Full Text of SB3687 103rd General Assembly
SB3687enr 103RD GENERAL ASSEMBLY | | | SB3687 Enrolled | | LRB103 38108 RTM 68240 b |
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| 1 | | AN ACT concerning regulation. | 2 | | Be it enacted by the People of the State of Illinois, | 3 | | represented in the General Assembly: | 4 | | Section 10. The Illinois Credit Union Act is amended by | 5 | | changing Sections 2, 8, 12, 13, 39, and 59 as follows: | 6 | | (205 ILCS 305/2) (from Ch. 17, par. 4403) | 7 | | Sec. 2. Organization procedure. | 8 | | (1) Any 9 or more persons of legal age, the majority of | 9 | | whom shall be residents of the State of Illinois, who have a | 10 | | common bond referred to in Section 1.1 may organize a credit | 11 | | union or a central credit union by complying with this | 12 | | Section. | 13 | | (2) The subscribers shall execute in duplicate Articles of | 14 | | Incorporation and agree to the terms thereof, which Articles | 15 | | shall state: | 16 | | (a) The name, which shall include the words "credit | 17 | | union" and which shall not be the same as that of any other | 18 | | existing credit union in this state, and the location | 19 | | where the proposed credit union is to have its principal | 20 | | place of business; | 21 | | (b) The common bond of the members of the credit | 22 | | union; | 23 | | (c) The par value of the shares of the credit union, |
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| 1 | | which must be at least $1; | 2 | | (d) The names, addresses and Social Security numbers | 3 | | of the subscribers to the Articles of Incorporation, and | 4 | | the number and the value of shares subscribed to by each; | 5 | | (e) That the credit union may exercise such incidental | 6 | | powers as are necessary or requisite to enable it to carry | 7 | | on effectively the purposes for which it is incorporated, | 8 | | and those powers which are inherent in the credit union as | 9 | | a legal entity; | 10 | | (f) That the existence of the credit union shall be | 11 | | perpetual. | 12 | | (3) The subscribers shall prepare and adopt bylaws for the | 13 | | general governance government of the credit union, consistent | 14 | | with this Act, and execute same in duplicate. If there is a | 15 | | conflict, inconsistency, or variation between the terms of | 16 | | this Act and the provisions in the bylaws adopted by the credit | 17 | | union, the terms of this Act shall control. A conflict, | 18 | | inconsistency, or variation may not be deemed to exist if the | 19 | | Act specifically requires that a particular matter shall be | 20 | | adopted in the bylaws. | 21 | | (4) The subscribers shall forward the articles of | 22 | | incorporation and the bylaws to the Secretary in duplicate, | 23 | | along with the required charter fee. If they conform to the | 24 | | law, and such rules and regulations as the Secretary and the | 25 | | Director may prescribe, if the Secretary determines that a | 26 | | common bond exists, and that it is economically advisable to |
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| 1 | | organize the credit union, he or she shall within 60 days issue | 2 | | a certificate of approval attached to the articles of | 3 | | incorporation and return a copy of the bylaws and the articles | 4 | | of incorporation to the applicants or their representative, | 5 | | which shall be preserved in the permanent files of the credit | 6 | | union. The subscribers shall file the certificate of approval, | 7 | | with the articles of incorporation attached, in the office of | 8 | | the recorder (or, if there is no recorder, in the office of the | 9 | | county clerk) of the county in which the credit union is to | 10 | | locate its principal place of business. The recorder or the | 11 | | county clerk, as the case may be, shall accept and record the | 12 | | documents if they are accompanied by the proper fee. When the | 13 | | documents are so recorded, the credit union is incorporated | 14 | | under this Act. | 15 | | (5) The subscribers for a credit union charter shall not | 16 | | transact any business until the certificate of approval has | 17 | | been received. | 18 | | (Source: P.A. 100-361, eff. 8-25-17.) | 19 | | (205 ILCS 305/8) (from Ch. 17, par. 4409) | 20 | | Sec. 8. Secretary's powers and duties. Credit unions are | 21 | | regulated by the Department. The Secretary in executing the | 22 | | powers and discharging the duties vested by law in the | 23 | | Department has the following powers and duties: | 24 | | (1) To exercise the rights, powers, and duties set | 25 | | forth in this Act or any related Act. The Director shall |
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| 1 | | oversee the functions of the Division and report to the | 2 | | Secretary, with respect to the Director's exercise of any | 3 | | of the rights, powers, and duties vested by law in the | 4 | | Secretary under this Act. All references in this Act to | 5 | | the Secretary shall be deemed to include the Director, as | 6 | | a person authorized by the Secretary or this Act to assume | 7 | | responsibility for the oversight of the functions of the | 8 | | Department relating to the regulatory supervision of | 9 | | credit unions under this Act. | 10 | | (2) To adopt prescribe rules and regulations for the | 11 | | administration of this Act. The provisions of the Illinois | 12 | | Administrative Procedure Act are hereby expressly adopted | 13 | | and incorporated herein as though a part of this Act, and | 14 | | shall apply to all administrative rules and procedures of | 15 | | the Department under this Act. Rules adopted by the | 16 | | Secretary shall be within the statutory authority upon | 17 | | which they are based. If there is a conflict, | 18 | | inconsistency, or variation between the terms of this Act | 19 | | and the provisions in a rule adopted by the Secretary, the | 20 | | terms of this Act shall control. A conflict, | 21 | | inconsistency, or variation may not be deemed to exist if | 22 | | the Act specifically delegates authority to the Secretary | 23 | | to adopt by rule standards or limitations on a particular | 24 | | matter, provided the rule is within the statutory | 25 | | authority upon which it is based. | 26 | | (3) To direct and supervise all the administrative and |
