Public Act 100-0778
 
HB5497 EnrolledLRB100 20610 LNS 36026 b


  
    AN ACT concerning regulation.
  
 
    Be it enacted by the People of the State of Illinois,
 
represented in the General Assembly:
  
 
 
    Section 5. The Illinois Credit Union Act is amended  by 
changing Sections 10, 34, and 59 as follows:
 


    (205 ILCS 305/10)  (from Ch. 17, par. 4411)



    Sec. 10. Credit union records; member financial records. 

    (1) A credit union shall establish and maintain books, 
records, accounting
systems and procedures which accurately 
reflect its operations and which
enable the Department to 
readily ascertain the true financial condition
of the credit 
union and whether it is complying with this Act.

    (2) A photostatic or photographic reproduction of any 
credit union records
shall be admissible as evidence of 
transactions with the credit union.


    (3)(a) For the purpose of this Section, the term "financial 
records"
means any original, any copy, or any summary of (1) a 
document granting
signature authority over an account, (2) a 
statement, ledger card or other
record on any account which 
shows each transaction in or with respect to
that account, (3) 
a check, draft or money order drawn on a financial
institution 
or other entity or issued and payable by or through a financial

institution or other entity, or (4) any other item containing 
information
pertaining to any relationship established in the 
ordinary course of
business between a credit union and its 
member, including financial
statements or other financial 
information provided by the member.


    (b) This Section does not prohibit:

        (1) The preparation, examination, handling or 
    maintenance of any
financial records by any officer, 
    employee or agent of a credit union
having custody of such 
    records, or the examination of such records by a
certified 
    public accountant  engaged by the credit union to perform an

    independent audit.

        (2) The examination of any financial records by or the 
    furnishing of
financial records by a credit union to any 
    officer, employee or agent of
the Department, the National 
    Credit Union Administration, Federal Reserve
board or any 
    insurer of share accounts for use solely in the exercise of

    his duties as an officer, employee or agent.

        (3) The publication of data furnished from financial 
    records relating
to members where the data cannot be 
    identified to any particular customer
of account.

        (4) The making of reports or returns required under 
    Chapter 61 of the
Internal Revenue Code of 1954.

        (5) Furnishing information concerning the dishonor of 
    any negotiable
instrument permitted to be disclosed under 
    the Uniform Commercial
Code.

        (6) The exchange in the regular course of business
of 
    (i) credit information
between a credit union and other 
    credit unions or financial institutions
or commercial 
    enterprises, directly or through a consumer reporting 
    agency
or (ii) financial records or information derived 
    from financial records
between a credit union and other 
    credit unions or financial institutions or
commercial 
    enterprises for
the purpose of conducting due diligence 
    pursuant to a merger or a purchase or
sale of assets or 
    liabilities of the credit union.

        (7) The furnishing of information to the appropriate 
    law enforcement
authorities where the credit union 
    reasonably believes it has been the victim
of a crime.

        (8) The furnishing of information pursuant to the 
    Revised Uniform Unclaimed Property Act.

        (9) The furnishing of information pursuant to the 
    Illinois Income Tax
Act and the Illinois Estate and 
    Generation-Skipping Transfer Tax Act.

        (10) The furnishing of information pursuant to the 
    federal "Currency
and Foreign Transactions Reporting Act", 
    Title 31, United States Code,
Section 1051 et sequentia.

        (11) The furnishing of information pursuant to any 
    other statute which
by its terms or by regulations 
    promulgated thereunder requires the disclosure
of 
    financial records other than by subpoena, summons, warrant 
    or court order.

        (12) The furnishing of information in accordance with 
    the federal
Personal Responsibility and Work Opportunity 
    Reconciliation Act of 1996.
Any credit union governed by 
    this Act shall enter into an agreement for data
exchanges 
    with a State agency provided the State agency
pays to the 
    credit union a reasonable fee not to exceed its
actual cost 
    incurred.  A credit union
providing
information in 
    accordance with this item shall not be liable to any 
    account
holder or other person for any disclosure of 
    information to a State agency, for
encumbering or 
    surrendering any assets held by the credit union in 
    response to
a lien
or order to withhold and deliver issued 
    by a State agency, or for any other
action taken pursuant 
    to this item, including individual or mechanical errors,

    provided the action does not constitute gross negligence or 
    willful misconduct.
A credit union shall have no obligation 
    to hold, encumber, or surrender
assets until
it has been 
    served with a subpoena, summons, warrant, court or 
    administrative
order, lien, or levy.

