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Public Act 095-0077 |
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AN ACT concerning regulation.
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Be it enacted by the People of the State of Illinois,
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represented in the General Assembly:
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Section 5. The Illinois Banking Act is amended by changing | ||||
Section 35.2 as follows:
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(205 ILCS 5/35.2) (from Ch. 17, par. 345)
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Sec. 35.2. Limitations on investments in and loans to | ||||
affiliates.
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(a) Restrictions on transactions with affiliates.
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(1) A state bank and
its subsidiaries may engage in a | ||||
covered transaction with an affiliate,
as expressly | ||||
provided in this Section 35.2, only if:
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(A) in the case of any one affiliate, the aggregate | ||||
amount of covered
transactions of the state bank and | ||||
its subsidiaries will not exceed 10%
of the unimpaired | ||||
capital and unimpaired surplus of the state bank; and
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(B) in the case of all affiliates, the aggregate | ||||
amount of covered
transactions of the state bank and | ||||
its subsidiaries will not exceed 20% of
the unimpaired | ||||
capital and unimpaired surplus of the state bank.
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(2) For the purpose of this Section, any transactions | ||||
by a state bank
with any person shall be deemed to be a | ||||
transaction with an affiliate to
the extent that the |
proceeds of the transaction are used for the benefit
of, or | ||
transferred to, that affiliate.
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(3) A state bank and its subsidiaries may not purchase | ||
a low-quality asset
from an affiliate unless the bank or | ||
such subsidiary, pursuant to an
independent credit | ||
evaluation, committed itself to purchase such asset
prior | ||
to the time such asset was acquired by the affiliate.
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(4) Any covered transactions and any transactions | ||
exempt under subsection
(d) between a state bank and an | ||
affiliate shall be on terms and conditions
that are | ||
consistent with safe and sound banking practices.
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(b) Definitions. For the purpose of this Section, the | ||
following rules
and definitions apply:
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(1) "Affiliate" with respect to a state bank means
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(A) any company that controls the state bank and | ||
any other company that
is controlled by the company | ||
that controls the state bank;
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(B) a bank subsidiary of the state bank;
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(C) any company
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(i) controlled directly or indirectly, by a | ||
trust or otherwise, by
or for the benefit of | ||
shareholders who beneficially or otherwise | ||
control,
directly or indirectly, by trust or | ||
otherwise, the state bank or any
company
that | ||
controls the state
bank; or
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(ii) a majority of the directors or trustees of |
which constitute a
majority
of the persons holding | ||
any such office with the state bank or any company
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that controls the state bank;
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(D) (i) any company, including a real estate | ||
investment trust, that is
sponsored and advised on | ||
a contractual basis by the state bank or any
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subsidiary or affiliate of the state bank; or
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(ii) any investment company with respect to | ||
which a state bank or any
affiliate thereof is an | ||
investment advisor. An investment advisor is | ||
defined
as "any person (other than a bona fide | ||
officer, director, trustee, member
of an advisory | ||
board, or employee of such company, as such) who | ||
pursuant
to contract with such company regularly | ||
furnishes advice to such company,
with respect to | ||
the desirability or investing in, purchasing, or | ||
selling
securities or other property shall be | ||
purchased or sold by such company,
and any other | ||
who pursuant to contract with a person as described | ||
above
regularly performs substantially all of the | ||
duties undertaken by such person
described above; | ||
but does not include a person whose advice is | ||
furnished
solely through uniform publications to | ||
subscribers thereto or a person who
furnishes only | ||
statistical and other factual information, advice | ||
regarding
economic factors and trends, or advice |
as to occasional transactions in
specific | ||
securities, but without generally furnishing | ||
advice or making
recommendations regarding the | ||
purchase or sale of securities, or a company
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furnishing such services at cost to one or more | ||
investment companies,
insurance companies or other | ||
financial institutions, or any person the
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character and amount of whose compensation for | ||
such services must be approved
by a court.
