and to prohibit from
2    further participation in any manner in the conduct of the
3    affairs of any credit union any director, officer, or
4    committee member who has committed any violation of a law,
5    rule, or regulation or of a cease and desist order or who
6    has engaged or participated in any unsafe or unsound
7    practice in connection with the credit union or who has
8    committed or engaged in any act, omission, or practice
9    which constitutes a breach of his fiduciary duty as such
10    director, officer, or committee member, when the Secretary
11    has determined that such action or actions have resulted
12    or will result in substantial financial loss or other
13    damage that seriously prejudices the interests of the
14    members.
15        (6) To assess a civil penalty against a credit union
16    provided that:
17            (A) the Secretary reasonably determines, based on
18        objective facts and an accurate assessment of
19        applicable legal standards, that the credit union has:
20                (i) committed a violation of this Act, any
21            rule adopted in accordance with this Act, or any
22            order of the Secretary issued pursuant to his or
23            her authority under this Act; or
24                (ii) engaged or participated in any unsafe or
25            unsound practice;
26            (B) before a civil penalty is assessed under this

 

 

SB3687- 7 -LRB103 38108 RTM 68240 b

1        item (6), the Secretary must make the further
2        reasonable determination, based on objective facts and
3        an accurate assessment of applicable legal standards,
4        that the credit union's action constituting a
5        violation under subparagraph (i) of paragraph (A) of
6        this item (6) or an unsafe and unsound practice under
7        subparagraph (ii) of paragraph (A) of this item (6):
8                (i) directly resulted in a substantial and
9            material financial loss or created a reasonable
10            probability that a substantial and material
11            financial loss will directly result; or
12                (ii) constituted willful misconduct or a
13            material breach of fiduciary duty of any director,
14            officer, or committee member of the credit union;
15            Material financial loss, as referenced in this
16        paragraph (B), shall be assessed in light of
17        surrounding circumstances and the relative size and
18        nature of the financial loss or probable financial
19        loss. Certain benchmarks shall be used in determining
20        whether financial loss is material, such as a
21        percentage of total assets or total gross income for
22        the immediately preceding 12-month period. Absent
23        compelling and extraordinary circumstances, no civil
24        penalty shall be assessed, unless the financial loss
25        or probable financial loss is equal to or greater than
26        either 1% of the credit union's total assets for the

 

 

SB3687- 8 -LRB103 38108 RTM 68240 b

1        immediately preceding 12-month period, or 1% of the
2        credit union's total gross income for the immediately
3        preceding 12-month period, whichever is less;
4            (C) before a civil penalty is assessed under this
5        item (6), the credit union must be expressly advised
6        in writing of the:
7                (i) specific violation that could subject it
8            to a penalty under this item (6); and
9                (ii) specific remedial action to be taken
10            within a specific and reasonable time frame to
11            avoid imposition of the penalty;
12            (D) civil penalties assessed under this item (6)
13        shall be remedial, not punitive, and reasonably
14        tailored to ensure future compliance by the credit
15        union with the provisions of this Act and any rules
16        adopted pursuant to this Act;
17            (E) a credit union's failure to take timely
18        remedial action with respect to the specific violation
19        may result in the issuance of an order assessing a
20        civil penalty up to the following maximum amount,
21        based upon the total assets of the credit union:
22                (i) Credit unions with assets of less than $10
23            million................................................$1,000
24                (ii) Credit unions with assets of at least $10
25            million and less than $50 million......................$2,500
26                (iii) Credit unions with assets of at least

 

 

SB3687- 9 -LRB103 38108 RTM 68240 b

1            $50 million and less than $100 million.................$5,000
2                (iv) Credit unions with assets of at least
3            $100 million and less than $500 million...............$10,000
4                (v) Credit unions with assets of at least $500
5            million and less than $1 billion......................$25,000
6                (vi) Credit unions with assets of $1 billion
7            and greater.....................................$50,000; and
8            (F) an order assessing a civil penalty under this
9        item (6) shall take effect upon service of the order,
10        unless the credit union makes a written request for a
11        hearing under 38 Ill. Adm. Code 190.20 of the
12        Department's rules for credit unions within 90 days
13        after issuance of the order; in that event, the order
14        shall be stayed until a final administrative order is
15        entered.
16        This item (6) shall not apply to violations separately
17    addressed in rules as authorized under item (7) of this
18    Section.
19        (7) Except for the fees established in this Act, to
20    prescribe, by rule and regulation, fees and penalties for
21    preparing, approving, and filing reports and other
22    documents; furnishing transcripts; holding hearings;
23    investigating applications for permission to organize,
24    merge, or convert; failure to maintain accurate books and
25    records to enable the Department to conduct an
26    examination; and taking supervisory actions.

