Illinois General Assembly - Full Text of HB2825
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Full Text of HB2825  101st General Assembly




State of Illinois
2019 and 2020


Introduced , by Rep. Michael J. Zalewski


New Act
30 ILCS 105/6z-26

    Creates the Regulatory Sandbox Act. Creates the regulatory sandbox to enable persons to obtain limited access to the Illinois marketplace in order to test innovations in financial products or services. Provides requirements for approval to enter the regulatory sandbox, the application fee, and approval or denial time. Provides requirements for operating an innovation in the regulatory sandbox and extending a test period. Contains provisions regarding rules and judicial review of the administration of this Act. Makes conforming changes in the State Finance Act. Effective immediately.

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1    AN ACT concerning regulation.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 1. Short title. This Act may be cited as the
5Regulatory Sandbox Act.
6    Section 5. Definitions. As used in this Act:
7    "Consumer" means a person who purchases or otherwise enters
8into a transaction or agreement to receive an innovative
9financial product or service tested by a person participating
10in the regulatory sandbox.
11    "Department" means the Department of Financial and
12Professional Regulation.
13    "Division of Financial Institutions" means the Division of
14Financial Institutions of the Department of Financial and
15Professional Regulation.
16    "Financial institutions" means ambulatory and community
17currency exchanges, persons engaged in the business of
18transmitting money to foreign countries or buying and selling
19foreign money, pawners' societies, title insuring or
20guaranteeing companies, and persons engaged in the business of
21making loans of $800 or less.
22    "Financial product or service" means a product or service
23regulated by the Department's Division of Financial



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1Institutions or a product or service that includes elements
2that may otherwise require a license, certification, or
3recognition as a financial institution or enterprise regulated
4by the Department's Division of Financial Institutions.
5    "Innovation" means, with respect to a product or service,
6that which uses or incorporates new or emerging technology, or
7new uses for existing technology, to address a problem, provide
8a benefit, or otherwise offer a product, service, business
9model, or delivery mechanism that has no comparable widespread
10offering in the marketplace regulated by the Department's
11Division of Financial Institutions.
12    "Person" means an individual, partnership, joint venture,
13trust, estate, firm, corporation, association, or cooperative
14society or association.
15    "Regulatory sandbox" means the program established by this
16Act that allows a person to temporarily test innovative
17financial products, services, business models, or delivery
18mechanisms on a limited basis without being required to first
19obtain a license, certification, or recognition as a regulated
20financial institution or enterprise.
21    "Secretary" means the Secretary of Financial and
22Professional Regulation.
23    Section 10. Purpose. The purpose of the regulatory sandbox
24is to enable a person to obtain limited access to the Illinois
25marketplace in order to temporarily test innovations through



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1the regulatory sandbox, including allowing the person to test
2innovations without first having to obtain licensure with the
4    Section 15. Applications; review.
5    (a) A person may apply to the Department to enter the
6regulatory sandbox to temporarily test innovations before
7releasing the innovation to Illinois consumers.
8    (b) An application to enter the regulatory sandbox shall be
9in a form prescribed by the Secretary.
10    (c) At the time of application, an applicant shall provide
11the Department with an accurate and up-to-date email address.
12    (d) If an applicant is a corporation, the applicant must be
13in good standing and in statutory compliance with the state or
14country of its incorporation. If an applicant is an entity
15other than a corporation, the applicant must be properly
16registered under the laws of this State or another state or
17country. If required by the Department, the applicant must be
18authorized to do business in the State of Illinois.
19    (e) A financial institution already regulated by the
20Department's Division of Financial Institutions must file an
21application to test products or services that are outside the
22scope of its current license.
23    (f) The fee for an application to enter the regulatory
24sandbox is $500 per innovation.
25    (g) All moneys received by the Department under this Act



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1shall be deposited in the Financial Institution Fund created
2under Section 6z-26 of the State Finance Act.
3    (h) The Department shall approve or deny an application
4within 90 days after the date of receipt of the application.
5The Department and the applicant may agree to extend the time
6beyond 90 days.
7    Section 20. Operation.
8    (a) An applicant approved for the regulatory sandbox has 12
9months from the date of approval to test the innovation.
10    (b) Consumers upon whom innovations are tested must be
11Illinois residents.
12    (c) No more than 5,000 Illinois consumers may transact
13through or enter into an agreement to use the innovation.
14    (d) At the end of the innovation's 12-month test period, a
15person testing an innovation must exit the regulatory sandbox
16and wind down the operation of the innovation within 60 days,
17except as otherwise provided in Section 25.
18    (e) Before temporarily testing an innovation, a person
19approved for the regulatory sandbox must disclose, in a clear
20and conspicuous form, to Illinois consumers:
21        (1) the name and contact information of the person
22    providing the innovation;
23        (2) that the innovation is authorized pursuant to the
24    regulatory sandbox and not pursuant to any license issued
25    by the Department;