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(E) any company the Commissioner determines as | ||
having a relationship
with
the state bank or any | ||
subsidiary or affiliate of the state bank, such that
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covered transactions by the state bank or its | ||
subsidiary with the company
may be affected by the | ||
relationship to the detriment of the state bank or
its | ||
subsidiary.
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(2) None of the following are considered to be an | ||
affiliate:
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(A) any company, other than a bank, that is a | ||
subsidiary of a state
bank,
unless a determination is | ||
made under subparagraph (E) of paragraph (1) not
to | ||
exclude such subsidiary company from the definition of | ||
affiliate;
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(B) any company engaged solely in holding the | ||
premises of the state
bank;
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(C) any company engaged solely in conducting a safe |
deposit business;
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(D) any company engaged solely in holding | ||
obligations of the United
States
or its agencies or | ||
obligations fully guaranteed by the United States or
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its agencies as to principal and interest; and
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(E) any company where control results from the | ||
exercise of rights
arising
out of a bona fide debt | ||
previously contracted, but only for the period of
time | ||
specifically authorized under applicable State and | ||
federal law or
regulations or, in the absence of such | ||
law or regulation, for a period of 2
years from the | ||
date of the exercise of such rights or the effective | ||
date of
this Act, whichever date is later, subject, | ||
upon application, to
authorization by the Commissioner | ||
for good cause shown of extensions of
time for not more | ||
than one year at a time, with such extensions not to
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exceed an aggregate of 3 years.
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(3) (A) A company or shareholder has control over | ||
another company if
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(i) such company or shareholder, directly or | ||
indirectly, or acting
through
one or more other | ||
persons, owns, controls, or has power to vote 25% | ||
or more
of any class of voting securities of the | ||
other company;
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(ii) such company or shareholder controls in | ||
any manner the election
of a majority of the |
directors or trustees of the other company; or
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(iii) the Commissioner determines, after | ||
notice and opportunity for
hearing, that such | ||
company or shareholder, directly or indirectly,
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exercises a controlling influence over the | ||
management or policies of the
other company.
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(B) Notwithstanding any other provisions of this | ||
Section, no company
shall be deemed to own or control | ||
another company by virtue of its
ownership or control | ||
of shares in a fiduciary capacity, except as provided
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in subparagraph (C) of paragraph (1) or because of its | ||
ownership or control
of such shares in a business | ||
trust.
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(4) "Subsidiary" with respect to a specified company | ||
means a company that
is controlled by such specified | ||
company.
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(5) "Bank" means any bank now or hereafter organized | ||
under the laws of
any State or territory of the United | ||
States including the District of Columbia,
any national | ||
bank, and any trust company.
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(6) "Company" means a corporation, partnership, | ||
business trust,
association,
or similar organization and, | ||
unless specifically excluded, includes a "state
bank" and a | ||
"bank".
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(7) "Covered transaction" means, with respect to an | ||
affiliate of a
state bank,
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(A) a loan or extension of credit to the affiliate;
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(B) a purchase of or an investment in securities | ||
issued by the
affiliate;
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(C) a purchase of assets, including assets subject | ||
to an agreement to
repurchase, from the affiliate, | ||
except such purchases of real and personal
property as | ||
may be specifically exempted by the Commissioner;
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(D) the acceptance of securities issued by the | ||
affiliate as collateral
security for a loan or | ||
extension of credit to any person or company; or
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(E) the issuance of a guarantee, acceptance, or | ||
letter of credit,
including
an endorsement or standby | ||
letter of credit, on behalf of an affiliate.
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(8) "Aggregate amount of covered transactions" means | ||
the amount of
covered transactions about to be engaged in | ||
added to the current amount of
all outstanding covered | ||
transactions.
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(9) "Securities" means stocks, bonds, debentures, | ||
notes or other similar
obligations.