 

 

SB3687- 10 -LRB103 38108 RTM 68240 b

1        (8) To destroy, in his discretion, any or all books
2    and records of any credit union in his possession or under
3    his control after the expiration of three years from the
4    date of cancellation of the charter of such credit unions.
5        (9) To make investigations and to conduct research and
6    studies and to publish some of the problems of persons in
7    obtaining credit at reasonable rates of interest and of
8    the methods and benefits of cooperative saving and lending
9    for such persons.
10        (10) To authorize, foster, or establish experimental,
11    developmental, demonstration, or pilot projects by public
12    or private organizations including credit unions which:
13            (a) promote more effective operation of credit
14        unions so as to provide members an opportunity to use
15        and control their own money to improve their economic
16        and social conditions; or
17            (b) are in the best interests of credit unions,
18        their members and the people of the State of Illinois.
19        (11) To cooperate in studies, training, or other
20    administrative activities with, but not limited to, the
21    NCUA, other state credit union regulatory agencies and
22    industry trade associations in order to promote more
23    effective and efficient supervision of Illinois chartered
24    credit unions.
25        (12) Notwithstanding the provisions of this Section,
26    the Secretary shall not:

 

 

SB3687- 11 -LRB103 38108 RTM 68240 b

1            (1) issue an order against a credit union
2        organized under this Act for unsafe or unsound banking
3        practices solely because the entity provides or has
4        provided financial services to a cannabis-related
5        legitimate business;
6            (2) prohibit, penalize, or otherwise discourage a
7        credit union from providing financial services to a
8        cannabis-related legitimate business solely because
9        the entity provides or has provided financial services
10        to a cannabis-related legitimate business;
11            (3) recommend, incentivize, or encourage a credit
12        union not to offer financial services to an account
13        holder or to downgrade or cancel the financial
14        services offered to an account holder solely because:
15                (A) the account holder is a manufacturer or
16            producer, or is the owner, operator, or employee
17            of a cannabis-related legitimate business;
18                (B) the account holder later becomes an owner
19            or operator of a cannabis-related legitimate
20            business; or
21                (C) the credit union was not aware that the
22            account holder is the owner or operator of a
23            cannabis-related legitimate business; and
24            (4) take any adverse or corrective supervisory
25        action on a loan made to an owner or operator of:
26                (A) a cannabis-related legitimate business

 

 

SB3687- 12 -LRB103 38108 RTM 68240 b

1            solely because the owner or operator owns or
2            operates a cannabis-related legitimate business;
3            or
4                (B) real estate or equipment that is leased to
5            a cannabis-related legitimate business solely
6            because the owner or operator of the real estate
7            or equipment leased the equipment or real estate
8            to a cannabis-related legitimate business.
9(Source: P.A. 102-858, eff. 5-13-22; 103-154, eff. 6-30-23.)
 
10    (205 ILCS 305/9)  (from Ch. 17, par. 4410)
11    Sec. 9. Reports and examinations.
12    (1) Credit unions shall report to the Department on forms
13supplied by the Department, in accordance with a schedule
14published by the Department. A recapitulation of the annual
15reports shall be compiled and published annually by the
16Department, for the use of the General Assembly, credit
17unions, various educational institutions and other interested
18parties. A credit union which fails to file any report when due
19shall pay to the Department a late filing fee for each day the
20report is overdue as prescribed by rule. The Secretary may
21extend the time for filing a report. Invoices for a 5300 Call
22Report and other reports and documents shall be paid by a
23credit union no later than 20 days after the credit union
24receives an invoice from the Department. If an invoice is not
25paid in a timely manner, the Department shall continue to

 

 

SB3687- 13 -LRB103 38108 RTM 68240 b

1issue invoices to the credit union on a monthly basis
2reflecting applicable late filing fees until the invoice is
3paid.
4    (2) The Secretary may require special examinations of and
5special financial reports from a credit union or a credit
6union organization in which a credit union loans, invests, or
7delegates substantially all managerial duties and
8responsibilities when he determines that such examinations and
9reports are necessary to enable the Department to determine
10the safety of a credit union's operation or its solvency. The
11cost to the Department of the aforesaid special examinations
12shall be borne by the credit union being examined as
13prescribed by rule.
14    (3) All credit unions incorporated under this Act shall be
15examined at least biennially by the Department or, at the
16discretion of the Secretary, by a public accountant registered
17by the Department of Financial and Professional Regulation.
18The costs of an examination shall be paid by the credit union.
19The scope of all examinations by a public accountant shall be
20at least equal to the examinations made by the Department. The
21examiners shall have full access to, and may compel the
22production of, all the books, papers, securities and accounts
23of any credit union. A special examination shall be made by the
24Department or by a public accountant approved by the
25Department upon written request of 5 or more members, who
26guarantee the expense of the same. Any credit union refusing

