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U.S. Code as of:
01/19/04
Section 1831t. Depository institutions lacking Federal deposit insurance
(a) Annual independent audit of private deposit insurers
(1) Audit required
Any private deposit insurer shall obtain an annual audit from
an independent auditor using generally accepted auditing
standards. The audit shall include a determination of whether the
private deposit insurer follows generally accepted accounting
principles and has set aside sufficient reserves for losses.
(2) Providing copies of audit report
(A) Private deposit insurer
The private deposit insurer shall provide a copy of the audit
report -
(i) to each depository institution the deposits of which
are insured by the private deposit insurer, not later than 14
days after the audit is completed; and
(ii) to the appropriate supervisory agency of each State in
which such an institution receives deposits, not later than 7
days after the audit is completed.
(B) Depository institution
Any depository institution the deposits of which are insured
by the private deposit insurer shall provide a copy of the
audit report, upon request, to any current or prospective
customer of the institution.
(b) Disclosure required
Any depository institution lacking Federal deposit insurance
shall, within the United States, do the following:
(1) Periodic statements; account records
Include conspicuously in all periodic statements of account, on
each signature card, and on each passbook, certificate of
deposit, or similar instrument evidencing a deposit a notice that
the institution is not federally insured, and that if the
institution fails, the Federal Government does not guarantee that
depositors will get back their money.
(2) Advertising; premises
Include conspicuously in all advertising and at each place
where deposits are normally received a notice that the
institution is not federally insured.
(3) Acknowledgement of disclosure
(A) New depositors
With respect to any depositor who was not a depositor at the
depository institution before June 19, 1994, receive any
deposit for the account of such depositor only if the depositor
has signed a written acknowledgement that -
(i) the institution is not federally insured; and
(ii) if the institution fails, the Federal Government does
not guarantee that the depositor will get back the
depositor's money.
(B) Current depositors
Receive any deposit after the effective date of this
paragraph for the account of any depositor who was a depositor
before June 19, 1994, only if -
(i) the depositor has signed a written acknowledgement
described in subparagraph (A); or
(ii) the institution has complied with the provisions of
subparagraph (C) which are applicable as of the date of the
deposit.
(C) Alternative provision of notice to current depositors
(i) In general
Transmit to each depositor who was a depositor before June
19, 1994, and has not signed a written acknowledgement
described in subparagraph (A) -
(I) a card containing the information described in
clauses (i) and (ii) of subparagraph (A), and a line for
the signature of the depositor; and
(II) accompanying materials requesting the depositor to
sign the card, and return the signed card to the
institution.
(ii) Manner and timing of notice
(I) First notice
Make the transmission described in clause (i) via first
class mail not later than September 12, 1994.
(II) Second notice
Make a second transmission described in clause (i) via
first class mail not less than 30 days and not more than 45
days after a transmission to the depositor in accordance
with subclause (I), if the institution has not, by the date
of such mailing, received from the depositor a card
referred to in clause (i) which has been signed by the
depositor.
(III) Third notice
Make a third transmission described in clause (i) via
first class mail not less than 30 days and not more than 45
days after a transmission to the depositor in accordance
with subclause (II), if the institution has not, by the
date of such mailing, received from the depositor a card
referred to in clause (i) which has been signed by the
depositor.
(c) Manner and content of disclosure
To ensure that current and prospective customers understand the
risks involved in foregoing Federal deposit insurance, the Federal
Trade Commission, by regulation or order, shall prescribe the
manner and content of disclosure required under this section.
(d) Exceptions for institutions not receiving retail deposits
The Federal Trade Commission may, by regulation or order, make
exceptions to subsection (b) of this section for any depository
institution that, within the United States, does not receive
initial deposits of less than $100,000 from individuals who are
citizens or residents of the United States, other than money
received in connection with any draft or similar instrument issued
to transmit money.
(e) Eligibility for Federal deposit insurance
(1) In general
Except as permitted by the Federal Trade Commission, in
consultation with the Federal Deposit Insurance Corporation, no
depository institution (other than a bank, including an
unincorporated bank) lacking Federal deposit insurance may use
the mails or any instrumentality of interstate commerce to
receive or facilitate receiving deposits, unless the appropriate
supervisor of the State in which the institution is chartered has
determined that the institution meets all eligibility
requirements for Federal deposit insurance, including -
(A) in the case of an institution described in section
461(b)(1)(A)(iv) of this title, all eligibility requirements
set forth in the Federal Credit Union Act [12 U.S.C. 1751 et
seq.] and regulations of the National Credit Union
Administration; and
(B) in the case of any other institution, all eligibility
requirements set forth in this chapter and regulations of the
Corporation.
(2) Authority of FDIC and NCUA not affected
No determination under paragraph (1) shall bind, or otherwise
affect the authority of, the National Credit Union Administration
or the Corporation.
(f) Definitions
For purposes of this section:
(1) Appropriate supervisor
The "appropriate supervisor" of a depository institution means
the agency primarily responsible for supervising the institution.
(2) Depository institution
The term "depository institution" includes -
(A) any entity described in section 461(b)(1)(A)(iv) of this
title; and
(B) any entity that, as determined by the Federal Trade
Commission -
(i) is engaged in the business of receiving deposits; and
(ii) could reasonably be mistaken for a depository
institution by the entity's current or prospective customers.
(3) Lacking Federal deposit insurance
A depository institution lacks Federal deposit insurance if the
institution is not either -
(A) an insured depository institution; or
(B) an insured credit union, as defined in section 101 of the
Federal Credit Union Act [12 U.S.C. 1752].
(4) Private deposit insurer
The term "private deposit insurer" means any entity insuring
the deposits of any depository institution lacking Federal
deposit insurance.
(g) Enforcement
Compliance with the requirements of this section, and any
regulation prescribed or order issued under this section, shall be
enforced under the Federal Trade Commission Act [15 U.S.C. 41 et
seq.] by the Federal Trade Commission.
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