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| 1 | | technical activities of the Department including the | 2 | | employment of a Credit Union Supervisor who shall have | 3 | | knowledge in the theory and practice of, or experience in, | 4 | | the operations or supervision of financial institutions, | 5 | | preferably credit unions, and such other persons as are | 6 | | necessary to carry out his functions. The Secretary shall | 7 | | ensure that all examiners appointed or assigned to examine | 8 | | the affairs of State-chartered credit unions possess the | 9 | | necessary training and continuing education to effectively | 10 | | execute their jobs. | 11 | | (4) To issue cease and desist orders when in the | 12 | | opinion of the Secretary, a credit union is engaged or has | 13 | | engaged, or the Secretary has reasonable cause to believe | 14 | | the credit union is about to engage, in an unsafe or | 15 | | unsound practice, or is violating or has violated or the | 16 | | Secretary has reasonable cause to believe is about to | 17 | | violate a law, rule, or regulation or any condition | 18 | | imposed in writing by the Department. | 19 | | (5) To suspend from office and to prohibit from | 20 | | further participation in any manner in the conduct of the | 21 | | affairs of any credit union any director, officer, or | 22 | | committee member who has committed any violation of a law, | 23 | | rule, or regulation or of a cease and desist order or who | 24 | | has engaged or participated in any unsafe or unsound | 25 | | practice in connection with the credit union or who has | 26 | | committed or engaged in any act, omission, or practice |
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| 1 | | which constitutes a breach of his fiduciary duty as such | 2 | | director, officer, or committee member, when the Secretary | 3 | | has determined that such action or actions have resulted | 4 | | or will result in substantial financial loss or other | 5 | | damage that seriously prejudices the interests of the | 6 | | members. | 7 | | (6) To assess a civil penalty against a credit union | 8 | | provided that: | 9 | | (A) the Secretary reasonably determines, based on | 10 | | objective facts and an accurate assessment of | 11 | | applicable legal standards, that the credit union has: | 12 | | (i) committed a violation of this Act, any | 13 | | rule adopted in accordance with this Act, or any | 14 | | order of the Secretary issued pursuant to his or | 15 | | her authority under this Act; or | 16 | | (ii) engaged or participated in any unsafe or | 17 | | unsound practice; | 18 | | (B) before a civil penalty is assessed under this | 19 | | item (6), the Secretary must make the further | 20 | | reasonable determination, based on objective facts and | 21 | | an accurate assessment of applicable legal standards, | 22 | | that the credit union's action constituting a | 23 | | violation under subparagraph (i) of paragraph (A) of | 24 | | this item (6) or an unsafe and unsound practice under | 25 | | subparagraph (ii) of paragraph (A) of this item (6): | 26 | | (i) directly resulted in a substantial and |
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| 1 | | material financial loss or created a reasonable | 2 | | probability that a substantial and material | 3 | | financial loss will directly result; or | 4 | | (ii) constituted willful misconduct or a | 5 | | material breach of fiduciary duty of any director, | 6 | | officer, or committee member of the credit union; | 7 | | Material financial loss, as referenced in this | 8 | | paragraph (B), shall be assessed in light of | 9 | | surrounding circumstances and the relative size and | 10 | | nature of the financial loss or probable financial | 11 | | loss. Certain benchmarks shall be used in determining | 12 | | whether financial loss is material, such as a | 13 | | percentage of total assets or total gross income for | 14 | | the immediately preceding 12-month period. Absent | 15 | | compelling and extraordinary circumstances, no civil | 16 | | penalty shall be assessed, unless the financial loss | 17 | | or probable financial loss is equal to or greater than | 18 | | either 1% of the credit union's total assets for the | 19 | | immediately preceding 12-month period, or 1% of the | 20 | | credit union's total gross income for the immediately | 21 | | preceding 12-month period, whichever is less; | 22 | | (C) before a civil penalty is assessed under this | 23 | | item (6), the credit union must be expressly advised | 24 | | in writing of the: | 25 | | (i) specific violation that could subject it | 26 | | to a penalty under this item (6); and |
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| 1 | | (ii) specific remedial action to be taken | 2 | | within a specific and reasonable time frame to | 3 | | avoid imposition of the penalty; | 4 | | (D) civil penalties assessed under this item (6) | 5 | | shall be remedial, not punitive, and reasonably | 6 | | tailored to ensure future compliance by the credit | 7 | | union with the provisions of this Act and any rules | 8 | | adopted pursuant to this Act; | 9 | | (E) a credit union's failure to take timely | 10 | | remedial action with respect to the specific violation | 11 | | may result in the issuance of an order assessing a | 12 | | civil penalty up to the following maximum amount, | 13 | | based upon the total assets of the credit union: | 14 | | (i) Credit unions with assets of less than $10 | 15 | | million ................................................$1,000 | 16 | | (ii) Credit unions with assets of at least $10 | 17 | | million and less than $50 million ......................$2,500 | 18 | | (iii) Credit unions with assets of at least | 19 | | $50 million and less than $100 million .................$5,000 | 20 | | (iv) Credit unions with assets of at least | 21 | | $100 million and less than $500 million ...............$10,000 | 22 | | (v) Credit unions with assets of at least $500 | 23 | | million and less than $1 billion ......................$25,000 | 24 | | (vi) Credit unions with assets of $1 billion | 25 | | and greater .....................................$50,000; and | 26 | | (F) an order assessing a civil penalty under this |
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| 1 | | item (6) shall take effect upon service of the order, | 2 | | unless the credit union makes a written request for a | 3 | | hearing under 38 Ill. Adm. Code 190.20 of the | 4 | | Department's rules for credit unions within 90 days | 5 | | after issuance of the order; in that event, the order | 6 | | shall be stayed until a final administrative order is | 7 | | entered. | 8 | | This item (6) shall not apply to violations separately | 9 | | addressed in rules as authorized under item (7) of this | 10 | | Section. | 11 | | (7) Except for the fees established in this Act, to | 12 | | prescribe, by rule and regulation, fees and penalties for | 13 | | preparing, approving, and filing reports and other | 14 | | documents; furnishing transcripts; holding hearings; | 15 | | investigating applications for permission to organize, | 16 | | merge, or convert; failure to maintain accurate books and | 17 | | records to enable the Department to conduct an | 18 | | examination; and taking supervisory actions. | 19 | | (8) To destroy, in his discretion, any or all books | 20 | | and records of any credit union in his possession or under | 21 | | his control after the expiration of three years from the | 22 | | date of cancellation of the charter of such credit unions. | 23 | | (9) To make investigations and to conduct research and | 24 | | studies and to publish some of the problems of persons in | 25 | | obtaining credit at reasonable rates of interest and of | 26 | | the methods and benefits of cooperative saving and lending |