 

 

SB3687- 14 -LRB103 38108 RTM 68240 b

1to submit to an examination when ordered by the Department
2shall be reported to the Attorney General, who shall institute
3proceedings to have its charter revoked. If the Secretary
4determines that the examination of a credit union is to be
5conducted by a public accountant registered by the Department
6of Financial and Professional Regulation and the examination
7is done in conjunction with the credit union's external
8independent audit of financial statements, the requirements of
9this Section and subsection (3) of Section 34 shall be deemed
10met.
11    (3.5) Pursuant to Section 8, the Secretary shall adopt
12rules that ensure consistency and due process in the
13examination process. The Secretary may also establish
14guidelines that (i) define the scope of the examination
15process and (ii) clarify examination items to be resolved. The
16rules, formal guidance, interpretive letters, or opinions
17furnished to credit unions by the Secretary may be relied upon
18by the credit unions.
19    (4) A copy of the completed report of examination and a
20review comment letter, if any, citing exceptions revealed
21during the examination, shall be submitted to the credit union
22by the Department. A detailed report stating the corrective
23actions taken by the board of directors on each exception set
24forth in the review comment letter shall be filed with the
25Department within 40 days after the date of the review comment
26letter, or as otherwise directed by the Department. Any credit

 

 

SB3687- 15 -LRB103 38108 RTM 68240 b

1union through its officers, directors, committee members or
2employees, which willfully provides fraudulent or misleading
3information regarding the corrective actions taken on
4exceptions appearing in a review comment letter may have its
5operations restricted to the collection of principal and
6interest on loans outstanding and the payment of normal
7expenses and salaries until all exceptions are corrected and
8accepted by the Department.
9    (5) The Secretary may accept an examination from the
10National Credit Union Administration or a private insurer of
11share deposits approved by the Secretary instead of an
12examination conducted by the Department or by a public
13accountant registered by the Department pursuant to subsection
14(3). Acceptance of an examination from the National Credit
15Union Administration or an approved private insurer of share
16deposits shall only be permitted on an alternating basis with
17examinations that the Department or a registered public
18accountant conducts.
19(Source: P.A. 102-558, eff. 8-20-21; 102-858, eff. 5-13-22.)
 
20    (205 ILCS 305/12.5 new)
21    Sec. 12.5. Community Reinvestment Act examination fees.
22    (a) As used in this Section:
23    "Fiscal year" means a period beginning on July 1 of any
24calendar year and ending on June 30 of the next calendar year.
25    "Examination fee" means the examination fee described in

 

 

SB3687- 16 -LRB103 38108 RTM 68240 b

1Section 35-15 of the Illinois Community Reinvestment Act.
2    (b) For the fiscal year beginning July 1, 2025, a credit
3union regulated by the Department that is a covered financial
4institution under the Illinois Community Reinvestment Act
5shall pay an examination fee to the Department at the
6frequency and rate set forth in rules adopted by the
7Department implementing the Illinois Community Reinvestment
8Act, unless exempted from the payment of the examination fee
9by those rules. The examination fee shall be separate from and
10in addition to the regulatory fees paid by credit unions
11regulated by the Department as prescribed in Section 12 and
12shall be exclusively used to defray the administrative and
13operational expenses of the Credit Union Section of the
14Department incidental to conducting the examinations required
15by the Illinois Community Reinvestment Act and implementing
16rules of the Department.
17    (c) The aggregate of all credit union examination fees
18collected by the Department under the Illinois Community
19Reinvestment Act shall be paid and transferred promptly,
20accompanied by a detailed statement, into the State Treasury
21and shall be set apart in the Credit Union Community
22Reinvestment Act Fund. All earnings received from investment
23of the funds in the Credit Union Community Reinvestment Act
24Fund shall be deposited in the Fund and shall be used for the
25same purposes as examination fees deposited into the Fund.
26Moneys deposited into the Credit Union Community Reinvestment

 

 

