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SB1797 Enrolled LRB104 09833 BAB 19901 b
1 AN ACT concerning regulation.
2 Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
4 Article 1. General Provisions
5 Section 1-1. Short title. This Act may be cited as the
6 Digital Assets and Consumer Protection Act.
7 Section 1-5. Definitions.
8 (a) As used in this Act:
9 "Affiliate" means any person that controls, is controlled
10 by, or is under common control with another person. For
11 purposes of this definition, "control" means the possession,
12 direct or indirect, of the power to direct or cause the
13 direction of the management and policies of a person.
14 "Applicant" means a person that applies for registration
15 under this Act.
16 "Bank" means a bank, savings banks, savings and loan
17 association, savings association, or industrial loan company
18 chartered under the laws of this State or any other state or
19 under the laws of the United States.
20 "Confidential supervisory information" means information
21 or documents obtained by employees, agents, or representatives
22 of the Department in the course of any examination,
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1 investigation, audit, visit, registration, certification,
2 review, licensing, or any other regulatory or supervisory
3 activity pursuant to this Act, and any record prepared or
4 obtained by the Department to the extent that the record
5 summarizes or contains information derived from any report,
6 document, or record described in this Act.
7 "Conflict of interest" means an interest that might
8 incline a covered person or an individual who is an associated
9 person of a covered person to make a recommendation that is not
10 disinterested.
11 "Corporate fiduciary" shall mean a corporate fiduciary as
12 defined by Section 1-5.05 of the Corporate Fiduciary Act.
13 "Covered person" means a registrant or person required to
14 register pursuant to this Act.
15 "Covered exchange" means a covered person that exchanges
16 or holds itself out as being able to exchange a digital asset
17 for a resident as part of a business or on behalf of a customer
18 who has entered into an agreement with a business for the
19 provision of such services.
20 "Credit union" means a credit union chartered under the
21 laws of this State or any other state or under the laws of the
22 United States.
23 "Department" means the Department of Financial and
24 Professional Regulation.
25 "Digital asset" means a digital representation of value
26 that is used as a medium of exchange, unit of account, or store
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1 of value, and that is not fiat currency, whether or not
2 denominated in fiat currency. "Digital asset" does not include
3 any of the following:
4 (1) A digital representation of value that a merchant
5 grants as part of an affinity or rewards program and that
6 primarily relates to such affinity or rewards program.
7 (2) A digital representation of value that is issued
8 by or on behalf of a game publisher and that is used
9 primarily within online games or gaming platforms.
10 (3) Other digital representations of value that have
11 substantial value, utility, or significance beyond the
12 asset's mere existence as a digital asset, including
13 digital equivalents of tangible and intangible goods such
14 as: (A) works of art, musical compositions, literary
15 works, and similar intellectual property; (B) collectibles
16 and merchandise; and (C) licenses, tickets, and similar
17 rights to attend events or participate in activities.
18 (4) A digital representation of value that is not
19 marketed, used, promoted, offered, or sold for investment
20 or speculation, except that this exclusion shall not apply
21 to any digital representation of value that (A) is
22 meme-based with no intrinsic value or utility or (B) is
23 marketed, used, promoted, offered, or sold in a manner
24 that intends to establish a reasonable expectation or
25 belief among the general public that the instrument will
26 retain a nominal value that is so stable as to render the
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1 nominal value effectively fixed. The Department may adopt
2 rules to clarify the scope and applicability of this
3 subsection.
4 (5) A digital representation of value that is used as
5 part of prepaid cards.
6 "Digital asset business activity" means any of the
7 following:
8 (1) Exchanging, transferring, or storing a digital
9 asset as part of a business or on behalf of a customer who
10 has entered into an agreement with a business for the
11 provision of such services.
12 (2) Engaging in digital asset administration.
13 (3) Any other business activity involving digital
14 assets designated by rule by the Department as may be
15 necessary and appropriate for the protection of residents.
16 "Digital asset business activity" does not include (1)
17 peer-to-peer exchanges or transfers of digital assets, (2)
18 decentralized exchanges facilitating peer-to-peer exchanges or
19 transfers solely through use of a computer program or a
20 transaction protocol that is intended to automatically
21 execute, control, or document events and actions, (3) the
22 development, publication, constitution, administration,
23 maintenance, and dissemination of software in and of itself,
24 (4) the issuance of a non-fungible token in and of itself, and
25 (5) validating a digital asset transaction, operating a node,
26 or engaging in similar activity to participate in
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1 facilitating, operating, or securing a blockchain system.
2 "Exchange", when used as a verb, means to exchange, buy,
3 sell, trade, or convert, on behalf of a resident, either of the
4 following:
5 (1) A digital asset for fiat currency or one or more
6 forms of digital assets.
7 (2) Fiat currency for one or more forms of digital
8 assets.
9 "Exchange" does not include buying, selling, or trading
10 digital assets for a person's own account in a principal
11 capacity.
12 "Executive officer" includes, without limitation, an
13 individual who is a director, officer, manager, managing
14 member, partner, or trustee, or other functionally equivalent
15 responsible individual, of a person.
16 "Federally insured depository institution" shall mean an
17 insured depository institution as defined by Section 3(c)(2)
18 of the Federal Deposit Insurance Act, 12 U.S.C. 1813(c)(2), as
19 amended, or an insured credit union as defined by Section
20 101(7) of the Federal Credit Union Act, 12 U.S.C. 1752(7), as
21 amended.
22 "Fiat currency" means a medium of exchange or unit of
23 value issued by the United States or a foreign government and
24 that is designated as legal tender in its country of issuance.
25 "Insolvent" means any of the following:
26 (1) Having generally ceased to pay debts in the
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1 ordinary course of business other than as a result of a
2 bona fide dispute.
3 (2) Being unable to pay debts as they become due.
4 (3) Being insolvent within the meaning of federal
5 bankruptcy law.
6 "Non-fungible token" means any unique digital identifier
7 on any blockchain or digital asset network used to certify
8 authenticity and ownership rights that is not readily
9 exchangeable or replaceable with a mutually interchangeable
10 digital asset of the same value. The Department may modify
11 this definition by rule.
12 "Person" includes, without limitation, any individual,
13 corporation, business trust, estate, trust, partnership,
14 proprietorship, syndicate, limited liability company,
15 association, joint venture, government, governmental
16 subsection, agency or instrumentality, public corporation or
17 joint stock company, or any other organization or legal or
18 commercial entity.
19 "Prepaid card" means an electronic payment device that,
20 subject to any rules adopted by the Department:
21 (1) is usable at a single merchant or an affiliated
22 group of merchants that share the same name, mark, or
23 logo, or is usable at multiple, unaffiliated merchants or
24 service providers;
25 (2) is issued in and for a specified amount of fiat
26 currency;
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1 (3) can be reloaded in and for only fiat currency, if
2 at all;
3 (4) is issued or reloaded on a prepaid basis for the
4 future purchase or delivery of goods or services;
5 (5) is honored upon presentation;
6 (6) can be redeemed in and for only fiat currency, if
7 at all;
8 (7) is governed by the Uniform Money Transmission
9 Modernization Act; and
10 (8) complies with any other condition designated by
11 rule by the Department as may be necessary and appropriate
12 for the protection of residents.
13 "Qualified custodian" means a bank, credit union, or trust
14 company, subject to any rules adopted by the Department.
15 "Record" means information that is inscribed on a tangible
16 medium or that is stored in an electronic or other medium and
17 is retrievable in perceivable form.
18 "Registrant" means a person registered under this Act.
19 "Resident" means any of the following:
20 (1) A person who is domiciled in this State.
21 (2) A person who is physically located in this State
22 for more than 183 days of the previous 365 days.
23 (3) A person who has a place of business in this State.
24 (4) A legal representative of a person that is
25 domiciled in this State.
26 "Request for assistance" means all inquiries, complaints,
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1 account disputes, and requests for documentation a covered
2 person receives from residents.
3 "Responsible individual" means an individual who has
4 direct control over, or significant management, policy, or
5 decision-making authority with respect to, a person's digital
6 asset business activity in this State.
7 "Secretary" means the Secretary of Financial and
8 Professional Regulation and any authorized representative of
9 the Secretary.
10 "Service provider" means any person that provides a
11 material service to a covered person in connection with the
12 offering or provision by that covered person of a digital
13 asset business activity in this State, including a person that
14 either:
15 (1) Participates in designing, operating, or
16 maintaining the digital asset business activity.
17 (2) Processes transactions relating to the digital
18 asset business activity, other than unknowingly or
19 incidentally transmitting or processing financial data in
20 a manner that the data is undifferentiated from other
21 types of data of the same form as the person transmits or
22 processes.
23 "State" means a state of the United States, the District
24 of Columbia, Puerto Rico, the United States Virgin Islands, or
25 any territory or insular possession subject to the
26 jurisdiction of the United States.
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1 "Store," "storage", and "storing", except in the phrase
2 "store of value," means to store, hold, or maintain custody or
3 control of a digital asset on behalf of a resident by a person
4 other than the resident.
5 "Transfer" means to transfer or transmit a digital asset
6 on behalf of a resident, including by doing any of the
7 following:
8 (1) Crediting the digital asset to the account or
9 storage of another person.
10 (2) Moving the digital asset from one account or
11 storage of a resident to another account or storage of the
12 same resident.
13 (3) Relinquishing custody or control of a digital
14 asset to another person.
15 "United States dollar equivalent of digital assets" means
16 the equivalent value of a particular digital asset in United
17 States dollars shown on a covered exchange regulated in the
18 United States for a particular date or period specified in
19 this Act, subject to any rules adopted by the Department.
20 (b) Whenever the terms "include", "including" or terms of
21 similar import appear in this Act, unless the context requires
22 otherwise, such terms shall not be construed to imply the
23 exclusion of any person, class, or thing not specifically
24 included.
25 (c) A reference in this Act to any other law or statute of
26 this State, or of any other jurisdiction, means such law or
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1 statute as amended to the effective date of this Act, and
2 unless the context otherwise requires, as amended thereafter.
3 (d) Any reference to this Act shall include any rules
4 adopted in accordance with this Act.
5 Section 1-10. Applicability.
6 (a) This Act governs the digital asset business activity
7 of a person doing business in this State or, wherever located,
8 who engages in or holds itself out as engaging in the activity
9 with or on behalf of a resident, to the extent not preempted by
10 federal law and except as otherwise provided in subsections
11 (b), (c), (d), or (e).
12 (b)(1) This Act does not apply to the exchange, transfer,
13 or storage of a digital asset or to digital asset
14 administration to the extent that:
15 (A) the Securities Exchange Act of 1934, 15 U.S.C.
16 78a et seq., or the Illinois Securities Law of 1953
17 govern the activity as a security transaction and the
18 activity is regulated by the U.S. Securities and
19 Exchange Commission or the Illinois Secretary of
20 State; or
21 (B) the Commodity Exchange Act, 7 U.S.C. 1 et
22 seq., governs the activity, the activity is in
23 connection with trading of a contract of sale of a
24 commodity for future delivery, an option on such a
25 contract or a swap, and the activity is regulated by
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1 the U.S. Commodity Futures Trading Commission.
2 (2) This subsection shall be construed in a manner
3 consistent with affording the greatest protection to
4 residents and the Department's authority under subsection
5 (a) of Section 1-15 to exercise nonexclusive oversight and
6 enforcement under any federal law applicable to digital
7 asset business activity. This subsection shall not be
8 construed to exempt an activity solely because a financial
9 regulatory agency has anti-fraud and anti-manipulation
10 enforcement authority over the activity.
11 (c) This Act does not apply to the following persons:
12 (1) The United States, a State, political subdivision
13 of a State, agency, or instrumentality of federal, State,
14 or local government, or a foreign government or a
15 subdivision, department, agency, or instrumentality of a
16 foreign government.
17 (2) A federally insured depository institution.
18 (3) A corporate fiduciary acting as a fiduciary or
19 otherwise engaging in fiduciary activities.
20 (4) A merchant using digital assets solely for the
21 purchase or sale of goods or services, excluding the sale
22 of purchase of digital assets, in the ordinary course of
23 its business.
24 (5) A person using digital assets solely for the
25 purchase or sale of goods or services for his or her own
26 personal, family, or household purposes.
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1 (6) A person who (A) contributes connectivity software
2 or computing power or otherwise participates in the
3 process of securing a network, (B) records digital asset
4 transactions to the network or protocol governing transfer
5 of the digital representation of value, or (C) develops,
6 publishes, constitutes, administers, maintains, or
7 otherwise distributes software relating to the network, so
8 long as the person does not control transactions of
9 digital assets on the network.
10 (7) A credit union with member share accounts insured
11 by an insurer approved by the credit union's primary
12 financial regulatory agency. An out-of-state credit union
13 may not conduct any activity in this State that is not
14 authorized for a credit union chartered under the laws of
15 this State.
16 Nothing in this Act grants persons described in this
17 subsection (c) authority to engage in any activity not
18 otherwise granted under existing law.
19 (d) The Department may by rule or order clarify whether an
20 activity is governed under this Act or another Act that
21 governs money transmission. This subsection (d) shall not be
22 applied in a manner inconsistent with the protection of
23 residents.
24 (e) Notwithstanding any other provision of this Act, the
25 Department, by rule or order, may conditionally or
26 unconditionally exempt any person, digital asset, or
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1 transaction, or any class or classes of persons, digital
2 assets, or transactions, from any provision of this Act or of
3 any rule thereunder, to the extent that the exemption is
4 necessary or appropriate, in the public interest, and
5 consistent with the protection of residents.
6 Section 1-15. General powers and duties.
7 (a) The Department shall regulate digital asset business
8 activity in this State, unless it is exempt pursuant to
9 Section 1-10. To the extent permissible under federal law, the
10 Department shall exercise nonexclusive oversight and
11 enforcement under any federal law applicable to digital asset
12 business activity.
13 (b) The functions, powers, and duties conferred upon the
14 Department by this Act are cumulative to any other functions,
15 powers, and duties conferred upon the Department by other laws
16 applicable to digital asset business activity.
17 (c) The Department shall have the following functions,
18 powers, and duties in carrying out its responsibilities under
19 this Act and any other law applicable to digital asset
20 business activity in this State:
21 (1) to issue or refuse to issue any registration or
22 other authorization under this Act;
23 (2) to revoke or suspend for cause any registration or
24 other authorization under this Act;
25 (3) to keep records of all registrations or other
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1 authorizations under this Act;
2 (4) to receive, consider, investigate, and act upon
3 complaints made by any person relating to any digital
4 asset business activity in this State;
5 (5) to prescribe the forms of and receive:
6 (A) applications for registrations or other
7 authorizations under this Act; and
8 (B) all reports and all books and records required
9 to be made under this Act;
10 (6) to subpoena documents and witnesses and compel
11 their attendance and production, to administer oaths, and
12 to require the production of any books, papers, or other
13 materials relevant to any inquiry authorized by this Act
14 or other law applicable to digital asset business activity
15 in this State;
16 (7) to issue orders against any person:
17 (A) if the Secretary has reasonable cause to
18 believe that an unsafe, unsound, or unlawful practice
19 has occurred, is occurring, or is about to occur;
20 (B) if any person has violated, is violating, or
21 is about to violate any law, rule, or written
22 agreement with the Secretary; or
23 (C) for the purpose of administering the
24 provisions of this Act or other law applicable to
25 digital asset business activity and any rule adopted
26 in accordance with this Act or other law applicable to
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1 digital asset business activity;
2 (8) to address any inquiries to any covered person, or
3 the directors, officers, or employees of the covered
4 person, or the affiliates or service providers of the
5 covered person, in relation to the covered person's
6 activities and conditions or any other matter connected
7 with its affairs, and it shall be the duty of any person so
8 addressed to promptly reply in writing to those inquiries;
9 the Secretary may also require reports from any covered
10 person at any time the Secretary chooses;
11 (9) to examine the books and records of every covered
12 person, affiliate, or service provider;
13 (10) to enforce the provisions of this Act and any
14 state or federal law applicable to digital asset business
15 activity;
16 (11) to levy fees, fines, and civil penalties, charges
17 for services, and assessments to defray operating
18 expenses, including direct and indirect costs, of
19 administering this Act and other laws applicable to
20 digital asset business activity;
21 (12) to appoint examiners, supervisors, experts, and
22 special assistants as needed to effectively and
23 efficiently administer this Act and other laws applicable
24 to digital asset business activity;
25 (13) to conduct hearings for the purpose of carrying
26 out the purposes of this Act;
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1 (14) to exercise visitorial power over a covered
2 person, affiliate, or service provider;
3 (15) to enter into cooperative agreements with federal
4 and state regulatory authorities and to accept reports of
5 examinations from federal and state regulatory
6 authorities;
7 (16) to assign on an emergency basis an examiner or
8 examiners to monitor the affairs of a covered person,
9 affiliate, or service provider with whatever frequency the
10 Secretary determines appropriate and to charge the covered
11 person for reasonable and necessary expenses of the
12 Secretary if in the opinion of the Secretary an emergency
13 exists or appears likely to occur;
14 (17) to impose civil penalties against a covered
15 person, affiliate, or service provider for failing to
16 respond to a regulatory request or reporting requirement;
17 and
18 (18) to conduct investigations, market surveillance,
19 and research, studies, and analyses of matters affecting
20 the interests of users of digital assets;
21 (19) to take such actions as the Secretary deems
22 necessary to educate and protect users of digital assets;
23 (20) to develop and implement initiatives and programs
24 to promote responsible innovation in digital asset
25 business activity; and
26 (21) to perform any other lawful acts necessary or
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1 desirable to carry out the purposes and provisions of this
2 Act and other laws applicable to digital asset business
3 activity.
4 (d) The Department may share any information obtained
5 pursuant to this Act or any other law applicable to digital
6 asset business activity with law enforcement officials or
7 other regulatory agencies.
8 Section 1-20. Funds.
9 (a) All moneys collected or received by the Department
10 under this Act shall be deposited into the Consumer Protection
11 Fund, which is hereby created as a special fund in the State
12 treasury. The amounts deposited into the Consumer Protection
13 Fund shall be used for the ordinary and contingent expenses of
14 the Department in administering this Act and other financial
15 laws; nothing in this Act shall prevent the continuation of
16 the practice of paying expenses involving salaries,
17 retirement, social security, and State-paid insurance of State
18 officers and employees by appropriation from the General
19 Revenue Fund or any other fund. Moneys deposited into the
20 Consumer Protection Fund may be transferred to the Professions
21 Indirect Cost Fund or any other Department fund.
22 (b) The expenses of administering this Act, including
23 investigations and examinations provided for in this Act,
24 shall be borne by and assessed against persons regulated by
25 this Act. The Department may establish fees by rule, including
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1 in the following categories:
2 (1) investigation of registrants and registration
3 applicant fees;
4 (2) examination fees;
5 (3) contingent fees; and
6 (4) such other categories as may be required to
7 administer this Act.
