Title 6. Banks and Financial Institutions.

Chapter 01. Administration.

Sec. 06.01.010. Examination and investigation fees and assessments.
 (a) The expenses of the department reasonably incurred in the examination or investigation of all financial institutions or applications to establish financial institutions regulated by the department under this title shall be charged to and paid by each financial institution as provided in (b) and (d) of this section.

 (b) Except for deposit institutions, the commissioner shall assess every financial institution and every applicant to establish a financial institution a fee for the actual expenses necessarily incurred by the department in connection with any examination or investigation, whether regular or special. The commissioner shall assess every deposit institution and every applicant to establish a deposit institution a fee for the actual expenses necessarily incurred by the department in connection with any special examination or investigation. A fee assessed under this subsection must include the proportionate part of the salaries and cost of employee benefits of the examiners while conducting examinations or investigations and while preparing reports of them, and transportation costs and per diem of each examiner while away from the examiner’s duty station. The cost to the financial institution in connection with an examination may not exceed the actual cost to the department of the examination. The assessment shall be made by the commissioner as soon as feasible after the examination or investigation has been completed. The assessment must be received by the department within 30 days after receipt of notice of the assessment by the institution.

 (c) [Repealed, § 102 ch 26 SLA 1993.]
 (d) The commissioner shall adopt regulations providing for semiannual assessments of deposit institutions. An assessment must be based on the amount of assets of a deposit institution and must cover, but may not exceed, the aggregate cost of periodic examinations of the deposit institution.

 (e) An exam fee or other charge assessed to a state financial institution under this section may not exceed a fee or other charge assessed for the same type of exam or service to a similarly situated federally-chartered financial institution.

 (f) In this section “deposit institution” means a state financial institution that has obtained authority from the department to receive deposits of the type eligible to be insured by an agency of the federal government.




Sec. 06.01.015. Examinations.
 (a) Financial institutions regulated under this title are subject to at least one examination every 18 months. The department may conduct additional examinations at its discretion.

 (b) The department shall select one or more competent persons to make examinations of financial institutions. The examiner shall take and subscribe an oath that
     (1) the examiner will honestly and impartially examine into and report the condition of the institution as to assets and liabilities and other information required by the department;

     (2) the examiner will not disclose the information the examiner obtains through the examination to a person other than the department;

     (3) at the time of employment, the examiner is not obligated to, or the owner of an interest in, the institution and is not an officer or shareholder of the institution;

     (4) the examiner does not own more than five percent of the voting shares in another financial institution in the state; and

     (5) the examiner is not an officer or employee of another financial institution in the state.

 (c) The department shall promptly call to the attention of the directors of an institution irregularities in the conduct of the financial institution’s business and any violations. The department shall send a copy of the report of examination to the institution examined.




Sec. 06.01.020. Department authority to add financial institution powers and limitations.
 (a) Notwithstanding other provisions of this title, the department may by order authorize state financial institutions, except licensees subject to AS 06.20, AS 06.40, or AS 06.50, to exercise any of the powers conferred upon, or to be subject to any of the limitations imposed upon, a federally chartered financial institution doing business in this state with deposits insured by an agency of the federal government if the department finds that the exercise of the power or imposition of the limitation both
     (1) serves the public convenience and advantage; and

     (2) equalizes and maintains the quality of competition between state financial institutions and federally chartered financial institutions.

 (b) The authority granted to the department by this section may not be limited by law unless that law expressly refers to this section.




Sec. 06.01.025. Records of department.
 (a) Information in the records of the department obtained through the administration of this title is confidential, is not subject to subpoena, and may be revealed only with the consent of the department.

 (b) The department shall retain reports of examinations for five years.




Sec. 06.01.028. Depositor and customer records confidential.
 (a) The records of financial institutions relating to their depositors and customers and the information in the records are confidential. A financial institution may not disclose the records and information to another person except when, and only to the extent that, the disclosure is
     (1) authorized in writing by the depositor or customer;

     (2) required by federal or state statute or regulation or by an order directed to the financial institution and issued by a court or administrative agency of competent jurisdiction;

     (3) made to the holder of a negotiable instrument drawn on the financial institution as to whether the drawer has sufficient funds in the financial institution to cover the instrument;

     (4) made to a consumer reporting agency regulated under 15 U.S.C. 1681 — 1681v (Fair Credit Reporting Act); or

     (5) made in connection with the maintenance or servicing of the depositor’s or customer’s account with the financial institution, or with another entity as part of a private label credit card or other extension of credit on behalf of the entity.

 (b) When disclosure of financial institution records is compelled by a subpoena, a search warrant, or another court or administrative agency order under (a)(2) of this section, the court or administrative agency shall provide in the order for the reimbursement of the financial institution for the reasonable costs incurred in complying with the order. Nothing in this subsection imposes a reimbursement obligation on a government agency, or abrogates an otherwise established reimbursement obligation of a government agency, when the financial institution is the subject of an audit, examination, or investigation and disclosure is sought under a federal or state law or regulation.

 (c) Unless otherwise provided in this subsection, when disclosure of financial institution records is required under a court or administrative agency order under (a)(2) of this section, the financial institution shall notify the depositor or customer of the disclosure before the disclosure is made. If notification before disclosure is not possible, the financial institution shall notify the customer or depositor of the disclosure as soon as practicable after the disclosure is made. However, notification either before or after disclosure may not be made if disclosure is made under a court or administrative agency order under (a)(2) of this section and the document requiring disclosure requires on its face that the financial institution not notify or inform the depositor or customer, or the document requiring disclosure is, or is accompanied by, a court order that expressly directs the financial institution not to notify or inform the depositor or customer.

 (d) Nothing in (a) — (c) of this section prohibits a financial institution from disclosing information to a person if
     (1) the disclosure is necessary to
          (A) provide the services of the financial institution to a depositor or customer; or

          (B) market financially related products or services of the financial institution and its marketing partners; and

     (2) the person receiving the information has a written agreement with the financial institution to be bound by the requirements of (a) — (c) of this section.

 (e) Nothing in this section authorizes the disclosure of information if disclosure is prohibited by 15 U.S.C. 6801 — 6827 or the regulations adopted under those sections.

 (f) A financial institution or any other person who violates this section is liable to a depositor or customer for damages caused by the disclosure of the confidential records or information of the financial institution pertaining to the depositor or customer. A financial institution or other person who takes an action under this section while relying in good faith on any provision of this section is not liable under this section to any person for the action.