SB3687- 17 -LRB103 38108 RTM 68240 b

1Act Fund may be transferred to the Professions Indirect Cost
2Fund, as authorized under Section 2105-300 of the Department
3of Professional Regulation Law of the Civil Administrative
4Code of Illinois.
5    (d) The administrative and operational expenses of the
6Credit Union Section of the Department in conducting
7examinations shall have the same meaning and scope as the
8administrative and operational expenses of the Credit Union
9Section of the Department in conducting regulatory
10examinations, as defined in subsection (5) of Section 12.
11    (e) When the balance in the Credit Union Community
12Reinvestment Act Fund at the end of a fiscal year exceeds 25%
13of the total administrative and operational expenses incurred
14by the Department in administering and enforcing the Illinois
15Community Reinvestment Act and rules of the Department in the
16administration and enforcement of the Illinois Community
17Reinvestment Act by conducting examinations of credit unions,
18such excess shall be credited to credit unions and applied
19against the credit unions' examination fees for the subsequent
20fiscal year. The amount credited to each credit union shall be
21in the same proportion as the examination fee paid by such
22credit union for the fiscal year in which the excess is
23produced bears to the aggregate amount of all examination fees
24collected by the Department from credit unions under the
25Illinois Community Reinvestment Act for the same fiscal year.
 

 

 

SB3687- 18 -LRB103 38108 RTM 68240 b

1    (205 ILCS 305/13)  (from Ch. 17, par. 4414)
2    Sec. 13. General powers. A credit union may:
3        (1) Make contracts; sue and be sued; and adopt and use
4    a common seal and alter the same;
5        (2) Acquire, lease (either as lessee or lessor), hold,
6    pledge, mortgage, sell and dispose of real property,
7    either in whole or in part, or any interest therein, as may
8    be necessary or incidental to its present or future
9    operations and needs, subject to such limitations as may
10    be imposed thereon in rules and regulations promulgated by
11    the Secretary; acquire, lease (either as lessee or
12    lessor), hold, pledge, mortgage, sell and dispose of
13    personal property, either in whole or in part, or any
14    interest therein, as may be necessary or incidental to its
15    present or future operations and needs;
16        (3) At the discretion of the board of directors,
17    require the payment of an entrance fee or annual
18    membership fee, or both, of any person admitted to
19    membership;
20        (4) Receive savings from its members in the form of
21    shares of various classes, or special purpose share
22    accounts; act as custodian of its members' accounts; issue
23    shares in trust as provided in this Act;
24        (5) Lend its funds to its members and otherwise as
25    hereinafter provided;
26        (6) Borrow from any source in accordance with policy

 

 

SB3687- 19 -LRB103 38108 RTM 68240 b

1    established by the board of directors to a maximum of 50%
2    of capital, surplus and reserves;
3        (7) Discount and sell any obligations owed to the
4    credit union;
5        (8) Honor requests for withdrawals or transfers of all
6    or any part of member share accounts, and any classes
7    thereof, in any manner approved by the credit union board
8    of directors;
9        (9) Sell all or a part of its assets or purchase all or
10    a part of the assets of another credit union and assume the
11    liabilities of the selling credit union, subject to the
12    prior approval of the Director, which approval shall not
13    be required in the case of loan transactions otherwise
14    authorized under applicable law;
15        (10) Invest surplus funds as provided in this Act;
16        (11) Make deposits in banks, savings banks, savings
17    and loan associations, trust companies; and invest in
18    shares, classes of shares or share certificates of other
19    credit unions;
20        (12) Assess charges and fees to members in accordance
21    with board resolution;
22        (13) Hold membership in and pay dues to associations
23    and organizations; to invest in shares, stocks or
24    obligations of any credit union organization;
25        (14) Declare dividends and pay interest refunds to
26    borrowers as provided in this Act;

 

 

SB3687- 20 -LRB103 38108 RTM 68240 b

1        (15) Collect, receive and disburse monies in
2    connection with providing negotiable checks, money orders
3    and other money-type instruments, and for such other
4    purposes as may provide benefit or convenience to its
5    members, and charge a reasonable fee for such services;
6        (16) Act as fiscal agent for and receive deposits from
7    the federal government, this State, or any other state,
8    state or any agency or political subdivision thereof,
9    including, but not limited to, political subdivisions as
10    defined in subsection (b) of Section 59;
11        (17) Receive savings from nonmembers in the form of
12    shares or share accounts in the case of credit unions
13    serving predominantly low-income members. The term "low
14    income members" shall mean those members who make less
15    than 80% of the average for all wage earners as
16    established by the Bureau of Labor Statistics or those
17    members whose annual household income falls at or below
18    80% of the median household income for the nation as
19    established by the Census Bureau. The term "predominantly"
20    is defined as a simple majority;
21        (18) Establish, maintain, and operate terminals as
22    authorized by the Electronic Fund Transfer Act;
23        (19) Subject to Article XLIV of the Illinois Insurance
24    Code, act as the agent for any fire, life, or other
25    insurance company authorized by the State of Illinois, by
26    soliciting and selling insurance and collecting premiums