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| 1 | | for such persons. | 2 | | (10) To authorize, foster, or establish experimental, | 3 | | developmental, demonstration, or pilot projects by public | 4 | | or private organizations including credit unions which: | 5 | | (a) promote more effective operation of credit | 6 | | unions so as to provide members an opportunity to use | 7 | | and control their own money to improve their economic | 8 | | and social conditions; or | 9 | | (b) are in the best interests of credit unions, | 10 | | their members and the people of the State of Illinois. | 11 | | (11) To cooperate in studies, training, or other | 12 | | administrative activities with, but not limited to, the | 13 | | NCUA, other state credit union regulatory agencies and | 14 | | industry trade associations in order to promote more | 15 | | effective and efficient supervision of Illinois chartered | 16 | | credit unions. | 17 | | (12) Notwithstanding the provisions of this Section, | 18 | | the Secretary shall not: | 19 | | (1) issue an order against a credit union | 20 | | organized under this Act for unsafe or unsound banking | 21 | | practices solely because the entity provides or has | 22 | | provided financial services to a cannabis-related | 23 | | legitimate business; | 24 | | (2) prohibit, penalize, or otherwise discourage a | 25 | | credit union from providing financial services to a | 26 | | cannabis-related legitimate business solely because |
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| 1 | | the entity provides or has provided financial services | 2 | | to a cannabis-related legitimate business; | 3 | | (3) recommend, incentivize, or encourage a credit | 4 | | union not to offer financial services to an account | 5 | | holder or to downgrade or cancel the financial | 6 | | services offered to an account holder solely because: | 7 | | (A) the account holder is a manufacturer or | 8 | | producer, or is the owner, operator, or employee | 9 | | of a cannabis-related legitimate business; | 10 | | (B) the account holder later becomes an owner | 11 | | or operator of a cannabis-related legitimate | 12 | | business; or | 13 | | (C) the credit union was not aware that the | 14 | | account holder is the owner or operator of a | 15 | | cannabis-related legitimate business; and | 16 | | (4) take any adverse or corrective supervisory | 17 | | action on a loan made to an owner or operator of: | 18 | | (A) a cannabis-related legitimate business | 19 | | solely because the owner or operator owns or | 20 | | operates a cannabis-related legitimate business; | 21 | | or | 22 | | (B) real estate or equipment that is leased to | 23 | | a cannabis-related legitimate business solely | 24 | | because the owner or operator of the real estate | 25 | | or equipment leased the equipment or real estate | 26 | | to a cannabis-related legitimate business. |
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| 1 | | (Source: P.A. 102-858, eff. 5-13-22; 103-154, eff. 6-30-23.) | 2 | | (205 ILCS 305/12) (from Ch. 17, par. 4413) | 3 | | Sec. 12. Regulatory fees. | 4 | | (1) For the fiscal year beginning July 1, 2007, a credit | 5 | | union regulated by the Department shall pay a regulatory fee | 6 | | to the Department based upon its total assets as shown by its | 7 | | Year-end Call Report at the following rates or at a lesser rate | 8 | | established by the Secretary in a manner proportionately | 9 | | consistent with the following rates and sufficient to fund the | 10 | | actual administrative and operational expenses of the | 11 | | Department's Credit Union Section pursuant to subsection (4) | 12 | | of this Section: | |
13 | | TOTAL ASSETS | REGULATORY FEE | |
14 | | $25,000 or less ................ | $100 | |
15 | | Over $25,000 and not over | | |
16 | | $100,000 ....................... | $100 plus $4 per | |
17 | | | $1,000 of assets in excess of | | 18 | | $25,000 | |
19 | | Over $100,000 and not over | | |
20 | | $200,000 ....................... | $400 plus $3 per | |
21 | | | $1,000 of assets in excess of | | 22 | | $100,000 | |
23 | | Over $200,000 and not over | | |
24 | | $500,000 ....................... | $700 plus $2 per | |
25 | | | $1,000 of assets in excess of | |
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| 1 | | $200,000 | |
2 | | Over $500,000 and not over | | |
3 | | $1,000,000 ..................... | $1,300 plus $1.40 | |
4 | | | per $1,000 of assets in excess | | 5 | | of $500,000 | |
6 | | Over $1,000,000 and not | | |
7 | | over $5,000,000 ................. | $2,000 plus $0.50 | | 8 | | per $1,000 of assets in | | 9 | | excess of $1,000,000 | |
10 | | Over $5,000,000 and not | | |
11 | | over $30,000,000 ............... | $4,540 plus $0.397 | | 12 | | per $1,000 of assets | | 13 | | in excess of $5,000,000 | |
14 | | Over $30,000,000 and not over | | |
15 | | $100,000,000 .................... | $14,471 plus $0.34 | |
16 | | | per $1,000 of assets | | 17 | | in excess of $30,000,000 | |
18 | | Over $100,000,000 and not | | |
19 | | over $500,000,000 .............. | $38,306 plus $0.17 | |
20 | | | per $1,000 of assets | | 21 | | in excess of $100,000,000 | |
22 | | Over $500,000,000 .............. | $106,406 plus $0.056 | |
23 | | | per $1,000 of assets | | 24 | | in excess of $500,000,000 |
| 25 | | (2) The Secretary shall review the regulatory fee schedule | 26 | | in subsection (1) and the projected earnings on those fees on |
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| 1 | | an annual basis and adjust the fee schedule no more than 5% | 2 | | annually if necessary to defray the estimated administrative | 3 | | and operational expenses of the Credit Union Section of the | 4 | | Department as defined in subsection (5). However, the fee | 5 | | schedule shall not be increased if the amount remaining in the | 6 | | Credit Union Fund at the end of any fiscal year is greater than | 7 | | 25% of the total actual and operational expenses incurred by | 8 | | the State in administering and enforcing the Illinois Credit | 9 | | Union Act and other laws, rules, and regulations as may apply | 10 | | to the administration and enforcement of the foregoing laws, | 11 | | rules, and regulations as amended from time to time for the | 12 | | preceding fiscal year. The regulatory fee for the next fiscal | 13 | | year shall be calculated by the Secretary based on the credit | 14 | | union's total assets as of December 31 of the preceding | 15 | | calendar year. The Secretary shall provide credit unions with | 16 | | written notice of any adjustment made in the regulatory fee | 17 | | schedule. | 18 | | (3) A credit union shall pay to the Department a | 19 | | regulatory fee in quarterly installments equal to one-fourth | 20 | | of the regulatory fee due in accordance with the regulatory | 21 | | fee schedule in subsection (1), on the basis of assets as of | 22 | | the Year-end Call Report of the preceding calendar year. The | 23 | | total annual regulatory fee shall not be less than $100 or more | 24 | | than $210,000, provided that the regulatory fee cap of | 25 | | $210,000 shall be adjusted to incorporate the same percentage | 26 | | increase as the Secretary makes in the regulatory fee schedule |
