Illinois General Assembly - Full Text of Public Act 102-0858
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Public Act 102-0858


Public Act 0858 102ND GENERAL ASSEMBLY



Public Act 102-0858
SB3787 EnrolledLRB102 21295 BMS 30406 b

    AN ACT concerning regulation.
    Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
    Section 5. The Illinois Credit Union Act is amended by
changing Sections 8, 9, 20 and 59 as follows:
    (205 ILCS 305/8)  (from Ch. 17, par. 4409)
    Sec. 8. Secretary's powers and duties. Credit unions are
regulated by the Department. The Secretary in executing the
powers and discharging the duties vested by law in the
Department has the following powers and duties:
        (1) To exercise the rights, powers and duties set
    forth in this Act or any related Act. The Director shall
    oversee the functions of the Division and report to the
    Secretary, with respect to the Director's exercise of any
    of the rights, powers, and duties vested by law in the
    Secretary under this Act. All references in this Act to
    the Secretary shall be deemed to include the Director, as
    a person authorized by the Secretary or this Act to assume
    responsibility for the oversight of the functions of the
    Department relating to the regulatory supervision of
    credit unions under this Act.
        (2) To prescribe rules and regulations for the
    administration of this Act. The provisions of the Illinois
    Administrative Procedure Act are hereby expressly adopted
    and incorporated herein as though a part of this Act, and
    shall apply to all administrative rules and procedures of
    the Department under this Act.
        (3) To direct and supervise all the administrative and
    technical activities of the Department including the
    employment of a Credit Union Supervisor who shall have
    knowledge in the theory and practice of, or experience in,
    the operations or supervision of financial institutions,
    preferably credit unions, and such other persons as are
    necessary to carry out his functions. The Secretary shall
    ensure that all examiners appointed or assigned to examine
    the affairs of State-chartered credit unions possess the
    necessary training and continuing education to effectively
    execute their jobs.
        (4) To issue cease and desist orders when in the
    opinion of the Secretary, a credit union is engaged or has
    engaged, or the Secretary has reasonable cause to believe
    the credit union is about to engage, in an unsafe or
    unsound practice, or is violating or has violated or the
    Secretary has reasonable cause to believe is about to
    violate a law, rule or regulation or any condition imposed
    in writing by the Department.
        (5) To suspend from office and to prohibit from
    further participation in any manner in the conduct of the
    affairs of any his credit union any director, officer or
    committee member who has committed any violation of a law,
    rule, regulation or of a cease and desist order or who has
    engaged or participated in any unsafe or unsound practice
    in connection with the credit union or who has committed
    or engaged in any act, omission, or practice which
    constitutes a breach of his fiduciary duty as such
    director, officer or committee member, when the Secretary
    has determined that such action or actions have resulted
    or will result in substantial financial loss or other
    damage that seriously prejudices the interests of the
        (6) To assess a civil penalty against a credit union
    provided that:
            (A) the Secretary reasonably determines, based on
        objective facts and an accurate assessment of
        applicable legal standards, that the credit union has:
                (i) committed a violation of this Act, any
            rule adopted in accordance with this Act, or any
            order of the Secretary issued pursuant to his or
            her authority under this Act; or
                (ii) engaged or participated in any unsafe or
            unsound practice;
            (B) before a civil penalty is assessed under this
        item (6), the Secretary must make the further
        reasonable determination, based on objective facts and
        an accurate assessment of applicable legal standards,
        that the credit union's action constituting a
        violation under subparagraph (i) of paragraph (A) of
        item (6) or an unsafe and unsound practice under
        subparagraph (ii) of paragraph (A) of item (6):
                (i) directly resulted in a substantial and
            material financial loss or created a reasonable
            probability that a substantial and material
            financial loss will directly result; or
                (ii) constituted willful misconduct or a
            material breach of fiduciary duty of any director,
            officer, or committee member of the credit union;
            Material financial loss, as referenced in this
        paragraph (B), shall be assessed in light of
        surrounding circumstances and the relative size and
        nature of the financial loss or probable financial
        loss. Certain benchmarks shall be used in determining
        whether financial loss is material, such as a
        percentage of total assets or total gross income for
        the immediately preceding 12-month period. Absent
        compelling and extraordinary circumstances, no civil
        penalty shall be assessed, unless the financial loss
        or probable financial loss is equal to or greater than
        either 1% of the credit union's total assets for the
        immediately preceding 12-month period, or 1% of the
        credit union's total gross income for the immediately
        preceding 12-month period, whichever is less;
            (C) before a civil penalty is assessed under this