        (13) The furnishing of information to law enforcement 
    authorities, the
Illinois Department on
Aging and its 
    regional administrative and provider agencies, the 
    Department of
Human Services Office
of Inspector General, 
    or public guardians: (i) upon subpoena by the investigatory 
    entity or the guardian, or (ii) if there is suspicion by 
    the credit union that a
member who is an elderly person or 
    person with a disability has been or may become the victim 
    of financial exploitation.
For the purposes of this
item 
    (13), the term: (i) "elderly person" means a person who is 
    60 or more
years of age, (ii) "person with a disability" 
    means a person who has or reasonably appears to the credit 
    union to
have a physical or mental
disability that impairs 
    his or her ability to seek or obtain protection from or

    prevent financial
exploitation, and (iii) "financial 
    exploitation" means tortious or illegal use
of the assets 
    or resources of
an elderly person or person with a 
    disability, and includes, without limitation,

    misappropriation of the elderly or
disabled person's 
    assets or resources by undue influence, breach of fiduciary

    relationship, intimidation,
fraud, deception, extortion, 
    or the use of assets or resources in any manner
contrary to 
    law. A credit
union or person furnishing information 
    pursuant to this item (13) shall be
entitled to the same 
    rights and
protections as a person furnishing information 
    under the Adult Protective Services Act and the Illinois

    Domestic Violence Act of 1986.

        (14) The disclosure of financial records or 
    information as necessary
to
effect, administer, or enforce 
    a transaction requested or authorized by the
member, or in 
    connection with:

            (A) servicing or processing a financial product or 
        service requested
or
authorized by the member;

            (B) maintaining or servicing a member's account 
        with the credit union;
or

            (C) a proposed or actual securitization or 
        secondary market sale
(including sales of servicing 
        rights) related to a
transaction of a member.

        Nothing in this item (14), however, authorizes the sale 
    of the financial
records or information of a member without 
    the consent of the member.

        (15) The disclosure of financial records or 
    information as necessary to
protect against or prevent 
    actual or potential fraud, unauthorized
transactions, 
    claims, or other liability.

        (16)(a) The disclosure of financial records or 
    information
related to a private label credit program 
    between a financial
institution and a private label party 
    in connection
with that private label credit program. Such 
    information
is limited to outstanding balance, available 
    credit, payment and
performance and account history, 
    product references, purchase
information,
and information 
    related to the identity of the
customer.

        (b)(1) For purposes of this paragraph (16) of 
    subsection
(b) of Section 10, a "private label credit 
    program" means a credit
program involving a financial 
    institution and a private label party
that is used by a 
    customer of the financial institution and the
private label 
    party primarily for payment for goods or services
sold, 
    manufactured, or distributed by a private label party.

        (2) For purposes of this paragraph (16) of subsection 
    (b)
of Section 10, a "private label party" means, with 
    respect to a
private label credit program, any of the 
    following: a
retailer, a merchant, a manufacturer, a trade 
    group,
or any such person's affiliate, subsidiary, member,

    agent, or service provider.

        (17)    The furnishing of the financial records of a 
    member to an appropriate law enforcement authority, 
    without prior notice to or consent of the member, upon 
    written request of the law enforcement authority, when 
    reasonable suspicion of an imminent threat to the personal 
    security and safety of the member exists that necessitates 
    an expedited release of the member's financial records, as 
    determined by the law enforcement authority. The law 
    enforcement authority shall include a brief explanation of 
    the imminent threat to the member in its written request to 
    the credit union. The written request shall reflect that it 
    has been authorized by a supervisory or managerial official 
    of the law enforcement authority.  The decision to furnish 
    the financial records of a member to a law enforcement 
    authority shall be made by a supervisory or managerial 
    official of the credit union. A credit union providing 
    information in accordance with this item (17) shall not be 
    liable to the member or any other person for the disclosure 
    of the information to the law enforcement authority. 

    (c) Except as otherwise provided by this Act, a credit 
union may not
disclose to any person, except to the member
or 
his duly authorized agent, any financial records relating to 
that member
of the credit union unless:

        (1) the member has authorized disclosure to the person;

        (2) the financial records are disclosed in response to 
    a lawful
subpoena,
summons, warrant, citation to discover 
    assets, or court order that meets the requirements of 
    subparagraph
(d) of this Section; or

        (3) the credit union is attempting to collect an 
    obligation owed to
the credit union and the credit union 
    complies with the provisions of
Section 2I of the Consumer 
    Fraud and Deceptive Business Practices Act.