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(10) "Low-quality asset" means an asset that falls into | ||
any one or more
of the following categories:
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(A) an asset classified as "substandard", | ||
"doubtful", or "loss" or
treated
as "other loans | ||
especially mentioned" in the most recent report of | ||
examination
of an affiliate;
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(B) an asset in a nonaccrual status;
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(C) an asset on which principal or interest | ||
payments are more than 30
days past due; or
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(D) an asset whose terms have been renegotiated or | ||
compromised due to
the deteriorating financial | ||
condition of the obligor.
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(c) Collateral for certain transactions with affiliates.
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(1) Each loan
or extension of credit to, or guarantee, | ||
acceptance or letter of credit
issued on behalf of, an | ||
affiliate by a state bank or its subsidiary shall
be | ||
secured at the time of the transaction by collateral having | ||
a market value
equal to
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(A) 100% of the amount of such loan or extension of | ||
credit, guarantee,
acceptance, or letter of credit, if | ||
the collateral is composed of
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(i) obligations of the United States or its | ||
agencies;
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(ii) obligations fully guaranteed by the | ||
United States or its agencies
as to principal and | ||
interest;
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(iii) notes, drafts, bills of exchange or | ||
bankers' acceptances that
are
eligible for | ||
rediscount or purchase by a Federal Reserve Bank; | ||
or
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(iv) a segregated, earmarked deposit account | ||
with the state bank;
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(B) 110% of the amount of such loan or extension of |
credit, guarantee,
acceptance or letter of credit if | ||
the collateral is composed of obligations
of any state | ||
or political subdivision of any State;
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(C) 120% of the amount of such loan or extension of | ||
credit, guarantee,
acceptance, or letter of credit if | ||
the collateral is composed of other debt
instruments, | ||
including receivables; and
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(D) 130% of the amount of such loan or extension of | ||
credit, guarantee,
acceptance or letter of credit if | ||
the collateral is composed of stock, leases,
or other | ||
real or personal property.
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(2) Any such collateral that is subsequently retired or | ||
amortized shall
be replaced by additional eligible | ||
collateral where needed to keep the
percentage of the | ||
collateral value relative to the amount of the
outstanding | ||
loan or extension of credit, guarantee, acceptance, or | ||
letter
of credit equal to the minimum percentage required | ||
at the inception of the
transaction.
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(3) A low-quality asset shall not be acceptable as | ||
collateral for a loan
or extension of credit to, or | ||
guarantee, acceptance, or letter of credit
issued on behalf | ||
of, an affiliate.
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(4) The securities issued by an affiliate of the state | ||
bank shall not
be acceptable as collateral for a loan or | ||
extension of credit to, or guarantee,
acceptance or letter | ||
of credit issued on behalf of, that affiliate or any
other |
affiliate of the state bank.
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(5) The collateral requirements of this paragraph do | ||
not apply to an
acceptance that is already fully secured | ||
either by attached documents or by
other property having an | ||
ascertainable market value that is involved in the
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transaction.