        item (6), the credit union must be expressly advised
        in writing of the:
                (i) specific violation that could subject it
            to a penalty under this item (6); and
                (ii) specific remedial action to be taken
            within a specific and reasonable time frame to
            avoid imposition of the penalty;
            (D) Civil penalties assessed under this item (6)
        shall be remedial, not punitive, and reasonably
        tailored to ensure future compliance by the credit
        union with the provisions of this Act and any rules
        adopted pursuant to this Act;
            (E) a credit union's failure to take timely
        remedial action with respect to the specific violation
        may result in the issuance of an order assessing a
        civil penalty up to the following maximum amount,
        based upon the total assets of the credit union:
                (i) Credit unions with assets of less than $10
                (ii) Credit unions with assets of at least $10
            million and less than $50 million......................$2,500
                (iii) Credit unions with assets of at least
            $50 million and less than $100 million.................$5,000
                (iv) Credit unions with assets of at least
            $100 million and less than $500 million...............$10,000
                (v) Credit unions with assets of at least $500
            million and less than $1 billion......................$25,000
                (vi) Credit unions with assets of $1 billion
            and greater.....................................$50,000; and
            (F) an order assessing a civil penalty under this
        item (6) shall take effect upon service of the order,
        unless the credit union makes a written request for a
        hearing under 38 IL. Adm. Code 190.20 of the
        Department's rules for credit unions within 90 days
        after issuance of the order; in that event, the order
        shall be stayed until a final administrative order is
        This item (6) shall not apply to violations separately
    addressed in rules as authorized under item (7) of this
        (7) Except for the fees established in this Act, to
    prescribe, by rule and regulation, fees and penalties for
    preparing, approving, and filing reports and other
    documents; furnishing transcripts; holding hearings;
    investigating applications for permission to organize,
    merge, or convert; failure to maintain accurate books and
    records to enable the Department to conduct an
    examination; and taking supervisory actions.
        (8) To destroy, in his discretion, any or all books
    and records of any credit union in his possession or under
    his control after the expiration of three years from the
    date of cancellation of the charter of such credit unions.
        (9) To make investigations and to conduct research and
    studies and to publish some of the problems of persons in
    obtaining credit at reasonable rates of interest and of
    the methods and benefits of cooperative saving and lending
    for such persons.
        (10) To authorize, foster or establish experimental,
    developmental, demonstration or pilot projects by public
    or private organizations including credit unions which:
            (a) promote more effective operation of credit
        unions so as to provide members an opportunity to use
        and control their own money to improve their economic
        and social conditions; or
            (b) are in the best interests of credit unions,
        their members and the people of the State of Illinois.
        (11) To cooperate in studies, training or other
    administrative activities with, but not limited to, the
    NCUA, other state credit union regulatory agencies and
    industry trade associations in order to promote more
    effective and efficient supervision of Illinois chartered
    credit unions.
        (12) Notwithstanding the provisions of this Section,
    the Secretary shall not:
            (1) issue an order against a credit union
        organized under this Act for unsafe or unsound banking
        practices solely because the entity provides or has
        provided financial services to a cannabis-related
        legitimate business;
            (2) prohibit, penalize, or otherwise discourage a
        credit union from providing financial services to a
        cannabis-related legitimate business solely because
        the entity provides or has provided financial services
        to a cannabis-related legitimate business;
            (3) recommend, incentivize, or encourage a credit
        union not to offer financial services to an account
        holder or to downgrade or cancel the financial
        services offered to an account holder solely because:
                (A) the account holder is a manufacturer or
            producer, or is the owner, operator, or employee
            of a cannabis-related legitimate business;
                (B) the account holder later becomes an owner
            or operator of a cannabis-related legitimate
            business; or
                (C) the credit union was not aware that the
            account holder is the owner or operator of a
            cannabis-related legitimate business; and
            (4) take any adverse or corrective supervisory
        action on a loan made to an owner or operator of:
                (A) a cannabis-related legitimate business
            solely because the owner or operator owns or
            operates a cannabis-related legitimate business;
                (B) real estate or equipment that is leased to
            a cannabis-related legitimate business solely
            because the owner or operator of the real estate
            or equipment leased the equipment or real estate
            to a cannabis-related legitimate business.