    (d) A credit union shall disclose financial records under 
subparagraph
(c)(2) of this Section pursuant to a lawful 
subpoena, summons, warrant, citation to discover assets, or

court order only after the credit union mails a copy of the 
subpoena, summons,
warrant, citation to discover assets, or 
court order to the person establishing the relationship with

the credit union, if living, and otherwise his personal 
representative,
if known, at his last known address by first 
class mail, postage prepaid
unless the credit union is 
specifically prohibited from notifying the person
by order of 
court or by applicable State or federal law. In the case
of a 
grand jury subpoena, a credit union shall not mail a copy of a 
subpoena
to any person pursuant to this subsection if the 
subpoena was issued by a grand
jury under the Statewide Grand 
Jury Act or notifying the
person would constitute a violation 
of the federal Right to Financial
Privacy Act of 1978.


    (e)(1) Any officer or employee of a credit union who 
knowingly and
wilfully furnishes financial records in 
violation of this Section is guilty of
a business offense and 
upon conviction thereof shall be fined not more than
$1,000.


    (2) Any person who knowingly and wilfully induces or 
attempts to induce
any officer or employee of a credit union to 
disclose financial records
in violation of this Section is 
guilty of a business offense and upon
conviction thereof shall 
be fined not more than $1,000.


    (f) A credit union shall be reimbursed for costs which are 
reasonably
necessary and which have been directly incurred in 
searching for,
reproducing or transporting books, papers, 
records or other data of a
member required or requested to be 
produced pursuant to a lawful subpoena,
summons, warrant, 
citation to discover assets, or court order.  The Secretary and 
the Director may determine, by rule, the
rates and
conditions 
under which payment shall be made.  Delivery of requested 
documents
may be delayed until final reimbursement of all costs 
is received.

(Source: P.A. 99-143, eff. 7-27-15; 100-22, eff. 1-1-18.)

 



    (205 ILCS 305/34)  (from Ch. 17, par. 4435)



    Sec. 34. Duties of supervisory committee. 
    (1) The supervisory committee
shall make or cause to be 
made an annual internal audit of the books and
affairs of the 
credit union to determine that the credit union's accounting

records and reports are prepared promptly and accurately 
reflect operations
and results, that internal controls are 
established and effectively
maintained to safeguard the assets 
of the credit union, and that the
policies, procedures and 
practices established by the board of directors
and management 
of the credit union are being properly administered.  The 
supervisory committee
 shall submit a report of that audit to 
the board of directors and a summary of that report to the 
members at the next annual
meeting of the credit union.  It 
shall make or cause to be made such
supplementary audits as it 
deems necessary or as are required by the Secretary
 or by the 
board of directors, and submit reports of these
supplementary 
audits to the Secretary or board of directors as applicable.
If 
the supervisory committee has not engaged a licensed certified 
public accountant or licensed certified public accounting firm 
registered
by the Department of Financial and Professional 
Regulation to make the internal audit,
the supervisory 
committee or other officials of the credit union shall not

indicate or in any manner imply that such audit has been 
performed by a licensed certified
public accountant or licensed 
certified public accounting firm or that the audit represents 
the independent opinion of a licensed certified
public 
accountant or licensed certified public accounting firm.  The 
supervisory committee must retain its tapes and working papers

of each internal audit for inspection by the Department. The 
report of this
audit must be made on a form approved by the 
Secretary. A copy of the report
must be promptly delivered 
mailed to the Secretary.

    (2) The supervisory committee shall make or cause to be 
made at least
once each year a reasonable percentage 
verification of members' share and
loan accounts, consistent 
with rules promulgated by the Secretary.

