Illinois General Assembly - Full Text of SB3687
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Full Text of SB3687  103rd General Assembly



SB3687 EnrolledLRB103 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 10. The Illinois Credit Union Act is amended by
5changing 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
9whom shall be residents of the State of Illinois, who have a
10common bond referred to in Section 1.1 may organize a credit
11union or a central credit union by complying with this
13    (2) The subscribers shall execute in duplicate Articles of
14Incorporation and agree to the terms thereof, which Articles
15shall 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
13general governance government of the credit union, consistent
14with this Act, and execute same in duplicate. If there is a
15conflict, inconsistency, or variation between the terms of
16this Act and the provisions in the bylaws adopted by the credit
17union, the terms of this Act shall control. A conflict,
18inconsistency, or variation may not be deemed to exist if the
19Act specifically requires that a particular matter shall be
20adopted in the bylaws.
21    (4) The subscribers shall forward the articles of
22incorporation and the bylaws to the Secretary in duplicate,
23along with the required charter fee. If they conform to the
24law, and such rules and regulations as the Secretary and the
25Director may prescribe, if the Secretary determines that a
26common bond exists, and that it is economically advisable to



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1organize the credit union, he or she shall within 60 days issue
2a certificate of approval attached to the articles of
3incorporation and return a copy of the bylaws and the articles
4of incorporation to the applicants or their representative,
5which shall be preserved in the permanent files of the credit
6union. The subscribers shall file the certificate of approval,
7with the articles of incorporation attached, in the office of
8the recorder (or, if there is no recorder, in the office of the
9county clerk) of the county in which the credit union is to
10locate its principal place of business. The recorder or the
11county clerk, as the case may be, shall accept and record the
12documents if they are accompanied by the proper fee. When the
13documents are so recorded, the credit union is incorporated
14under this Act.
15    (5) The subscribers for a credit union charter shall not
16transact any business until the certificate of approval has
17been 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
21regulated by the Department. The Secretary in executing the
22powers and discharging the duties vested by law in the
23Department 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
5union regulated by the Department shall pay a regulatory fee
6to the Department based upon its total assets as shown by its
7Year-end Call Report at the following rates or at a lesser rate
8established by the Secretary in a manner proportionately
9consistent with the following rates and sufficient to fund the
10actual administrative and operational expenses of the
11Department's Credit Union Section pursuant to subsection (4)
12of this Section:
14$25,000 or less ................$100
15Over $25,000 and not over
16$100,000 .......................$100 plus $4 per
17$1,000 of assets in excess of
19Over $100,000 and not over
20$200,000 .......................$400 plus $3 per
21$1,000 of assets in excess of
23Over $200,000 and not over
24$500,000 .......................$700 plus $2 per
25$1,000 of assets in excess of



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2Over $500,000 and not over
3$1,000,000 .....................$1,300 plus $1.40
4per $1,000 of assets in excess
5of $500,000
6Over $1,000,000 and not
7over $5,000,000.................$2,000 plus $0.50
8per $1,000 of assets in
9excess of $1,000,000
10Over $5,000,000 and not
11over $30,000,000 ............... $4,540 plus $0.397
12per $1,000 of assets
13in excess of $5,000,000
14Over $30,000,000 and not over
15$100,000,000....................$14,471 plus $0.34
16per $1,000 of assets
17 in excess of $30,000,000
18Over $100,000,000 and not
19over $500,000,000 ..............$38,306 plus $0.17
20per $1,000 of assets
21in excess of $100,000,000
22Over $500,000,000 ..............$106,406 plus $0.056
23per $1,000 of assets
24in excess of $500,000,000
25    (2) The Secretary shall review the regulatory fee schedule
26in subsection (1) and the projected earnings on those fees on