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| 1 | | from time to time under subsection (2). No regulatory fee | 2 | | shall be collected from a credit union until it has been in | 3 | | operation for one year. The regulatory fee shall be billed to | 4 | | credit unions on a quarterly basis and it shall be payable by | 5 | | credit unions on the due date for the Call Report for the | 6 | | subject quarter. | 7 | | (4) (a) The aggregate of all fees collected by the | 8 | | Department under this Act and from credit unions pursuant to | 9 | | the Illinois Community Reinvestment Act shall be paid promptly | 10 | | after they are received, accompanied by a detailed statement | 11 | | thereof, into the State treasury Treasury and shall be set | 12 | | apart in the Credit Union Fund, a special fund hereby created | 13 | | in the State treasury. The amount from time to time deposited | 14 | | in the Credit Union Fund and shall be used to offset the | 15 | | ordinary administrative and operational expenses of the Credit | 16 | | Union Section of the Department under this Act. All earnings | 17 | | received from investments of funds in the Credit Union Fund | 18 | | shall be deposited into the Credit Union Fund and may be used | 19 | | for the same purposes as fees deposited into that fund. Moneys | 20 | | deposited in the Credit Union Fund may be transferred to the | 21 | | Professions Indirect Cost Fund, as authorized under Section | 22 | | 2105-300 of the Department of Professional Regulation Law of | 23 | | the Civil Administrative Code of Illinois. | 24 | | (b) At the conclusion of each fiscal year, beginning in | 25 | | fiscal year 2025, the Department shall separately identify the | 26 | | direct administrative and operational expenses and allocable |
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| 1 | | indirect costs of the Credit Union Section of the Department | 2 | | incidental to conducting the examinations required or | 3 | | authorized by the Illinois Community Reinvestment Act and | 4 | | implementing rules adopted by the Department. Pursuant to | 5 | | Section 2105-300 of the Department of Professional Regulation | 6 | | Law of the Civil Administrative Code of Illinois, the | 7 | | Department shall make copies of the analyses available to the | 8 | | credit union industry in a timely manner. The administrative | 9 | | and operational expenses of the Credit Union Section of the | 10 | | Department in conducting examinations required or authorized | 11 | | by the Illinois Community Reinvestment Act shall have the same | 12 | | meaning and scope as the administrative and operational | 13 | | expenses of the Credit Union Section of the Department, as | 14 | | defined in subsection (5) of this Section. | 15 | | (c) Notwithstanding provisions in the State Finance Act, | 16 | | as now or hereafter amended, or any other law to the contrary, | 17 | | the Governor may, during any fiscal year through January 10, | 18 | | 2011, from time to time direct the State Treasurer and | 19 | | Comptroller to transfer a specified sum not exceeding 10% of | 20 | | the revenues to be deposited into the Credit Union Fund during | 21 | | that fiscal year from that Fund to the General Revenue Fund in | 22 | | order to help defray the State's operating costs for the | 23 | | fiscal year. Notwithstanding provisions in the State Finance | 24 | | Act, as now or hereafter amended, or any other law to the | 25 | | contrary, the total sum transferred from the Credit Union Fund | 26 | | to the General Revenue Fund pursuant to this provision shall |
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| 1 | | not exceed during any fiscal year 10% of the revenues to be | 2 | | deposited into the Credit Union Fund during that fiscal year. | 3 | | The State Treasurer and Comptroller shall transfer the amounts | 4 | | designated under this Section as soon as may be practicable | 5 | | after receiving the direction to transfer from the Governor. | 6 | | (5) The administrative and operational expenses for any | 7 | | fiscal year shall mean the ordinary and contingent expenses | 8 | | for that year incidental to making the examinations provided | 9 | | for by, and for administering, this Act, including all | 10 | | salaries and other compensation paid for personal services | 11 | | rendered for the State by officers or employees of the State to | 12 | | enforce this Act; all expenditures for telephone and telegraph | 13 | | charges, postage and postal charges, office supplies and | 14 | | services, furniture and equipment, office space and | 15 | | maintenance thereof, travel expenses and other necessary | 16 | | expenses; all to the extent that such expenditures are | 17 | | directly incidental to such examination or administration. | 18 | | (6) When the balance in the Credit Union Fund at the end of | 19 | | a fiscal year exceeds 25% of the total administrative and | 20 | | operational expenses incurred by the State in administering | 21 | | and enforcing the Illinois Credit Union Act and other laws, | 22 | | rules, and regulations as may apply to the administration and | 23 | | enforcement of the foregoing laws, rules, and regulations as | 24 | | amended from time to time for that fiscal year, such excess | 25 | | shall be credited to credit unions and applied against their | 26 | | regulatory fees for the subsequent fiscal year. The amount |
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| 1 | | credited to each credit union shall be in the same proportion | 2 | | as the regulatory fee paid by such credit union for the fiscal | 3 | | year in which the excess is produced bears to the aggregate | 4 | | amount of all fees collected by the Department under this Act | 5 | | for the same fiscal year. | 6 | | (7) (Blank). | 7 | | (8) Nothing in this Act shall prohibit the General | 8 | | Assembly from appropriating funds to the Department from the | 9 | | General Revenue Fund for the purpose of administering this | 10 | | Act. | 11 | | (9) For purposes of this Section, "fiscal year" means a | 12 | | period beginning on July 1 of any calendar year and ending on | 13 | | June 30 of the next calendar year. | 14 | | (Source: P.A. 103-107, eff. 6-27-23.) | 15 | | (205 ILCS 305/13) (from Ch. 17, par. 4414) | 16 | | Sec. 13. General powers. A credit union may: | 17 | | (1) Make contracts; sue and be sued; and adopt and use | 18 | | a common seal and alter the same; | 19 | | (2) Acquire, lease (either as lessee or lessor), hold, | 20 | | pledge, mortgage, sell and dispose of real property, | 21 | | either in whole or in part, or any interest therein, as may | 22 | | be necessary or incidental to its present or future | 23 | | operations and needs, subject to such limitations as may | 24 | | be imposed thereon in rules and regulations promulgated by | 25 | | the Secretary; acquire, lease (either as lessee or |