 (g) In this section, “financial institution” means a person subject to the regulation of the department under this title, including a BIDCO licensed under AS 10.13 (Alaska BIDCO Act).




Sec. 06.01.030. Orders and injunctions; notice and hearings.
 (a) Whenever it appears to the department that a person is engaging, has engaged, or is about to engage in an unsafe or unsound practice in conducting the business of a financial institution, or is violating, has violated, or is about to violate a provision of this title or a regulation adopted or order issued under this title, the department may
     (1) issue and serve on the person a notice of intent to issue an order directing the person to cease and desist from continuing the act or practice, or imposing a penalty under AS 06.01.035(e) — (g); or

     (2) bring an action in the superior court to enjoin the act or practice.

 (b) A notice issued under (a)(1) of this section must contain a statement of the facts constituting the alleged violation or the unsafe or unsound practice, and must give reasonable notice of and an opportunity for a hearing to determine whether an order to cease and desist the act or practice should be issued. If a hearing is not requested within 30 days, or if the person served or the person’s representative fails to appear at the hearing, the person is considered to have consented to the issuance of the order, and the department may issue the order to cease and desist. If the department finds at the hearing that a violation or an unsafe or unsound practice has been established, the department may issue the order to cease and desist.

 (c) A cease and desist order issued under (b) of this section may impose a penalty under AS 06.01.035(e) — (g) and may require the person to cease and desist from the act or practice and to take affirmative action to correct the conditions resulting from the act or practice.

 (d) Notwithstanding the other provisions of this section, the department may issue a temporary cease and desist order at the same time that the department issues a notice under (a)(1) of this section. The department may not issue a temporary cease and desist order under this subsection without a prior hearing unless the order is issued for the sole purpose of preserving the status quo and preventing damage to a financial institution pending completion of any hearing. A temporary cease and desist order issued under this subsection remains in effect until a final order is issued under (b) of this section or until otherwise terminated by the department, except that the order may not remain in effect for more than 60 days.

 (e) Except for notices issued under (a)(1) of this section, the department shall give public notice of each proposed action, but the department is not required to hold a hearing before taking the action unless it receives written opposition to the proposed action. Written opposition must be filed with the department within the time specified by the department. In cases involving extraordinary circumstances requiring immediate action, the department may take action without notice and public hearing, but upon application to rescind the action taken, the department shall promptly hold a hearing on the application.

 (f) Hearings required or authorized under this title are not subject to AS 44.62.330 — 44.62.630, except as required by AS 44.62.560 and 44.62.570. The department shall adopt regulations, consistent with the provisions of this title, establishing procedures for hearings held under this section. Administrative hearings on contested cases shall be conducted by the office of administrative hearings (AS 44.64.010).

 (g) For the purpose of hearings, investigations, or other proceedings under this title, and except as otherwise provided in this title, the department or an officer designated by the commissioner may administer oaths and affirmations, subpoena witnesses, compel the attendance of witnesses, take evidence, and require the production of books, papers, correspondence, memoranda, agreements, or other documents or records that the department considers relevant or material to the inquiry.

 (h) In this section, “unsafe or unsound practice” means
     (1) operating a bank while it is in an unsafe or unsound condition;

     (2) doing an act that violates a law or order of the department, or the bank’s articles or bylaws; or

     (3) doing an act reasonably likely to result in a bank’s condition becoming unsafe or unsound.




Sec. 06.01.035. Penalties.
 (a) A person who knowingly violates, or causes another person to violate, a provision of this title, or a regulation or order of the department under this title, for which a specific remedy is not provided, is guilty of a class A misdemeanor.

 (b) A person who, without first receiving a license or certificate of authority from the department, participates in an activity that requires a license or certificate of authority under this title, is guilty of a class A misdemeanor.

 (c) A person is guilty of a class C felony if the person, with intent to deceive the department, the commissioner, or a person authorized to examine the affairs of a financial institution, knowingly
     (1) makes or causes a false statement or report to be made;

     (2) enters a false figure, statement, or entry in the books of a financial institution; or

     (3) makes or circulates a false report or statement about the condition of a financial institution.

 (d) A director, officer, or employee of a financial institution who receives a deposit, after having been notified by regulatory authorities that the institution is insolvent and without the department’s prior approval, is guilty of a class C felony.

 (e) In addition to other penalties applicable under this section, if a person other than a financial institution knowingly or intentionally violates, or causes another person to violate, a provision of this title, or a regulation or order of the department under this title, the department may issue an order against the person imposing a civil penalty of not more than $2,500 a day for a single violation, and not more than $25,000 for multiple violations that constitute a single proceeding or a series of related proceedings.

 (f) In addition to other penalties applicable under this section, if a financial institution knowingly or intentionally violates a provision of this title, or a regulation or order of the department under this title, the department may issue an order against the institution imposing a civil penalty of not more than $5,000 a day for a single violation, and not more than $50,000 for multiple violations that constitute a single proceeding or a series of related proceedings.

 (g) For violations not covered by (e) or (f) of this section, and in addition to other penalties applicable under this section, if a person, including a financial institution, violates, or causes another person to violate, a provision of this title, or a regulation or order of the department under this title, the department may issue an order against the person imposing a civil penalty of not more than $500 a day for a single violation, and not more than $5,000 for multiple violations that constitute a single proceeding or a series of related proceedings.

 (h) A financial institution that fails to file a report or make payments required by the department within the time specified in this title is subject to a penalty of not more than $100 a day for each day the report or payment is late. A financial institution is considered to have transmitted a report or payment when the institution mails the report or payment, properly addressed to the department and with the appropriate postage.

 (i) In addition to other penalties applicable under this section, the department shall dismiss an employee of the department who violates AS 06.05.065(a). An employee dismissed under this subsection is forever disqualified from holding a position in the department relating to the regulation of financial institutions. An employee who is dismissed under this subsection may appeal the dismissal under AS 39.25 (State Personnel Act), unless the employee is in the exempt or partially exempt service under AS 39.25.110 — 39.25.120.

 (j) Notwithstanding the other provisions of this section, the failure to have a business license issued under AS 43.70.020 as required by AS 06.50.020(a) is not a violation for the purposes of (a) and (e) — (g) of this section.