8 (c) The Department shall charge and collect fees from
9 covered persons, which shall be nonrefundable unless otherwise
10 indicated, for the expenses of administering this Act as
11 follows:
12 (1) Each covered person shall pay $150 for each hour
13 or part of an hour for each examiner or staff assigned to
14 the supervision of the covered person plus actual travel
15 costs for any examination of digital asset business
16 activity pursuant to the Act.
17 (2) Each covered person shall pay to the Department
18 its pro rata share of the cost for administration of this
19 Act that exceeds other fees listed in this Act, as
20 estimated by the Department, for the current year and any
21 deficit actually incurred in the administration of the Act
22 in prior years. The total annual assessment for all
23 registrants shall initially be divided into a
24 transaction-based assessment and a custody-based
25 assessment, each equal to approximately half the cost for
26 administration of this Act. Each registrant's pro rata
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1 share of the transaction-based assessment shall be the
2 percentage that the total volume of digital asset
3 transactions conducted on behalf of residents by the
4 registrant bears to the total volume of digital asset
5 transactions by all registrants in Illinois. Each
6 registrant's pro rata share of the custody-based
7 assessment shall be the percentage that the total United
8 States dollar value of digital assets held in custody or
9 controlled by the registrant for residents bears to the
10 total United States dollar value held in custody or
11 controlled by all registrants in Illinois for residents.
12 (3) Beginning one year after the effective date of
13 this Act, the Department may, by rule, amend the fees set
14 forth in this subsection in accordance with this Act. The
15 Department is authorized to consider setting fees for
16 digital asset business activity based on the value of
17 digital assets transacted by covered persons, volume of
18 digital assets transacted by covered persons, the value of
19 digital assets held in custody by covered person, and the
20 volume of digital assets held in custody by covered
21 persons.
22 Article 5. Customer Protections
23 Section 5-5. Customer disclosures.
24 (a) When engaging in digital asset business activity with
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1 a resident, a covered person shall provide to a resident the
2 customer disclosures required by subsection (b) and any
3 additional disclosures the Department by rule determines to be
4 necessary and appropriate for the protection of residents. The
5 Department may determine by rule the time and form required
6 for disclosures. A disclosure required by this Section shall
7 be made separately from any other information provided by the
8 covered person and in a clear and conspicuous manner in a
9 record the resident may keep.
10 (b) Before engaging in digital asset business activity
11 with a resident, a covered person shall disclose, to the
12 extent applicable to the digital asset business activity the
13 covered person will undertake with the resident, subject to
14 any rule or order issued by the Department, all of the
15 following:
16 (1) A schedule of fees and charges the covered person
17 may assess, the manner by which fees and charges will be
18 calculated if they are not set in advance and disclosed,
19 and the timing of the fees and charges.
20 (2) Whether the product or service provided by the
21 covered person is covered by either of the following:
22 (A) A form of insurance or other guarantee against
23 loss by an agency of the United States as follows:
24 (i) Up to the full United States dollar
25 equivalent of digital assets placed under the
26 custody or control of, or purchased from, the
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1 covered person as of the date of the placement or
2 purchase, including the maximum amount provided by
3 insurance under the Federal Deposit Insurance
4 Corporation or National Credit Union
5 Administration or otherwise available from the
6 Securities Investor Protection Corporation.
7 (ii) If not provided at the full United States
8 dollar equivalent of the digital assets placed
9 under the custody or control of or purchased from
10 the covered person, the maximum amount of coverage
11 for each resident expressed in the United States
12 dollar equivalent of the digital asset.
13 (iii) If not applicable to the product or
14 service provided by the covered person, a clear
15 and conspicuous statement that the product is not
16 insured, as applicable, by the Federal Deposit
17 Insurance Corporation, National Credit Union
18 Administration, or the Securities Investor
19 Protection Corporation.
20 (B)(i) Private insurance against loss or theft,
21 including cybertheft or theft by other means.
22 (ii) A covered person shall disclose the terms
23 of the insurance policy to the resident in a
24 manner that allows the resident to understand the
25 specific insured risks that may result in partial
26 coverage of the resident's assets.
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1 (3) The irrevocability of a transfer or exchange and
2 any exception to irrevocability.
3 (4) A description of all of the following:
4 (A) The covered person's liability for an
5 unauthorized, mistaken, or accidental transfer or
6 exchange.
7 (B) The resident's responsibility to provide
8 notice to the covered person of an unauthorized,
9 mistaken, or accidental transfer or exchange.
10 (C) The basis for any recovery by the resident
11 from the covered person in case of an unauthorized,
12 mistaken, or accidental transfer or exchange.
13 (D) General error resolution rights applicable to
14 an unauthorized, mistaken, or accidental transfer or
15 exchange.
16 (E) The method for the resident to update the
17 resident's contact information with the covered
18 person.
19 (5) That the date or time when the transfer or
20 exchange is made and the resident's account is debited may
21 differ from the date or time when the resident initiates
22 the instruction to make the transfer or exchange.
23 (6) Whether the resident has a right to stop a
24 preauthorized payment or revoke authorization for a
25 transfer and the procedure to initiate a stop-payment
26 order or revoke authorization for a subsequent transfer.
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1 (7) The resident's right to receive a receipt, trade
2 ticket, or other evidence of the transfer or exchange.
3 (8) The resident's right to at least 14 days' prior
4 notice of a change in the covered person's fee schedule,
5 other terms and conditions that have a material impact on
6 digital asset business activity with the resident, or the
7 policies applicable to the resident's account.
8 (9) That no digital asset is currently recognized as
9 legal tender by the State of Illinois or the United
10 States.
11 (10)(A) A list of instances in the past 12 months when
12 the covered person's service was unavailable to customers
13 seeking to engage in digital asset business activity due
14 to a service outage on the part of the covered person and
15 the causes of each identified service outage.
16 (B) As part of the disclosure required by this
17 paragraph, the covered person may list any steps the
18 covered person has taken to resolve underlying causes
19 for those outages.
20 (11) A disclosure, provided separately from the
21 disclosures provided pursuant to paragraphs (1) to (10) of
22 this subsection and written prominently in bold type, that
23 the State of Illinois has not approved or endorsed any
24 digital assets or determined if this customer disclosure
25 is truthful or complete.
26 (c) Except as otherwise provided in subsection (d), at the
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1 conclusion of a digital asset transaction with, or on behalf
2 of, a resident, a covered person shall provide the resident a
3 confirmation in a record which contains all of the following:
4 (1) The name and contact information of the covered
5 person, including the toll-free telephone number required
6 under Section 5-20.
7 (2) The type, value, date, precise time, and amount of
8 the transaction.
9 (3) The fee charged for the transaction, including any
10 charge for conversion of a digital asset to fiat currency
11 or other digital asset, as well as any indirect charges.
12 (d) If a covered person discloses that it will provide a
13 daily confirmation in the initial disclosure under subsection
14 (c), the covered person may elect to provide a single, daily
15 confirmation for all transactions with or on behalf of a
16 resident on that day instead of a per transaction
17 confirmation.
18 Section 5-10. Custody and protection of customer assets.
19 (a) A covered person that stores, holds, or maintains
20 custody or control of a digital asset for one or more persons
21 shall:
22 (1) at all times maintain an amount of each type of
23 digital asset sufficient to satisfy the aggregate
24 entitlements of the persons to the type of digital asset;
25 (2) segregate such digital assets from the other
SB1797 Enrolled - 25 - LRB104 09833 BAB 19901 b
1 assets of the covered person; and
2 (3) not sell, transfer, assign, lend, hypothecate,
3 pledge, or otherwise use or encumber such digital assets,
4 except for the sale, transfer, or assignment of such
5 digital assets at the direction of such other persons.
6 (b) If a covered person violates subsection (a), then the
7 property interests of the persons in the digital asset are pro
8 rata property interests in the type of digital asset to which
9 the persons are entitled without regard to the time the
10 persons became entitled to the digital asset or the covered
11 person obtained control of the digital asset.
12 (c) A digital asset subject to this Section is:
13 (1) held for the persons entitled to the digital asset
14 under subsection (a);
15 (2) not the property of the covered person; and
16 (3) not subject to the claims of creditors of the
17 covered person.
18 (d) Digital assets subject to this Section, even if
19 commingled with other assets of the covered person, are held
20 in trust for the benefit of the persons entitled to the digital
21 assets under subsection (a), in the event of insolvency, the
22 filing of a petition by or against the covered person under the
23 United States Bankruptcy Code (11 U.S.C. 101 et seq.) for
24 bankruptcy or reorganization, the filing of a petition by or
25 against the covered person for receivership, the commencement
26 of any other judicial or administrative proceeding for its
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1 dissolution or reorganization, or an action by a creditor
2 against the covered person who is not a beneficiary of this
3 statutory trust. No digital asset impressed with a trust
4 pursuant to this subsection shall be subject to attachment,
5 levy of execution, or sequestration by order of any court,
6 except for a beneficiary of this statutory trust.
7 (e) The Department may adopt rules applicable to covered
8 persons related to additional protections of customer assets,
9 including, but not limited to:
10 (1) rules requiring that digital assets and funds
11 controlled by the covered person on behalf of residents be
12 held in accounts segregated from the covered person's own
13 digital assets and funds;
14 (2) rules related to qualified custodians that may
15 hold such segregated accounts;
16 (3) rules related to titling of such segregated
17 accounts;
18 (4) rules related to audit requirements for customer
19 assets;
20 (5) rules requiring compliance with specific
21 provisions of the Uniform Commercial Code applicable to
22 digital assets;
23 (6) rules restricting selling, transferring,
24 assigning, lending, hypothecating, pledging, or otherwise
25 using or encumbering customer assets; and
26 (7) any rules as may be as may be necessary and
SB1797 Enrolled - 27 - LRB104 09833 BAB 19901 b
1 appropriate for the protection of residents or necessary
2 to effectuate the purposes of this Section.
3 Section 5-15. Covered exchanges.
4 (a)(1) Except as provided for under paragraph (2) of this
5 subsection, a covered exchange, before listing or offering a
6 digital asset that the covered exchange can exchange on behalf
7 of a resident, shall certify on a form provided by the
8 Department that the covered exchange has done the following:
9 (A) Identified the risk that the digital asset would
10 be deemed a security by federal or state regulators.
11 (B) Provided, in writing, full and fair disclosure of
12 all material facts relating to conflicts of interest that
13 are associated with the covered exchange and the digital
14 asset.
15 (C) Conducted a comprehensive risk assessment designed
16 to ensure consumers are adequately protected from
17 cybersecurity risk, risk of malfeasance, including theft,
18 risks related to code or protocol defects, market-related
19 risks, including price manipulation and fraud, and any
20 other material risks.
21 (D) Established policies and procedures to reevaluate
22 the appropriateness of the continued listing or offering
23 of the digital asset, including an evaluation of whether
24 material changes have occurred.
25 (E) Established policies and procedures to cease
SB1797 Enrolled - 28 - LRB104 09833 BAB 19901 b
1 listing or offering the digital asset, including
2 notification to affected consumers and counterparties.
3 (F) Any other requirement designated by rule by the
4 Department as may be necessary and appropriate for the
5 protection of residents.
6 (2) Certification by a covered exchange shall not be
7 required for any digital asset approved for listing on or
8 before the effective date of this Act by the New York
9 Department of Financial Services pursuant to Part 200 of Title
10 23 of the New York Code of Rules and Regulations, if the
11 covered exchange provides notification to the Department on a
12 form provided by the Department.
13 (3) After a finding that a covered exchange has listed or
14 offered a digital asset without appropriate certification or
15 after a finding that misrepresentations were made in the
16 certification process, the Department may require the covered
17 exchange to cease listing or offering the digital asset and
18 may take an enforcement action under Section 20-50 of this
19 Act.
20 (b)(1) A covered exchange shall make every effort to
21 execute a resident's request to exchange a digital asset that
22 the covered exchange receives fully and promptly.
23 (2)(A) A covered exchange shall use reasonable diligence
24 to ensure that the outcome to the resident is as favorable as
25 possible under prevailing market conditions. Compliance with
26 this paragraph shall be determined by factors, including, but
SB1797 Enrolled - 29 - LRB104 09833 BAB 19901 b
1 not limited to, all of the following:
2 (i) The character of the market for the digital asset,
3 including price and volatility.
4 (ii) The size and type of transaction.
5 (iii) The number of markets checked.
6 (iv) Accessibility of appropriate pricing.
7 (v) Any other factor designated by rule by the
8 Department as may be necessary and appropriate for the
9 protection of residents.
10 (B) At least once every 6 months, a covered exchange shall
11 review aggregated trading records of residents against
12 benchmarks to determine execution quality, investigate the
13 causes of any variance, and promptly take action to remedy
14 issues identified in that review.
15 (3) In a transaction for or with a resident, the covered
16 exchange shall not interject a third party between the covered
17 exchange and the best market for the digital asset in a manner
18 inconsistent with this subsection.
19 (4) If a covered exchange cannot execute directly with a
20 market and employs other means in order to ensure an execution
21 advantageous to the resident, the burden of showing the
22 acceptable circumstances for doing so is on the covered
23 exchange.
24 Section 5-20. Customer service; requests for assistance.
25 (a) A covered person shall prominently display on its
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1 internet website a toll-free telephone number through which a
2 resident can contact the covered person for requests for
3 assistance and receive live customer assistance, subject to
4 any rules adopted by the Department.
5 (b) A covered person shall implement reasonable policies
6 and procedures for accepting, processing, investigating, and
7 responding to requests for assistance in a timely and
8 effective manner. Such policies and procedures shall include
9 all of the following:
10 (1) A procedure for resolving disputes between the
11 covered person and a resident.
12 (2) A procedure for a resident to report an
13 unauthorized, mistaken, or accidental digital asset
14 business activity transaction.
15 (3) A procedure for a resident to file a complaint
16 with the covered person and for the resolution of the
17 complaint in a fair and timely manner with notice to the
18 resident as soon as reasonably practical of the resolution
19 and the reasons for the resolution.
20 (4) Any other procedure designated by rule by the
21 Department as may be necessary and appropriate for the
22 protection of residents.
23 Section 5-25. Collection of compensation. Unless exempt
24 from registration under this Act, no person engaged in or
25 offering to engage in any act or service for which a
SB1797 Enrolled - 31 - LRB104 09833 BAB 19901 b
1 registration under this Act is required may bring or maintain
2 any action in any court to collect compensation for the
3 performance of the registrable services without alleging and
4 proving that he or she was the holder of a valid registration
5 under this Act at all times during the performance of those
6 services.
7 Article 10. Compliance
8 Section 10-5. General requirements.
9 (a) Each registrant is required to comply with the
10 provisions of this Act, any lawful order, rule, or regulation
11 made or issued under the provisions of this Act, and all
12 applicable federal and State laws, rules, and regulations.
13 (b) Each registrant shall designate a qualified individual
14 or individuals responsible for coordinating and monitoring
15 compliance with subsection (a).
16 (c) Each registrant shall maintain, implement, update, and
17 enforce written compliance policies and procedures, in
18 accordance with Section 10-10 and subject to any rules adopted
19 by the Department, which policies and procedures must be
20 reviewed and approved by the registrant's board of directors
21 or an equivalent governing body of the registrant.
22 Section 10-10. Required policies and procedures.
23 (a) An applicant, before submitting an application, shall
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1 create and a registrant, during registration, shall maintain,
2 implement, update, and enforce, written compliance policies
3 and procedures for all of the following:
4 (1) A cybersecurity program.
5 (2) A business continuity program.
6 (3) A disaster recovery program.
7 (4) An anti-fraud program.
8 (5) An anti-money laundering and countering the
9 financing of terrorism program.
10 (6) An operational security program.
11 (7)(A) A program designed to ensure compliance with
12 this Act and other laws of this State or federal laws that
13 are relevant to the digital asset business activity
14 contemplated by the registrant with or on behalf of
15 residents and to assist the registrant in achieving the
16 purposes of other State laws and federal laws if violation
17 of those laws has a remedy under this Act.
18 (B) At a minimum, the program described by this
19 paragraph shall specify the policies and procedures that
20 the registrant undertakes to minimize the risk that the
21 registrant facilitates the exchange of unregistered
22 securities.
23 (8) A conflict of interest program.
24 (9) A request for assistance program to comply with
25 Section 5-20.
26 (10) Any other compliance program, policy, or
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1 procedure the Department establishes by rule as necessary
2 for the protection of residents or for the safety and
3 soundness of the registrant's business or to effectuate
4 the purposes of this Act.
5 (b) A policy required by subsection (a) shall be
6 maintained in a record and designed to be adequate for a
7 registrant's contemplated digital asset business activity with
8 or on behalf of residents, considering the circumstances of
9 all participants and the safe operation of the activity. Any
10 policy and implementing procedure shall be compatible with
11 other policies and the procedures implementing them and not
12 conflict with policies or procedures applicable to the
13 registrant under other State law.
14 (c) A registrant's anti-fraud program shall include, at a
15 minimum, all of the following:
16 (1) Identification and assessment of the material
17 risks of its digital asset business activity related to
18 fraud, which shall include any form of market manipulation
19 and insider trading by the registrant, its employees, its
20 associated persons, or its customers.
21 (2) Protection against any material risk related to
22 fraud identified by the Department or the registrant.
23 (3) Periodic evaluation and revision of the anti-fraud
24 program, policies, and procedures.
25 (d) A registrant's anti-money laundering and countering
26 the financing of terrorism program shall include, at a
SB1797 Enrolled - 34 - LRB104 09833 BAB 19901 b
1 minimum, all of the following:
2 (1) Identification and assessment of the material
3 risks of its digital asset business activity related to
4 money laundering and financing of terrorist activity.
5 (2) Procedures, in accordance with federal law or
6 guidance published by federal agencies responsible for
7 enforcing federal law, pertaining to money laundering and
8 financing of terrorist activity.