(Source: P.A. 101-27, eff. 6-25-19.)
    (205 ILCS 305/9)  (from Ch. 17, par. 4410)
    Sec. 9. Reports and examinations.
    (1) Credit unions shall report to the Department on forms
supplied by the Department, in accordance with a schedule
published by the Department. A recapitulation of the annual
reports shall be compiled and published annually by the
Department, for the use of the General Assembly, credit
unions, various educational institutions and other interested
parties. A credit union which fails to file any report when due
shall pay to the Department a late filing fee for each day the
report is overdue as prescribed by rule. The Secretary may
extend the time for filing a report.
    (2) The Secretary may require special examinations of and
special financial reports from a credit union or a credit
union organization in which a credit union loans, invests, or
delegates substantially all managerial duties and
responsibilities when he determines that such examinations and
reports are necessary to enable the Department to determine
the safety of a credit union's operation or its solvency. The
cost to the Department of the aforesaid special examinations
shall be borne by the credit union being examined as
prescribed by rule.
    (3) All credit unions incorporated under this Act shall be
examined at least biennially by the Department or, at the
discretion of the Secretary, by a public accountant registered
by the Department of Financial and Professional Regulation.
The costs of an examination shall be paid by the credit union.
The scope of all examinations by a public accountant shall be
at least equal to the examinations made by the Department. The
examiners shall have full access to, and may compel the
production of, all the books, papers, securities and accounts
of any credit union. A special examination shall be made by the
Department or by a public accountant approved by the
Department upon written request of 5 or more members, who
guarantee the expense of the same. Any credit union refusing
to submit to an examination when ordered by the Department
shall be reported to the Attorney General, who shall institute
proceedings to have its charter revoked. If the Secretary
determines that the examination of a credit union is to be
conducted by a public accountant registered by the Department
of Financial and Professional Regulation and the examination
is done in conjunction with the credit union's external
independent audit of financial statements, the requirements of
this Section and subsection (3) of Section 34 shall be deemed
    (3.5) Pursuant to Section 8, the Secretary shall adopt
rules that ensure consistency and due process in the
examination process. The Secretary may also establish
guidelines that (i) define the scope of the examination
process and (ii) clarify examination items to be resolved. The
rules, formal guidance, interpretive letters, or opinions
furnished to credit unions by the Secretary may be relied upon
by the credit unions.
    (4) A copy of the completed report of examination and a
review comment letter, if any, citing exceptions revealed
during the examination, shall be submitted to the credit union
by the Department. A detailed report stating the corrective
actions taken by the board of directors on each exception set
forth in the review comment letter shall be filed with the
Department within 40 days after the date of the review comment
letter, or as otherwise directed by the Department. Any credit
union through its officers, directors, committee members or
employees, which willfully provides fraudulent or misleading
information regarding the corrective actions taken on
exceptions appearing in a review comment letter may have its
operations restricted to the collection of principal and
interest on loans outstanding and the payment of normal
expenses and salaries until all exceptions are corrected and
accepted by the Department.
    (5) The Secretary may accept an examination from the
National Credit Union Administration or a private insurer of
share deposits approved by the Secretary instead of an
examination conducted by the Department or by a public
accountant registered by the Department pursuant to subsection
(3). Acceptance of an examination from the National Credit
Union Administration or an approved private insurer of share
deposits shall only be permitted on an alternating basis with
examinations that the Department or a registered public
accountant conducts.
(Source: P.A. 102-558, eff. 8-20-21.)
    (205 ILCS 305/20)  (from Ch. 17, par. 4421)
    Sec. 20. Election or appointment of officials.