Sec. 06.01.040. Examination policy.
It shall be the policy of the department to conduct, whenever reasonably possible, joint examinations with the Federal Deposit Insurance Corporation or with the National Credit Union Administration of those institutions subject to this title whose accounts are insured through those agencies.


Sec. 06.01.045. Accounting and disposition of fees. [Repealed, § 28 ch 90 SLA 1991.]
Sec. 06.01.048. Regulations.
Regulations required or authorized under this title shall be adopted under AS 44.62 (Administrative Procedure Act).


Sec. 06.01.050. Definitions.
In this chapter, unless the context otherwise requires,
     (1) “commissioner” means the commissioner of commerce, community, and economic development or a designee of the commissioner;

     (2) “department” means the Department of Commerce, Community, and Economic Development;

     (3) “financial institution” means an institution subject to the regulation of the department under this title; in this paragraph, “institution” includes a commercial bank, savings bank, credit union, premium finance company, small loan company, bank holding company, financial holding company, trust company, savings and loan association, deferred deposit advance licensee under AS 06.50, and a licensee under AS 06.60;

     (4) “state financial institution” means a financial institution that is organized under this title or that is subject to examination by the department under this title.




Chapter 05. Alaska Banking Code.

Article 1. Department Powers, Bank Reports, Prohibited Interests, and Department Standards.


Sec. 06.05.005. Powers of department.
 (a) The department shall
     (1) exercise general supervision over all state financial institutions and their subsidiaries and affiliated corporations;

     (2) adopt regulations necessary to implement this chapter, including regulations providing for the retention and preservation of state bank records;

     (3) review and approve or disapprove applications for new state banks under AS 06.05.344, new bank branches under AS 06.05.399, and international bank branches or interstate state bank branches under AS 06.05.555;

     (4) issue permits authorizing certain acquisitions by bank holding companies under AS 06.05.235 and 06.05.570;

     (5) determine for each state bank the amount of paid-in capital necessary to operate under AS 06.05.305(a);

     (6) review and approve transfers of state bank ownership under AS 06.05.327;

     (7) perform examinations of state banks, branch banks, and subsidiaries under AS 06.01.015.

 (b) The department may
     (1) relieve a bank from the examination requirements of AS 06.01.015 if the bank’s deposits are insured by the Federal Deposit Insurance Corporation or another agency of the United States that insures bank deposits;

     (2) approve under AS 06.05.166(f) the operation of a branch bank on a schedule different than normal banking days;

     (3) [Repealed, § 55 ch 75 SLA 2002.]
     (4) approve certain bank subsidiaries under AS 06.05.272;

     (5) approve under AS 06.05.205(d) the acceptance by a bank of the bank’s stock or of the stock of the bank’s holding company as security for a loan in certain circumstances;

     (6) restrict the withdrawal of deposits from a state bank where the department finds that extraordinary circumstances make restriction necessary for the proper protection of depositors;

     (7) require a state bank to
          (A) maintain its capital and reserve accounts in amounts determined appropriate by the department, considering the size of the bank;

          (B) observe the methods and standards that the bank adopts for determining the value of various types of assets;

          (C) charge off part or all of an asset that has not been lawfully acquired;

          (D) write down an asset to its market value;

          (E) record liens and other interests in property;

          (F) obtain a financial statement from a borrower or prospective borrower to the extent that the bank can obtain the statement;

          (G) obtain insurance against damage to real property taken as security;

          (H) search, or obtain insurance of, the title to real property taken as security;

          (I) maintain adequate insurance against other risks as the department determines necessary and appropriate for the protection of depositors and the public;

          (J) charge off that portion of an asset classified as a loss, or charge off or reserve up to 50 percent of loans classified as doubtful, in a state or federal report of examination; or

          (K) charge off all debts owed to the bank in which interest is past due and unpaid for a period of six months, unless the debt principal is adequately secured and the bank is in the process of collection;

     (8) require the board of directors of a bank to hold a meeting under AS 06.05.438(f);

     (9) order the removal of a board member of a bank under AS 06.05.435(g);

     (10) order a bank to suspend the payment of dividends under AS 06.05.441(b);

     (11) require a bank to increase its capital accounts under AS 06.05.305(c);

     (12) take possession of a bank in the manner provided in AS 06.05.468(c), and operate, reorganize, or liquidate the bank under AS 06.05.470 — 06.05.474 after taking possession under this paragraph;

     (13) issue an order under AS 06.01.030 that the department determines is necessary to ensure compliance with this chapter and regulations adopted under this chapter; and

     (14) exercise other powers expressly or implicitly granted in this chapter.




Sec. 06.05.010. Notice and hearing. [Repealed, § 54 ch 169 SLA 1978. For current law, see AS 06.01.030.]
Secs. 06.05.015 — 06.05.040. Powers over state banks; miscellaneous powers of department; bank examinations; banks exempt from examination; examination fee; examiner’s oath. [Repealed, § 102 ch 26 SLA 1993.]
Sec. 06.05.045. Bank reports to the department.
 (a) Each state bank shall make at least four reports of condition each year to the department on days designated by, and on forms prescribed by, the department. The report shall be signed by a duly authorized officer of the bank and shall be signed by at least three directors who certify under penalty of unsworn falsification in the second degree under AS 11.56.210 that they, and each of them, have personal knowledge of the facts stated in the report and that the facts are true. The reports must exhibit in detail and under appropriate heads the resources and liabilities of the bank and must be received by the department within 30 calendar days after the end of the period covered by the report.

 (b) The department may require special reports from a bank whenever in its judgment they are necessary in order to obtain a full knowledge of its condition.

 (c) Each state bank shall make at least one report of income and dividends to the department each year. The report shall be submitted to the department within 30 days following the end of the calendar year covered in the report.




Sec. 06.05.050. Publication of reports.
 (a) Condensed forms of all reports of condition required by AS 06.05.045(a) shall be immediately
     (1) published by the state bank in a newspaper of general circulation published in the place where the state bank is located; if a newspaper of general circulation is not published in that place, the report shall be published in the newspaper of general circulation published nearest to that place; or

     (2) posted
          (A) at the primary Internet website of the state bank; and

          (B) in the lobby of the principal office and all branches of the state bank.

 (b) Notice of the publication or posting of the reports of condition under (a) of this section shall be posted in the lobby of the principal office and all branches of the state bank. Upon request, a copy of a report of condition shall be supplied to any person at no cost.