    (3) (A) The supervisory committee of a credit union with 
assets of $10,000,000
$5,000,000 or more shall engage a 
licensed certified public accountant or licensed certified 
public accounting firm registered by the
Department of 
Financial and Professional Regulation to perform an annual 
external
independent audit of the credit union's financial 
statements in accordance
with generally accepted auditing 
standards and the financial statements shall be issued in 
accordance with accounting principles generally accepted in 
the United States of America.  
    (B) The supervisory committee of a
credit union with assets 
of $5,000,000 $3,000,000 or more, but less than $10,000,000 
$5,000,000,
shall engage a licensed certified public 
accountant or licensed certified public accounting firm 
registered by the Department of Financial and
Professional 
Regulation to perform on an annual basis: (i) an agreed-upon 
procedures engagement under attestation standards established 
by the American Institute of Certified Public Accountants to 
minimally satisfy the supervisory committee internal audit 
standards set forth in subsection (1); or (ii) an external 
independent audit of the credit union's financial statements 
pursuant to the standards set forth in paragraph (A) of 
subsection (3) an external independent audit of the
credit 
union's financial statements in accordance with generally 
accepted
auditing standards at least once every 3 years.  A copy 
of an external
independent audit shall be completed and mailed 
to the Secretary no later than 90 days after December 31 of 
each year; provided that a credit union or group of credit 
unions may obtain an extension of the due date upon application 
to and receipt of written approval from the Secretary. If the

annual internal audit of such a credit union is conducted by a 
public
accountant registered by the Department of Financial and 
Professional Regulation and the
annual internal audit is done 
in conjunction with the credit union's annual
external audit, 
the requirements of subsection (1) of this Section shall
be 
deemed met.

    (C)    The external independent audit report or agreed upon 
procedures report shall be completed and a copy thereof 
delivered to the Secretary no later than 120 days after the end 
of the calendar or fiscal year under audit or fiscal period for 
which the agreed upon procedures are performed. A credit union 
or group of credit unions may obtain an extension of the due 
date upon application to and receipt of written approval from 
the Secretary. 
    (D)   If the credit union engages a licensed certified public 
accountant or licensed certified public accounting firm to 
perform an annual external independent audit of the credit 
union's financial statements pursuant to the standards in 
paragraph (A) of subsection (3) or an annual agreed upon 
procedures engagement pursuant to the standards in paragraph 
(B) of subsection (3), then the annual internal audit 
requirements of subsection (1) shall be deemed satisfied and 
met in all respects. 
    (4) In determining the appropriate balance in the allowance 
for loan losses account, a credit union may determine its 
historical loss rate using a defined period of time of less 
than 5 years, provided that:
        (A) the methodology used to determine the defined 
    period of time is formally documented in the credit union's 
    policies and procedures and is appropriate to the credit 
    union's size, business strategy, and loan portfolio 
    characteristics and the economic environment of the areas 
    and employers served by the credit union;
        (B) supporting documentation is maintained for the 
    technique used to develop the credit union loss rates, 
    including the period of time used to accumulate historical 
    loss data and the factors considered in establishing the 
    time frames; and
        (C) the external auditor conducting the credit union's 
    financial statement audit has analyzed the methodology 
    employed by the credit union and concludes that the 
    financial statements, including the allowance for loan 
    losses, are fairly stated in all material respects in 
    accordance with U.S. Generally Accepted Accounting 
    Principles, as promulgated by the Financial Accounting 
    Standards Board.
    (5) A majority of the members of the supervisory committee

shall constitute a quorum.

    (6) On an annual basis commencing January 1, 2015, the 
members of the supervisory committee shall receive training 
related to their statutory duties.  Supervisory committee 
members may receive the training through internal credit union 
training, external training offered by the credit union's 
retained auditors, trade associations, vendors, regulatory 
agencies, or any other sources or on-the-job experience, or a 
combination of those activities.  The training may be received 
through any medium, including, but not limited to, conferences, 
workshops, audit closing meetings, seminars, teleconferences, 
webinars, and other Internet-based delivery channels. 
(Source: P.A. 97-133, eff. 1-1-12; 98-784, eff. 7-24-14.)

 
    (205 ILCS 305/59)  (from Ch. 17, par. 4460)

    Sec. 59. Investment of funds. 

    (a) Funds not used in loans to members may be
invested, 
pursuant to subsection (7) of Section 30 of this Act, and

subject to Departmental rules and
regulations:


        (1) In securities, obligations or other instruments of 
    or issued by or
fully guaranteed as to principal and 
    interest by the United States of America
or any agency 
    thereof or in any trust or trusts established for investing

    directly or collectively in the same;


        (2) In obligations of any state of the United States, 
    the District of
Columbia, the Commonwealth of Puerto Rico, 
    and the several
territories organized
by Congress, or any 
    political subdivision thereof; however, a credit union
may

    not invest more than 10% of its unimpaired capital and 
    surplus in the
obligations of one issuer, exclusive of 
    general obligations of the issuer, and
investments in 
    municipal securities must be limited to securities rated in 
    one
of the 4
highest rating categories by a nationally 
    recognized statistical rating
organization;