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(d) Exemptions. The provisions of this Section, except | ||
paragraph (4) of
subsection (a), shall not be applicable to
the | ||
following as to which there shall be no limitation:
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(1) any transaction, subject to the prohibition | ||
contained in paragraph
(3) of subsection (a), with a bank
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(A) which controls 80% or more of the voting shares | ||
of the state bank;
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(B) in which the state bank controls 80% or more of | ||
the voting shares;
or
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(C) in which 80% or more of the voting shares are | ||
controlled by the
company
that controls 80% or more of | ||
the voting shares of the state bank;
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(2) making deposits in an affiliated bank or affiliated | ||
foreign bank in
the ordinary course of correspondent | ||
business, subject to any restrictions
that the | ||
Commissioner may prescribe;
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(3) giving immediate credit to an affiliate for | ||
uncollected items received
in the ordinary course of | ||
business;
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(4) making a loan or extension of credit to, or issuing |
a guarantee,
acceptance, or letter of credit on behalf of, | ||
an affiliate that is fully
secured by
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(A) obligations of the United States or its | ||
agencies;
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(B) obligations fully guaranteed by the United | ||
States or its agencies
as to principal and interest; or
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(C) a segregated, earmarked deposit account with | ||
the state bank;
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(5) purchasing securities issued by any company of the | ||
kinds described
as follows:
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Shares of any company engaged or to be engaged solely | ||
in one or more of
the following activities: holding or | ||
operating properties used wholly or
substantially by any | ||
banking subsidiary of such bank holding company in
the | ||
operations of such banking subsidiary or acquired for such | ||
future use;
or conducting a safe deposit business; or | ||
furnishing services to or
performing services for such bank | ||
holding company or its banking
subsidiaries; or | ||
liquidating assets acquired from such bank holding company
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or its banking subsidiaries or acquired from any other | ||
source prior to May
9, 1956, or the date on which such | ||
company became a bank holding company,
whichever is later;
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(6) purchasing assets having a readily identifiable | ||
and publicly available
market quotation and purchased at | ||
the market quotation or, subject to the
prohibition | ||
contained in paragraph (3) of subsection (a), purchasing |
loans
on a nonrecourse basis from affiliated banks; and
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(7) purchasing from an affiliate a loan or extension of | ||
credit that was
originated by the state bank and sold to | ||
the affiliate subject to a repurchase
agreement or with | ||
recourse.
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(e) Notwithstanding the provisions of this Section, a state | ||
bank and its subsidiaries in compliance with the provisions of | ||
Regulation W [12 C.F.R. Part 223] promulgated by the Board of | ||
Governors of the Federal Reserve, as amended from time to time, | ||
shall be deemed to be in compliance with this Section.
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This Section shall apply to any transaction entered into | ||
after January
1, 1984, except for transactions which are the | ||
subject of a binding written
contract or commitment entered | ||
into on or before July 28, 1982, and except
that any renewal of | ||
a participation in a loan outstanding on July 28, 1982,
to a | ||
company that becomes an affiliate as a result of the enactment | ||
of this
Act, or any participation in a loan to such an | ||
affiliate emanating from the
renewal of a binding written | ||
contract or commitment outstanding on July 28,
1982, shall not | ||
be subject to the collateral requirements of this Act.
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(Source: P.A. 88-546; 89-364, eff. 8-18-95.)
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Section 10. The Banking Emergencies Act is amended by | ||
changing Section 2 as follows:
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(205 ILCS 610/2) (from Ch. 17, par. 1002)
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Sec. 2. Power of Commissioner. | ||
(a) Whenever the Commissioner is notified by any officer of | ||
a bank or by any
other means becomes aware that an
emergency | ||
exists, or is impending, he may, by proclamation, authorize all | ||
banks in the State
of Illinois to close any or all of their | ||
offices, or if only a
bank or banks, or offices thereof, in a | ||
particular
area or areas of the State of Illinois are affected | ||
by the emergency or
impending
emergency, the Commissioner may | ||
authorize only the affected bank, banks, or
offices thereof, to | ||
close. The office or offices so closed may remain closed
until
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the Commissioner declares, by further proclamation, that the | ||
emergency or
impending emergency has ended. The
Commissioner | ||
during an emergency or while an impending emergency exists,
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which affects, or may affect, a particular bank or banks, or a | ||
particular
office or offices thereof, but not banks located in | ||
the area generally of
the said county or municipality, may | ||
authorize the particular bank or
banks, or office or offices so | ||
affected, to close. The office or offices so
closed shall | ||
remain closed until the Commissioner is notified by a bank
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officer of the closed bank that the emergency has ended. The | ||
Commissioner
shall notify, at such time, the officers of the | ||
bank that one or more
offices, heretofore closed because of the | ||
emergency, should reopen and, in
either event, for such further | ||
time thereafter as may reasonably be
required to reopen.