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1an annual basis and adjust the fee schedule no more than 5%
2annually if necessary to defray the estimated administrative
3and operational expenses of the Credit Union Section of the
4Department as defined in subsection (5). However, the fee
5schedule shall not be increased if the amount remaining in the
6Credit Union Fund at the end of any fiscal year is greater than
725% of the total actual and operational expenses incurred by
8the State in administering and enforcing the Illinois Credit
9Union Act and other laws, rules, and regulations as may apply
10to the administration and enforcement of the foregoing laws,
11rules, and regulations as amended from time to time for the
12preceding fiscal year. The regulatory fee for the next fiscal
13year shall be calculated by the Secretary based on the credit
14union's total assets as of December 31 of the preceding
15calendar year. The Secretary shall provide credit unions with
16written notice of any adjustment made in the regulatory fee
18    (3) A credit union shall pay to the Department a
19regulatory fee in quarterly installments equal to one-fourth
20of the regulatory fee due in accordance with the regulatory
21fee schedule in subsection (1), on the basis of assets as of
22the Year-end Call Report of the preceding calendar year. The
23total annual regulatory fee shall not be less than $100 or more
24than $210,000, provided that the regulatory fee cap of
25$210,000 shall be adjusted to incorporate the same percentage
26increase as the Secretary makes in the regulatory fee schedule



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1from time to time under subsection (2). No regulatory fee
2shall be collected from a credit union until it has been in
3operation for one year. The regulatory fee shall be billed to
4credit unions on a quarterly basis and it shall be payable by
5credit unions on the due date for the Call Report for the
6subject quarter.
7    (4)(a) The aggregate of all fees collected by the
8Department under this Act and from credit unions pursuant to
9the Illinois Community Reinvestment Act shall be paid promptly
10after they are received, accompanied by a detailed statement
11thereof, into the State treasury Treasury and shall be set
12apart in the Credit Union Fund, a special fund hereby created
13in the State treasury. The amount from time to time deposited
14in the Credit Union Fund and shall be used to offset the
15ordinary administrative and operational expenses of the Credit
16Union Section of the Department under this Act. All earnings
17received from investments of funds in the Credit Union Fund
18shall be deposited into the Credit Union Fund and may be used
19for the same purposes as fees deposited into that fund. Moneys
20deposited in the Credit Union Fund may be transferred to the
21Professions Indirect Cost Fund, as authorized under Section
222105-300 of the Department of Professional Regulation Law of
23the Civil Administrative Code of Illinois.
24    (b) At the conclusion of each fiscal year, beginning in
25fiscal year 2025, the Department shall separately identify the
26direct administrative and operational expenses and allocable



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1indirect costs of the Credit Union Section of the Department
2incidental to conducting the examinations required or
3authorized by the Illinois Community Reinvestment Act and
4implementing rules adopted by the Department. Pursuant to
5Section 2105-300 of the Department of Professional Regulation
6Law of the Civil Administrative Code of Illinois, the
7Department shall make copies of the analyses available to the
8credit union industry in a timely manner. The administrative
9and operational expenses of the Credit Union Section of the
10Department in conducting examinations required or authorized
11by the Illinois Community Reinvestment Act shall have the same
12meaning and scope as the administrative and operational
13expenses of the Credit Union Section of the Department, as
14defined in subsection (5) of this Section.
15    (c) Notwithstanding provisions in the State Finance Act,
16as now or hereafter amended, or any other law to the contrary,
17the Governor may, during any fiscal year through January 10,
182011, from time to time direct the State Treasurer and
19Comptroller to transfer a specified sum not exceeding 10% of
20the revenues to be deposited into the Credit Union Fund during
21that fiscal year from that Fund to the General Revenue Fund in
22order to help defray the State's operating costs for the
23fiscal year. Notwithstanding provisions in the State Finance
24Act, as now or hereafter amended, or any other law to the
25contrary, the total sum transferred from the Credit Union Fund
26to the General Revenue Fund pursuant to this provision shall