Secs. 06.05.055 , 06.05.060. Annual report of department; records of department. [Repealed, § 102 ch 26 SLA 1993.]
Sec. 06.05.065. Financial institution interest of department officers and employees.
 (a) A bank examiner of the department who deals with the regulation of financial institutions, a special agent selected by the department to do work relating to financial institutions, the commissioner or deputy commissioner, or the director of banking may not be an officer, employee, director, trustee, attorney, shareholder, or partner of a financial institution, or receive, directly or indirectly, a payment or gratuity from a financial institution. A person subject to this section may not borrow money from a state financial institution, except as provided in this section.

 (b) A person subject to this section may
     (1) be a depositor in a financial institution;

     (2) purchase shares of a savings and loan association on the same terms available to the public;

     (3) be a member of an employee credit union;

     (4) be indebted to a state financial institution upon an installment debt incurred by the employee in the purchase of goods for personal use only and transferred to the financial institution in the regular course of business, including debts for household goods, mobile homes, motor vehicles, or boats; or

     (5) retain a preexisting extension of credit that was incurred before commencement of the employment that subjected the person to this section; any renegotiation of a preexisting extension of credit shall be treated as a new extension of credit that is subject to the prohibitions of this section.

 (c) This section does not limit the authority of an officer or employee of the department acting in the person’s official capacity in the business of the department.

 (d) [Repealed, § 102 ch 26 SLA 1993.]
 (e) [Repealed, § 102 ch 26 SLA 1993.]
 (f) [Repealed, § 102 ch 26 SLA 1993.]




Sec. 06.05.070. Preservation of bank records. [Repealed, § 102 ch 26 SLA 1993.]
Sec. 06.05.075. Standards.
The department, in the exercise of its authority under this chapter, shall act in the interests of promoting and maintaining a sound and competitive banking system, the security of deposits and customers, the liquid position of banks, and the prevention of injurious credit expansions and contractions.


Secs. 06.05.080 , 06.05.085. Effect of invalidity of order or regulation; limitation of personal liability. [Repealed, § 102 ch 26 SLA 1993.]

Article 2. Banking Practices.


Sec. 06.05.090. Certification of checks.
 (a) The check of a depositor may not be certified unless the amount of the check actually stands to the credit of the drawer.

 (b) Any check certified is a valid obligation against the bank when held by an innocent holder.

 (c) [Repealed, § 102 ch 26 SLA 1993.]




Sec. 06.05.095. Payment of items.
If the balance in an account subject to withdrawal by or upon the order of a depositor is insufficient to pay an item presented for payment, a bank may select from the items that in the aggregate exceed the balance the items to be paid in the order convenient to the bank.


Sec. 06.05.100. Deposit of minor or person under disability.
Where a deposit is made in a bank by or on behalf of a minor or a person under disability in the name of the minor or person under disability, the bank may pay the money on check or order of that person as in other cases.


Secs. 06.05.105 , 06.05.110. Deposits in two names; deposits in trust. [Repealed, § 5 ch 78 SLA 1972. For current law, see AS 13.33.]
Sec. 06.05.120. Notice of charges.
A bank or other financial institution that levies a charge for the establishment or maintenance of personal nonbusiness demand deposit accounts shall clearly post a schedule of the charges in each of its places of business where these accounts are opened.


Sec. 06.05.130. Final adjustment of statements of account. [Repealed, § 102 ch 26 SLA 1993.]
Sec. 06.05.145. Adverse claim to bank deposit.
Notice to a bank of an adverse claim to a deposit standing on its books to the credit of a person is ineffective unless the adverse claimant procures a restraining order, injunction or other appropriate process against the bank from a court in a cause where the person to whose credit the deposit stands is made a party or executes to the bank in form and with sureties acceptable to it a bond, indemnifying the bank from any liability, loss, damage, costs and expenses on account of the payment of the adverse claim or the dishonor of the check or other order of the person to whose credit the deposit stands on the books of the bank. This section does not apply where the person to whose credit the deposit stands is a fiduciary for the adverse claimant, and the facts constituting that relationship and the facts showing a reasonable belief on the part of the claimant that the fiduciary is about to misappropriate the deposit are made to appear by the affidavit of the claimant.


Sec. 06.05.160. Transmitting money and foreign exchange.
A bank may accept for transmission and transmit money, and may buy and sell foreign exchange to the extent necessary to meet the reasonably anticipated needs of customers.


Sec. 06.05.165. Optional five-day week. [Repealed, § 1 ch 56 SLA 1971.]
Sec. 06.05.166. Legal holidays and closings.
 (a) A bank organized under or doing business under the laws of the state or a national bank may remain closed on the legal holidays described in AS 44.12.010 — 44.12.025. The bank shall post a notice of holiday closing in the place of business affected at least seven days in advance.

 (b) If a contract by its terms requires the payment of money or the performance of a condition on a holiday allowed under (a) of this section by or at a state or national bank, payment may be made or the condition performed on the next succeeding business day with the same effect as if made or performed in accordance with the terms of the contract.

 (c) In an emergency, a bank may elect not to open any of its banking offices on a business or banking day or, having opened, to close any banking office. The bank shall notify the department of the nonopening or the closing before taking the action, if possible, and as soon as possible, in any event. Any act relating to the banking office that has been closed for any period of time under this subsection may be performed on the next business day that the office is open for business. No liability or loss of rights of any kind on the part of any person, firm, or corporation or of the bank results from the nonopening or closing, and the rights of all parties are suspended during the nonopening or closing.

 (d) In addition to legal holidays, a bank’s board of directors may declare a closing of the bank on any other normal business day, if the department authorizes the closure, the bank posts notice of the closing in the place of business affected at least 15 days in advance, and the bank maintains all normal processing and clearing operations on the closed day.

 (e) Under (a) or (d) of this section, a bank may not be closed for more than three consecutive days.

 (f) A bank may operate a branch bank on a different schedule approved by the department if the department determines that operation on a different schedule will provide better service or otherwise benefit the public.