9 (3) Filing reports under the Bank Secrecy Act, 31
10 U.S.C. 5311 et seq., or Chapter X of Title 31 of the Code
11 of Federal Regulations and other federal or State law
12 pertaining to the prevention or detection of money
13 laundering or financing of terrorist activity.
14 (e) A registrant's operational security program shall
15 include, at a minimum, reasonable and appropriate
16 administrative, physical, and technical safeguards to protect
17 the confidentiality, integrity, and availability of any
18 nonpublic information or digital asset it receives, maintains,
19 or transmits.
20 (f)(1) A registrant's cybersecurity program shall include,
21 at a minimum, all of the following:
22 (A) Maintaining, updating, and enforcing policies and
23 procedures designed to protect the confidentiality,
24 integrity, and availability of the registrant's
25 information systems and nonpublic information stored on
26 those information systems.
SB1797 Enrolled - 35 - LRB104 09833 BAB 19901 b
1 (B) Implementing and maintaining a written policy or
2 policies, approved at least annually by an executive
3 officer or the registrant's board of directors, or an
4 appropriate committee thereof, or equivalent governing
5 body, setting forth the registrant's policies and
6 procedures for the protection of its information systems
7 and nonpublic information stored on those information
8 systems.
9 (C) Designating a qualified individual responsible for
10 overseeing and implementing the registrant's cybersecurity
11 program and enforcing its cybersecurity policy. The
12 individual must have adequate authority to ensure
13 cybersecurity risks are appropriately managed, including
14 the ability to direct sufficient resources to implement
15 and maintain a cybersecurity program. The individual may
16 be employed by the registrant, one of its affiliates, or a
17 service provider.
18 (2) To assist in carrying out this subsection, the
19 Department may adopt rules to define terms used in this
20 subsection and to establish specific requirements for the
21 required cybersecurity program, including, but not limited to,
22 rules related to:
23 (A) penetration testing and vulnerability assessment;
24 (B) audit trails;
25 (C) access privileges;
26 (D) application security;
SB1797 Enrolled - 36 - LRB104 09833 BAB 19901 b
1 (E) risk assessment;
2 (F) cybersecurity personnel and intelligence;
3 (G) affiliates and service providers;
4 (H) authentication;
5 (I) data retention;
6 (J) training and monitoring;
7 (K) encryption;
8 (L) incident response;
9 (M) notice of cybersecurity events; and
10 (N) any other requirement necessary and appropriate
11 for the protection of residents or for the safety and
12 soundness of the registrant or to effectuate the purposes
13 of this subsection.
14 (g) The Department may require a registrant to file with
15 the Department a copy of any report it makes to a federal or
16 state authority.
17 (h) After the policies and procedures required under this
18 Article are created and approved by the registrant, the
19 registrant shall engage a qualified individual or individuals
20 with adequate authority and experience to monitor and
21 implement each policy and procedure, publicize it as
22 appropriate, recommend changes as necessary, and enforce it.
23 Article 15. Registration
24 Section 15-5. Registration required. A person shall not
SB1797 Enrolled - 37 - LRB104 09833 BAB 19901 b
1 engage in digital asset business activity, or hold itself out
2 as being able to engage in digital asset business activity,
3 with or on behalf of a resident unless the person is registered
4 in this State by the Department under this Article, or the
5 person is exempt from registration pursuant to Section 1-10.
6 Section 15-10. Application.
7 (a) An application for a registration under this Act shall
8 meet all of the following requirements:
9 (1) The application shall be in a form and medium
10 prescribed by the Department. The Department may require
11 the filing of the application through a multistate
12 licensing system.
13 (2) The application shall provide all of the following
14 information relevant to the applicant's proposed digital
15 asset business activity:
16 (A) The legal name of the applicant, any current
17 or proposed business United States Postal Service
18 address of the applicant, and any fictitious or trade
19 name the applicant uses or plans to use in conducting
20 the applicant's digital asset business activity with
21 or on behalf of a resident.
22 (B) The legal name, any former or fictitious name,
23 and the residential and business United States Postal
24 Service address of any executive officer and
25 responsible individual of the applicant and any person
SB1797 Enrolled - 38 - LRB104 09833 BAB 19901 b
1 that has control of the applicant.
2 (C) A description of the current and former
3 business of the applicant and any affiliate of the
4 applicant for the 5 years before the application is
5 submitted, or, if the business has operated for less
6 than 5 years, for the time the business has operated,
7 including its products and services, associated
8 internet website addresses and social media pages,
9 principal place of business, projected user base, and
10 specific marketing targets.
11 (D) A list of all of the following:
12 (i) Any digital asset, money service, or money
13 transmitter registration the applicant and any
14 affiliates hold in another state or from an agency
15 of the United States.
16 (ii) The date the registrations described in
17 subdivision (i) expire.
18 (iii) Any revocation, suspension, or other
19 disciplinary action taken against the applicant
20 and any affiliates in any state or by an agency of
21 the United States and any applications rejected by
22 any state or agency of the United States.
23 (E) A list of any criminal conviction, deferred
24 prosecution agreement, and pending criminal proceeding
25 in any jurisdiction against all of the following:
26 (i) The applicant.
SB1797 Enrolled - 39 - LRB104 09833 BAB 19901 b
1 (ii) Any executive officer of the applicant.
2 (iii) Any responsible individual of the
3 applicant.
4 (iv) Any person that has control over the
5 applicant.
6 (v) Any affiliate of the applicant.
7 (F) A list of any litigation, arbitration, or
8 administrative proceeding in any jurisdiction in which
9 the applicant or an executive officer, responsible
10 individual, or affiliate of the applicant has been a
11 party for the 10 years before the application is
12 submitted determined to be material in accordance with
13 generally accepted accounting principles and, to the
14 extent the applicant or such other person would be
15 required to disclose the litigation, arbitration, or
16 administrative proceeding in the applicant's or such
17 other person's audited financial statements, reports
18 to equity owners, and similar statements or reports.
19 (G) A list of any bankruptcy or receivership
20 proceeding in any jurisdiction for the 10 years before
21 the application is submitted in which any of the
22 following was a debtor:
23 (i) The applicant.
24 (ii) An executive officer of the applicant.
25 (iii) A responsible individual of the
26 applicant.
SB1797 Enrolled - 40 - LRB104 09833 BAB 19901 b
1 (iv) A person that has control over the
2 applicant.
3 (v) An affiliate of the applicant.
4 (H) The name and United States Postal Service
5 address of any bank or credit union in which the
6 applicant and any affiliates plan to deposit funds
7 obtained by digital asset business activity.
8 (I) The source of funds and credit to be used by
9 the applicant and any affiliate to conduct digital
10 asset business activity with or on behalf of a
11 resident.
12 (J) A current financial statement and other
13 documentation satisfactory to the Department
14 demonstrating that the applicant has the capital and
15 liquidity required by Section 20-5.
16 (K) The United States Postal Service address and
17 email address to which communications from the
18 Department can be sent.
19 (L) The name, United States Postal Service
20 address, and email address of the registered agent of
21 the applicant in this State.
22 (M) A copy of the certificate, or a detailed
23 summary acceptable to the Department, of coverage for
24 any liability, casualty, business interruption, or
25 cybersecurity insurance policy maintained by the
26 applicant for itself, an executive officer, a
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1 responsible individual, an affiliate, or the
2 applicant's users.
3 (N) If applicable, the date on which and the state
4 in which the applicant is formed and a copy of a
5 current certificate of good standing issued by that
6 state.
7 (O) If a person has control of the applicant and
8 the person's equity interests are publicly traded in
9 the United States, a copy of the audited financial
10 statement of the person for the most recent fiscal
11 year or most recent report of the person filed under
12 Section 13 of the Securities Exchange Act of 1934, 15
13 U.S.C. 78m.
14 (P) If a person has control of the applicant and
15 the person's equity interests are publicly traded
16 outside the United States, a copy of the audited
17 financial statement of the person for the most recent
18 fiscal year of the person or a copy of the most recent
19 documentation similar to that required in subparagraph
20 (O) filed with the foreign regulator in the domicile
21 of the person.
22 (Q) If the applicant is a partnership or a
23 member-managed limited liability company, the names
24 and United States Postal Service addresses of any
25 general partner or member.
26 (R) If the applicant is required to register with
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1 the Financial Crimes Enforcement Network of the United
2 States Department of the Treasury as a money service
3 business, evidence of the registration.
4 (S) A set of fingerprints for each executive
5 officer and responsible individual of the applicant.
6 (T) If available, for any executive officer and
7 responsible individual of the applicant, for the 10
8 years before the application is submitted, employment
9 history and history of any investigation of the
10 individual or legal proceeding to which the individual
11 was a party.
12 (U) The plans through which the applicant will
13 meet its obligations under Article 10.
14 (V) Any other information the Department requires
15 by rule.
16 (3) The application shall be accompanied by a
17 nonrefundable fee of $5,000 or the amount determined by
18 the Department to cover the costs of application review,
19 whichever is greater.
20 (b)(1) On receipt of a completed application, the
21 Department shall investigate all of the following:
22 (A) The financial condition and responsibility of the
23 applicant and any affiliate of the applicant.
24 (B) The relevant financial and business experience,
25 character, and general fitness of the applicant and any
26 affiliate of the applicant.
SB1797 Enrolled - 43 - LRB104 09833 BAB 19901 b
1 (C) The competence, experience, character, and general
2 fitness of each executive officer and director, each
3 responsible individual, and any person that has control of
4 the applicant.
5 (2) On receipt of a completed application, the Department
6 may investigate the business premises of an applicant or an
7 affiliate of the applicant or require the submission of any
8 other documents or information the Department deems relevant
9 to the application.
10 (3) The investigation required by this subsection must
11 allow the Secretary to issue positive findings stating that
12 the financial condition, financial responsibility, competence,
13 experience, character, and general fitness of the applicant,
14 each executive officer and director, each responsible
15 individual, any person that has control of the applicant, and
16 any affiliate of the applicant are such as to command the
17 confidence of the community and to warrant belief that the
18 business will be operated honestly, fairly, and efficiently
19 within the purpose of this Act; if the Secretary does not so
20 find, he or she shall not issue the registration, and he or she
21 shall notify the applicant of the denial.
22 (c)(1) After completing the investigation required by
23 subsection (b), the Department shall send the applicant notice
24 of its decision to approve, conditionally approve, or deny the
25 application. If the Department does not receive notice from
26 the applicant that the applicant accepts conditions specified
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1 by the Department within 31 days following the Department's
2 notice of the conditions, the application shall be deemed
3 withdrawn.
4 (2) The Secretary may impose conditions on a registration
5 if the Secretary determines that those conditions are
6 necessary or appropriate. These conditions shall be imposed in
7 writing and shall continue in effect for the period prescribed
8 by the Secretary.
9 (d) A registration issued pursuant to this Act shall take
10 effect on the later of the following:
11 (1) The date the Department issues the registration.
12 (2) The date the registration provides the security
13 required by Section 20-5.
14 (e) In addition to the fee required by paragraph (3) of
15 subsection (a), an applicant shall pay the costs of the
16 Department's investigation under subsection (b).
17 (f) A registration issued pursuant to this Act shall
18 remain in full force and effect until it expires without
19 renewal, is surrendered by the registration, or revoked or
20 suspended as hereinafter provided.
21 (g)(1) The Department may issue a conditional registration
22 to an applicant who holds or maintains a registration to
23 conduct virtual currency business activity in the State of New
24 York pursuant to Part 200 of Title 23 of the New York Code of
25 Rules and Regulations, or a charter as a New York State limited
26 purpose trust company with approval to conduct virtual
SB1797 Enrolled - 45 - LRB104 09833 BAB 19901 b
1 currency business under the New York Banking Law, if the
2 registration or approval was issued no later than the
3 effective date of this Act and the applicant pays all
4 appropriate fees and complies with the requirements of this
5 Act.
6 (2) A conditional registration issued pursuant to this
7 subsection shall expire at the earliest of the following:
8 (A) upon issuance of an unconditional registration;
9 (B) upon denial of a registration;
10 (C) upon revocation of a registration issued pursuant
11 to Part 200 of Title 23 of the New York Code of Rules and
12 Regulations or disapproval or revocation of a charter as a
13 New York State limited purpose trust company with approval
14 to conduct virtual currency business under the New York
15 Banking Law.
16 Section 15-15. Renewal.
17 (a) Registrations shall be subject to renewal every year
18 using a common renewal period as established by the Department
19 by rule. A registrant may apply for renewal of the
20 registration by submitting a renewal application under
21 subsection (b) and paying all applicable fees due to the
22 Department.
23 (b) The renewal application required by subsection (a)
24 shall be submitted in a form and medium prescribed by the
25 Department. The application shall contain all of the
SB1797 Enrolled - 46 - LRB104 09833 BAB 19901 b
1 following:
2 (1) Either a copy of the registrant's most recent
3 reviewed annual financial statement, if the gross revenue
4 generated by the registrant's digital asset business
5 activity in this State was not more than $2,000,000 for
6 the fiscal year ending before the anniversary date of
7 issuance of its registration under this Act, or a copy of
8 the registrant's most recent audited annual financial
9 statement, if the registrant's digital asset business
10 activity in this State amounted to more than $2,000,000,
11 for the fiscal year ending before the anniversary date.
12 (2) If a person other than an individual has control
13 of the registrant, a copy of either of the following:
14 (A) The person's most recent reviewed annual
15 financial statement, if the person's gross revenue was
16 not more than $2,000,000 in the previous fiscal year
17 measured as of the anniversary date of issuance of its
18 registration under this Act.
19 (B) The person's most recent audited consolidated
20 annual financial statement, if the person's gross
21 revenue was more than $2,000,000 in the previous
22 fiscal year measured as of the anniversary date of
23 issuance of its registration under this Act.
24 (3) A description of any of the following:
25 (A) Any material change in the financial condition
26 of the registrant and any affiliate of the registrant.
SB1797 Enrolled - 47 - LRB104 09833 BAB 19901 b
1 (B) Any material litigation related to the
2 registrant's digital asset business activity and
3 involving the registrant or an executive officer,
4 responsible individual, or affiliate of the
5 registrant.
6 (C) Any federal, state, or foreign investigation
7 involving the registrant or an executive officer,
8 responsible individual, or affiliate of the
9 registrant.
10 (D)(i) Any data security breach or cybersecurity
11 event involving the registrant.
12 (ii) A description of a data security breach
13 pursuant to this subparagraph does not constitute
14 disclosure or notification of a security breach
15 for purposes of any other law.
16 (4) Information or records required by Section 20-25
17 that the registrant has not reported to the Department.
18 (5) The number of digital asset business activity
19 transactions with or on behalf of residents for the period
20 since the later of the date the registration was issued or
21 the date the last renewal application was submitted.
22 (6)(A) The amount of United States dollar equivalent
23 of digital assets in the custody or control of the
24 registrant at the end of the last month that ends not later
25 than 30 days before the date of the renewal application.
26 (B) The total number of residents for whom the
SB1797 Enrolled - 48 - LRB104 09833 BAB 19901 b
1 registrant had custody or control of United States
2 dollar equivalent of digital assets on that date.
3 (7) Evidence that the registrant is in compliance with
4 Section 5-10.
5 (8) Evidence that the registrant is in compliance with
6 Section 20-5.
7 (9) A list of all locations where the registrant
8 engages in digital asset business activity.
9 (10) Any other information the Department requires by
10 rule.
11 (c) If a registrant does not timely comply with this
12 Section, the Department may take enforcement actions provided
13 under Section 20-50. Notice or hearing is not required for a
14 suspension or revocation of a registration under this Act for
15 failure to pay a renewal fee, file a renewal application, or
16 otherwise comply with this Section.
17 (d) Suspension or revocation of a registration under this
18 Section does not invalidate a transfer or exchange of digital
19 assets for or on behalf of a resident made during the
20 suspension or revocation and does not insulate the registrant
21 from liability under this Act.
22 (e) For good cause, the Department, in its sole
23 discretion, may extend a period under this Section.
24 (f) A registrant that does not comply with this Section
25 shall cease digital asset business activities with or on
26 behalf of a resident. A registrant ceasing an activity or
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1 activities regulated by this Act and desiring to no longer be
2 registered shall so inform the Department in writing and, at
3 the same time, convey any registration issued and all other
4 symbols or indicia of registration. The registrant shall
5 include a plan for the withdrawal from regulated business,
6 including a timetable for the disposition of the business, and
7 comply with the surrender guidelines or requirements of the
8 Department.
9 Section 15-20. Nontransferable registration. A
10 registration under this Act is not transferable or assignable.
11 Article 20. Supervision
12 Section 20-5. Surety bond; capital and liquidity
13 requirements.
14 (a)(1)(A) A registrant shall maintain a surety bond or
15 trust account in United States dollars in a form and amount as
16 determined by the Department for the protection of residents
17 that engage in digital asset business activity with the
18 registrant.
19 (B) If a registrant maintains a trust account
20 pursuant to this Section, that trust account shall be
21 maintained with a qualified custodian.
22 (2) Security deposited under this Section shall be for
23 the benefit of a claim against the registrant on account
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1 of the registrant's digital asset business activity with
2 or on behalf of a resident.
3 (3) Security deposited under this Section shall cover
4 claims for the period the Department specifies by rule and
5 for an additional period the Department specifies after
6 the registrant ceases to engage in digital asset business
7 activity with or on behalf of a resident.
8 (4) The Department may require the registrant to
9 increase the amount of security deposited under this
10 Section, and the registrant shall deposit the additional
11 security not later than 15 days after the registrant
12 receives notice in a record of the required increase.
13 (5) The Department may permit a registrant to
14 substitute or deposit an alternate form of security
15 satisfactory to the Department if the registrant at all
16 times complies with this Section.
17 (b) In addition to the security required under subsection
18 (a), a registrant shall maintain at all times capital and
19 liquidity, each in an amount and form as the Department
20 determines is sufficient to ensure the financial integrity of
21 the registrant and its ongoing operations based on an
22 assessment of the specific risks applicable to the registrant.
23 In determining the minimum amount of capital and liquidity
24 that shall be maintained by a registrant, the Department may
25 consider factors, including, but not limited to, all of the
26 following:
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1 (1) The composition of the registrant's total assets,
2 including the position, size, quality, liquidity, risk
3 exposure, and price volatility of each type of asset.
4 (2) The composition of the registrant's total
5 liabilities, including the size and repayment timing of
6 each type of liability.