 

 

SB3687- 21 -LRB103 38108 RTM 68240 b

1    on policies issued by such company; and may receive for
2    services so rendered such fees or commissions as may be
3    agreed upon between the said credit union and the
4    insurance company for which it may act as agent; provided,
5    however, that no such credit union shall in any case
6    assume or guarantee the payment of any premium on
7    insurance policies issued through its agency by its
8    principal; and provided further, that the credit union
9    shall not guarantee the truth of any statement made by an
10    assured in filing his application for insurance; and
11        (20) Make reasonable contributions to civic,
12    charitable, or service organizations not organized for
13    profit; religious corporations; and fundraisers benefiting
14    persons in the credit union's service area.
15(Source: P.A. 97-133, eff. 1-1-12.)
 
16    (205 ILCS 305/39)  (from Ch. 17, par. 4440)
17    Sec. 39. Special purpose share accounts; charitable
18donation accounts.
19    (1) If provided for in and consistent with the bylaws,
20Christmas clubs, vacation clubs and other special purpose
21share accounts may be established and offered under conditions
22and restrictions established by the board of directors.
23    (2) Pursuant to a policy adopted by the board of
24directors, which may be amended from time to time, a credit
25union may establish one or more charitable donation accounts.

 

 

SB3687- 22 -LRB103 38108 RTM 68240 b

1The investments and purchases to fund a charitable donation
2account are not subject to the investment limitations of this
3Act, provided the charitable donation account is structured in
4accordance with this Act. At their time of purchase, the book
5value of the investments in all charitable donation accounts,
6in the aggregate, shall not exceed 5% of the credit union's net
7worth.
8        (a) If a credit union chooses to establish a
9    charitable donation account using a trust vehicle, the
10    trustee must be an entity regulated by the Office of the
11    Comptroller of the Currency, the U.S. Securities and
12    Exchange Commission, another federal regulatory agency, or
13    a State financial regulatory agency. A regulated trustee
14    or other person who is authorized to make investment
15    decisions for a charitable donation account, other than
16    the credit union itself, shall either be registered with
17    the U.S. Securities and Exchange Commission as an
18    investment advisor or regulated by the Office of the
19    Comptroller of the Currency.
20        (b) The parties to the charitable donation account
21    must document the terms and conditions controlling the
22    account in a written operating agreement, trust agreement,
23    or similar instrument. The terms of the agreement shall be
24    consistent with the requirements and conditions set forth
25    in this Section. The agreement, if applicable, and
26    policies must document the investment strategies of the

 

 

SB3687- 23 -LRB103 38108 RTM 68240 b

1    charitable donation account trustee or other manager in
2    administering the charitable donation account and provide
3    for the accounting of all aspects of the account,
4    including its distributions and liquidation, in accordance
5    with generally accepted accounting principles.
6        (c) A credit union's charitable donation account
7    agreement, if applicable, and policies shall provide that
8    the charitable organization or non-profit entity
9    recipients of any charitable donation account funds must
10    be identified in the policy and be exempt from taxation
11    under Section 501(c)(3) or Section 501(c)(19) of the
12    Internal Revenue Code.
13        (d) Upon termination of a charitable donation account,
14    the credit union may receive a distribution of the
15    remaining assets in cash, or a distribution in kind of the
16    remaining assets, but only if those assets are permissible
17    investments for credit unions pursuant to this Act.
18    (3) Pursuant to subsection (20) of Section 13 authorizing
19a credit union to make reasonable contributions to civic,
20charitable, service, or religious corporations and to avoid
21the cost, administrative expenses, and reporting requirements
22associated with establishing its own private foundation, a
23credit union may establish one or more donor-advised fund
24accounts. The credit union shall maintain the account on its
25books and records under a name it selects, which may identify
26the account as a charitable or grant fund or other name that

 

 

SB3687- 24 -LRB103 38108 RTM 68240 b

1reflects the charitable nature of the account. The account
2shall be subject to the terms and restrictions set forth in
3this subsection.
4        (a) Transfers from a donor-advised fund account shall
5    be limited to foundations exempt from taxation under
6    Section 501(c)(3) of the Internal Revenue Code.
7        (b) Distributions by a foundation receiving
8    donor-advised funds from the credit union shall be:
9            (i) based upon specific grant recommendations of
10        the credit union; and
11            (ii) limited to public charities exempt from
12        taxation under Section 501(c)(3) of the Internal
13        Revenue Code.
14        (c) Transfers by a credit union from its donor-advised
15    fund account to a foundation irrevocably conveys all
16    right, title, and interest in the funds to the foundation,
17    subject only to the continuing right of the credit union
18    to designate the entity or entities that will receive the
19    grant funds. Grants may not be used to satisfy any
20    obligation of the credit union and no goods or services
21    may be received by the credit union from the recipient
22    organization in consideration of the grant.
23(Source: P.A. 102-774, eff. 5-13-22.)
 