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| 1 | | lessor), hold, pledge, mortgage, sell and dispose of | 2 | | personal property, either in whole or in part, or any | 3 | | interest therein, as may be necessary or incidental to its | 4 | | present or future operations and needs; | 5 | | (3) At the discretion of the board of directors, | 6 | | require the payment of an entrance fee or annual | 7 | | membership fee, or both, of any person admitted to | 8 | | membership; | 9 | | (4) Receive savings from its members in the form of | 10 | | shares of various classes, or special purpose share | 11 | | accounts; act as custodian of its members' accounts; issue | 12 | | shares in trust as provided in this Act; | 13 | | (5) Lend its funds to its members and otherwise as | 14 | | hereinafter provided; | 15 | | (6) Borrow from any source in accordance with policy | 16 | | established by the board of directors to a maximum of 50% | 17 | | of capital, surplus and reserves; | 18 | | (7) Discount and sell any obligations owed to the | 19 | | credit union; | 20 | | (8) Honor requests for withdrawals or transfers of all | 21 | | or any part of member share accounts, and any classes | 22 | | thereof, in any manner approved by the credit union board | 23 | | of directors; | 24 | | (9) Sell all or a part of its assets or purchase all or | 25 | | a part of the assets of another credit union and assume the | 26 | | liabilities of the selling credit union, subject to the |
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| 1 | | prior approval of the Director, which approval shall not | 2 | | be required in the case of loan transactions otherwise | 3 | | authorized under applicable law; | 4 | | (10) Invest surplus funds as provided in this Act; | 5 | | (11) Make deposits in banks, savings banks, savings | 6 | | and loan associations, trust companies; and invest in | 7 | | shares, classes of shares or share certificates of other | 8 | | credit unions; | 9 | | (12) Assess charges and fees to members in accordance | 10 | | with board resolution; | 11 | | (13) Hold membership in and pay dues to associations | 12 | | and organizations; to invest in shares, stocks or | 13 | | obligations of any credit union organization; | 14 | | (14) Declare dividends and pay interest refunds to | 15 | | borrowers as provided in this Act; | 16 | | (15) Collect, receive and disburse monies in | 17 | | connection with providing negotiable checks, money orders | 18 | | and other money-type instruments, and for such other | 19 | | purposes as may provide benefit or convenience to its | 20 | | members, and charge a reasonable fee for such services; | 21 | | (16) Act as fiscal agent for and receive deposits from | 22 | | the federal government, this State, or any other state, | 23 | | state or any agency or political subdivision thereof , | 24 | | including, but not limited to, political subdivisions as | 25 | | defined in subsection (b) of Section 59. The receipt of | 26 | | deposits from any state other than Illinois, or any agency |
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| 1 | | or political subdivision thereof, shall not exceed the | 2 | | total limit of the greater of 50% of paid-in and | 3 | | unimpaired capital and surplus or $3,000,000 as described | 4 | | in 12 CFR 701.32 and shall otherwise comply with the | 5 | | requirements of 12 CFR 701.32 ; | 6 | | (17) Receive savings from nonmembers in the form of | 7 | | shares or share accounts in the case of credit unions | 8 | | serving predominantly low-income members. The term "low | 9 | | income members" shall mean those members who make less | 10 | | than 80% of the average for all wage earners as | 11 | | established by the Bureau of Labor Statistics or those | 12 | | members whose annual household income falls at or below | 13 | | 80% of the median household income for the nation as | 14 | | established by the Census Bureau. The term "predominantly" | 15 | | is defined as a simple majority; | 16 | | (18) Establish, maintain, and operate terminals as | 17 | | authorized by the Electronic Fund Transfer Act; | 18 | | (19) Subject to Article XLIV of the Illinois Insurance | 19 | | Code, act as the agent for any fire, life, or other | 20 | | insurance company authorized by the State of Illinois, by | 21 | | soliciting and selling insurance and collecting premiums | 22 | | on policies issued by such company; and may receive for | 23 | | services so rendered such fees or commissions as may be | 24 | | agreed upon between the said credit union and the | 25 | | insurance company for which it may act as agent; provided, | 26 | | however, that no such credit union shall in any case |
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| 1 | | assume or guarantee the payment of any premium on | 2 | | insurance policies issued through its agency by its | 3 | | principal; and provided further, that the credit union | 4 | | shall not guarantee the truth of any statement made by an | 5 | | assured in filing his application for insurance; and | 6 | | (20) Make reasonable contributions to civic, | 7 | | charitable, or service organizations not organized for | 8 | | profit; religious corporations; and fundraisers benefiting | 9 | | persons in the credit union's service area. | 10 | | (Source: P.A. 97-133, eff. 1-1-12.) | 11 | | (205 ILCS 305/39) (from Ch. 17, par. 4440) | 12 | | Sec. 39. Special purpose share accounts; charitable | 13 | | donation accounts. | 14 | | (1) If provided for in and consistent with the bylaws, | 15 | | Christmas clubs, vacation clubs and other special purpose | 16 | | share accounts may be established and offered under conditions | 17 | | and restrictions established by the board of directors. | 18 | | (2) Pursuant to a policy adopted by the board of | 19 | | directors, which may be amended from time to time, a credit | 20 | | union may establish one or more charitable donation accounts. | 21 | | The investments and purchases to fund a charitable donation | 22 | | account are not subject to the investment limitations of this | 23 | | Act, provided the charitable donation account is structured in | 24 | | accordance with this Act. At their time of purchase, the book | 25 | | value of the investments in all charitable donation accounts, |