7 (3) The actual and expected volume of the registrant's
8 digital asset business activity.
9 (4) The amount of leverage employed by the registrant.
10 (5) The liquidity position of the registrant.
11 (6) The financial protection that the registrant
12 provides pursuant to subsection (a).
13 (7) The types of entities to be serviced by the
14 registrant.
15 (8) The types of products or services to be offered by
16 the registrant.
17 (9) Arrangements adopted by the registrant for the
18 protection of its customers in the event of the
19 registrant's insolvency.
20 (c) A registrant shall hold liquidity required to be
21 maintained in accordance with this Section in the form of cash
22 or high-quality liquid assets, as defined by the Department
23 and in proportions determined by the Department.
24 (d) The Department may require a registrant to increase
25 the capital or liquidity required under this Section. A
26 registrant shall submit evidence satisfactory to the
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1 Department that it has additional capital or liquidity
2 required pursuant to this subsection not later than 15 days
3 after the registrant receives notice in a record of the
4 required increase.
5 Section 20-10. Examination.
6 (a)(1)(A) The Department may, at any time and from time to
7 time, examine the business and any office, within or outside
8 this State, of any covered person, or any agent of a covered
9 person, in order to ascertain (i) the financial condition of
10 the covered person, (ii) the safety and soundness of the
11 conduct of its business, (iii) the policies of its management,
12 (iv) whether the business is being conducted in a lawful
13 manner, (v) whether all digital asset business activity is
14 properly accounted for, and (vi) such other matters as the
15 Department may determine, including, but not limited to, any
16 activities of the covered person outside the State if in the
17 Department's judgment such activities may affect the covered
18 person's digital asset business activity.
19 (B) The directors, officers, and employees of a
20 covered person, or agent of a covered person, being
21 examined by the Department shall exhibit to the
22 Department, on request, any or all of the covered
23 person's accounts, books, correspondence, memoranda,
24 papers, and other records and shall otherwise
25 facilitate the examination so far as it may be in their
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1 power to do so.
2 (C) The covered person shall permit and assist the
3 Department to examine an affiliate or service provider
4 of the covered person when, in the Department's
5 judgment, it is necessary or advisable to do so.
6 (2) The Department may examine a covered person, its
7 affiliate, or service provider pursuant to this paragraph
8 without prior notice to the covered person, affiliate, or
9 service provider.
10 (b) A covered person shall pay the necessary costs of an
11 examination under this Section.
12 Section 20-15. Books and records.
13 (a) A registrant shall maintain, for all digital asset
14 business activity with or on behalf of a resident for 5 years
15 after the date of the activity, a record of all of the
16 following:
17 (1) Any transaction of the registrant with or on
18 behalf of the resident or for the registrant's account in
19 this State, including all of the following:
20 (A) The identity of the resident.
21 (B) The form of the transaction.
22 (C) The amount, date, and payment instructions
23 given by the resident.
24 (D) The account number, name, and physical address
25 of:
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1 (i) the parties to the transaction that are
2 customers or account holders of the registrant;
3 and
4 (ii) to the extent practicable, any other
5 parties to the transaction.
6 (2) The aggregate number of transactions and aggregate
7 value of transactions by the registrant with, or on behalf
8 of, the resident and for the registrant's account in this
9 State expressed in United States dollar equivalent of
10 digital assets for the previous 12 calendar months.
11 (3) Any transaction in which the registrant exchanged
12 one form of digital asset for fiat currency or another
13 form of digital asset with or on behalf of the resident.
14 (4) A general ledger maintained at least monthly that
15 lists all assets, liabilities, capital, income, and
16 expenses of the registrant.
17 (5) Any report of condition or other reports to the
18 Department, at such times and in such form, as the
19 Department may request.
20 (6) Bank statements and bank reconciliation records
21 for the registrant and the name, account number, and
22 United States Postal Service address of any bank or credit
23 union the registrant uses in the conduct of its digital
24 asset business activity with or on behalf of the resident.
25 (7) A report of any dispute with a resident.
26 (b) A registrant shall maintain records required by
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1 subsection (a) in a form that enables the Department to
2 determine whether the registrant is in compliance with this
3 Act, any court order, and the laws of this State.
4 (c) If a registrant maintains records outside this State
5 that pertain to transactions with or on behalf of a resident,
6 the registrant shall make the records available to the
7 Department not later than 3 days after request, or, on a
8 determination of good cause by the Department, in its sole
9 discretion, at a later time.
10 (d) All records maintained by a registrant, any affiliate,
11 or any service provider are subject to inspection by the
12 Department.
13 Section 20-20. Regulatory cooperation. The Department may
14 cooperate, coordinate, jointly examine, consult, and share
15 records and other information with the appropriate regulatory
16 agency of another state, a self-regulatory organization,
17 federal or state regulator of banking or non-depository
18 institutions, or a regulator of a jurisdiction outside the
19 United States, concerning the affairs and conduct of a covered
20 person, affiliate, or service provider in this State.
21 Section 20-25. Material business changes.
22 (a) A registrant shall file with the Department a report
23 of the following, as may be applicable:
24 (1) A material change in information in the
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1 application for a registration under this Act or the most
2 recent renewal report of the registrant under this Act.
3 (2) A material change in the registrant's business for
4 the conduct of its digital asset business activity with or
5 on behalf of a resident.
6 (3) A change of an affiliate, executive officer,
7 responsible individual, or person in control of the
8 registrant.
9 (b) A report required by this Section shall be filed not
10 later than 15 days after the change described in subsection
11 (a).
12 Section 20-30. Change in control.
13 (a) As used in this Section, "proposed person to be in
14 control" means the person that would control a registrant
15 after a proposed transaction that would result in a change in
16 control of the registrant.
17 (b) The following rules apply in determining whether a
18 person has control over a registrant:
19 (1) There is a rebuttable presumption of control if a
20 person directly or indirectly owns, controls, holds with
21 the power to vote, or holds proxies representing 10% or
22 more of the then outstanding voting securities issued by
23 the registrant.
24 (2) A person has control over a registrant if the
25 person's voting power in the registrant constitutes or
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1 will constitute at least 25% of the total voting power of
2 the registrant.
3 (3) There is a rebuttable presumption of control if
4 the person's voting power in another person constitutes or
5 will constitute at least 10% of the total voting power of
6 the other person and the other person's voting power in
7 the registrant constitutes at least 10% of the total
8 voting power of the registrant.
9 (4) There is no presumption of control solely because
10 an individual is an executive officer of the registrant.
11 (c) Before a proposed change in control of a registrant,
12 the proposed person to be in control shall submit to the
13 Department in a record all of the following:
14 (1) An application in a form and medium prescribed by
15 the Department.
16 (2) The information and records that Section 15-10
17 would require if the proposed person to be in control
18 already had control of the registrant.
19 (d) The Department shall not approve an application unless
20 the Secretary finds all of the following:
21 (1) The proposed person to be in control and all
22 executive officers of the proposed person to be in
23 control, if any, are of good character and sound financial
24 standing.
25 (2) The proposed person to be in control is competent
26 to engage in digital asset business activity.
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1 (3) It is reasonable to believe that, if the person
2 acquires control of the registrant, the proposed person to
3 be in control and the registrant will comply with all
4 applicable provisions of this Act and any rules or order
5 issued under this Act.
6 (4) Any plans by the proposed person to be in control
7 to change the business, corporate structure, or management
8 of the registrant are not detrimental to the safety and
9 soundness of the registrant.
10 (e) The Department, in accordance with Section 15-10,
11 shall approve, approve with conditions, or deny an application
12 for a change in control of a registrant. The Department, in a
13 record, shall send notice of its decision to the registrant
14 and the person that would be in control if the Department had
15 approved the change in control. If the Department denies the
16 application, the registrant shall abandon the proposed change
17 in control or cease digital asset business activity with or on
18 behalf of residents.
19 (f) If the Department applies a condition to approval of a
20 change in control of a registrant, and the Department does not
21 receive notice of the applicant's acceptance of the condition
22 specified by the Department not later than 31 days after the
23 Department sends notice of the condition, the application is
24 deemed denied. If the application is deemed denied, the
25 registrant shall abandon the proposed change in control or
26 cease digital asset business activity with or on behalf of
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1 residents.
2 (g) The Department may revoke or modify a determination
3 under subsection (d), after notice and opportunity to be
4 heard, if, in its judgment, revocation or modification is
5 consistent with this Act.
6 (h) If a change in control of a registrant requires
7 approval of another regulatory agency, and the action of the
8 other agency conflicts with that of the Department, the
9 Department shall confer with the other agency. If the proposed
10 change in control cannot be completed because the conflict
11 cannot be resolved, the registrant shall abandon the change in
12 control or cease digital asset business activity with or on
13 behalf of residents.
14 Section 20-35. Mergers.
15 (a) Before a proposed merger or consolidation of a
16 registrant with another person, the registrant shall submit
17 all of the following, as applicable, to the Department:
18 (1) An application in a form and medium prescribed by
19 the Department.
20 (2) The plan of merger or consolidation in accordance
21 with subsection (e).
22 (3) In the case of a registrant, the information
23 required by Section 15-10 concerning the person that would
24 be the surviving entity in the proposed merger or
25 consolidation.
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1 (b) If a proposed merger or consolidation would change the
2 control of a registrant, the registrant shall comply with
3 Section 20-30 and this Section.
4 (c) The Department, in accordance with Section 15-10,
5 shall approve, conditionally approve, or deny an application
6 for approval of a merger or consolidation of a registrant. The
7 Department, in a record, shall send notice of its decision to
8 the registrant and the person that would be the surviving
9 entity. If the Department denies the application, the
10 registrant shall abandon the merger or consolidation or cease
11 digital asset business activity with or on behalf of
12 residents.
13 (d) The Department may revoke or modify a determination
14 under paragraph (c), after notice and opportunity to be heard,
15 if, in its judgment, revocation or modification is consistent
16 with this Act.
17 (e) A plan of merger or consolidation of a registrant with
18 another person shall do all of the following:
19 (1) Describe the effect of the proposed transaction on
20 the registrant's conduct of digital asset business
21 activity with or on behalf of residents.
22 (2) Identify each person to be merged or consolidated
23 and the person that would be the surviving entity.
24 (3) Describe the terms and conditions of the merger or
25 consolidation and the mode of carrying it into effect.
26 (f) If a merger or consolidation of a registrant and
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1 another person requires approval of another regulatory agency,
2 and the action of the other agency conflicts with that of the
3 Department, the Department shall confer with the other agency.
4 If the proposed merger or consolidation cannot be completed
5 because the conflict cannot be resolved, the registrant shall
6 abandon the merger or consolidation or cease digital asset
7 business activity with or on behalf of residents.
8 (g) The Department may condition approval of an
9 application under subsection (a). If the Department does not
10 receive notice from the parties that the parties accept the
11 Department's condition not later than 31 days after the
12 Department sends notice in a record of the condition, the
13 application is deemed denied. If the application is deemed
14 denied, the registrant shall abandon the merger or
15 consolidation or cease digital asset business activity with,
16 or on behalf of, residents.
17 (h) If a registrant acquires substantially all of the
18 assets of a person, whether or not the person's registration
19 was approved by the Department, the transaction is subject to
20 this Section.
21 Section 20-40. Investigation of complaints. The Secretary
22 shall be authorized at all times to maintain staff and
23 facilities adequate to receive, record, and investigate
24 complaints and inquiries made by any person concerning this
25 Act and any covered persons, affiliates, and service providers
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1 under this Act. Each such person shall open their books,
2 records, documents, and offices wherever situated to the
3 Secretary or his or her appointees as needed to facilitate
4 such investigations.
5 Section 20-45. Additional investigation and examination
6 authority. In addition to any authority allowed under this Act
7 or other applicable law, the Secretary shall have the
8 authority to conduct investigations and examinations as
9 follows:
10 (1) For purposes of initial registration, renewal,
11 suspension, conditioning, revocation or termination, or
12 general or specific inquiry or investigation to determine
13 compliance with this Act, the Secretary shall have the
14 authority to access, receive, and use any books, accounts,
15 records, files, documents, information, or evidence,
16 including, but not limited to, the following:
17 (A) criminal, civil, and administrative history
18 information, including nonconviction data as specified
19 in the Criminal Code of 2012;
20 (B) personal history and experience information,
21 including independent credit reports obtained from a
22 consumer reporting agency described in Section 603(p)
23 of the federal Fair Credit Reporting Act; and
24 (C) any other documents, information, or evidence
25 the Secretary deems relevant to the inquiry or
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1 investigation, regardless of the location, possession,
2 control, or custody of the documents, information, or
3 evidence.
4 (2) For the purposes of investigating violations or
5 complaints arising under this Act or for the purposes of
6 examination, the Secretary may review, investigate, or
7 examine any covered person, affiliate, service provider,
8 individual, or person subject to this Act as often as
9 necessary in order to carry out the purposes of this Act.
10 The Secretary may direct, subpoena, or order the
11 attendance of and examine under oath all persons whose
12 testimony may be required about the transactions or the
13 business or subject matter of any such examination or
14 investigation, and may direct, subpoena, or order the
15 person to produce books, accounts, records, files, and any
16 other documents the Secretary deems relevant to the
17 inquiry.
18 (3) Each covered person, affiliate, service provider,
19 individual, or person subject to this Act shall make
20 available to the Secretary upon request the books and
21 records relating to the operations of the registrant,
22 affiliate, individual, or person subject to this Act. The
23 Secretary shall have access to those books and records and
24 interview the officers, principals, employees, independent
25 contractors, agents, and customers of the covered person,
26 affiliate, service provider, individual, or person subject
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1 to this Act concerning their business.
2 (4) Each covered person, affiliate, service provider,
3 individual, or person subject to this Act shall make or
4 compile reports or prepare other information as directed
5 by the Secretary in order to carry out the purposes of this
6 Section, including, but not limited to:
7 (A) accounting compilations;
8 (B) information lists and data concerning
9 transactions in a format prescribed by the Secretary;
10 or
11 (C) other information deemed necessary to carry
12 out the purposes of this Section.
13 (5) In making any examination or investigation
14 authorized by this Act, the Secretary may control access
15 to any documents and records of the covered person or
16 person under examination or investigation. The Secretary
17 may take possession of the documents and records or place
18 a person in exclusive charge of the documents and records
19 in the place where they are usually kept. During the
20 period of control, no person shall remove or attempt to
21 remove any of the documents or records, except pursuant to
22 a court order or with the consent of the Secretary. Unless
23 the Secretary has reasonable grounds to believe the
24 documents or records of the covered person or person under
25 examination or investigation have been or are at risk of
26 being altered or destroyed for purposes of concealing a
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1 violation of this Act, the covered person or owner of the
2 documents and records shall have access to the documents
3 or records as necessary to conduct its ordinary business
4 affairs.
5 (6) In order to carry out the purposes of this
6 Section, the Secretary may:
7 (A) retain attorneys, accountants, or other
8 professionals and specialists as examiners, auditors,
9 or investigators to conduct or assist in the conduct
10 of examinations or investigations;
11 (B) enter into agreements or relationships with
12 other government officials, regulatory associations,
13 or self-regulatory organizations in order to improve
14 efficiencies and reduce regulatory burden by sharing
15 resources, standardized or uniform methods or
16 procedures, and documents, records, information, or
17 evidence obtained under this Section;
18 (C) use, hire, contract, or employ public or
19 privately available analytical systems, methods, or
20 software to examine or investigate the covered person,
21 affiliate, service provider, individual, or person
22 subject to this Act;
23 (D) accept and rely on examination or
24 investigation reports made by other government
25 officials, within or outside this State; or
26 (E) accept audit reports made by an independent
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1 certified public accountant for the covered person,
2 affiliate, service provider, individual, or person
3 subject to this Act in the course of that part of the
4 examination covering the same general subject matter
5 as the audit and may incorporate the audit report in
6 the report of the examination, report of
7 investigation, or other writing of the Secretary.
8 (7) The authority of this Section shall remain in
9 effect, whether such a covered person, affiliate, service
10 provider, individual, or person subject to this Act acts
11 or claims to act under any licensing or registration law
12 of this State or claims to act without the authority.
13 (8) No covered person, affiliate, service provider,
14 individual, or person subject to investigation or
15 examination under this Section may knowingly withhold,
16 abstract, remove, mutilate, destroy, or secrete any books,
17 records, computer records, or other information.
18 Section 20-50. Enforcement actions.
19 (a) As used in this Article, "enforcement action" means an
20 action including, but not limited to, all of the following:
21 (1) Suspending or revoking a registration under this
22 Act.
23 (2) Ordering a person to cease and desist from doing
24 digital asset business activity with or on behalf of a
25 resident.
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1 (3) Requesting the court to appoint a receiver for the
2 assets of a person doing digital asset business activity
3 with or on behalf of a resident.
4 (4) Requesting the court to issue temporary,
5 preliminary, or permanent injunctive relief against a
6 person doing digital asset business activity with or on
7 behalf of a resident.
8 (5) Assessing a civil penalty under Section 20-70.
9 (6) Recovering on the security under Section 20-5 and
10 initiating a plan to distribute the proceeds for the
11 benefit of a resident injured by a violation of this Act,
12 or law of this State other than this Act that applies to
13 digital asset business activity with or on behalf of a
14 resident.
15 (7) Imposing necessary or appropriate conditions on
16 the conduct of digital asset business activity with or on
17 behalf of a resident.
18 (8) Seeking restitution on behalf of a resident if the
19 Department shows economic injury due to a violation of
20 this Act.
21 (b) The Department may enter into a consent order with a
22 person regarding an enforcement action.
23 (c) This Section does not provide a private right of
24 action to a resident, provided this Section does not preclude
25 an action by a resident to enforce rights under Article 5 or
26 subsection (a) of Section 20-5.
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1 Section 20-55. Violations.
2 (a) The Department may take an enforcement action against
3 a covered person or any person otherwise subject to this Act in
4 any of the following instances:
5 (1) The covered person or person violates this Act, a
6 rule adopted or order issued under this Act, or a State or
7 federal law or regulation that applies to digital asset
8 business activity of the violator with or on behalf of a
9 resident.
10 (2) The covered person or person does not cooperate
11 with an examination or investigation by the Department,
12 fails to pay a fee, or fails to submit a report or
13 documentation.