24    (205 ILCS 305/59)  (from Ch. 17, par. 4460)
25    Sec. 59. Investment of funds.

 

 

SB3687- 25 -LRB103 38108 RTM 68240 b

1    (a) Funds not used in loans to members may be invested,
2pursuant to subsection (7) of Section 30 of this Act, and
3subject to Departmental rules and regulations:
4        (1) In securities, obligations or other instruments of
5    or issued by or fully guaranteed as to principal and
6    interest by the United States of America or any agency
7    thereof or in any trust or trusts established for
8    investing directly or collectively in the same;
9        (2) In obligations of any state of the United States,
10    the District of Columbia, the Commonwealth of Puerto Rico,
11    and the several territories organized by Congress, or any
12    political subdivision thereof; however, a credit union may
13    not invest more than 10% of its unimpaired capital and
14    surplus in the obligations of one issuer, exclusive of
15    general obligations of the issuer, and investments in
16    municipal securities must be limited to securities rated
17    in one of the 4 highest rating investment grades by a
18    nationally recognized statistical rating organization;
19        (3) In certificates of deposit or passbook type
20    accounts issued by a state or national bank, mutual
21    savings bank or savings and loan association; provided
22    that such institutions have their accounts insured by the
23    Federal Deposit Insurance Corporation or the Federal
24    Savings and Loan Insurance Corporation; but provided,
25    further, that a credit union's investment in an account in
26    any one institution may exceed the insured limit on

 

 

SB3687- 26 -LRB103 38108 RTM 68240 b

1    accounts;
2        (4) In shares, classes of shares or share certificates
3    of other credit unions, including, but not limited to,
4    corporate credit unions; provided that such credit unions
5    have their members' accounts insured by the NCUA or other
6    approved insurers, and that if the members' accounts are
7    so insured, a credit union's investment may exceed the
8    insured limit on accounts;
9        (5) In shares of a cooperative society organized under
10    the laws of this State or the laws of the United States in
11    the total amount not exceeding 10% of the unimpaired
12    capital and surplus of the credit union; provided that
13    such investment shall first be approved by the Department;
14        (6) In obligations of the State of Israel, or
15    obligations fully guaranteed by the State of Israel as to
16    payment of principal and interest;
17        (7) In shares, stocks or obligations of other
18    financial institutions in the total amount not exceeding
19    5% of the unimpaired capital and surplus of the credit
20    union;
21        (8) In federal funds and bankers' acceptances;
22        (9) In shares or stocks of Credit Union Service
23    Organizations in the total amount not exceeding the
24    greater of 6% of the unimpaired capital and surplus of the
25    credit union or the amount authorized for federal credit
26    unions;

 

 

SB3687- 27 -LRB103 38108 RTM 68240 b

1        (10) In corporate bonds identified as investment grade
2    by at least one nationally recognized statistical rating
3    organization, provided that:
4            (i) the board of directors has established a
5        written policy that addresses corporate bond
6        investment procedures and how the credit union will
7        manage credit risk, interest rate risk, liquidity
8        risk, and concentration risk; and
9            (ii) the credit union has documented in its
10        records that a credit analysis of a particular
11        investment and the issuing entity was conducted by the
12        credit union, a third party on behalf of the credit
13        union qualified by education or experience to assess
14        the risk characteristics of corporate bonds, or a
15        nationally recognized statistical rating agency before
16        purchasing the investment and the analysis is updated
17        at least annually for as long as it holds the
18        investment;
19        (11) To aid in the credit union's management of its
20    assets, liabilities, and liquidity in the purchase of an
21    investment interest in a pool of loans, in whole or in part
22    and without regard to the membership of the borrowers,
23    from other depository institutions and financial type
24    institutions, including mortgage banks, finance companies,
25    insurance companies, and other loan sellers in the total
26    amount not exceeding 150% of the net worth of the credit

 

 