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| 1 | | in the aggregate, shall not exceed 5% of the credit union's net | 2 | | worth. | 3 | | (a) If a credit union chooses to establish a | 4 | | charitable donation account using a trust vehicle, the | 5 | | trustee must be an entity regulated by the Office of the | 6 | | Comptroller of the Currency, the U.S. Securities and | 7 | | Exchange Commission, another federal regulatory agency, or | 8 | | a State financial regulatory agency. A regulated trustee | 9 | | or other person who is authorized to make investment | 10 | | decisions for a charitable donation account, other than | 11 | | the credit union itself, shall either be registered with | 12 | | the U.S. Securities and Exchange Commission as an | 13 | | investment advisor or regulated by the Office of the | 14 | | Comptroller of the Currency. | 15 | | (b) The parties to the charitable donation account | 16 | | must document the terms and conditions controlling the | 17 | | account in a written operating agreement, trust agreement, | 18 | | or similar instrument. The terms of the agreement shall be | 19 | | consistent with the requirements and conditions set forth | 20 | | in this Section. The agreement, if applicable, and | 21 | | policies must document the investment strategies of the | 22 | | charitable donation account trustee or other manager in | 23 | | administering the charitable donation account and provide | 24 | | for the accounting of all aspects of the account, | 25 | | including its distributions and liquidation, in accordance | 26 | | with generally accepted accounting principles. |
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| 1 | | (c) A credit union's charitable donation account | 2 | | agreement, if applicable, and policies shall provide that | 3 | | the charitable organization or non-profit entity | 4 | | recipients of any charitable donation account funds must | 5 | | be identified in the policy and be exempt from taxation | 6 | | under Section 501(c)(3) or Section 501(c)(19) of the | 7 | | Internal Revenue Code. | 8 | | (d) Upon termination of a charitable donation account, | 9 | | the credit union may receive a distribution of the | 10 | | remaining assets in cash, or a distribution in kind of the | 11 | | remaining assets, but only if those assets are permissible | 12 | | investments for credit unions pursuant to this Act. | 13 | | (3) Pursuant to subsection (20) of Section 13 authorizing | 14 | | a credit union to make reasonable contributions to civic, | 15 | | charitable, service, or religious corporations and to avoid | 16 | | the cost, administrative expenses, and reporting requirements | 17 | | associated with establishing its own private foundation, a | 18 | | credit union may establish one or more donor-advised fund | 19 | | accounts. The credit union shall maintain the account on its | 20 | | books and records under a name it selects, which may identify | 21 | | the account as a charitable or grant fund or other name that | 22 | | reflects the charitable nature of the account. The account | 23 | | shall be subject to the terms and restrictions set forth in | 24 | | this subsection. | 25 | | (a) Transfers from a donor-advised fund account shall | 26 | | be limited to foundations exempt from taxation under |
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| 1 | | Section 501(c)(3) of the Internal Revenue Code. | 2 | | (b) Distributions by a foundation receiving | 3 | | donor-advised funds from the credit union shall be: | 4 | | (i) based upon specific grant recommendations of | 5 | | the credit union; and | 6 | | (ii) limited to public charities exempt from | 7 | | taxation under Section 501(c)(3) of the Internal | 8 | | Revenue Code. | 9 | | (c) Transfers by a credit union from its donor-advised | 10 | | fund account to a foundation irrevocably conveys all | 11 | | right, title, and interest in the funds to the foundation, | 12 | | subject only to the continuing right of the credit union | 13 | | to designate the entity or entities that will receive the | 14 | | grant funds. Grants may not be used to satisfy any | 15 | | obligation of the credit union and no goods or services | 16 | | may be received by the credit union from the recipient | 17 | | organization in consideration of the grant. | 18 | | (Source: P.A. 102-774, eff. 5-13-22.) | 19 | | (205 ILCS 305/59) (from Ch. 17, par. 4460) | 20 | | Sec. 59. Investment of funds. | 21 | | (a) Funds not used in loans to members may be invested, | 22 | | pursuant to subsection (7) of Section 30 of this Act, and | 23 | | subject to Departmental rules and regulations: | 24 | | (1) In securities, obligations or other instruments of | 25 | | or issued by or fully guaranteed as to principal and |
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| 1 | | interest by the United States of America or any agency | 2 | | thereof or in any trust or trusts established for | 3 | | investing directly or collectively in the same; | 4 | | (2) In obligations of any state of the United States, | 5 | | the District of Columbia, the Commonwealth of Puerto Rico, | 6 | | and the several territories organized by Congress, or any | 7 | | political subdivision thereof; however, a credit union may | 8 | | not invest more than 10% of its unimpaired capital and | 9 | | surplus in the obligations of one issuer, exclusive of | 10 | | general obligations of the issuer, and investments in | 11 | | municipal securities must be limited to securities rated | 12 | | in one of the 4 highest rating investment grades by a | 13 | | nationally recognized statistical rating organization; | 14 | | (3) In certificates of deposit or passbook type | 15 | | accounts issued by a state or national bank, mutual | 16 | | savings bank or savings and loan association; provided | 17 | | that such institutions have their accounts insured by the | 18 | | Federal Deposit Insurance Corporation or the Federal | 19 | | Savings and Loan Insurance Corporation; but provided, | 20 | | further, that a credit union's investment in an account in | 21 | | any one institution may exceed the insured limit on | 22 | | accounts; | 23 | | (4) In shares, classes of shares or share certificates | 24 | | of other credit unions, including, but not limited to, | 25 | | corporate credit unions; provided that such credit unions | 26 | | have their members' accounts insured by the NCUA or other |