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(b) Whenever the Commissioner becomes aware that an | ||
emergency exists, or is impending, he or she may, by |
proclamation, authorize any bank organized under the laws of | ||
another state, or of the United States, to open and operate | ||
offices in this State, notwithstanding any other laws of this | ||
State to the contrary. Any office or offices opened in | ||
accordance with this subsection may remain open until the | ||
Commissioner declares, by further proclamation, that the | ||
emergency or impending emergency has ended. The Department of | ||
Financial and Professional Regulation shall adopt rules to | ||
implement this subsection (b).
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(Source: P.A. 92-483, eff. 8-23-01.)
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Section 15. The Financial Institutions Electronic | ||
Documents and Digital Signature Act is amended by changing | ||
Sections 5 and 10 as follows:
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(205 ILCS 705/5)
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Sec. 5. Definitions. As used in this Act:
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"Digital signature" means an encrypted
electronic | ||
identifier, created by computer, intended by the party using it | ||
to
have the same force and effect as the use of a manual | ||
signature.
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"Financial institution" means a bank,
a savings
and loan | ||
association, a savings bank, or
a credit
union or any | ||
subsidiary or affiliate of a bank, savings and loan | ||
association, savings bank, or credit union .
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"Substitute check" means a paper reproduction of an |
original check, as defined in the Check Clearing for the 21st | ||
Century Act (12 U.S.C. 5001, et seq.), as amended from time to | ||
time, and the rules promulgated thereunder.
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(Source: P.A. 94-458, eff. 8-4-05.)
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(205 ILCS 705/10)
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Sec. 10. Electronic documents; digital signatures ; | ||
electronic notices .
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(a) Electronic documents. If in the regular course of | ||
business, a financial institution possesses,
records, or | ||
generates any document, representation, image, substitute | ||
check, reproduction, or
combination thereof, of any agreement, | ||
transaction, act, occurrence, or event
by any electronic or | ||
computer-generated process that accurately reproduces,
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comprises, or records the agreement, transaction, act, | ||
occurrence, or event,
the recording, comprising, or | ||
reproduction shall have the same force and effect under the | ||
laws of this State
as one comprised, recorded, or created on | ||
paper or other tangible form by
writing, typing, printing, or | ||
similar means.
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(b) Digital signatures. In any communication, | ||
acknowledgement, agreement, or contract between a
financial | ||
institution and its customer, in which a signature is required | ||
or
used, any party to the communication, acknowledgement, | ||
agreement, or contract
may affix a signature by use of a | ||
digital signature, and the digital signature,
when lawfully |
used by the person whose signature it purports to be,
shall | ||
have the same force and effect as the use of a manual signature | ||
if it is
unique to the person using it, is capable of | ||
verification, is under the sole
control of the person using it, | ||
and is linked to data in such a manner that if
the data are | ||
changed, the digital signature is invalidated. Nothing in this
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Section shall require any financial institution or customer to | ||
use or permit
the use of a digital signature.