14 (3) The covered person or person, in the conduct of
15 its digital asset business activity with or on behalf of a
16 resident, has engaged, is engaging, or is about to engage
17 in any of the following:
18 (A) An unsafe, unsound, or unlawful act or
19 practice.
20 (B) An unfair, deceptive, or abusive act or
21 practice.
22 (C) Fraud, misrepresentation, deceit, or
23 negligence.
24 (D) Misappropriation of fiat currency, a digital
25 asset, or other value.
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1 (4) An agency of the United States or another state
2 takes an action against the covered person or person that
3 would constitute an enforcement action if the Department
4 had taken the action.
5 (5) The covered person or person is convicted of a
6 crime related to its digital asset business activity with
7 or on behalf of a resident or involving fraud or felonious
8 activity that, as determined by the Department, makes the
9 covered person or person unsuitable to engage in digital
10 asset business activity.
11 (6) Any of the following occurs:
12 (A) The covered person or person becomes
13 insolvent.
14 (B) The covered person or person makes a general
15 assignment for the benefit of its creditors.
16 (C) The covered person or person becomes the
17 debtor, alleged debtor, respondent, or person in a
18 similar capacity in a case or other proceeding under
19 any bankruptcy, reorganization, arrangement,
20 readjustment, insolvency, receivership, dissolution,
21 liquidation, or similar law, and does not obtain from
22 the court, within a reasonable time, confirmation of a
23 plan or dismissal of the case or proceeding.
24 (D) The covered person or person applies for, or
25 permits the appointment of, a receiver, trustee, or
26 other agent of a court for itself or for a substantial
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1 part of its assets.
2 (7) The covered person or person makes a
3 misrepresentation to the Department.
4 (b) If the Secretary finds, as the result of examination,
5 investigation, or review of reports submitted by a registrant,
6 that the business and affairs of a registrant are not being
7 conducted in accordance with this Act, the Secretary may
8 notify the registrant of the correction necessary. If a
9 registrant fails to correct such violations, the Secretary may
10 issue an order requiring immediate correction and compliance
11 with this Act and may specify a reasonable date for
12 performance.
13 Section 20-60. Hearings.
14 (a) Except as provided in subsection (b), the Department
15 may take an enforcement action only after notice and
16 opportunity for a hearing as appropriate in the circumstances.
17 All hearings provided for in this Act shall be conducted in
18 accordance with Title 38, Part 100 of the Illinois
19 Administrative Code, and the Secretary shall have all the
20 powers granted therein.
21 (b)(1)(A) The Department may take an enforcement action,
22 other than the imposition of a civil penalty under Section
23 20-70, without notice if the circumstances require action
24 before notice can be given.
25 (B) A person subject to an enforcement action
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1 pursuant to this subsection shall have the right to an
2 expedited post-action hearing by the Department unless
3 the person has waived the hearing.
4 (2)(A) The Department may take an enforcement action,
5 other than the imposition of a civil penalty under Section
6 20-70, after notice and without a prior hearing if the
7 circumstances require action before a hearing can be held.
8 (B) A person subject to an enforcement action
9 pursuant to this subsection shall have the right to an
10 expedited post-action hearing by the Department unless
11 the person has waived the hearing.
12 (3) The Department may take an enforcement action
13 after notice and without a hearing if the person subject
14 to the enforcement action does not timely request a
15 hearing.
16 Section 20-65. Hearing rules.
17 (a) The Department may, in accordance with the Illinois
18 Administrative Procedure Act, adopt rules to provide for
19 review within the Department of the Secretary's decisions
20 affecting the rights of persons or entities under this Act.
21 The review shall provide for, at a minimum:
22 (1) appointment of a hearing officer;
23 (2) appropriate procedural rules, specific deadlines
24 for filings, and standards of evidence and of proof; and
25 (3) provision for apportioning costs among parties to
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1 the appeal.
2 (b) All final administrative decisions of the Department
3 under this Act, all amendments and modifications of final
4 administrative decisions, and any rules adopted by the
5 Department pursuant to this Act shall be subject to judicial
6 review pursuant to the provisions of the Administrative Review
7 Law.
8 Section 20-70. Civil penalties.
9 (a) If a person other than a registrant has engaged, is
10 engaging, or is about to engage in digital asset business
11 activity with or on behalf of a resident in violation of this
12 Act, the Department may assess a civil penalty against the
13 person in an amount not to exceed $100,000 for each day the
14 person is in violation of this Act.
15 (b) If a person violates a provision of this Act, the
16 Department may assess a civil penalty in an amount not to
17 exceed $25,000 for each day of violation or for each act or
18 omission in violation, except that a fine may be imposed not to
19 exceed $75,000 for each day of violation or for each act or
20 omission in violation related to fraud, misrepresentation,
21 deceit, or negligence.
22 (c) A civil penalty under this Section continues to accrue
23 until the date the violation ceases.
24 (d) A civil penalty under this Section is cumulative to
25 any civil penalties enforceable by the Department under any
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1 other law.
2 Section 20-75. Subpoena power.
3 (a) The Secretary shall have the power to issue and to
4 serve subpoenas and subpoenas duces tecum to compel the
5 attendance of witnesses and the production of all books,
6 accounts, records, and other documents and materials relevant
7 to an examination or investigation. The Secretary, or his or
8 her duly authorized representative, shall have power to
9 administer oaths and affirmations to any person.
10 (b) In the event of noncompliance with a subpoena or
11 subpoena duces tecum issued or caused to be issued by the
12 Secretary, the Secretary may, through the Attorney General or
13 the State's Attorney of the county in which the person
14 subpoenaed resides or has its principal place of business,
15 petition the circuit court of the county for an order
16 requiring the subpoenaed person to appear and testify and to
17 produce such books, accounts, records, and other documents as
18 are specified in the subpoena duces tecum. The court may grant
19 injunctive relief restraining the person from advertising,
20 promoting, soliciting, entering into, offering to enter into,
21 continuing, or completing any digital asset business activity.
22 The court may grant other relief, including, but not limited
23 to, the restraint, by injunction or appointment of a receiver,
24 of any transfer, pledge, assignment, or other disposition of
25 the person's assets or any concealment, alteration,
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1 destruction, or other disposition of books, accounts, records,
2 or other documents and materials as the court deems
3 appropriate, until the person has fully complied with the
4 subpoena or subpoena duces tecum and the Secretary has
5 completed an investigation or examination.
6 (c) If it appears to the Secretary that the compliance
7 with a subpoena or subpoena duces tecum issued or caused to be
8 issued by the Secretary pursuant to this Section is essential
9 to an investigation or examination, the Secretary, in addition
10 to the other remedies provided for in this Act, may, through
11 the Attorney General or the State's Attorney of the county in
12 which the subpoenaed person resides or has its principal place
13 of business, apply for relief to the circuit court of the
14 county. The court shall thereupon direct the issuance of an
15 order against the subpoenaed person requiring sufficient bond
16 conditioned on compliance with the subpoena or subpoena duces
17 tecum. The court shall cause to be endorsed on the order a
18 suitable amount of bond or payment pursuant to which the
19 person named in the order shall be freed, having a due regard
20 to the nature of the case.
21 (d) In addition, the Secretary may, through the Attorney
22 General or the State's Attorney of the applicable county, seek
23 a writ of attachment or an equivalent order from the circuit
24 court having jurisdiction over the person who has refused to
25 obey a subpoena, who has refused to give testimony, or who has
26 refused to produce the matters described in the subpoena duces
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1 tecum.
2 Section 20-80. Civil actions.
3 (a) The Department may bring a civil action in accordance
4 with the following:
5 (1) If a person violates any provision of this Act, a
6 rule or final order, or condition imposed in writing by
7 the Department, the Department through the Attorney
8 General or the State's Attorney of the county in which any
9 such violation occurs may bring an action in the circuit
10 court to enjoin the acts or practices or to enforce
11 compliance with this Act or any rule or order adopted
12 pursuant to this Act. Upon a proper showing, a permanent
13 or preliminary injunction, restraining order, or writ of
14 mandate shall be granted and a receiver, monitor,
15 conservator, or other designated fiduciary or officer of
16 the court may be appointed for the defendant or the
17 defendant's assets, or any other ancillary relief may be
18 granted as appropriate. A receiver, monitor, conservator,
19 or other designated fiduciary or officer of the court
20 appointed by the circuit court pursuant to this Section
21 may, with the approval of the court, exercise any or all of
22 the powers of the defendant's officers, directors,
23 partners, trustees, or persons who exercise similar powers
24 and perform similar duties, including the filing of a
25 petition for bankruptcy. No action at law or in equity may
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1 be maintained by any party against the Secretary, a
2 receiver, monitor, conservator, or other designated
3 fiduciary or officer of the court, by reason of their
4 exercising these powers or performing these duties
5 pursuant to the order of, or with the approval of, the
6 circuit court.
7 (2) The Secretary may include in any action relief
8 authorized by Section 20-50. The circuit court shall have
9 jurisdiction to award additional relief.
10 (3) In any action brought by the Department, the
11 Department may recover its costs and attorney's fees in
12 connection with prosecuting the action if the Department
13 is the prevailing party in the action.
14 (b) The Attorney General may enforce a violation of
15 Article 5 as an unlawful practice under the Consumer Fraud and
16 Deceptive Business Practices Act.
17 (c) A claim of violation of Article 5 may be asserted in a
18 civil action. Additionally, a prevailing resident may be
19 awarded reasonable attorney's fees and court costs.
20 Article 30. Additional Procedural Provisions
21 Section 30-5. Confidential supervisory information.
22 (a) Confidential supervisory information shall, unless
23 made a matter of public record, not be subject to disclosure
24 under the Freedom of Information Act, and shall only be
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1 subject to disclosure pursuant to subpoena or court order as
2 provided in subsection (e).
3 (b) All records of communications or summaries of
4 communications between employees, agents, or representatives
5 of the Department and employees, agents, or representatives of
6 other governmental agencies, a provider of any multistate
7 licensing system, or associations or organizations
8 representing federal, state, or local law enforcement or
9 regulatory agencies or providers of any multistate licensing
10 system, pursuant to any regulatory or supervision activity
11 under this Act (1) shall not be subject to disclosure under the
12 Freedom of Information Act, and (2) to the extent the records
13 contain confidential supervisory information, shall only be
14 subject to disclosure pursuant to subpoena or court order as
15 provided in subsection (e).
16 (c) All confidential supervisory information received from
17 other governmental agencies, a multistate licensing system
18 provider, or associations or organizations consisting of
19 employees, agents, or representatives of such agencies or
20 providers, shall not be subject to disclosure under the
21 Freedom of Information Act, and only subject to disclosure
22 pursuant to subpoena or court order as provided in subsection
23 (e).
24 (d) The sharing of any confidential supervisory
25 information under this Act with governmental agencies,
26 providers of any multistate licensing system, or associations
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1 or organizations consisting of employees, agents, or
2 representatives of such federal, state, or local law
3 enforcement or regulatory agencies, shall not result in the
4 loss of privilege arising under federal or state law, or the
5 loss of confidentiality protections provided by federal law or
6 state law, and are only subject to disclosure pursuant to
7 subpoena or court order as provided in subsection (e).
8 (e) Confidential supervisory information may not be
9 disclosed to anyone other than the regulated person, law
10 enforcement officials or other regulatory agencies that have
11 an appropriate regulatory interest as determined by the
12 Secretary, or to a party presenting a lawful subpoena, order,
13 or other judicial or administrative process to the Secretary.
14 The Secretary may immediately appeal to the court of
15 jurisdiction the disclosure of such confidential supervisory
16 information and seek a stay of the subpoena pending the
17 outcome of the appeal. Reports required of regulated persons
18 by the Secretary under this Act and results of examinations
19 performed by the Secretary under this Act shall be the
20 property of only the Secretary but may be shared with the
21 regulated person. Access under this Act to the books and
22 records of each regulated person shall be limited to the
23 Secretary and his agents as provided in this Act and to the
24 regulated person and its authorized agents and designees. No
25 other person shall have access to the books and records of a
26 regulated person under this Act. Any person upon whom a demand
SB1797 Enrolled - 79 - LRB104 09833 BAB 19901 b
1 for production of confidential supervisory information is
2 made, whether by subpoena, order, or other judicial or
3 administrative process, must withhold production of the
4 confidential supervisory information and must notify the
5 Secretary of the demand, at which time the Secretary is
6 authorized to intervene for the purpose of enforcing the
7 limitations of this Section or seeking the withdrawal or
8 termination of the attempt to compel production of the
9 confidential supervisory information. The Secretary may impose
10 any conditions and limitations on the disclosure of
11 confidential supervisory information that are necessary to
12 protect the confidentiality of such information. Except as
13 authorized by the Secretary, no person obtaining access to
14 confidential supervisory information may make a copy of the
15 confidential supervisory information. The Secretary may
16 condition a decision to disclose confidential supervisory
17 information on entry of a protective order by the court or
18 administrative tribunal presiding in the particular case or on
19 a written agreement of confidentiality. In a case in which a
20 protective order or agreement has already been entered between
21 parties other than the Secretary, the Secretary may
22 nevertheless condition approval for release of confidential
23 supervisory information upon the inclusion of additional or
24 amended provisions in the protective order. The Secretary may
25 authorize a party who obtained the records for use in one case
26 to provide them to another party in another case, subject to
SB1797 Enrolled - 80 - LRB104 09833 BAB 19901 b
1 any conditions that the Secretary may impose on either or both
2 parties. The requester shall promptly notify other parties to
3 a case of the release of confidential supervisory information
4 obtained and, upon entry of a protective order, shall provide
5 copies of confidential supervisory information to the other
6 parties.
7 (f) The Secretary is authorized to enter agreements or
8 sharing arrangements with other governmental agencies,
9 providers of any multistate licensing system, or associations
10 or organizations representing governmental agencies or
11 providers of any multistate licensing system. Notwithstanding
12 the foregoing, the provisions of this Section shall apply
13 regardless of the existence of any such agreement or sharing
14 arrangement.
15 (g) This Section in no way limits any right, privilege, or
16 authority that the Department has pursuant to any other
17 applicable law. This Section does not in any way limit any
18 privilege arising under federal or state law or other
19 exemption from disclosure pursuant to the Freedom of
20 Information Act.
21 (h) Notwithstanding the foregoing, whenever the Secretary
22 determines, in his or her sole discretion, that it is in the
23 public's interest, he or she may publicly disclose information
24 or documents obtained under this Act, unless otherwise
25 prohibited by law.
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1 Section 30-10. Additional rulemaking authority.
2 (a) In addition to such powers and rulemaking authority as
3 may be prescribed elsewhere in this Act or other financial
4 laws administered by the Department, the Department is hereby
5 authorized and empowered to adopt rules consistent with the
6 purposes of this Act, including, but not limited to:
7 (1) rules in connection with the activities of covered
8 persons, affiliates, and service providers as may be
9 necessary and appropriate for the protection of residents;
10 (2) rules to define the terms used in this Act and as
11 may be necessary and appropriate to interpret and
12 implement the provisions of this Act;
13 (3) rules as may be necessary for the administration
14 and enforcement of this Act;
15 (4) rules to set and collect fees necessary to
16 administer and enforce this Act;
17 (5) rules in connection with the activities of covered
18 persons, affiliates, and service providers as may be
19 necessary and appropriate for the safety and soundness of
20 such covered persons and affiliates and the stability of
21 the financial system in this State; and
22 (6) rules in connection with the adoption of
23 reciprocity agreements between the Department and the
24 appropriate licensing agency of another state to register
25 a covered person on an expedited basis.
26 (b) The Secretary is hereby authorized and empowered to
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1 make specific rulings, demands, and findings that he or she
2 deems necessary for the proper conduct of the registrants and
3 affiliates thereof.
4 Article 35. Miscellaneous Provisions
5 Section 35-5. No evasion.
6 (a) It shall be unlawful to engage in any device,
7 subterfuge, or pretense to willfully evade or attempt to evade
8 the requirements of this Act or any rule or order issued by the
9 Department hereunder.
10 (b) Any financial product, service, or transaction that is
11 willfully structured to evade or attempt to evade the
12 definitions of digital asset or digital asset business
13 activity is a digital asset or digital asset business
14 activity, respectively, for purposes of this Act.
15 Section 35-10. Construction; severability.
16 (a) The provisions of this Act shall be liberally
17 construed to effectuate its purposes.
18 (b) The provisions of this Act are severable under Section
19 1.31 of the Statute on Statutes.
20 (c) To the extent that any provision of this Act is
21 preempted by federal law, the provision shall not apply and
22 shall not be enforced solely as to the extent of the preemption
23 and not as to other circumstances, persons, or applications.
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1 Section 35-15. Transition period.
2 (a) A covered person engaging in digital asset business
3 activity without a registration under this Act shall not be
4 considered in violation of Section 15-5 or 5-25 until July 1,
5 2027.
6 (b) A covered person engaging in digital asset business
7 activity shall not be considered in violation of Sections 5-5,
8 5-10, and 5-20 until January 1, 2027.
9 (c) A covered exchange shall not be considered in
10 violation of Section 5-15 until January 1, 2027.
11 (d) Notwithstanding the foregoing, the Department may
12 adopt rules pursuant to this Act upon this Act becoming law
13 with such rules not to take effect earlier than January 1,
14 2026.".
15 Article 90. Amendatory provisions
16 Section 90-5. The Freedom of Information Act is amended by
17 changing Section 7.5 as follows:
18 (5 ILCS 140/7.5)
19 Sec. 7.5. Statutory exemptions. To the extent provided for
20 by the statutes referenced below, the following shall be
21 exempt from inspection and copying:
22 (a) All information determined to be confidential
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1 under Section 4002 of the Technology Advancement and
2 Development Act.
3 (b) Library circulation and order records identifying
4 library users with specific materials under the Library
5 Records Confidentiality Act.
6 (c) Applications, related documents, and medical
7 records received by the Experimental Organ Transplantation
8 Procedures Board and any and all documents or other
9 records prepared by the Experimental Organ Transplantation
10 Procedures Board or its staff relating to applications it
11 has received.
12 (d) Information and records held by the Department of
13 Public Health and its authorized representatives relating
14 to known or suspected cases of sexually transmitted
15 infection or any information the disclosure of which is
16 restricted under the Illinois Sexually Transmitted
17 Infection Control Act.
18 (e) Information the disclosure of which is exempted
19 under Section 30 of the Radon Industry Licensing Act.