SB3687- 28 -LRB103 38108 RTM 68240 b

1    union, so long as the credit union has received a
2    composite rating of 1 or 2 under the CAMELS supervisory
3    rating system at the time of the purchase of the
4    investment interest. The limit is increased to 175% of the
5    net worth of the credit union if it has received a
6    management rating of 1 under the CAMELS supervisory rating
7    system at the time of the purchase of the investment
8    interest. A credit union that satisfies the criteria for
9    the 175% limit may request approval from the Secretary for
10    an exception to the 175% limit up to a limit of 200% of the
11    net worth of the credit union, subject to such safety and
12    soundness standards, limitations, and qualifications as
13    the Department may establish by rule or guidance from time
14    to time;
15        (12) To aid in the credit union's management of its
16    assets, liabilities, and liquidity by receiving funds from
17    another financial institution as evidenced by certificates
18    of deposit, share certificates, or other classes of shares
19    issued by the credit union to the financial institution;
20        (13) In the purchase and assumption of assets held by
21    other financial institutions, with approval of the
22    Secretary and subject to any safety and soundness
23    standards, limitations, and qualifications as the
24    Department may establish by rule or guidance from time to
25    time;
26        (14) In the shares, stocks, or obligations of

 

 

SB3687- 29 -LRB103 38108 RTM 68240 b

1    community development financial institutions as defined in
2    regulations issued by the U.S. Department of the Treasury
3    and minority depository institutions as defined by the
4    National Credit Union Administration; however the
5    aggregate amount of all such investments shall not at any
6    time exceed 5% of the paid-in and unimpaired capital and
7    surplus of the credit union; and
8        (15)(A) In shares, stocks, or member units of
9    financial technology companies in the total amount not
10    exceeding 2.5% of the net worth of the credit union, so
11    long as:
12            (i) the credit union would remain well capitalized
13        as defined by 12 CFR 702.102 if the credit union
14        reduced its net worth by the full investment amount at
15        the time the investment is made or at any point during
16        the time the investment is held by the credit union;
17            (ii) the credit union and the financial technology
18        company are operated in a manner that demonstrates to
19        the public the separate corporate existence of the
20        credit union and financial technology company; and
21            (iii) the credit union has received a composite
22        rating of 1 or 2 under the CAMELS supervisory rating
23        system.
24        (B) The investment limit in subparagraph (A) of this
25    paragraph (15) is increased to 5% of the net worth of the
26    credit union if it has received a management rating of 1

 

 

SB3687- 30 -LRB103 38108 RTM 68240 b

1    under the CAMELS supervisory rating system at the time a
2    specific investment is made and at all times during the
3    term of the investment. A credit union that satisfies the
4    criteria in subparagraph (A) of this paragraph (15) and
5    this subparagraph may request approval from the Secretary
6    for an exception to the 5% limit up to a limit of 10% of
7    the net worth of the credit union, subject to such safety
8    and soundness standards, limitations, and qualifications
9    as the Department may establish by rule or guidance from
10    time to time. The request shall be in writing and
11    substantiate the need for the higher limit, describe the
12    credit union's record of investment activity, and include
13    financial statements reflecting a sound fiscal history.
14        (C) Before investing in a financial technology
15    company, the credit union shall obtain a written legal
16    opinion as to whether the financial technology company is
17    established in a manner that will limit potential exposure
18    of the credit union to no more than the loss of funds
19    invested in the financial technology company and the legal
20    opinion shall:
21            (i) address factors that have led courts to
22        "pierce the corporate veil", such as inadequate
23        capitalization, lack of separate corporate identity,
24        common boards of directors and employees, control of
25        one entity over another, and lack of separate books
26        and records; and

 

 

SB3687- 31 -LRB103 38108 RTM 68240 b

1            (ii) be provided by independent legal counsel of
2        the credit union.
3        (D) Before investing in the financial technology
4    company, the credit union shall enter into a written
5    investment agreement with the financial technology company
6    and the agreement shall contain the following clauses:
7            (i) the financial technology company will: (I)
8        provide the Department with access to the books and
9        records of the financial technology company relating
10        to the investment made by the credit union, with the
11        costs of examining those records borne by the credit
12        union in accordance with the per diem rate established
13        by the Department by rule; (II) follow generally
14        accepted accounting principles; and (III) provide the
15        credit union with its financial statements on at least
16        a quarterly basis and certified public accountant
17        audited financial statements on an annual basis; and
18            (ii) the financial technology company and credit
19        union agree to terminate their contractual
20        relationship: (I) upon 90 days' written notice to the
21        parties by the Secretary that the safety and soundness
22        of the credit union is threatened pursuant to the
23        Department's cease and desist and suspension authority
24        in Sections 8 and 61; (II) upon 30 days' written notice
25        to the parties if the credit union's net worth ratio
26        falls below the level that classifies it as well