    (1) The credit union shall be directed by a board of
directors consisting of no less than 7 in number, to be elected
at the annual meeting by and from the members. Directors shall
hold office until the next annual meeting, unless their terms
are staggered. Upon amendment of its bylaws, a credit union
may divide the directors into 2 or 3 classes with each class as
nearly equal in number as possible. The term of office of the
directors of the first class shall expire at the first annual
meeting after their election, that of the second class shall
expire at the second annual meeting after their election, and
that of the third class, if any, shall expire at the third
annual meeting after their election. At each annual meeting
after the classification, the number of directors equal to the
number of directors whose terms expire at the time of the
meeting shall be elected to hold office until the second
succeeding annual meeting if there are 2 classes or until the
third succeeding annual meeting if there are 3 classes. A
director shall hold office for the term for which he or she is
elected and until his or her successor is elected and
    (1.5) Except as provided in subsection (1.10), in all
elections for directors, every member has the right to vote,
in person, by proxy, or by secure electronic record if
approved by the board of directors, the number of shares owned
by him, or in the case of a member other than a natural person,
the member's one vote, for as many persons as there are
directors to be elected, or to cumulate such shares, and give
one candidate as many votes as the number of directors
multiplied by the number of his shares equals, or to
distribute them on the same principle among as many candidates
as he may desire and the directors shall not be elected in any
other manner. Shares held in a joint account owned by more than
one member may be voted by any one of the members, however, the
number of cumulative votes cast may not exceed a total equal to
the number of shares multiplied by the number of directors to
be elected. A majority of the shares entitled to vote shall be
represented either in person or by proxy for the election of
directors. Each director shall wholly take and subscribe to an
oath that he will diligently and honestly perform his duties
in administering the affairs of the credit union, that while
he may delegate to another the performance of those
administrative duties he is not thereby relieved from his
responsibility for their performance, that he will not
knowingly violate or permit to be violated any law applicable
to the credit union, and that he is the owner of at least one
share of the credit union.
    (1.10) Upon amendment of a credit union's bylaws approved
by the members, in all elections for directors, every member
who is a natural person shall have the right to cast one vote,
regardless of the number of his or her shares, in person, by
proxy, or by secure electronic record if approved by the board
of directors, for as many persons as there are directors to be
    (1.15) If the board of directors has adopted a policy
addressing age eligibility standards on voting, holding
office, or petitioning the board, then a credit union may
require (i) that members be at least 18 years of age by the
date of the meeting in order to vote at meetings of the
members, sign nominating petitions, or sign petitions
requesting special meetings, and (ii) that members be at least
18 years of age by the date of election or appointment in order
to hold elective or appointive office.
    (2) The board of directors shall appoint from among the
members of the credit union, a supervisory committee of not
less than 3 members at the organization meeting and within 30
days following each annual meeting of the members for such
terms as the bylaws provide. Members of the supervisory
committee may, but need not be, on the board of directors, but
shall not be officers of the credit union, members of the
credit committee, or the credit manager if no credit committee
has been appointed.
    (3) The board of directors may appoint, from among the
members of the credit union, a credit committee consisting of
an odd number, not less than 3 for such terms as the bylaws
provide. Members of the credit committee may, but need not be,
directors or officers of the credit union, but shall not be
members of the supervisory committee.
    (4) The board of directors may appoint from among the
members of the credit union a membership committee of one or
more persons. If appointed, the committee shall act upon all
applications for membership and submit a report of its actions
to the board of directors at the next regular meeting for
review. If no membership committee is appointed, credit union
management shall act upon all applications for membership and
submit a report of its actions to the board of directors at the
next regular meeting for review.
    (5) As used in this Section, "electronic" and "electronic
record" have the meanings ascribed to those terms in the
Uniform Electronic Transactions Act. As used in this Section,
"secured electronic record" means an electronic record that
meets the criteria set forth in the Uniform Electronic
Transactions Act.
(Source: P.A. 102-38, eff. 6-25-21; revised 8-3-21.)
    (205 ILCS 305/59)  (from Ch. 17, par. 4460)
    Sec. 59. Investment of funds.