Sec. 06.05.175. Depositor and customer records confidential. [Repealed, § 55 ch 75 SLA 2002.]
Sec. 06.05.180. Fiduciary and other powers authorized.
Every bank organized under this chapter, subject to the restrictions and limitations of laws and the regulations of the department, may
     (1) act as trustee under any mortgage or bond issued by the state, or any municipality, body politic, or corporation, foreign or domestic, and accept and execute any municipal or corporate trust not prohibited by the laws of this state;

     (2) accept a trust from, and execute a trust for, a married person in respect to the married person’s separate property, and act as agent in the management of the property or transact any business in relation to the property;

     (3) act under the order or appointment of a court of competent jurisdiction, including any probate court, as custodian, receiver, or trustee of the estate of a minor, and as depository of money paid into court for the benefit of any person, corporation, or party, and in any other fiduciary capacity;

     (4) act under the order or appointment of a court of competent jurisdiction, including any probate court, as trustee, custodian, receiver or committee of the estate of an incapacitated person, as defined in AS 13.26.005, or of a spendthrift, or as receiver or committee of the property or estate of a person in insolvency or bankruptcy proceedings;

     (5) act as executor or administrator with or without the will annexed of the estate of a deceased person;

     (6) accept and execute any legal trust, duty, and power in regard to the holding, management, and disposition of any estate, real or personal, wherever located, and the rents and profits from it, or the sale of it, as may be granted or confided to it by a court of competent jurisdiction, including any probate court, or by any person, corporation, municipality, or other authority, and is accountable to all parties in interest for the faithful discharge of every trust, duty, or power which it may accept;

     (7) accept and execute any trust or power conferred upon it by any person or any body politic or domestic or foreign corporation, or any other authority, grant, assignment, transfer, devise, bequest, or otherwise, or which may be entrusted or committed or transferred to it by order of a court of competent jurisdiction, including any probate court;

     (8) receive, manage, hold, and dispose of according to the terms of any trust or power any property or estate, real or personal, which may be the subject of any such trust or power;

     (9) act as the fiscal or transfer agent of the United States or of any state, territory, municipality, or other body politic, and in this capacity may receive and disburse money, transfer, register, and countersign certificates of stocks, bonds, or other evidences of indebtedness;

     (10) whenever the instrument or power governing the fiduciary relationship directs, requires, authorizes, or permits investment in obligations of the United States government, or its agencies or instrumentalities, invest in those obligations either directly or in the form of securities of, or other interests in, an open-end or closed-end management type investment company or investment trust registered under 15 U.S.C. 80a-1 — 80a-64 (Investment Company Act of 1940) if
          (A) the portfolio of the investment company or investment trust is limited to
               (i) obligations of the United States government, or its agencies or instrumentalities;

               (ii) repurchase agreements fully collateralized by the obligations identified in (i) of this subparagraph; and

               (iii) securities of, or other interests in, other open-end or closed-end management type investment companies or investment trusts registered under 15 U.S.C. 80a-1 — 80a-64 whose portfolios are limited to the obligations and repurchase agreements identified in (i) and (ii) of this subparagraph; and

          (B) the investment company or investment trust takes delivery of the collateral for any repurchase agreement directly or through an authorized custodian.




Secs. 06.05.185 — 06.05.195. Application of chapter to trust companies; supervision by the department; dissolution of trust companies. [Repealed, § 102 ch 26 SLA 1993.]
Sec. 06.05.197. Nominees.
 (a) A state or national bank or a trust company, when acting in the state as a fiduciary or as a co-fiduciary with others, may with the consent of its co-fiduciary or co-fiduciaries, if any, who are hereby authorized to give such consent, cause any investment it holds as a fiduciary or co-fiduciary to be registered and held in the name of a nominee or nominees of the bank or trust company. The bank or trust company is liable for the acts of its nominee with respect to an investment registered in the nominee’s name.

 (b) The records of the bank or trust company must at all times show the ownership of the investment registered and held in the name of its nominee. The bank or trust company shall retain possession and control of the investment and keep the investment separate and apart from its assets.




Article 3. Reserves, Loans, Investments, Bank Service Corporations, Practices, and Services.


Sec. 06.05.200. Reserves against deposits.
 (a) A bank shall maintain a reserve fund sufficient to maintain liquidity and meet all reasonable demands of depositors, as provided in regulations adopted by the department.

 (b) [Repealed, § 102 ch 26 SLA 1993.]
 (c) [Repealed, § 102 ch 26 SLA 1993.]
 (d) If the reserve fund of a bank falls below the amount required by the department to be maintained under this section, the department may prohibit the bank from making any new loans or other investments or paying any dividends until the bank’s reserve fund has been restored to the amount required under this section.




Sec. 06.05.205. Loans and extensions of credit.
 (a) The total loans and extensions of credit by a state bank to a person outstanding at one time and not fully secured, as determined in a manner consistent with (b) of this section, by collateral having a market value at least equal to the amount of the loan or extension of credit may not exceed 15 percent of the unimpaired capital and unimpaired surplus of the state bank.

 (b) The total loans and extensions of credit by a state bank to a person outstanding at one time and fully secured by readily marketable collateral having a market value, as determined by reliable and continuously available price quotations, at least equal to the amount of the money outstanding, may not exceed 10 percent of the unimpaired capital and unimpaired surplus of the state bank. The limitation in this subsection is separate from and in addition to the limitation contained in (a) of this section.

 (c) The limitations contained in (a) and (b) of this section are subject to the following exceptions:
     (1) loans or extensions of credit arising from the discount of commercial or business paper evidencing an obligation to the person negotiating it with recourse are not subject to a limitation based on unimpaired capital and unimpaired surplus;

     (2) the purchase of bankers’ acceptances described in AS 06.05.275 and issued by other banks are not subject to a limitation based on unimpaired capital and unimpaired surplus;

     (3) loans or extensions of credit secured by bills of lading, warehouse receipts, or similar documents transferring or securing title to readily marketable staples are subject to a limitation of 35 percent of unimpaired capital and unimpaired surplus in addition to the general limitations if the market value of the staples securing each additional loan or extension of credit at all times equals or exceeds 115 percent of the outstanding amount of the loan or extension of credit; in order to be considered under this paragraph, the staples must be fully covered by insurance whenever it is customary to insure those staples;

     (4) loans or extensions of credit secured by bonds, notes, certificates of indebtedness, or treasury bills of the United States or by other such obligations fully guaranteed as to principal and interest by the United States are not subject to a limitation based on unimpaired capital and unimpaired surplus;

     (5) loans or extensions of credit to, or secured by unconditional takeout commitments or guarantees of, any department, agency, bureau, board, commission, or establishment of the United States or a corporation wholly owned directly or indirectly by the United States are not subject to a limitation based on unimpaired capital and unimpaired surplus;