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| 1 | | approved insurers, and that if the members' accounts are | 2 | | so insured, a credit union's investment may exceed the | 3 | | insured limit on accounts; | 4 | | (5) In shares of a cooperative society organized under | 5 | | the laws of this State or the laws of the United States in | 6 | | the total amount not exceeding 10% of the unimpaired | 7 | | capital and surplus of the credit union; provided that | 8 | | such investment shall first be approved by the Department; | 9 | | (6) In obligations of the State of Israel, or | 10 | | obligations fully guaranteed by the State of Israel as to | 11 | | payment of principal and interest; | 12 | | (7) In shares, stocks or obligations of other | 13 | | financial institutions in the total amount not exceeding | 14 | | 5% of the unimpaired capital and surplus of the credit | 15 | | union; | 16 | | (8) In federal funds and bankers' acceptances; | 17 | | (9) In shares or stocks of Credit Union Service | 18 | | Organizations in the total amount not exceeding the | 19 | | greater of 6% of the unimpaired capital and surplus of the | 20 | | credit union or the amount authorized for federal credit | 21 | | unions; | 22 | | (10) In corporate bonds identified as investment grade | 23 | | by at least one nationally recognized statistical rating | 24 | | organization, provided that: | 25 | | (i) the board of directors has established a | 26 | | written policy that addresses corporate bond |
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| 1 | | investment procedures and how the credit union will | 2 | | manage credit risk, interest rate risk, liquidity | 3 | | risk, and concentration risk; and | 4 | | (ii) the credit union has documented in its | 5 | | records that a credit analysis of a particular | 6 | | investment and the issuing entity was conducted by the | 7 | | credit union, a third party on behalf of the credit | 8 | | union qualified by education or experience to assess | 9 | | the risk characteristics of corporate bonds, or a | 10 | | nationally recognized statistical rating agency before | 11 | | purchasing the investment and the analysis is updated | 12 | | at least annually for as long as it holds the | 13 | | investment; | 14 | | (11) To aid in the credit union's management of its | 15 | | assets, liabilities, and liquidity in the purchase of an | 16 | | investment interest in a pool of loans, in whole or in part | 17 | | and without regard to the membership of the borrowers, | 18 | | from other depository institutions and financial type | 19 | | institutions, including mortgage banks, finance companies, | 20 | | insurance companies, and other loan sellers, subject to | 21 | | such safety and soundness standards, limitations, and | 22 | | qualifications as the Department may establish by rule or | 23 | | guidance from time to time; | 24 | | (12) To aid in the credit union's management of its | 25 | | assets, liabilities, and liquidity by receiving funds from | 26 | | another financial institution as evidenced by certificates |
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| 1 | | of deposit, share certificates, or other classes of shares | 2 | | issued by the credit union to the financial institution; | 3 | | (13) In the purchase and assumption of assets held by | 4 | | other financial institutions, with approval of the | 5 | | Secretary and subject to any safety and soundness | 6 | | standards, limitations, and qualifications as the | 7 | | Department may establish by rule or guidance from time to | 8 | | time; | 9 | | (14) In the shares, stocks, or obligations of | 10 | | community development financial institutions as defined in | 11 | | regulations issued by the U.S. Department of the Treasury | 12 | | and minority depository institutions as defined by the | 13 | | National Credit Union Administration; however the | 14 | | aggregate amount of all such investments shall not at any | 15 | | time exceed 5% of the paid-in and unimpaired capital and | 16 | | surplus of the credit union; and | 17 | | (15)(A) In shares, stocks, or member units of | 18 | | financial technology companies in the total amount not | 19 | | exceeding 2.5% of the net worth of the credit union, so | 20 | | long as: | 21 | | (i) the credit union would remain well capitalized | 22 | | as defined by 12 CFR 702.102 if the credit union | 23 | | reduced its net worth by the full investment amount at | 24 | | the time the investment is made or at any point during | 25 | | the time the investment is held by the credit union; | 26 | | (ii) the credit union and the financial technology |
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| 1 | | company are operated in a manner that demonstrates to | 2 | | the public the separate corporate existence of the | 3 | | credit union and financial technology company; and | 4 | | (iii) the credit union has received a composite | 5 | | rating of 1 or 2 under the CAMELS supervisory rating | 6 | | system. | 7 | | (B) The investment limit in subparagraph (A) of this | 8 | | paragraph (15) is increased to 5% of the net worth of the | 9 | | credit union if it has received a management rating of 1 | 10 | | under the CAMELS supervisory rating system at the time a | 11 | | specific investment is made and at all times during the | 12 | | term of the investment. A credit union that satisfies the | 13 | | criteria in subparagraph (A) of this paragraph (15) and | 14 | | this subparagraph may request approval from the Secretary | 15 | | for an exception to the 5% limit up to a limit of 10% of | 16 | | the net worth of the credit union, subject to such safety | 17 | | and soundness standards, limitations, and qualifications | 18 | | as the Department may establish by rule or guidance from | 19 | | time to time. The request shall be in writing and | 20 | | substantiate the need for the higher limit, describe the | 21 | | credit union's record of investment activity, and include | 22 | | financial statements reflecting a sound fiscal history. | 23 | | (C) Before investing in a financial technology | 24 | | company, the credit union shall obtain a written legal | 25 | | opinion as to whether the financial technology company is | 26 | | established in a manner that will limit potential exposure |
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| 1 | | of the credit union to no more than the loss of funds | 2 | | invested in the financial technology company and the legal | 3 | | opinion shall: | 4 | | (i) address factors that have led courts to | 5 | | "pierce the corporate veil", such as inadequate | 6 | | capitalization, lack of separate corporate identity, | 7 | | common boards of directors and employees, control of | 8 | | one entity over another, and lack of separate books | 9 | | and records; and | 10 | | (ii) be provided by independent legal counsel of | 11 | | the credit union. | 12 | | (D) Before investing in the financial technology | 13 | | company, the credit union shall enter into a written | 14 | | investment agreement with the financial technology company | 15 | | and the agreement shall contain the following clauses: | 16 | | (i) the financial technology company will: (I) | 17 | | provide the Department with access to the books and | 18 | | records of the financial technology company relating | 19 | | to the investment made by the credit union, with the | 20 | | costs of examining those records borne by the credit | 21 | | union in accordance with the per diem rate established | 22 | | by the Department by rule; (II) follow generally | 23 | | accepted accounting principles; and (III) provide the | 24 | | credit union with its financial statements on at least | 25 | | a quarterly basis and certified public accountant | 26 | | audited financial statements on an annual basis; and |