    (a) Funds not used in loans to members may be invested,
pursuant to subsection (7) of Section 30 of this Act, and
subject to Departmental rules and regulations:
        (1) In securities, obligations or other instruments of
    or issued by or fully guaranteed as to principal and
    interest by the United States of America or any agency
    thereof or in any trust or trusts established for
    investing directly or collectively in the same;
        (2) In obligations of any state of the United States,
    the District of Columbia, the Commonwealth of Puerto Rico,
    and the several territories organized by Congress, or any
    political subdivision thereof; however, a credit union may
    not invest more than 10% of its unimpaired capital and
    surplus in the obligations of one issuer, exclusive of
    general obligations of the issuer, and investments in
    municipal securities must be limited to securities rated
    in one of the 4 highest rating investment grades
    categories by a nationally recognized statistical rating
        (3) In certificates of deposit or passbook type
    accounts issued by a state or national bank, mutual
    savings bank or savings and loan association; provided
    that such institutions have their accounts insured by the
    Federal Deposit Insurance Corporation or the Federal
    Savings and Loan Insurance Corporation; but provided,
    further, that a credit union's investment in an account in
    any one institution may exceed the insured limit on
        (4) In shares, classes of shares or share certificates
    of other credit unions, including, but not limited to
    corporate credit unions; provided that such credit unions
    have their members' accounts insured by the NCUA or other
    approved insurers, and that if the members' accounts are
    so insured, a credit union's investment may exceed the
    insured limit on accounts;
        (5) In shares of a cooperative society organized under
    the laws of this State or the laws of the United States in
    the total amount not exceeding 10% of the unimpaired
    capital and surplus of the credit union; provided that
    such investment shall first be approved by the Department;
        (6) In obligations of the State of Israel, or
    obligations fully guaranteed by the State of Israel as to
    payment of principal and interest;
        (7) In shares, stocks or obligations of other
    financial institutions in the total amount not exceeding
    5% of the unimpaired capital and surplus of the credit
        (8) In federal funds and bankers' acceptances;
        (9) In shares or stocks of Credit Union Service
    Organizations in the total amount not exceeding the
    greater of 6% of the unimpaired capital and surplus of the
    credit union or the amount authorized for federal credit
        (10) In corporate bonds identified as investment grade
    by at least one nationally recognized statistical rating
    organization, provided that:
            (i) the board of directors has established a
        written policy that addresses corporate bond
        investment procedures and how the credit union will
        manage credit risk, interest rate risk, liquidity
        risk, and concentration risk; and
            (ii) the credit union has documented in its
        records that a credit analysis of a particular
        investment and the issuing entity was conducted by the
        credit union, a third party on behalf of the credit
        union qualified by education or experience to assess
        the risk characteristics of corporate bonds, or a
        nationally recognized statistical rating agency before
        purchasing the investment and the analysis is updated
        at least annually for as long as it holds the
        (11) To aid in the credit union's management of its
    assets, liabilities, and liquidity in the purchase of an
    investment interest in a pool of loans, in whole or in part
    and without regard to the membership of the borrowers,
    from other depository institutions and financial type
    institutions, including mortgage banks, finance companies,
    insurance companies, and other loan sellers, subject to
    such safety and soundness standards, limitations, and
    qualifications as the Department may establish by rule or
    guidance from time to time;
        (12) To aid in the credit union's management of its
    assets, liabilities, and liquidity by receiving funds from
    another financial institution as evidenced by certificates
    of deposit, share certificates, or other classes of shares
    issued by the credit union to the financial institution;
        (13) In the purchase and assumption of assets held by
    other financial institutions, with approval of the
    Secretary and subject to any safety and soundness
    standards, limitations, and qualifications as the
    Department may establish by rule or guidance from time to
    time; and
        (14) In the shares, stocks, or obligations of
    community development financial institutions as defined in
    regulations issued by the U.S. Department of the Treasury
    and minority depository institutions as defined by the
    National Credit Union Administration; however the
    aggregate amount of all such investments shall not at any
    time exceed 5% of the paid-in and unimpaired capital and
    surplus of the credit union.
    (b) As used in this Section:
    "Political subdivision" includes, but is not limited to,
counties, townships, cities, villages, incorporated towns,
school districts, educational service regions, special road
districts, public water supply districts, fire protection
districts, drainage districts, levee districts, sewer
districts, housing authorities, park districts, and any
agency, corporation, or instrumentality of a state or its
political subdivisions, whether now or hereafter created and
whether herein specifically mentioned or not.
    "Financial institution" includes any bank, savings bank,
savings and loan association, or credit union established
under the laws of the United States, this State, or any other
    (c) A credit union investing to fund an employee benefit
plan obligation is not subject to the investment limitations
of this Act and this Section and may purchase an investment
that would otherwise be impermissible if the investment is
directly related to the credit union's obligation under the
employee benefit plan and the credit union holds the
investment only for so long as it has an actual or potential
obligation under the employee benefit plan.
    (d) If a credit union acquires loans from another
financial institution or financial-type institution pursuant
to this Section, the credit union shall be authorized to
provide loan servicing and collection services in connection
with those loans.
(Source: P.A. 101-567, eff. 8-23-19; 102-496, eff. 8-20-21.)
    Section 99. Effective date. This Act takes effect upon
becoming law.

Effective Date: 5/13/2022