     (6) loans or extensions of credit secured by a segregated deposit account in the lending state bank are not subject to a limitation based on unimpaired capital and unimpaired surplus;

     (7) loans or extensions of credit to a bank or to a receiver, conservator, superintendent of banks, or other agent in charge of the business and property of that bank, if approved by the department, are not subject to a limitation based on unimpaired capital and unimpaired surplus;

     (8) loans or extensions of credit arising from the discount of negotiable or non-negotiable installment consumer paper that carries a full recourse endorsement or unconditional guarantee by the person transferring the paper are subject under this section to a maximum limitation equal to 25 percent of unimpaired capital and unimpaired surplus, notwithstanding the collateral requirements set out in (b) of this section; however, if the state bank’s files or the knowledge of its officers of the financial condition of each maker of that consumer paper is reasonably adequate, and an officer of the state bank designated for that purpose by the board of directors of the state bank certifies in writing that the state bank is relying primarily upon the responsibility of each maker for payment of the loans or extensions of credit and not upon any full or partial recourse endorsement or guarantee by the transferor, the limitations of (a) and (b) of this section as to the loans or extensions of credit of each such maker are the sole applicable loan limitations;

     (9) loans or extensions of credit secured by shipping documents or instruments transferring or securing title covering livestock or giving a lien on livestock when the market value of the livestock securing the obligation is not at any time less than 115 percent of the face amount of the note covered are subject under this section, notwithstanding the collateral requirements set out in (b) of this section, to a maximum limitation equal to 25 percent of unimpaired capital and unimpaired surplus;

     (10) loans or extensions of credit, arising from the discount by dealers in dairy cattle of paper given in payment for dairy cattle and carrying a full recourse endorsement or unconditional guarantee of the seller, that are secured by the cattle being sold are subject under this section, notwithstanding the collateral requirements set out in (b) of this section, to a maximum limitation equal to 25 percent of unimpaired capital and unimpaired surplus.

 (d) Except with the written prior approval of the department for an acquisition or merger with another financial institution, or except with the written prior approval of the department in order to prevent loss upon an indebtedness previously contracted in good faith, a state bank may not
     (1) accept as security for a loan the capital stock of the state bank;

     (2) accept as security for a loan the capital stock of the state bank’s parent holding companies, unless the stock of the holding companies is publicly traded on a nationally recognized exchange; or

     (3) loan money that is to be used to purchase the capital stock of the state bank or a parent holding company of the state bank.

 (e) The department may adopt regulations to administer and carry out the purposes of this section, including, notwithstanding any contrary provision of this section, regulations to define or further define terms used in this section in order to establish limits or requirements other than those specified in this section for particular classes or categories of loans or extensions of credit.

 (f) For purposes of this section, the department may determine when a loan putatively made to a person shall be attributed to another person.

 (g) In this section, “person” means an individual, sole proprietorship, partnership, joint venture, association, trust, estate, business trust, corporation, or any similar entity or organization.




Sec. 06.05.206. Leasehold and development loans. [Repealed, § 102 ch 26 SLA 1993.]
Sec. 06.05.207. Real estate loans.
 (a) A bank may, subject to the requirements of this chapter, make or acquire a loan secured primarily by a first lien on an interest in improved or unimproved real property, including leases, if
     (1) the making of the loan is consistent with written lending policies of the bank and regulations adopted by the department;

     (2) before the loan is made or acquired, the bank secures and maintains in its files, evidence of merchantable title and a determination of the value of the property by a person familiar with the real property values in the vicinity where the real property is located; and

     (3) insurance against loss from fire on all buildings on the real property that are included in the value of the property is acquired by the borrower or the bank and is not allowed to lapse.

 (b) A bank may, subject to the requirements of this chapter, make or acquire a loan secured by a junior lien on real property if
     (1) payments on the loan secured by all senior liens are current and the bank retains in its records a written report of the status and balance of the senior liens as of the date the junior lien loan is made or acquired; and

     (2) all requirements of (a) of this section are met.

 (c) In this section, “real property” includes a manufactured home that has become real property under AS 34.85.010. In this subsection, “manufactured home” has the meaning given in AS 45.29.102.




Sec. 06.05.208. Revolving credit plans. [Repealed, § 102 ch 26 SLA 1993.]
Sec. 06.05.209. Credit cards.
 (a) A bank is not prohibited from issuing unsolicited credit cards or other similar credit granting devices but the bank may not hold the customer liable for charges made on a credit card or other device before its acceptance by the customer. Before an unsolicited card is considered accepted by the customer, the customer shall execute and furnish to the bank a written statement of acceptance.

 (b) A state bank may issue a credit card or other similar credit granting device to a customer for obtaining money, goods, services, or anything else of value, and, notwithstanding AS 45.45.010, the state bank, when credit is extended under this section, may impose a service charge at a monthly rate as agreed upon by contract between the state bank and the customer receiving the credit granting device.

 (c) In addition to charges authorized under (b) of this section, a bank may charge an annual fee for the issuance of a credit card or other similar credit granting device.




Sec. 06.05.210. Loans to directors, officers, and employees.
 (a) Subject to the same terms and conditions applicable to other loans, a director or executive officer of a state bank may borrow up to $100,000, or up to $250,000 for the director’s or executive officer’s primary residence, from the state bank at the discretion of the chief executive or managing officer of the state bank. A loan to a director or executive officer that makes the total amount owed to the state bank by the director or executive officer in excess of the limits in this subsection, or loans of any amount to the chief executive or managing officer of the state bank, shall have the prior approval of the board of directors, shall be reported to the department within 30 days, and shall be secured by adequate collateral.

 (b) [Repealed, § 102 ch 26 SLA 1993.]
 (c) Notwithstanding (a) of this section, loans to directors, executive officers, and other officers and employees of a state bank are subject to the lending limits imposed by AS 06.05.205 and the regulations adopted under that section.




Sec. 06.05.211. Loans secured by forest tracts.
 (a) A bank may, subject to the requirements of this chapter, make or acquire a loan secured by a first lien on a forest tract if
     (1) the making of the loan is consistent with written lending policies of the bank and regulations adopted by the department;

     (2) before the loan is made or acquired, the bank secures and maintains in its files evidence of a determination of the value of the property; and

     (3) the loan is secured by an amortized mortgage, deed of trust, or assignment of a federal or state timber sale contract.