        (3) In certificates of deposit or passbook type 
    accounts issued by a state
or national bank, mutual savings 
    bank or savings and loan association; provided
that such 
    institutions have their accounts insured by the Federal 
    Deposit
Insurance Corporation or the Federal Savings and 
    Loan Insurance Corporation;
but provided, further, that a 
    credit union's investment in an account in
any one 
    institution may exceed the insured limit on accounts;


        (4) In shares, classes of shares or share certificates 
    of other credit
unions, including, but not limited to 
    corporate credit unions; provided
that such credit unions 
    have their members' accounts insured by the NCUA
or other 
    approved insurers, and that if the members' accounts are so 
    insured,
a credit union's investment may exceed the insured 
    limit on accounts;


        (5) In shares of a cooperative society organized under 
    the laws of this
State or the laws of the United States in 
    the total amount not exceeding
10% of the unimpaired 
    capital and surplus of the credit union; provided
that such 
    investment shall first be approved by the Department;


        (6) In obligations of the State of Israel, or 
    obligations fully guaranteed
by the State of Israel as to 
    payment of principal and interest;


        (7) In shares, stocks or obligations of other financial 
    institutions in
the total amount not exceeding 5% of the 
    unimpaired capital and surplus
of the credit union;


        (8) In federal funds and bankers' acceptances;


        (9) In shares or stocks of Credit Union Service 
    Organizations in the
total amount not exceeding the greater 
    of 3% of the unimpaired
capital and surplus of the
credit 
    union or the amount authorized for federal credit unions;


        (10) In corporate bonds identified as investment grade 
    by at least one nationally recognized statistical rating 
    organization, provided that: 
            (i) the board of directors has established a 
        written policy that addresses corporate bond 
        investment procedures and how the credit union will 
        manage credit risk, interest rate risk, liquidity 
        risk, and concentration risk; and
            (ii) the credit union has documented in its records 
        that a credit analysis of a particular investment and 
        the issuing entity was conducted by the credit union, a 
        third party on behalf of the credit union qualified by 
        education or experience to assess the risk 
        characteristics of corporate bonds, or a nationally 
        recognized statistical rating agency before purchasing 
        the investment and the analysis is updated at least 
        annually for as long as it holds the investment; and 
        (11) To aid in the credit union's management of its 
    assets, liabilities, and liquidity in the purchase of an 
    investment interest in a pool of loans, in whole or in part 
    and without regard to the membership of the borrowers, from 
    other depository institutions and financial type 
    institutions, including mortgage banks, finance companies, 
    insurance companies, and other loan sellers, subject to 
    such safety and soundness standards, limitations, and 
    qualifications as the Department may establish by rule or 
    guidance from time to time; . 
        (12)   To aid in the credit union's management of its 
    assets, liabilities, and liquidity by receiving funds from 
    another financial institution as evidenced by certificates 
    of deposit, share certificates, or other classes of shares 
    issued by the credit union to the financial institution; 
    and
        (13)   In the purchase and assumption of assets held by 
    other financial institutions, with approval of the 
    Secretary and subject to any safety and soundness 
    standards, limitations, and qualifications as the 
    Department may establish by rule or guidance from time to 
    time. 
    (b) As used in this Section: , 
    "Political political subdivision" includes, but is not

limited to, counties,
townships, cities, villages, 
incorporated towns, school districts, educational
service 
regions, special road districts, public water supply 
districts, fire
protection districts, drainage districts, 
levee districts, sewer districts,
housing authorities, park 
districts, and any
agency, corporation, or instrumentality of a 
state or its political
subdivisions, whether now or hereafter 
created and whether herein specifically
mentioned or not.

    "Financial institution" includes any bank, savings bank, 
savings and loan association, or credit union established under 
the laws of the United States, this State, or any other state. 
    (c) A credit union investing to fund an employee benefit 
plan obligation is not subject to the investment limitations of 
this Act and this Section and may purchase an investment that 
would otherwise be impermissible if the investment is directly 
related to the credit union's obligation under the employee 
benefit plan and the credit union holds the investment only for 
so long as it has an actual or potential obligation under the 
employee benefit plan.

(Source: P.A. 100-361, eff. 8-25-17.)

 
 
    Section 99. Effective date. This Act takes effect upon 
becoming law.