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(c) Electronic notices. | ||
(1) Consent to electronic records. If a statute, | ||
regulation, or other rule of law requires that information | ||
relating to a transaction or transactions in or affecting | ||
intrastate commerce in this State be provided or made | ||
available by a financial institution to a consumer in | ||
writing, the use of an electronic record to provide or make | ||
available that information satisfies the requirement that | ||
the information be in writing if: | ||
(A) the consumer has affirmatively consented to | ||
the use of an electronic record to provide or make | ||
available that information and has not withdrawn | ||
consent; | ||
(B) the consumer, prior to consenting, is provided | ||
with a clear and conspicuous statement: | ||
(i) informing the consumer of: | ||
(I) any right or option of the consumer to | ||
have the record provided or made available on |
paper or in nonelectronic form, and | ||
(II) the right of the consumer to withdraw | ||
the consent to have the record provided or made | ||
available in an electronic form and of any | ||
conditions, consequences (which may include | ||
termination of the parties' relationship), or | ||
fees in the event of a withdrawal of consent; | ||
(ii) informing the consumer of whether the | ||
consent applies: | ||
(I) only to the particular transaction | ||
that gave rise to the obligation to provide the | ||
record, or | ||
(II) to identified categories of records | ||
that may be provided or made available during | ||
the course of the parties' relationship; | ||
(iii) describing the procedures the consumer | ||
must use to withdraw consent, as provided in clause | ||
(i), and to update information needed to contact | ||
the consumer electronically; and | ||
(iv) informing the consumer: | ||
(I) how, after the consent, the consumer | ||
may, upon request, obtain a paper copy of an | ||
electronic record, and | ||
(II) whether any fee will be charged for a | ||
paper copy; | ||
(C) the consumer: |
(i) prior to consenting, is provided with a | ||
statement of the hardware and software | ||
requirements for access to and retention of the | ||
electronic records; and | ||
(ii) consents electronically, or confirms his | ||
or her consent electronically, in a manner that | ||
reasonably demonstrates that the consumer can | ||
access information in the electronic form that | ||
will be used to provide the information that is the | ||
subject of the consent;
and | ||
(D) after the consent of a consumer in accordance | ||
with subparagraph (A), if a change in the hardware or | ||
software requirements needed to access or retain | ||
electronic records creates a material risk that the | ||
consumer will not be able to access or retain a | ||
subsequent electronic record that was the subject of | ||
the consent, the person providing the electronic | ||
record: | ||
(i) provides the consumer with a statement of: | ||
(I) the revised hardware and software | ||
requirements for access to and retention of the | ||
electronic records, and | ||
(II) the right to withdraw consent without | ||
the imposition of any fees for the withdrawal | ||
and without the imposition of any condition or | ||
consequence that was not disclosed under |
subparagraph (B)(i); and | ||
(ii) again complies with subparagraph (C). | ||
(2) Other rights. | ||
(A) Preservation of consumer protections. Nothing | ||
in this subsection (c) affects the content or timing of | ||
any disclosure or other record required to be provided | ||
or made available to any consumer under any statute, | ||
regulation, or other rule of law. | ||
(B) Verification or acknowledgment. If a law that | ||
was enacted prior to this amendatory Act of the 95th | ||
General Assembly expressly requires a record to be | ||
provided or made available by a specified method that | ||
requires verification or acknowledgment of receipt, | ||
the record may be provided or made available | ||
electronically only if the method used provides the | ||
required verification or acknowledgment of receipt. | ||
(3) Effect of failure to obtain electronic consent or | ||
confirmation of consent. The legal effectiveness, | ||
validity, or enforceability of any contract executed by a | ||
consumer shall not be denied solely because of the failure | ||
to obtain electronic consent or confirmation of consent by | ||
that consumer in accordance with paragraph (1)(C)(ii). | ||
(4) Prospective effect. Withdrawal of consent by a | ||
consumer shall not affect the legal effectiveness, | ||
validity, or enforceability of electronic records provided | ||
or made available to that consumer in accordance with |
paragraph (1) prior to implementation of the consumer's | ||
withdrawal of consent. A consumer's withdrawal of consent | ||
shall be effective within a reasonable period of time after | ||
receipt of the withdrawal by the provider of the record. | ||
Failure to comply with paragraph (1)(D) may, at the | ||
election of the consumer, be treated as a withdrawal of | ||
consent for purposes of this paragraph. | ||
(5) Prior consent. This subsection does not apply to | ||
any records that are provided or made available to a | ||
consumer who has consented prior to the effective date of | ||
this amendatory Act of the 95th General Assembly to receive | ||
the records in electronic form as permitted by any statute, | ||
regulation, or other rule of law. | ||
(6) Oral communications. An oral communication or a | ||
recording of an oral communication shall not qualify as an | ||
electronic record for purposes of this subsection (c), | ||
except as otherwise provided under applicable law.
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(Source: P.A. 94-458, eff. 8-4-05.)
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Section 99. Effective date. This Act takes effect upon | ||
becoming law.
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