20 (f) Firm performance evaluations under Section 55 of
21 the Architectural, Engineering, and Land Surveying
22 Qualifications Based Selection Act.
23 (g) Information the disclosure of which is restricted
24 and exempted under Section 50 of the Illinois Prepaid
25 Tuition Act.
26 (h) Information the disclosure of which is exempted
SB1797 Enrolled - 85 - LRB104 09833 BAB 19901 b
1 under the State Officials and Employees Ethics Act, and
2 records of any lawfully created State or local inspector
3 general's office that would be exempt if created or
4 obtained by an Executive Inspector General's office under
5 that Act.
6 (i) Information contained in a local emergency energy
7 plan submitted to a municipality in accordance with a
8 local emergency energy plan ordinance that is adopted
9 under Section 11-21.5-5 of the Illinois Municipal Code.
10 (j) Information and data concerning the distribution
11 of surcharge moneys collected and remitted by carriers
12 under the Emergency Telephone System Act.
13 (k) Law enforcement officer identification information
14 or driver identification information compiled by a law
15 enforcement agency or the Department of Transportation
16 under Section 11-212 of the Illinois Vehicle Code.
17 (l) Records and information provided to a residential
18 health care facility resident sexual assault and death
19 review team or the Executive Council under the Abuse
20 Prevention Review Team Act.
21 (m) Information provided to the predatory lending
22 database created pursuant to Article 3 of the Residential
23 Real Property Disclosure Act, except to the extent
24 authorized under that Article.
25 (n) Defense budgets and petitions for certification of
26 compensation and expenses for court appointed trial
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1 counsel as provided under Sections 10 and 15 of the
2 Capital Crimes Litigation Act (repealed). This subsection
3 (n) shall apply until the conclusion of the trial of the
4 case, even if the prosecution chooses not to pursue the
5 death penalty prior to trial or sentencing.
6 (o) Information that is prohibited from being
7 disclosed under Section 4 of the Illinois Health and
8 Hazardous Substances Registry Act.
9 (p) Security portions of system safety program plans,
10 investigation reports, surveys, schedules, lists, data, or
11 information compiled, collected, or prepared by or for the
12 Department of Transportation under Sections 2705-300 and
13 2705-616 of the Department of Transportation Law of the
14 Civil Administrative Code of Illinois, the Regional
15 Transportation Authority under Section 2.11 of the
16 Regional Transportation Authority Act, or the St. Clair
17 County Transit District under the Bi-State Transit Safety
18 Act (repealed).
19 (q) Information prohibited from being disclosed by the
20 Personnel Record Review Act.
21 (r) Information prohibited from being disclosed by the
22 Illinois School Student Records Act.
23 (s) Information the disclosure of which is restricted
24 under Section 5-108 of the Public Utilities Act.
25 (t) (Blank).
26 (u) Records and information provided to an independent
SB1797 Enrolled - 87 - LRB104 09833 BAB 19901 b
1 team of experts under the Developmental Disability and
2 Mental Health Safety Act (also known as Brian's Law).
3 (v) Names and information of people who have applied
4 for or received Firearm Owner's Identification Cards under
5 the Firearm Owners Identification Card Act or applied for
6 or received a concealed carry license under the Firearm
7 Concealed Carry Act, unless otherwise authorized by the
8 Firearm Concealed Carry Act; and databases under the
9 Firearm Concealed Carry Act, records of the Concealed
10 Carry Licensing Review Board under the Firearm Concealed
11 Carry Act, and law enforcement agency objections under the
12 Firearm Concealed Carry Act.
13 (v-5) Records of the Firearm Owner's Identification
14 Card Review Board that are exempted from disclosure under
15 Section 10 of the Firearm Owners Identification Card Act.
16 (w) Personally identifiable information which is
17 exempted from disclosure under subsection (g) of Section
18 19.1 of the Toll Highway Act.
19 (x) Information which is exempted from disclosure
20 under Section 5-1014.3 of the Counties Code or Section
21 8-11-21 of the Illinois Municipal Code.
22 (y) Confidential information under the Adult
23 Protective Services Act and its predecessor enabling
24 statute, the Elder Abuse and Neglect Act, including
25 information about the identity and administrative finding
26 against any caregiver of a verified and substantiated
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1 decision of abuse, neglect, or financial exploitation of
2 an eligible adult maintained in the Registry established
3 under Section 7.5 of the Adult Protective Services Act.
4 (z) Records and information provided to a fatality
5 review team or the Illinois Fatality Review Team Advisory
6 Council under Section 15 of the Adult Protective Services
7 Act.
8 (aa) Information which is exempted from disclosure
9 under Section 2.37 of the Wildlife Code.
10 (bb) Information which is or was prohibited from
11 disclosure by the Juvenile Court Act of 1987.
12 (cc) Recordings made under the Law Enforcement
13 Officer-Worn Body Camera Act, except to the extent
14 authorized under that Act.
15 (dd) Information that is prohibited from being
16 disclosed under Section 45 of the Condominium and Common
17 Interest Community Ombudsperson Act.
18 (ee) Information that is exempted from disclosure
19 under Section 30.1 of the Pharmacy Practice Act.
20 (ff) Information that is exempted from disclosure
21 under the Revised Uniform Unclaimed Property Act.
22 (gg) Information that is prohibited from being
23 disclosed under Section 7-603.5 of the Illinois Vehicle
24 Code.
25 (hh) Records that are exempt from disclosure under
26 Section 1A-16.7 of the Election Code.
SB1797 Enrolled - 89 - LRB104 09833 BAB 19901 b
1 (ii) Information which is exempted from disclosure
2 under Section 2505-800 of the Department of Revenue Law of
3 the Civil Administrative Code of Illinois.
4 (jj) Information and reports that are required to be
5 submitted to the Department of Labor by registering day
6 and temporary labor service agencies but are exempt from
7 disclosure under subsection (a-1) of Section 45 of the Day
8 and Temporary Labor Services Act.
9 (kk) Information prohibited from disclosure under the
10 Seizure and Forfeiture Reporting Act.
11 (ll) Information the disclosure of which is restricted
12 and exempted under Section 5-30.8 of the Illinois Public
13 Aid Code.
14 (mm) Records that are exempt from disclosure under
15 Section 4.2 of the Crime Victims Compensation Act.
16 (nn) Information that is exempt from disclosure under
17 Section 70 of the Higher Education Student Assistance Act.
18 (oo) Communications, notes, records, and reports
19 arising out of a peer support counseling session
20 prohibited from disclosure under the First Responders
21 Suicide Prevention Act.
22 (pp) Names and all identifying information relating to
23 an employee of an emergency services provider or law
24 enforcement agency under the First Responders Suicide
25 Prevention Act.
26 (qq) Information and records held by the Department of
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1 Public Health and its authorized representatives collected
2 under the Reproductive Health Act.
3 (rr) Information that is exempt from disclosure under
4 the Cannabis Regulation and Tax Act.
5 (ss) Data reported by an employer to the Department of
6 Human Rights pursuant to Section 2-108 of the Illinois
7 Human Rights Act.
8 (tt) Recordings made under the Children's Advocacy
9 Center Act, except to the extent authorized under that
10 Act.
11 (uu) Information that is exempt from disclosure under
12 Section 50 of the Sexual Assault Evidence Submission Act.
13 (vv) Information that is exempt from disclosure under
14 subsections (f) and (j) of Section 5-36 of the Illinois
15 Public Aid Code.
16 (ww) Information that is exempt from disclosure under
17 Section 16.8 of the State Treasurer Act.
18 (xx) Information that is exempt from disclosure or
19 information that shall not be made public under the
20 Illinois Insurance Code.
21 (yy) Information prohibited from being disclosed under
22 the Illinois Educational Labor Relations Act.
23 (zz) Information prohibited from being disclosed under
24 the Illinois Public Labor Relations Act.
25 (aaa) Information prohibited from being disclosed
26 under Section 1-167 of the Illinois Pension Code.
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1 (bbb) Information that is prohibited from disclosure
2 by the Illinois Police Training Act and the Illinois State
3 Police Act.
4 (ccc) Records exempt from disclosure under Section
5 2605-304 of the Illinois State Police Law of the Civil
6 Administrative Code of Illinois.
7 (ddd) Information prohibited from being disclosed
8 under Section 35 of the Address Confidentiality for
9 Victims of Domestic Violence, Sexual Assault, Human
10 Trafficking, or Stalking Act.
11 (eee) Information prohibited from being disclosed
12 under subsection (b) of Section 75 of the Domestic
13 Violence Fatality Review Act.
14 (fff) Images from cameras under the Expressway Camera
15 Act. This subsection (fff) is inoperative on and after
16 July 1, 2025.
17 (ggg) Information prohibited from disclosure under
18 paragraph (3) of subsection (a) of Section 14 of the Nurse
19 Agency Licensing Act.
20 (hhh) Information submitted to the Illinois State
21 Police in an affidavit or application for an assault
22 weapon endorsement, assault weapon attachment endorsement,
23 .50 caliber rifle endorsement, or .50 caliber cartridge
24 endorsement under the Firearm Owners Identification Card
25 Act.
26 (iii) Data exempt from disclosure under Section 50 of
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1 the School Safety Drill Act.
2 (jjj) Information exempt from disclosure under Section
3 30 of the Insurance Data Security Law.
4 (kkk) Confidential business information prohibited
5 from disclosure under Section 45 of the Paint Stewardship
6 Act.
7 (lll) Data exempt from disclosure under Section
8 2-3.196 of the School Code.
9 (mmm) Information prohibited from being disclosed
10 under subsection (e) of Section 1-129 of the Illinois
11 Power Agency Act.
12 (nnn) Materials received by the Department of Commerce
13 and Economic Opportunity that are confidential under the
14 Music and Musicians Tax Credit and Jobs Act.
15 (ooo) Data or information provided pursuant to Section
16 20 of the Statewide Recycling Needs and Assessment Act.
17 (ppp) Information that is exempt from disclosure under
18 Section 28-11 of the Lawful Health Care Activity Act.
19 (qqq) Information that is exempt from disclosure under
20 Section 7-101 of the Illinois Human Rights Act.
21 (rrr) Information prohibited from being disclosed
22 under Section 4-2 of the Uniform Money Transmission
23 Modernization Act.
24 (sss) Information exempt from disclosure under Section
25 40 of the Student-Athlete Endorsement Rights Act.
26 (ttt) Audio recordings made under Section 30 of the
SB1797 Enrolled - 93 - LRB104 09833 BAB 19901 b
1 Illinois State Police Act, except to the extent authorized
2 under that Section.
3 (uuu) Information prohibited from being disclosed
4 under Section 30-5 of the Digital Assets Regulation Act.
5 (Source: P.A. 102-36, eff. 6-25-21; 102-237, eff. 1-1-22;
6 102-292, eff. 1-1-22; 102-520, eff. 8-20-21; 102-559, eff.
7 8-20-21; 102-813, eff. 5-13-22; 102-946, eff. 7-1-22;
8 102-1042, eff. 6-3-22; 102-1116, eff. 1-10-23; 103-8, eff.
9 6-7-23; 103-34, eff. 6-9-23; 103-142, eff. 1-1-24; 103-372,
10 eff. 1-1-24; 103-472, eff. 8-1-24; 103-508, eff. 8-4-23;
11 103-580, eff. 12-8-23; 103-592, eff. 6-7-24; 103-605, eff.
12 7-1-24; 103-636, eff. 7-1-24; 103-724, eff. 1-1-25; 103-786,
13 eff. 8-7-24; 103-859, eff. 8-9-24; 103-991, eff. 8-9-24;
14 103-1049, eff. 8-9-24; 103-1081, eff. 3-21-25.)
15 Section 90-10. The State Finance Act is amended by adding
16 Section 5.1030 as follows:
17 (30 ILCS 105/5.1030 new)
18 Sec. 5.1030. The Consumer Protection Fund.
19 Section 90-15. The Illinois Banking Act is amended by
20 changing Sections 2 and 30 as follows:
21 (205 ILCS 5/2) (from Ch. 17, par. 302)
22 Sec. 2. General definitions. In this Act, unless the
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1 context otherwise requires, the following words and phrases
2 shall have the following meanings:
3 "Accommodation party" shall have the meaning ascribed to
4 that term in Section 3-419 of the Uniform Commercial Code.
5 "Action" in the sense of a judicial proceeding includes
6 recoupments, counterclaims, set-off, and any other proceeding
7 in which rights are determined.
8 "Affiliate facility" of a bank means a main banking
9 premises or branch of another commonly owned bank. The main
10 banking premises or any branch of a bank may be an "affiliate
11 facility" with respect to one or more other commonly owned
12 banks.
13 "Appropriate federal banking agency" means the Federal
14 Deposit Insurance Corporation, the Federal Reserve Bank of
15 Chicago, or the Federal Reserve Bank of St. Louis, as
16 determined by federal law.
17 "Bank" means any person doing a banking business whether
18 subject to the laws of this or any other jurisdiction.
19 A "banking house", "branch", "branch bank", or "branch
20 office" shall mean any place of business of a bank at which
21 deposits are received, checks paid, or loans made, but shall
22 not include any place at which only records thereof are made,
23 posted, or kept. A place of business at which deposits are
24 received, checks paid, or loans made shall not be deemed to be
25 a branch, branch bank, or branch office if the place of
26 business is adjacent to and connected with the main banking
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1 premises, or if it is separated from the main banking premises
2 by not more than an alley; provided always that (i) if the
3 place of business is separated by an alley from the main
4 banking premises there is a connection between the two by
5 public or private way or by subterranean or overhead passage,
6 and (ii) if the place of business is in a building not wholly
7 occupied by the bank, the place of business shall not be within
8 any office or room in which any other business or service of
9 any kind or nature other than the business of the bank is
10 conducted or carried on. A place of business at which deposits
11 are received, checks paid, or loans made shall not be deemed to
12 be a branch, branch bank, or branch office (i) of any bank if
13 the place is a terminal established and maintained in
14 accordance with paragraph (17) of Section 5 of this Act, or
15 (ii) of a commonly owned bank by virtue of transactions
16 conducted at that place on behalf of the other commonly owned
17 bank under paragraph (23) of Section 5 of this Act if the place
18 is an affiliate facility with respect to the other bank.
19 "Branch of an out-of-state bank" means a branch
20 established or maintained in Illinois by an out-of-state bank
21 as a result of a merger between an Illinois bank and the
22 out-of-state bank that occurs on or after May 31, 1997, or any
23 branch established by the out-of-state bank following the
24 merger.
25 "Bylaws" means the bylaws of a bank that are adopted by the
26 bank's board of directors or shareholders for the regulation
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1 and management of the bank's affairs. If the bank operates as a
2 limited liability company, however, "bylaws" means the
3 operating agreement of the bank.
4 "Call report fee" means the fee to be paid to the
5 Commissioner by each State bank pursuant to paragraph (a) of
6 subsection (3) of Section 48 of this Act.
7 "Capital" includes the aggregate of outstanding capital
8 stock and preferred stock.
9 "Cash flow reserve account" means the account within the
10 books and records of the Commissioner of Banks and Real Estate
11 used to record funds designated to maintain a reasonable Bank
12 and Trust Company Fund operating balance to meet agency
13 obligations on a timely basis.
14 "Charter" includes the original charter and all amendments
15 thereto and articles of merger or consolidation.
16 "Commissioner" means the Commissioner of Banks and Real
17 Estate, except that beginning on April 6, 2009 (the effective
18 date of Public Act 95-1047), all references in this Act to the
19 Commissioner of Banks and Real Estate are deemed, in
20 appropriate contexts, to be references to the Secretary of
21 Financial and Professional Regulation.
22 "Commonly owned banks" means 2 or more banks that each
23 qualify as a bank subsidiary of the same bank holding company
24 pursuant to Section 18 of the Federal Deposit Insurance Act;
25 "commonly owned bank" refers to one of a group of commonly
26 owned banks but only with respect to one or more of the other
SB1797 Enrolled - 97 - LRB104 09833 BAB 19901 b
1 banks in the same group.
2 "Community" means a city, village, or incorporated town
3 and also includes the area served by the banking offices of a
4 bank, but need not be limited or expanded to conform to the
5 geographic boundaries of units of local government.
6 "Company" means a corporation, limited liability company,
7 partnership, business trust, association, or similar
8 organization and, unless specifically excluded, includes a
9 "State bank" and a "bank".
10 "Consolidating bank" means a party to a consolidation.
11 "Consolidation" takes place when 2 or more banks, or a
12 trust company and a bank, are extinguished and by the same
13 process a new bank is created, taking over the assets and
14 assuming the liabilities of the banks or trust company passing
15 out of existence.
16 "Continuing bank" means a merging bank, the charter of
17 which becomes the charter of the resulting bank.
18 "Converting bank" means a State bank converting to become
19 a national bank, or a national bank converting to become a
20 State bank.
21 "Converting trust company" means a trust company
22 converting to become a State bank.
23 "Court" means a court of competent jurisdiction.
24 "Director" means a member of the board of directors of a
25 bank. In the case of a manager-managed limited liability
26 company, however, "director" means a manager of the bank and,
SB1797 Enrolled - 98 - LRB104 09833 BAB 19901 b
1 in the case of a member-managed limited liability company,
2 "director" means a member of the bank. The term "director"
3 does not include an advisory director, honorary director,
4 director emeritus, or similar person, unless the person is
5 otherwise performing functions similar to those of a member of
6 the board of directors.
7 "Director of Banking" means the Director of the Division
8 of Banking of the Department of Financial and Professional
9 Regulation.
10 "Eligible depository institution" means an insured savings
11 association that is in default, an insured savings association
12 that is in danger of default, a State or national bank that is
13 in default or a State or national bank that is in danger of
14 default, as those terms are defined in this Section, or a new
15 bank as that term is defined in Section 11(m) of the Federal
16 Deposit Insurance Act or a bridge bank as that term is defined
17 in Section 11(n) of the Federal Deposit Insurance Act or a new
18 federal savings association authorized under Section
19 11(d)(2)(f) of the Federal Deposit Insurance Act.
20 "Fiduciary" means trustee, agent, executor, administrator,
21 committee, guardian for a minor or for a person under legal
22 disability, receiver, trustee in bankruptcy, assignee for
23 creditors, or any holder of similar position of trust.