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1not exceed during any fiscal year 10% of the revenues to be
2deposited into the Credit Union Fund during that fiscal year.
3The State Treasurer and Comptroller shall transfer the amounts
4designated under this Section as soon as may be practicable
5after receiving the direction to transfer from the Governor.
6    (5) The administrative and operational expenses for any
7fiscal year shall mean the ordinary and contingent expenses
8for that year incidental to making the examinations provided
9for by, and for administering, this Act, including all
10salaries and other compensation paid for personal services
11rendered for the State by officers or employees of the State to
12enforce this Act; all expenditures for telephone and telegraph
13charges, postage and postal charges, office supplies and
14services, furniture and equipment, office space and
15maintenance thereof, travel expenses and other necessary
16expenses; all to the extent that such expenditures are
17directly incidental to such examination or administration.
18    (6) When the balance in the Credit Union Fund at the end of
19a fiscal year exceeds 25% of the total administrative and
20operational expenses incurred by the State in administering
21and enforcing the Illinois Credit Union Act and other laws,
22rules, and regulations as may apply to the administration and
23enforcement of the foregoing laws, rules, and regulations as
24amended from time to time for that fiscal year, such excess
25shall be credited to credit unions and applied against their
26regulatory fees for the subsequent fiscal year. The amount



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1credited to each credit union shall be in the same proportion
2as the regulatory fee paid by such credit union for the fiscal
3year in which the excess is produced bears to the aggregate
4amount of all fees collected by the Department under this Act
5for the same fiscal year.
6    (7) (Blank).
7    (8) Nothing in this Act shall prohibit the General
8Assembly from appropriating funds to the Department from the
9General Revenue Fund for the purpose of administering this
11    (9) For purposes of this Section, "fiscal year" means a
12period beginning on July 1 of any calendar year and ending on
13June 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
13donation accounts.
14    (1) If provided for in and consistent with the bylaws,
15Christmas clubs, vacation clubs and other special purpose
16share accounts may be established and offered under conditions
17and restrictions established by the board of directors.
18    (2) Pursuant to a policy adopted by the board of
19directors, which may be amended from time to time, a credit
20union may establish one or more charitable donation accounts.
21The investments and purchases to fund a charitable donation
22account are not subject to the investment limitations of this
23Act, provided the charitable donation account is structured in
24accordance with this Act. At their time of purchase, the book
25value of the investments in all charitable donation accounts,



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1in the aggregate, shall not exceed 5% of the credit union's net
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
14a credit union to make reasonable contributions to civic,
15charitable, service, or religious corporations and to avoid
16the cost, administrative expenses, and reporting requirements
17associated with establishing its own private foundation, a
18credit union may establish one or more donor-advised fund
19accounts. The credit union shall maintain the account on its
20books and records under a name it selects, which may identify
21the account as a charitable or grant fund or other name that
22reflects the charitable nature of the account. The account
23shall be subject to the terms and restrictions set forth in
24this 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,
22pursuant to subsection (7) of Section 30 of this Act, and
23subject 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,
4counties, townships, cities, villages, incorporated towns,
5school districts, educational service regions, special road
6districts, public water supply districts, fire protection
7districts, drainage districts, levee districts, sewer
8districts, housing authorities, park districts, and any
9agency, corporation, or instrumentality of a state or its
10political subdivisions, whether now or hereafter created and
11whether herein specifically mentioned or not.
12    "Financial institution" includes any bank, savings bank,
13savings and loan association, or credit union established
14under the laws of the United States, this State, or any other
16    "Financial technology company" includes any corporation,
17partnership, limited liability company, or other entity
18organized under the laws of Illinois, another state, or the
19United 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



SB3687 Enrolled- 35 -LRB103 38108 RTM 68240 b

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
10plan obligation is not subject to the investment limitations
11of this Act and this Section and may purchase an investment
12that would otherwise be impermissible if the investment is
13directly related to the credit union's obligation under the
14employee benefit plan and the credit union holds the
15investment only for so long as it has an actual or potential
16obligation under the employee benefit plan.
17    (d) If a credit union acquires loans from another
18financial institution or financial-type institution pursuant
19to this Section, the credit union shall be authorized to
20provide loan servicing and collection services in connection
21with those loans.
22(Source: P.A. 102-496, eff. 8-20-21; 102-774, eff. 5-13-22;
23102-858, eff. 5-13-22; 103-154, eff. 6-30-23.)
24    Section 99. Effective date. This Act takes effect upon
25becoming law.