 (b) The aggregate of all loans made or acquired by a bank under this section may not exceed 50 percent of its combined capital, surplus, and undivided profits.

 (c) In this section, “forest tract” means a reasonably accessible tract of land primarily covered with marketable or potentially marketable growing timber having a recognized commercial value, which is safeguarded by fire protection, insect, pest, and disease control.




Sec. 06.05.212. Overdrafts.
 (a) A director, officer, or employee of a state bank may not knowingly, wilfully, and persistently overdraw the director’s, officer’s, or employee’s account or permit a customer to do so.

 (b) An overdraft of more than 30 days’ standing may not be allowed as an asset of the bank.

 (c) The provisions of this section do not apply to an approved overdraft created under a check guaranty plan or other similar revolving credit plan.




Sec. 06.05.215. Liability of directors and officers for certain loans.
A director, executive officer, managing officer, or issuing officer of a state bank who knowingly or with gross negligence approves or permits the funds of the bank to be lent or overdrafts to be made in an unsafe or unsound manner, or in violation of an order of the department, the bank’s lending policies, this title, or a regulation adopted under this title, is personally liable to the bank for all the loans and overdrafts. The bank may enforce the liability against the director or officer by an action in a court of competent jurisdiction.


Sec. 06.05.220. Loans under Title I of the National Housing Act. [Repealed, § 102 ch 26 SLA 1993.]
Sec. 06.05.225. Application of other laws to loans insured under national housing act.
The laws of the state prescribing or limiting interest rates upon loans do not apply to loans insured under 12 U.S.C. 1706c (National Housing Act).


Sec. 06.05.230. Investment in property and banking premises.
A bank may acquire, purchase, hold, and convey real and personal property for the following purposes only:
     (1) that which is necessary for the convenient transaction of, or the promotion of, its business, including buildings containing banking offices, equipment, furniture and fixtures, art work, leasehold improvements, parking lots, and, with the prior approval of the department, real property reasonably anticipated to be necessary for future expansion of the bank, if the book asset value of the purchase or investment does not exceed 60 percent of the capital and surplus of the bank;

     (2) the satisfaction of or on account of debts previously contracted in the course of its business;

     (3) the purchase at sale under judgment, decree, lien, or mortgage foreclosure, against security held by it;

     (4) that which is necessary in connection with a negatively amortizing loan described under AS 45.45.010(f).




Sec. 06.05.231. Bank service corporations.
 (a) A bank may invest not more than 10 percent of its paid-in and unimpaired capital and surplus in a bank service corporation if
     (1) the bank submits an application requesting permission to invest in a bank service corporation to the department, accompanied by complete information concerning feasibility, rates, and competitive organizations, and the department consents in writing to the investment before it is made; and

     (2) the total investment under this section and AS 06.05.230(1) does not exceed the combined capital, surplus, and undivided profits.

 (b) A bank may not employ or use the services of a bank service corporation unless the service corporation provides an adequate bond or insurance against liabilities arising from accounting or other activities performed by the service corporation affecting bank transactions and the bank gives written notice to the department, before any services are rendered, specifying the name and address of the bank service corporation and the nature of the activities to be performed.

 (c) The performance of a service for a bank by a bank, person, or organization other than the bank is subject to all laws and regulations governing performance and examination, in the same manner as if the bank were performing the services.

 (d) In this section,
     (1) “bank service corporation” means a corporation organized to perform bank services for two or more banks, each of which owns part of the capital stock of the corporation;

     (2) “bank services” means services for banks such as check and deposit sorting and posting, computation and posting of interest and other credits and charges, preparation and mailing of checks, statements, notices, and similar items, and any clerical, bookkeeping, accounting, statistical, or similar functions performed by a bank for its customers.




Sec. 06.05.232. Leasing of real and personal property. [Repealed, § 102 ch 26 SLA 1993.]
Sec. 06.05.235. Bank holding companies.
 (a) Except as provided in this section or in AS 06.05.570, it is unlawful for a person to own, control, or hold with power to vote 25 percent or more of a class of voting securities or other capital stock of one or more state banks or domestic bank holding companies subject to regulation under this chapter. However, when it becomes a bona fide necessity to avoid loss for a creditor to accept shares of stock in one or more state banks or domestic bank holding companies constituting more than 25 percent of the ownership or control of a state bank or domestic bank holding company in payment of indebtedness owing to the creditor, shares of stock may be accepted, but the shares of the one or more state banks or domestic bank holding companies exceeding that 25 percent shall be promptly disposed of under the supervision of the department.

 (b) A domestic bank holding company that maintains its principal office and place of business in the state and conducts its principal operations in the state, may acquire and own all or a portion of the voting securities or other capital stock of, or all or substantially all of the assets of, one or more banks or bank holding companies. The department may require a domestic bank holding company to post a bond with the department in an amount not more than the paid-in capital and paid-in surplus represented by the proportion of state bank stock directly or indirectly owned, held, or controlled by it, under conditions the department may prescribe, to assure full protection of the public. Before a domestic bank holding company may acquire a bank or bank holding company doing business in the state, the domestic bank holding company shall apply for and obtain a permit from the department. In considering whether to issue a permit, the department shall consider the benefits to the public, the preservation of a competitive banking industry, and the maintenance of a safe and sound bank industry. The domestic bank holding company is subject to an examination by the department or a competent person designated by the department when the department considers it necessary, but not less than once each year. The domestic bank holding company shall pay an examination fee under AS 06.01.010.

 (c) [Repealed, § 102 ch 26 SLA 1993.]
 (d) [Repealed, § 102 ch 26 SLA 1993.]
 (e) [Repealed, § 102 ch 26 SLA 1993.]
 (f) [Repealed, § 102 ch 26 SLA 1993.]
 (g) For the purpose of this section and AS 06.05.570, a trust company organized under AS 06.26 that is engaged in the business of banking shall be considered a state bank.