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1        (3) that the State of Illinois does not endorse or
2    recommend the innovation;
3        (4) that the innovation is a temporary test that may be
4    discontinued at the end of the test period, including the
5    expected end date of the test period; and
6        (5) the name and contact information for the
7    Department, including where a consumer may file a complaint
8    regarding the innovation.
9    These disclosures must be provided to the consumers before
10proceeding with the transaction.
11    (f) A person approved for the regulatory sandbox shall
12maintain books, accounts, and records for the innovation.
13    (g) The Department may inspect a person in the regulatory
14sandbox at any time. Unless it will interfere with the
15Department's duties under this Act, reasonable notice of the
16inspection shall be given to the person in the regulatory
17sandbox. The Secretary or appointed representative shall have
18full and free access to all the books, papers, and records that
19relate to the innovation.
20    (h) A person who winds down the operation of the innovation
21shall preserve books, accounts, and records, in any form, for
22the innovation for 5 years after the conclusion of the test
24    (i) The Department may suspend any person in the regulatory
25sandbox for failing to comply with this Act, including the
26failure to comply with the Department's request for books,



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1accounts, records, or other relevant material.
2    (j) The Secretary may revoke or suspend admission to or
3refuse to admit a person to the regulatory sandbox if the
4Secretary finds that:
5        (1) the person has failed to pay the application fee;
6        (2) the person has violated a provision of this Act or
7    a rule adopted by the Secretary under the authority of this
8    Act;
9        (3) a fact or condition exists which, if it had existed
10    at the time of the original application for admission to
11    the regulatory sandbox, would have warranted the Secretary
12    in refusing initial admission to the regulatory sandbox; or
13        (4) the person has made a false statement or a false
14    representation to the Secretary in application for
15    admission to the regulatory sandbox.
16    When a person's admission to the regulatory sandbox is
17denied, suspended, or revoked, the Secretary shall serve the
18person with notice of his or her action, including a statement
19of the reasons for his or her action, personally, by electronic
20mail, or by regular mail. Service by mail is completed when the
21notice is deposited in the U.S. Mail. Service to the email
22address of record is completed when sent.
23    Section 25. Extension.
24    (a) A person in the regulatory sandbox may request a
25one-time extension of the regulatory sandbox test period. The



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1request must be made no later than the end of the 11th month of
2the initial 12-month test period. The request for an extension
3must specify how long the requester believes will be necessary
4to produce a conclusive test and state specific reasons why an
5extension is necessary.
6    (b) The Department may grant a one-time test period
7extension of up to 6 months. The Department must grant or deny
8a request for a one-time test period extension before the end
9of the initial 12-month test period. A denial of an extension
10request is within the Department's sole discretion and any such
11denial is not appealable.
12    Section 30. Rules. The Secretary shall adopt and enforce
13all reasonable rules necessary or appropriate for the
14administration of this Act. The rulemaking shall be subject to
15the provisions of the Illinois Administrative Procedure Act.
16    Section 35. Judicial review. All final administrative
17decisions of the Department under this Act shall be subject to
18judicial review pursuant to the provisions of the
19Administrative Review Law and any rules adopted pursuant to the
20Administrative Review Law.
21    Section 40. Remedies. Nothing in this Act shall be
22construed to limit the remedies provided under the Code of
23Civil Procedure.



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1    Section 905. The State Finance Act is amended by changing
2Section 6z-26 as follows:
3    (30 ILCS 105/6z-26)
4    Sec. 6z-26. The Financial Institution Fund. All moneys
5received by the Department of Financial and Professional
6Regulation under the Safety Deposit License Act, the Foreign
7Exchange License Act, the Pawners Societies Act, the Sale of
8Exchange Act, the Currency Exchange Act, the Sales Finance
9Agency Act, the Debt Management Service Act, the Consumer
10Installment Loan Act, the Illinois Development Credit
11Corporation Act, the Title Insurance Act, the Debt Settlement
12Consumer Protection Act, the Debt Management Service Consumer
13Protection Fund, the Regulatory Sandbox Act, and any other Act
14administered by the Department of Financial and Professional
15Regulation as the successor of the Department of Financial
16Institutions now or in the future (unless an Act specifically
17provides otherwise) shall be deposited in the Financial
18Institution Fund (hereinafter "Fund"), a special fund that is
19hereby created in the State Treasury.
20    Moneys in the Fund shall be used by the Department, subject
21to appropriation, for expenses incurred in administering the
22above named and referenced Acts.
23    The Comptroller and the State Treasurer shall transfer from
24the General Revenue Fund to the Fund any monies received by the



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1Department after June 30, 1993, under any of the above named
2and referenced Acts that have been deposited in the General
3Revenue Fund.
4    As soon as possible after the end of each calendar year,
5the Comptroller shall compare the balance in the Fund at the
6end of the calendar year with the amount appropriated from the
7Fund for the fiscal year beginning on July 1 of that calendar
8year. If the balance in the Fund exceeds the amount
9appropriated, the Comptroller and the State Treasurer shall
10transfer from the Fund to the General Revenue Fund an amount
11equal to the difference between the balance in the Fund and the
12amount appropriated.
13    Nothing in this Section shall be construed to prohibit
14appropriations from the General Revenue Fund for expenses
15incurred in the administration of the above named and
16referenced Acts.
17    Moneys in the Fund may be transferred to the Professions
18Indirect Cost Fund, as authorized under Section 2105-300 of the
19Department of Professional Regulation Law of the Civil
20Administrative Code of Illinois.
21(Source: P.A. 96-1420, eff. 8-3-10.)
22    Section 999. Effective date. This Act takes effect upon
23becoming law.