 

 

SB3687- 32 -LRB103 38108 RTM 68240 b

1        capitalized as defined by 12 CFR 702.102; and (III)
2        immediately upon the parties' receipt of written
3        notice from the Secretary when the Secretary
4        reasonably concludes, based upon specific facts set
5        forth in the notice to the parties, that the credit
6        union will suffer immediate, substantial, and
7        irreparable injury or loss if it remains a party to the
8        investment agreement.
9        (E) The termination of the investment agreement
10    between the financial technology company and credit union
11    shall in no way operate to relieve the financial
12    technology company from repaying the investment or other
13    obligation due and owing the credit union at the time of
14    termination.
15        (F) Any financial technology company in which a credit
16    union invests pursuant to this paragraph (15) that
17    directly or indirectly originates, purchases, facilitates,
18    brokers, or services loans to consumers in Illinois shall
19    not charge an interest rate that exceeds the applicable
20    maximum rate established by the Board of the National
21    Credit Union Administration pursuant to 12 CFR
22    701.21(c)(7)(iii)-(iv). The maximum interest rate
23    described in this subparagraph that may be charged by a
24    financial technology company applies to all consumer loans
25    and consumer credit products; and .
26        (16) In derivatives transactions, to aid in the credit

 

 

SB3687- 33 -LRB103 38108 RTM 68240 b

1    union's management of interest rate risk. Before entering
2    into a derivatives transaction, and at all times during
3    its management of a derivatives transactions program, a
4    credit union shall satisfy and comply with all the
5    requirements set forth in 12 CFR 703.101 et seq. All
6    definitional terms and operational standards shall have
7    the meanings given to them in 12 CFR 703.101 et seq.,
8    except references to federal credit unions shall be
9    construed to mean Illinois-chartered credit unions, and
10    references to the National Credit Union Administration and
11    Regional Director shall be respectfully construed to mean
12    the Department and the Secretary. A credit union with
13    assets of at least $500 million and a CAMELS management
14    component rating of 1 or 2 need not obtain prior approval
15    from the Department before engaging in derivative
16    transactions
     but shall notify the Secretary in writing or
17    by electronic mail within 5 business days after entering
18    into its first derivatives transaction.
19    (b) As used in this Section:
20    "Political subdivision" includes, but is not limited to,
21counties, townships, cities, villages, incorporated towns,
22school districts, educational service regions, special road
23districts, public water supply districts, fire protection
24districts, drainage districts, levee districts, sewer
25districts, housing authorities, park districts, and any
26agency, corporation, or instrumentality of a state or its

 

 

SB3687- 34 -LRB103 38108 RTM 68240 b

1political subdivisions, whether now or hereafter created and
2whether herein specifically mentioned or not.
3    "Financial institution" includes any bank, savings bank,
4savings and loan association, or credit union established
5under the laws of the United States, this State, or any other
6state.
7    "Financial technology company" includes any corporation,
8partnership, limited liability company, or other entity
9organized under the laws of Illinois, another state, or the
10United States of America:
11        (1) that the principal business of which is the
12    provision of financial products or financial services, or
13    both, that:
14            (i) currently relate or may prospectively relate
15        to the daily operations of credit unions;
16            (ii) are of current or prospective benefit to the
17        members of credit unions; or
18            (iii) are of current or prospective benefit to
19        consumers eligible for membership in credit unions;
20        and
21        (2) that applies technological interventions,
22    including, without limitation, specialized software or
23    algorithm processes, products, or solutions, to improve
24    and automate the delivery and use of those financial
25    products or financial services.
26    (c) A credit union investing to fund an employee benefit

 

 

SB3687- 35 -LRB103 38108 RTM 68240 b

1plan obligation is not subject to the investment limitations
2of this Act and this Section and may purchase an investment
3that would otherwise be impermissible if the investment is
4directly related to the credit union's obligation under the
5employee benefit plan and the credit union holds the
6investment only for so long as it has an actual or potential
7obligation under the employee benefit plan.
8    (d) If a credit union acquires loans from another
9financial institution or financial-type institution pursuant
10to this Section, the credit union shall be authorized to
11provide loan servicing and collection services in connection
12with those loans.
13(Source: P.A. 102-496, eff. 8-20-21; 102-774, eff. 5-13-22;
14102-858, eff. 5-13-22; 103-154, eff. 6-30-23.)
 
15    Section 99. Effective date. This Act takes effect upon
16becoming law.