24 "Financial institution" means a bank, savings bank,
25 savings and loan association, credit union, or any licensee
26 under the Consumer Installment Loan Act or the Sales Finance
SB1797 Enrolled - 99 - LRB104 09833 BAB 19901 b
1 Agency Act and, for purposes of Section 48.3, any proprietary
2 network, funds transfer corporation, or other entity providing
3 electronic funds transfer services, or any corporate
4 fiduciary, its subsidiaries, affiliates, parent company, or
5 contractual service provider that is examined by the
6 Commissioner. For purposes of Section 5c and subsection (b) of
7 Section 13 of this Act, "financial institution" includes any
8 proprietary network, funds transfer corporation, or other
9 entity providing electronic funds transfer services, and any
10 corporate fiduciary.
11 "Foundation" means the Illinois Bank Examiners' Education
12 Foundation.
13 "General obligation" means a bond, note, debenture,
14 security, or other instrument evidencing an obligation of the
15 government entity that is the issuer that is supported by the
16 full available resources of the issuer, the principal and
17 interest of which is payable in whole or in part by taxation.
18 "Guarantee" means an undertaking or promise to answer for
19 payment of another's debt or performance of another's duty,
20 liability, or obligation whether "payment guaranteed" or
21 "collection guaranteed".
22 "In danger of default" means a State or national bank, a
23 federally chartered insured savings association, or an
24 Illinois state chartered insured savings association with
25 respect to which the Commissioner or the appropriate federal
26 banking agency has advised the Federal Deposit Insurance
SB1797 Enrolled - 100 - LRB104 09833 BAB 19901 b
1 Corporation that:
2 (1) in the opinion of the Commissioner or the
3 appropriate federal banking agency,
4 (A) the State or national bank or insured savings
5 association is not likely to be able to meet the
6 demands of the State or national bank's or savings
7 association's obligations in the normal course of
8 business; and
9 (B) there is no reasonable prospect that the State
10 or national bank or insured savings association will
11 be able to meet those demands or pay those obligations
12 without federal assistance; or
13 (2) in the opinion of the Commissioner or the
14 appropriate federal banking agency,
15 (A) the State or national bank or insured savings
16 association has incurred or is likely to incur losses
17 that will deplete all or substantially all of its
18 capital; and
19 (B) there is no reasonable prospect that the
20 capital of the State or national bank or insured
21 savings association will be replenished without
22 federal assistance.
23 "In default" means, with respect to a State or national
24 bank or an insured savings association, any adjudication or
25 other official determination by any court of competent
26 jurisdiction, the Commissioner, the appropriate federal
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1 banking agency, or other public authority pursuant to which a
2 conservator, receiver, or other legal custodian is appointed
3 for a State or national bank or an insured savings
4 association.
5 "Insured savings association" means any federal savings
6 association chartered under Section 5 of the federal Home
7 Owners' Loan Act and any State savings association chartered
8 under the Illinois Savings and Loan Act of 1985 or a
9 predecessor Illinois statute, the deposits of which are
10 insured by the Federal Deposit Insurance Corporation. The term
11 also includes a savings bank organized or operating under the
12 Savings Bank Act.
13 "Insured savings association in recovery" means an insured
14 savings association that is not an eligible depository
15 institution and that does not meet the minimum capital
16 requirements applicable with respect to the insured savings
17 association.
18 "Issuer" means for purposes of Section 33 every person who
19 shall have issued or proposed to issue any security; except
20 that (1) with respect to certificates of deposit, voting trust
21 certificates, collateral-trust certificates, and certificates
22 of interest or shares in an unincorporated investment trust
23 not having a board of directors (or persons performing similar
24 functions), "issuer" means the person or persons performing
25 the acts and assuming the duties of depositor or manager
26 pursuant to the provisions of the trust, agreement, or
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1 instrument under which the securities are issued; (2) with
2 respect to trusts other than those specified in clause (1)
3 above, where the trustee is a corporation authorized to accept
4 and execute trusts, "issuer" means the entrusters, depositors,
5 or creators of the trust and any manager or committee charged
6 with the general direction of the affairs of the trust
7 pursuant to the provisions of the agreement or instrument
8 creating the trust; and (3) with respect to equipment trust
9 certificates or like securities, "issuer" means the person to
10 whom the equipment or property is or is to be leased or
11 conditionally sold.
12 "Letter of credit" and "customer" shall have the meanings
13 ascribed to those terms in Section 5-102 of the Uniform
14 Commercial Code.
15 "Main banking premises" means the location that is
16 designated in a bank's charter as its main office.
17 "Maker or obligor" means for purposes of Section 33 the
18 issuer of a security, the promisor in a debenture or other debt
19 security, or the mortgagor or grantor of a trust deed or
20 similar conveyance of a security interest in real or personal
21 property.
22 "Merged bank" means a merging bank that is not the
23 continuing, resulting, or surviving bank in a consolidation or
24 merger.
25 "Merger" includes consolidation.
26 "Merging bank" means a party to a bank merger.
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1 "Merging trust company" means a trust company party to a
2 merger with a State bank.
3 "Mid-tier bank holding company" means a corporation that
4 (a) owns 100% of the issued and outstanding shares of each
5 class of stock of a State bank, (b) has no other subsidiaries,
6 and (c) 100% of the issued and outstanding shares of the
7 corporation are owned by a parent bank holding company.
8 "Municipality" means any municipality, political
9 subdivision, school district, taxing district, or agency.
10 "National bank" means a national banking association
11 located in this State and after May 31, 1997, means a national
12 banking association without regard to its location.
13 "Out-of-state bank" means a bank chartered under the laws
14 of a state other than Illinois, a territory of the United
15 States, or the District of Columbia.
16 "Parent bank holding company" means a corporation that is
17 a bank holding company as that term is defined in the Illinois
18 Bank Holding Company Act of 1957 and owns 100% of the issued
19 and outstanding shares of a mid-tier bank holding company.
20 "Person" means an individual, corporation, limited
21 liability company, partnership, joint venture, trust, estate,
22 or unincorporated association.
23 "Public agency" means the State of Illinois, the various
24 counties, townships, cities, towns, villages, school
25 districts, educational service regions, special road
26 districts, public water supply districts, fire protection
SB1797 Enrolled - 104 - LRB104 09833 BAB 19901 b
1 districts, drainage districts, levee districts, sewer
2 districts, housing authorities, the Illinois Bank Examiners'
3 Education Foundation, the Chicago Park District, and all other
4 political corporations or subdivisions of the State of
5 Illinois, whether now or hereafter created, whether herein
6 specifically mentioned or not, and shall also include any
7 other state or any political corporation or subdivision of
8 another state.
9 "Public funds" or "public money" means current operating
10 funds, special funds, interest and sinking funds, and funds of
11 any kind or character belonging to, in the custody of, or
12 subject to the control or regulation of the United States or a
13 public agency. "Public funds" or "public money" shall include
14 funds held by any of the officers, agents, or employees of the
15 United States or of a public agency in the course of their
16 official duties and, with respect to public money of the
17 United States, shall include Postal Savings funds.
18 "Published" means, unless the context requires otherwise,
19 the publishing of the notice or instrument referred to in some
20 newspaper of general circulation in the community in which the
21 bank is located at least once each week for 3 successive weeks.
22 Publishing shall be accomplished by, and at the expense of,
23 the bank required to publish. Where publishing is required,
24 the bank shall submit to the Commissioner that evidence of the
25 publication as the Commissioner shall deem appropriate.
26 "Qualified financial contract" means any security
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1 contract, commodity contract, forward contract, including spot
2 and forward foreign exchange contracts, repurchase agreement,
3 swap agreement, and any similar agreement, any option to enter
4 into any such agreement, including any combination of the
5 foregoing, and any master agreement for such agreements. A
6 master agreement, together with all supplements thereto, shall
7 be treated as one qualified financial contract. The contract,
8 option, agreement, or combination of contracts, options, or
9 agreements shall be reflected upon the books, accounts, or
10 records of the bank, or a party to the contract shall provide
11 documentary evidence of such agreement.
12 "Recorded" means the filing or recording of the notice or
13 instrument referred to in the office of the Recorder of the
14 county wherein the bank is located.
15 "Resulting bank" means the bank resulting from a merger or
16 conversion.
17 "Secretary" means the Secretary of Financial and
18 Professional Regulation, or a person authorized by the
19 Secretary or by this Act to act in the Secretary's stead.
20 "Securities" means stocks, bonds, debentures, notes, or
21 other similar obligations.
22 "Special purpose trust company" means a special purpose
23 trust company under Article IIA of the Corporate Fiduciary
24 Act.
25 "Stand-by letter of credit" means a letter of credit under
26 which drafts are payable upon the condition the customer has
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1 defaulted in performance of a duty, liability, or obligation.
2 "State bank" means any banking corporation that has a
3 banking charter issued by the Commissioner under this Act.
4 "State Banking Board" means the State Banking Board of
5 Illinois.
6 "Subsidiary" with respect to a specified company means a
7 company that is controlled by the specified company. For
8 purposes of paragraphs (8) and (12) of Section 5 of this Act,
9 "control" means the exercise of operational or managerial
10 control of a corporation by the bank, either alone or together
11 with other affiliates of the bank.
12 "Surplus" means the aggregate of (i) amounts paid in
13 excess of the par value of capital stock and preferred stock;
14 (ii) amounts contributed other than for capital stock and
15 preferred stock and allocated to the surplus account; and
16 (iii) amounts transferred from undivided profits.
17 "Tier 1 Capital" and "Tier 2 Capital" have the meanings
18 assigned to those terms in regulations promulgated for the
19 appropriate federal banking agency of a state bank, as those
20 regulations are now or hereafter amended.
21 "Trust company" means a limited liability company or
22 corporation incorporated in this State for the purpose of
23 accepting and executing trusts.
24 "Undivided profits" means undistributed earnings less
25 discretionary transfers to surplus.
26 "Unimpaired capital and unimpaired surplus", for the
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1 purposes of paragraph (21) of Section 5 and Sections 32, 33,
2 34, 35.1, 35.2, and 47 of this Act means the sum of the state
3 bank's Tier 1 Capital and Tier 2 Capital plus such other
4 shareholder equity as may be included by regulation of the
5 Commissioner. Unimpaired capital and unimpaired surplus shall
6 be calculated on the basis of the date of the last quarterly
7 call report filed with the Commissioner preceding the date of
8 the transaction for which the calculation is made, provided
9 that: (i) when a material event occurs after the date of the
10 last quarterly call report filed with the Commissioner that
11 reduces or increases the bank's unimpaired capital and
12 unimpaired surplus by 10% or more, then the unimpaired capital
13 and unimpaired surplus shall be calculated from the date of
14 the material event for a transaction conducted after the date
15 of the material event; and (ii) if the Commissioner determines
16 for safety and soundness reasons that a state bank should
17 calculate unimpaired capital and unimpaired surplus more
18 frequently than provided by this paragraph, the Commissioner
19 may by written notice direct the bank to calculate unimpaired
20 capital and unimpaired surplus at a more frequent interval. In
21 the case of a state bank newly chartered under Section 13 or a
22 state bank resulting from a merger, consolidation, or
23 conversion under Sections 21 through 26 for which no preceding
24 quarterly call report has been filed with the Commissioner,
25 unimpaired capital and unimpaired surplus shall be calculated
26 for the first calendar quarter on the basis of the effective
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1 date of the charter, merger, consolidation, or conversion.
2 (Source: P.A. 95-924, eff. 8-26-08; 95-1047, eff. 4-6-09;
3 96-1000, eff. 7-2-10; 96-1163, eff. 1-1-11; revised 8-6-24.)
4 (205 ILCS 5/30) (from Ch. 17, par. 337)
5 Sec. 30. Conversion; merger with trust company or special
6 purpose trust company. Upon approval by the Commissioner a
7 trust company having power so to do under the law under which
8 it is organized may convert into a state bank or may merge into
9 a state bank as prescribed by this Act; except that the action
10 by a trust company shall be taken in the manner prescribed by
11 and shall be subject to limitations and requirements imposed
12 by the law under which it is organized which law shall also
13 govern the rights of its dissenting stockholders. The rights
14 of dissenting stockholders of a state bank shall be governed
15 by Section 29 of this Act. The conversion or merger procedure
16 shall be:
17 (1) In the case of a merger, the board of directors of both
18 the merging trust company and the merging bank by a majority of
19 the entire board in each case shall approve a merger agreement
20 which shall contain:
21 (a) The name and location of the merging bank and of
22 the merging trust company and a list of the stockholders
23 of each as of the date of the merger agreement;
24 (b) With respect to the resulting bank (i) its name
25 and place of business; (ii) the amount of capital, surplus
SB1797 Enrolled - 109 - LRB104 09833 BAB 19901 b
1 and reserve for operating expenses; (iii) the classes and
2 the number of shares of stock and the par value of each
3 share; (iv) the charter which is to be the charter of the
4 resulting bank, together with the amendments to the
5 continuing charter and to the continuing by-laws; and (v)
6 a detailed financial statement showing the assets and
7 liabilities after the proposed merger;
8 (c) Provisions governing the manner of converting the
9 shares of the merging bank and of the merging trust
10 company into shares of the resulting bank;
11 (d) A statement that the merger agreement is subject
12 to approval by the Commissioner and by the stockholders of
13 the merging bank and the merging trust company, and that
14 whether approved or disapproved, the parties thereto will
15 pay the Commissioner's expenses of examination;
16 (e) Provisions governing the manner of disposing of
17 the shares of the resulting bank not taken by the
18 dissenting stockholders of the merging trust company; and
19 (f) Such other provisions as the Commissioner may
20 reasonably require to enable him to discharge his duties
21 with respect to the merger.
22 (2) After approval by the board of directors of the
23 merging bank and of the merging trust company, the merger
24 agreement shall be submitted to the Commissioner for approval
25 together with the certified copies of the authorizing
26 resolution of each board of directors showing approval by a
SB1797 Enrolled - 110 - LRB104 09833 BAB 19901 b
1 majority of each board.
2 (3) After receipt by the Commissioner of the papers
3 specified in subsection (2), he shall approve or disapprove
4 the merger agreement. The Commissioner shall not approve the
5 agreement unless he shall be of the opinion and finds:
6 (a) That the resulting bank meets the requirements of
7 this Act for the formation of a new bank at the proposed
8 place of business of the resulting bank;
9 (b) That the same matters exist in respect of the
10 resulting bank which would have been required under
11 Section 10 of this Act for the organization of a new bank;
12 and
13 (c) That the merger agreement is fair to all persons
14 affected. If the Commissioner disapproves the merger
15 agreement, he shall state his objections in writing and
16 give an opportunity to the merging bank and the merging
17 trust company to obviate such objections.
18 (4) To be effective, if approved by the Commissioner, a
19 merger of a bank and a trust company where there is to be a
20 resulting bank must be approved by the affirmative vote of the
21 holders of at least two-thirds of the outstanding shares of
22 stock of the merging bank entitled to vote at a meeting called
23 to consider such action, unless holders of preferred stock are
24 entitled to vote as a class in respect thereof, in which event
25 the proposed merger shall be adopted upon receiving the
26 affirmative vote of the holders of at least two-thirds of the
SB1797 Enrolled - 111 - LRB104 09833 BAB 19901 b
1 outstanding shares of each class of shares entitled to vote as
2 a class in respect thereof and of the total outstanding shares
3 entitled to vote at such meeting and must be approved by the
4 stockholders of the merging trust company as provided by the
5 Act under which it is organized. The prescribed vote by the
6 merging bank and the merging trust company shall constitute
7 the adoption of the charter and by-laws of the continuing
8 bank, including the amendments in the merger agreement, as the
9 charter and by-laws of the resulting bank. Written or printed
10 notice of the meeting of the stockholders of the merging bank
11 shall be given to each stockholder of record entitled to vote
12 at such meeting at least thirty days before such meeting and in
13 the manner provided in this Act for the giving of notice of
14 meetings of stockholders. The notice shall state that
15 dissenting stockholders of the merging trust company will be
16 entitled to payment of the value of those shares which are
17 voted against approval of the merger, if a proper demand is
18 made on the resulting bank and the requirements of the Act
19 under which the merging trust company is organized are
20 satisfied.
21 (5) Unless a later date is specified in the merger
22 agreement, the merger shall become effective upon the filing
23 with the Commissioner of the executed merger agreement,
24 together with copies of the resolutions of the stockholders of
25 the merging bank and the merging trust company approving it,
26 certified by the president or a vice-president or, the cashier
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1 and also by the secretary or other officer charged with
2 keeping the records. The charter of the merging trust company
3 shall thereupon automatically terminate. The Commissioner
4 shall thereupon issue to the continuing bank a certificate of
5 merger which shall specify the name of the merging trust
6 company, the name of the continuing bank and the amendments to
7 the charter of the continuing bank provided for by the merger
8 agreement. Such certificate shall be conclusive evidence of
9 the merger and of the correctness of all proceedings therefor
10 in all courts and places including the office of the Secretary
11 of State, and said certificate shall be recorded.
12 (6) In the case of a conversion, a trust company shall
13 apply for a charter by filing with the Commissioner:
14 (a) A certificate signed by its president, or a
15 vice-president, and by a majority of the entire board of
16 directors setting forth the corporate action taken in
17 compliance with the provisions of the Act under which it
18 is organized governing the conversion of a trust company
19 to a bank or governing the merger of a trust company into
20 another corporation;
21 (b) The plan of conversion and the proposed charter
22 approved by the stockholders for the operation of the
23 trust company as a bank. The plan of conversion shall
24 contain (i) the name and location proposed for the
25 converting trust company; (ii) a list of its stockholders
26 as of the date of the stockholders' approval of the plan of
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1 conversion; (iii) the amount of its capital, surplus and
2 reserve for operating expenses; (iv) the classes and the
3 number of shares of stock and the par value of each share;
4 (v) the charter which is to be the charter of the resulting
5 bank; and (vi) a detailed financial statement showing the
6 assets and liabilities of the converting trust company;
7 (c) A statement that the plan of conversion is subject
8 to approval by the Commissioner and that, whether approved
9 or disapproved, the converting trust company will pay the
10 Commissioner's expenses of examination; and
11 (d) Such other instruments as the Commissioner may
12 reasonably require to enable him to discharge his duties
13 with respect to the conversion.