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| 1 | | (ii) the financial technology company and credit | 2 | | union agree to terminate their contractual | 3 | | relationship: (I) upon 90 days' written notice to the | 4 | | parties by the Secretary that the safety and soundness | 5 | | of the credit union is threatened pursuant to the | 6 | | Department's cease and desist and suspension authority | 7 | | in Sections 8 and 61; (II) upon 30 days' written notice | 8 | | to the parties if the credit union's net worth ratio | 9 | | falls below the level that classifies it as well | 10 | | capitalized as defined by 12 CFR 702.102; and (III) | 11 | | immediately upon the parties' receipt of written | 12 | | notice from the Secretary when the Secretary | 13 | | reasonably concludes, based upon specific facts set | 14 | | forth in the notice to the parties, that the credit | 15 | | union will suffer immediate, substantial, and | 16 | | irreparable injury or loss if it remains a party to the | 17 | | investment agreement. | 18 | | (E) The termination of the investment agreement | 19 | | between the financial technology company and credit union | 20 | | shall in no way operate to relieve the financial | 21 | | technology company from repaying the investment or other | 22 | | obligation due and owing the credit union at the time of | 23 | | termination. | 24 | | (F) Any financial technology company in which a credit | 25 | | union invests pursuant to this paragraph (15) that | 26 | | directly or indirectly originates, purchases, facilitates, |
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| 1 | | brokers, or services loans to consumers in Illinois shall | 2 | | not charge an interest rate that exceeds the applicable | 3 | | maximum rate established by the Board of the National | 4 | | Credit Union Administration pursuant to 12 CFR | 5 | | 701.21(c)(7)(iii)-(iv). The maximum interest rate | 6 | | described in this subparagraph that may be charged by a | 7 | | financial technology company applies to all consumer loans | 8 | | and consumer credit products ; and . | 9 | | (16) In derivatives transactions, to aid in the credit | 10 | | union's management of interest rate risk. Before entering | 11 | | into a derivatives transaction, and at all times during | 12 | | its management of a derivatives transactions program, a | 13 | | credit union shall satisfy and comply with all the | 14 | | requirements set forth in 12 CFR 703.101 et seq. All | 15 | | definitional terms and operational standards shall have | 16 | | the meanings given to them in 12 CFR 703.101 et seq., | 17 | | except references to federal credit unions shall be | 18 | | construed to mean Illinois-chartered credit unions, and | 19 | | references to the National Credit Union Administration and | 20 | | Regional Director shall be respectfully construed to mean | 21 | | the Department and the Secretary. A credit union with | 22 | | assets of at least $500 million and a CAMELS management | 23 | | component rating of 1 or 2 need not obtain prior approval | 24 | | from the Department before engaging in derivative | 25 | | transactions | | | but shall notify the Secretary in writing or | 26 | | by electronic mail within 5 business days after entering |
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| 1 | | into its first derivatives transaction. | 2 | | (b) As used in this Section: | 3 | | "Political subdivision" includes, but is not limited to, | 4 | | counties, townships, cities, villages, incorporated towns, | 5 | | school districts, educational service regions, special road | 6 | | districts, public water supply districts, fire protection | 7 | | districts, drainage districts, levee districts, sewer | 8 | | districts, housing authorities, park districts, and any | 9 | | agency, corporation, or instrumentality of a state or its | 10 | | political subdivisions, whether now or hereafter created and | 11 | | whether herein specifically mentioned or not. | 12 | | "Financial institution" includes any bank, savings bank, | 13 | | savings and loan association, or credit union established | 14 | | under the laws of the United States, this State, or any other | 15 | | state. | 16 | | "Financial technology company" includes any corporation, | 17 | | partnership, limited liability company, or other entity | 18 | | organized under the laws of Illinois, another state, or the | 19 | | United States of America: | 20 | | (1) that the principal business of which is the | 21 | | provision of financial products or financial services, or | 22 | | both, that: | 23 | | (i) currently relate or may prospectively relate | 24 | | to the daily operations of credit unions; | 25 | | (ii) are of current or prospective benefit to the | 26 | | members of credit unions; or |
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| 1 | | (iii) are of current or prospective benefit to | 2 | | consumers eligible for membership in credit unions; | 3 | | and | 4 | | (2) that applies technological interventions, | 5 | | including, without limitation, specialized software or | 6 | | algorithm processes, products, or solutions, to improve | 7 | | and automate the delivery and use of those financial | 8 | | products or financial services. | 9 | | (c) A credit union investing to fund an employee benefit | 10 | | plan obligation is not subject to the investment limitations | 11 | | of this Act and this Section and may purchase an investment | 12 | | that would otherwise be impermissible if the investment is | 13 | | directly related to the credit union's obligation under the | 14 | | employee benefit plan and the credit union holds the | 15 | | investment only for so long as it has an actual or potential | 16 | | obligation under the employee benefit plan. | 17 | | (d) If a credit union acquires loans from another | 18 | | financial institution or financial-type institution pursuant | 19 | | to this Section, the credit union shall be authorized to | 20 | | provide loan servicing and collection services in connection | 21 | | with those loans. | 22 | | (Source: P.A. 102-496, eff. 8-20-21; 102-774, eff. 5-13-22; | 23 | | 102-858, eff. 5-13-22; 103-154, eff. 6-30-23.) | 24 | | Section 99. Effective date. This Act takes effect upon | 25 | | becoming law. |
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