14 (7) After receipt by the Commissioner of the papers
15 specified in subsection (6), he shall approve or disapprove
16 the plan of conversion. The Commissioner shall not approve the
17 plan of conversion unless he shall be of the opinion and finds:
18 (a) That the resulting bank meets the requirements of
19 this Act for the formation of a new bank at the proposed
20 place of business of the resulting bank;
21 (b) That the same matters exist in respect of the
22 resulting bank which would have been required under
23 Section 10 of this Act for the organization of a new bank;
24 and
25 (c) That the plan of conversion is fair to all persons
26 affected.
SB1797 Enrolled - 114 - LRB104 09833 BAB 19901 b
1 If the commissioner disapproves the plan of conversion, he
2 shall state his objections in writing and give an opportunity
3 to the converting trust company to obviate such objections.
4 (8) Unless a later date is specified in the plan of
5 conversion, the conversion shall become effective upon the
6 Commissioner's approval, and the charter proposed in the plan
7 of conversion shall constitute the charter of the resulting
8 bank. The Commissioner shall issue a certificate of conversion
9 which shall specify the name of the converting trust company,
10 the name of the resulting bank and the charter provided for by
11 said plan of conversion. Such certificate shall be conclusive
12 evidence of the conversion and of the correctness of all
13 proceedings therefor in all courts and places including the
14 office of the Secretary of State, and such certificate shall
15 be recorded.
16 (8.5) A special purpose trust company under Article IIA of
17 the Corporate Fiduciary Act may merge with a State bank or
18 convert to a State bank as if the special purpose trust company
19 were a trust company under Article II of the Corporate
20 Fiduciary Act, subject to rules adopted by the Department.
21 (9) In the case of either a merger or a conversion under
22 this Section 30, the resulting bank shall be considered the
23 same business and corporate entity as each merging bank and
24 merging trust company or as the converting trust company with
25 all the property, rights, powers, duties and obligations of
26 each as specified in Section 28 of this Act.
SB1797 Enrolled - 115 - LRB104 09833 BAB 19901 b
1 (Source: P.A. 91-357, eff. 7-29-99.)
2 Section 90-20. The Corporate Fiduciary Act is amended by
3 changing Sections 1-5.08, 2-1, 4-1, 4-2, 4-5, 4A-15, and 5-1
4 and by adding Article IIA as follows:
5 (205 ILCS 620/1-5.08) (from Ch. 17, par. 1551-5.08)
6 Sec. 1-5.08. "Foreign corporation" means:
7 (a) any bank, savings and loan association, savings bank,
8 or other corporation, limited liability company, or other
9 entity now or hereafter organized under the laws of any state
10 or territory of the United States of America, including the
11 District of Columbia, other than the State of Illinois;
12 (b) any national banking association having its principal
13 place of business in any state or territory of the United
14 States of America, including the District of Columbia, other
15 than the State of Illinois; and
16 (c) any federal savings and loan association or federal
17 savings bank having its principal place of business in any
18 state or territory of the United States of America, including
19 the District of Columbia, other than the State of Illinois.
20 (Source: P.A. 91-97, eff. 7-9-99.)
21 (205 ILCS 620/2-1) (from Ch. 17, par. 1552-1)
22 Sec. 2-1. (a) Any corporation which has been or shall be
23 incorporated under the general corporation laws of this State
SB1797 Enrolled - 116 - LRB104 09833 BAB 19901 b
1 and any limited liability company established under the
2 Limited Liability Company Act for the purpose of accepting and
3 executing trusts, and any state bank, state savings and loan
4 association, state savings bank, or other special corporation
5 now or hereafter authorized by law to accept or execute
6 trusts, may be appointed to act as a fiduciary in any capacity
7 a natural person or corporation may act, and shall include,
8 but not be limited to, acting as assignee or trustee by deed,
9 and executor, guardian or trustee by will, custodian under the
10 Illinois Uniform Transfers to Minors Act and such appointment
11 shall be of like force as in case of appointment of a natural
12 person and shall be designated a corporate fiduciary.
13 (b) No corporate fiduciary shall dissolve or cease its
14 corporate existence without prior notice to and approval by
15 the Commissioner and compliance with the requirements of
16 Section 7-1 of this Act.
17 (Source: P.A. 100-863, eff. 8-14-18.)
18 (205 ILCS 620/Art. IIA heading new)
19 ARTICLE IIA. SPECIAL PURPOSE TRUST COMPANY
20 AUTHORITY AND ORGANIZATION
21 (205 ILCS 620/2A-1 new)
22 Sec. 2A-1. Purpose. The General Assembly finds that
23 corporate fiduciaries perform a vital service in the custody,
24 safekeeping, and management of physical assets, traditional
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1 electronic assets, and emerging digital assets for customers;
2 that it is in the public interest that trust companies may be
3 organized for the special purpose of providing fiduciary
4 custodial services and related services to customers; that the
5 operation of special purpose trust companies is impressed with
6 a public interest such that it should be supervised as an
7 activity under this Act; and that such special purpose trust
8 companies should obtain their authority, conduct their
9 operations, and be supervised as corporate fiduciaries as
10 provided in this Act.
11 (205 ILCS 620/2A-2 new)
12 Sec. 2A-2. Special purpose trust company. Any corporation
13 that has been or shall be incorporated under the general
14 corporation laws of this State and any limited liability
15 company established under the Limited Liability Company Act
16 for the special purpose of providing fiduciary custodial
17 services or providing other like or related services as
18 specified by rule, consistent with this Article, may be
19 appointed to act as a fiduciary with respect to such services
20 and shall be designated a special purpose trust company.
21 (205 ILCS 620/2A-3 new)
22 Sec. 2A-3. Certificate of authority.
23 (a) It shall be lawful for any person to engage in the
24 activity of a special purpose trust company after the
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1 effective date of this amendatory Act of the 104th General
2 Assembly upon filing an application for and procuring from the
3 Secretary a certificate of authority stating that the person
4 has complied with the requirements of this Act and is
5 qualified to engage in the activity of a special purpose trust
6 company.
7 (b) No natural person or natural persons, firm,
8 partnership, or corporation not having been authorized under
9 this Act shall transact in the activity of a special purpose
10 trust company. A person who violates this Section is guilty of
11 a Class A misdemeanor and the Attorney General or State's
12 Attorney of the county in which the violation occurs may
13 restrain the violation by a complaint for injunctive relief.
14 (c) Any entity that holds a certificate of authority under
15 Article II of this Act may engage in the activity of a special
16 purpose trust company without applying for or receiving a
17 certificate of authority under this Article IIA.
18 (d) Nothing in this Section shall limit the authority of a
19 depository institution to provide nonfiduciary custodial
20 services consistent with its charter in accordance with
21 applicable law and subject to any limitations and restrictions
22 imposed by its chartering authority.
23 (205 ILCS 620/2A-4 new)
24 Sec. 2A-4. Rulemaking and organization.
25 (a) The Department shall adopt rules for the
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1 administration of this Article, including, but not limited to:
2 rules for defining statutory terms; applying for a certificate
3 of authority; review, investigation, and approval of
4 application for certificate of authority; capital
5 requirements; office location and name; collateralizing
6 fiduciary assets; and general corporate powers. The authority
7 of this subsection (a) is in addition to, and in no way limits,
8 the authority of the Secretary under subsection (a) of Section
9 5-1.
10 (b) Articles III, V, VI, VII, VIII, and IX of this Act
11 shall apply to a special purpose trust company under this
12 Article as if the special purpose trust company were a trust
13 company authorized under Article II of this Act, subject to
14 any rules adopted by the Department.
15 (205 ILCS 620/4-1) (from Ch. 17, par. 1554-1)
16 Sec. 4-1. Foreign corporate fiduciary; certificate of
17 authority. After July 13, 1953, no foreign corporation,
18 including banks, savings banks, and savings and loan
19 associations, now or hereafter organized under the laws of any
20 other state or territory, and no national banking association
21 having its principal place of business in any other state or
22 territory or federal savings and loan association or federal
23 savings bank having its principal place of business in any
24 other state or territory, may procure a certificate of
25 authority under Article II of this Act and any certificate of
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1 authority heretofore issued hereunder to any such foreign
2 corporation or to any such national banking association shall
3 become null and void on July 13, 1953, except that any such
4 foreign corporation or any such national banking association
5 actually acting as trustee, executor, administrator,
6 administrator to collect, guardian, or in any other like
7 fiduciary capacity in this State on July 13, 1953, may
8 continue to act as such fiduciary in that particular trust or
9 estate until such time as it has completed its duties
10 thereunder. Such foreign corporation and such national banking
11 association shall be subject to the provisions in this Article
12 IV, regardless of whether its certificate of authority was
13 obtained before July 13, 1953. The right and eligibility of
14 any foreign corporation, any national banking association
15 having its principal place of business in any other state or
16 territory or any federal savings and loan association or
17 federal savings bank having its principal place of business in
18 any other state or territory hereafter to act as trustee,
19 executor, administrator, administrator to collect, guardian,
20 or in any other like fiduciary capacity in this State shall be
21 governed solely by the provisions of this Act. Provided,
22 however, that the Commissioner shall not be required to
23 conduct an annual examination of such foreign corporation
24 pursuant to Section 5-2 of this Act, but may examine such
25 foreign corporation as the Commissioner deems appropriate.
26 "Principal place of business" of any bank, federal savings and
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1 loan association or savings bank, for purposes of this Article
2 IV, means the principal office as designated on the charter by
3 its principal regulator.
4 (Source: P.A. 91-97, eff. 7-9-99.)
5 (205 ILCS 620/4-2) (from Ch. 17, par. 1554-2)
6 Sec. 4-2. Foreign corporation; eligibility. Any foreign
7 corporation may act in this State as trustee, executor,
8 administrator, administrator to collect, guardian, or in any
9 other like fiduciary capacity, whether the appointment is by
10 will, deed, court order or otherwise, without complying with
11 any laws of this State relating to the qualification of
12 corporations organized under the laws of this State to conduct
13 a trust business or laws relating to the qualification of
14 foreign corporations, provided only (1) such foreign
15 corporation is authorized by the laws of the state of its
16 organization or domicile to act as a fiduciary in that state,
17 and (2) a corporation organized under the laws of this State, a
18 national banking association having its principal place of
19 business in this State, and a federal savings and loan
20 association or federal savings bank having its principal place
21 of business in this State and authorized to act as a fiduciary
22 in this State, may, in such other state, act in a similar
23 fiduciary capacity or capacities, as the case may be, upon
24 conditions and qualifications which the Commissioner finds are
25 not unduly restrictive when compared to those imposed by the
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1 laws of Illinois. Any foreign corporation eligible to act in a
2 fiduciary capacity in this State pursuant to the provisions of
3 this Act, shall be deemed qualified to accept and execute
4 trusts in this State within the meaning of this Act and the
5 Probate Act of 1975, approved August 7, 1975, as amended. No
6 foreign corporation shall be permitted to act as trustee,
7 executor, administrator, administrator to collect, guardian or
8 in any other like fiduciary capacity in this State except as
9 provided in Article IV of this Act; however, any foreign
10 corporation actually acting in any such fiduciary capacity in
11 this State on July 13, 1953, although not eligible to so act
12 pursuant to the provisions of this Article IV, may continue to
13 act as fiduciary in that particular trust or estate until such
14 time as it has completed its duties thereunder.
15 (Source: P.A. 92-685, eff. 7-16-02.)
16 (205 ILCS 620/4-5) (from Ch. 17, par. 1554-5)
17 Sec. 4-5. Certificate of authority; fees; certificate of
18 reciprocity.
19 (a) Prior to the time any foreign corporation acts in this
20 State as testamentary trustee, trustee appointed by any court,
21 trustee under any written agreement, declaration or instrument
22 of trust, executor, administrator, administrator to collect,
23 guardian or in any other like fiduciary capacity, such foreign
24 corporation shall apply to the Commissioner of Banks and Real
25 Estate for a certificate of authority with reference to the
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1 fiduciary capacity or capacities in which such foreign
2 corporation proposes to act in this State, and the
3 Commissioner of Banks and Real Estate shall issue a
4 certificate of authority to such corporation concerning only
5 the fiduciary capacity or such of the fiduciary capacities to
6 which the application pertains and with respect to which he
7 has been furnished satisfactory evidence that such foreign
8 corporation meets the requirements of Section 4-2 of this Act.
9 The certificate of authority shall set forth the fiduciary
10 capacity or capacities, as the case may be, for which the
11 certificate is issued, and shall recite and certify that such
12 foreign corporation is eligible to act in this State in such
13 fiduciary capacity or capacities, as the case may be, pursuant
14 to the provisions of this Act. The certificate of authority
15 shall remain in full force and effect until such time as such
16 foreign corporation ceases to be eligible so to act under the
17 provisions of this Act.
18 (b) Each foreign corporation making application for a
19 certificate of authority shall pay reasonable fees to the
20 Commissioner of Banks and Real Estate as determined by the
21 Commissioner for the services of his office.
22 (c) Any foreign corporation holding a certificate of
23 reciprocity which recites and certifies that such foreign
24 corporation is eligible to act in this State in any such
25 fiduciary capacity pursuant to the provisions of Article IV of
26 this Act or any predecessor Act upon the same subject, issued
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1 prior to the effective date of this amendatory Act of 1987 may
2 act in this State under such certificate of reciprocity in any
3 such fiduciary capacity without applying for a new certificate
4 of authority. Such certificate of reciprocity shall remain in
5 full force and effect until such time as such foreign
6 corporation ceases to be eligible so to act under the
7 provisions of Article IV of this Act.
8 (d) Any foreign corporation acting in Illinois under a
9 certificate of authority or a certificate of reciprocity shall
10 report changes in its name or address to the Commissioner and
11 shall notify the Commissioner when it is no longer serving as a
12 corporate fiduciary in Illinois.
13 (e) The provisions of this Section shall not apply to a
14 foreign corporation establishing or acquiring and maintaining
15 a place of business in this State to conduct business as a
16 fiduciary in accordance with Article IVA of this Act.
17 (Source: P.A. 92-483, eff. 8-23-01.)
18 (205 ILCS 620/4A-15)
19 Sec. 4A-15. Representative offices.
20 (a) A foreign corporation conducting fiduciary activities
21 outside this State, but not conducting fiduciary activities in
22 this State may establish a representative office under the
23 Foreign Bank Representative Office Act. At these offices, the
24 foreign corporation may market and solicit fiduciary services
25 and provide back office and administrative support to the
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1 foreign corporation's fiduciary activities, but it may not
2 engage in fiduciary activities.
3 (b) A foreign corporation invested with trust powers or
4 authority to act as a fiduciary pursuant to the laws of its
5 home state but not conducting fiduciary activities must apply
6 for and procure a license under the Foreign Bank
7 Representative Office Act before establishing an office in
8 this State for the purpose of marketing, soliciting, or
9 transacting any service or product, unless such office is
10 otherwise established as permitted by and in accordance with
11 this Act, the Illinois Banking Act, the Savings Bank Act, the
12 Foreign Banking Office Act, or any Act specified by rules
13 adopted under this Act.
14 (Source: P.A. 92-483, eff. 8-23-01; 92-811, eff. 8-21-02.)
15 (205 ILCS 620/5-1) (from Ch. 17, par. 1555-1)
16 Sec. 5-1. Commissioner's powers. The Commissioner of Banks
17 and Real Estate shall have the following powers and authority
18 and is charged with the duties and responsibilities designated
19 in this Act:
20 (a) To promulgate, in accordance with the Illinois
21 Administrative Procedure Act, reasonable rules for the purpose
22 of administering the provisions of this Act, for the purpose
23 of protecting consumers of this State as may be necessary and
24 appropriate, and for the purpose of incorporating by reference
25 rules promulgated by the Federal Deposit Insurance
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1 Corporation, the Board of Governors of the Federal Reserve
2 System, the Office of the Comptroller of the Currency, the
3 Office of Thrift Supervision, or their successors that pertain
4 to corporate fiduciaries, including, but not limited to,
5 standards for the operation and conduct of the affairs of
6 corporate fiduciaries;
7 (b) To issue orders for the purpose of administering the
8 provisions of this Act and any rule promulgated in accordance
9 with this Act;
10 (c) To appoint hearing officers to conduct hearings held
11 pursuant to any of the powers granted to the Commissioner
12 under this Section for the purpose of administering this Act
13 and any rule promulgated in accordance with this Act;
14 (d) To subpoena witnesses, to compel their attendance, to
15 administer an oath, to examine any person under oath and to
16 require the production of any relevant books, papers, accounts
17 and documents in the course of and pursuant to any
18 investigation being conducted, or any action being taken, by
19 the Commissioner in respect of any matter relating to the
20 duties imposed upon, or the powers vested in, the Commissioner
21 under the provisions of this Act, or any rule or regulation
22 promulgated in accordance with this Act;
23 (e) To conduct hearings;
24 (f) To promulgate the form and content of any applications
25 required under this Act;
26 (g) To impose civil penalties of up to $100,000 against
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1 any person or corporate fiduciary for each violation of any
2 provision of this Act, any rule promulgated in accordance with
3 this Act, any order of the Commissioner or any other action
4 which, in the Commissioner's discretion, is a detriment or
5 impediment to accepting or executing trusts; and
6 (h) To address any inquiries to any corporate fiduciary,
7 or the officers thereof, in relation to its doings and
8 conditions, or any other matter connected with its affairs,
9 and it shall be the duty of any corporate fiduciary or person
10 so addressed, to promptly reply in writing to such inquiries.
11 The Commissioner may also require reports from any corporate
12 fiduciary at any time he may deem desirable.
13 (Source: P.A. 96-1365, eff. 7-28-10.)
14 Section 90-25. The Consumer Fraud and Deceptive Business
15 Practices Act is amended by adding Section 2HHHH as follows:
16 (815 ILCS 505/2HHHH new)
17 Sec. 2HHHH. Violations of the Digital Assets and Consumer
18 Protection Act. Any person who violates Article 5 of the
19 Digital Assets and Consumer Protection Act commits an unlawful
20 practice within the meaning of this Act.
21 Article 99. Non-acceleration and Effective Date
22 Section 99-95. No acceleration or delay. Where this Act
SB1797 Enrolled - 128 - LRB104 09833 BAB 19901 b
1 makes changes in a statute that is represented in this Act by
2 text that is not yet or no longer in effect (for example, a
3 Section represented by multiple versions), the use of that
4 text does not accelerate or delay the taking effect of (i) the
5 changes made by this Act or (ii) provisions derived from any
6 other Public Act.
7 Section 99-99. Effective date. This Act takes effect upon
8 becoming law.Every fact on this page links to its source, starting with the official bill record.