 (h) [Repealed, § 102 ch 26 SLA 1993.]
 (i) The provisions of this section do not apply to a person that
     (1) acquires or holds voting securities or other capital stock of a bank or bank holding company only for a reasonable period of time in connection with the underwriting of securities;

     (2) is a state agency;

     (3) is a trustee or agent of an independent federal financial regulatory agency; or

     (4) under a plan of financial restructuring that is intended to prevent the failure of a state bank and that is approved by the department,
          (A) acquires or receives 25 percent or more of a class of voting securities or other capital stock of the bank or bank holding company subject to the plan, and owns, controls, or holds, with the power to vote, the securities acquired or received in excess of 24.99 percent of that class for a period of time that permits the distribution or resale of the securities or other capital stock on a reasonable basis; or

          (B) purchases or receives securities under the plan and, after the purchase or receipt, owns, controls, or holds, with a power to vote, less than 25 percent of a class of voting securities or other capital stock of the bank or bank holding company subject to the plan but subsequently, solely through the action or inaction of others, including the bank or bank holding company, owns, controls, or holds, with a power to vote, 25 percent or more of a class of voting securities or other capital stock of the bank or bank holding company; the exemption in this subparagraph does not apply if the department determines, after notice and opportunity for hearing under AS 06.01.030, that the ownership, control, or holding of the securities or stock exceeding 24.99 percent of a class, other than under a plan to promptly dispose of the securities or stock under the supervision of the department, permits the organization in any manner to control the election of a majority of the board of directors or trustees, or to directly or indirectly exercise a controlling influence over the management or policies of the bank or bank holding company.




Sec. 06.05.237. Financial holding companies.
Notwithstanding the provisions of AS 06.05.235 and regulations adopted under that section, a holding company formed under this title may apply to the Federal Reserve System for status as a financial holding company. If the status is granted, the financial holding company has powers as a financial holding company authorized by the Federal Reserve System if
     (1) at the time of application, the holding company provides the department with a complete copy of the application;

     (2) the holding company provides the department with copies of all correspondence concerning the application;

     (3) the holding company provides the department with a copy of the approval by the Federal Reserve System within 10 days after the holding company receives the approval; and

     (4) the department does not issue a letter denying financial holding company status within 30 days after the approval by the Federal Reserve System.




Sec. 06.05.238. Required directors’ meetings and statements to the department. [Repealed, § 102 ch 26 SLA 1993.]
Sec. 06.05.240. Acquisition of property to satisfy or protect previous loan.
A state bank may take property of any kind to satisfy or protect a loan previously made in good faith and in the ordinary course of business. A bank may not take the capital stock of the bank or of the bank’s parent holding companies unless it complies with AS 06.05.205(d). The property shall be entered on the books at cost, or fair market value, whichever is less. Property acquired to satisfy or protect previous loans shall be disposed of over periods of time as the department may prescribe by regulation.


Sec. 06.05.245. Disposition of property not needed in the conduct of a banking business.
All investments in real and personal property, regardless of how acquired, not permitted under AS 06.05.230 that come into the possession of a state bank shall be disposed of as soon as possible. If the real or personal property is not sold within the time limit set by the department in regulations, it shall be written off and may not be carried as an asset of the state bank.


Sec. 06.05.250. Limitation on cost of banking premises. [Repealed, § 10 ch 63 SLA 1969.]
Sec. 06.05.255. Borrowing.
 (a) The aggregate amount of outstanding liabilities of a state bank for money borrowed exclusive of (1) capital notes and debentures issued under AS 06.05.307, (2) obligations incurred in connection with the purchase of bank premises under AS 06.05.230(1), and (3) agreements to repurchase securities, earlier sold by the bank, at the end of a stated period, may not at any time exceed 15 percent of the bank’s total assets, or a larger amount if approved by the department.

 (b) Nothing in this section prevents a bank from rediscounting in good faith and endorsing any of its negotiable notes.

 (c) [Repealed, § 102 ch 26 SLA 1993.]




Sec. 06.05.260. Pledge, assignment, and transfer of assets.
 (a) A bank may not give preference to a depositor or creditor by pledging any of the assets of a bank as collateral security except
     (1) to the state to secure state funds, or to a municipal corporation or other public corporation, municipal utility or municipal utility board, or political subdivision of the state to secure its funds, and to the United States as may be required to make the bank a depository for United States funds;

     (2) to secure a mortgage or deed of trust in connection with the purchase of banking premises as provided in AS 06.05.230, if the only property pledged is property purchased in the transaction; or

     (3) to a federal reserve bank or federal home loan bank in the manner required by the applicable laws, regulations, and rules of the federal reserve bank or federal home loan bank, as applicable.

 (b) [Repealed, § 102 ch 26 SLA 1993.]
 (c) A pledge, assignment, or transfer of any of the assets of a bank in violation of this section is null and void against the creditors of the bank.




Sec. 06.05.262. Assumption of liability.
Except as expressly permitted in this chapter, a state bank may not assume liability as an insurer or as a guarantor or endorser of a security instrument or obligation unless the bank has a property interest in or with respect to the instrument or obligation. This section does not apply to warranty deeds issued by a bank.


Sec. 06.05.265. Liability of directors for certain loans.
A loan in violation of AS 06.05.200 — 06.05.260 makes the officers and directors of the bank jointly and severally liable to the bank for the loan.


Sec. 06.05.270. Investments and customer securities.
 (a) In addition to loans and acquisitions expressly authorized by this chapter, a state bank may deal in, underwrite, and invest in for its own account the obligations that the department by regulation authorizes the bank to deal in, underwrite, or invest in for its own account.

 (b) [Repealed, § 102 ch 26 SLA 1993.]
 (c) A state bank may purchase or sell, without recourse, any security upon the order of a customer and for the customer’s account.




Sec. 06.05.272. Bank subsidiaries.
 (a) A state bank may purchase or establish, and operate, one or more subsidiaries engaged in any of the following activities, if the subsidiary has the necessary licenses and permits and the operation is not detrimental to the bank’s business:
     (1) real property ownership, development, and leasing;

     (2) securities brokerage;

     (3) other activities authorized in regulations adopted under this section; or

     (4) other activities approved by the department.

 (b) Under this section, a state bank’s total investment in its subsidiaries may not exceed that which is permissible for a federally chartered bank’s total investment in all subsidiaries as set out in 12 U.S.C. 24a, as amended. Loans to subsidiaries are considered investments subject to the limitations of this subsection.

 (c) A subsidiary of a state bank is subject to examination by the department as part of the examination of the bank under AS 06.01.015.

 (d) [Repealed, § 55 ch 75 SLA 2002.]




Sec. 06.05.275. Trade and bank acceptances.
 (a) [Repealed, § 102 ch 26 SLA 1993.]
 (b) A bank may discount, invest in, negotiate, and issue trade acceptances and bank acceptances if
     (1) the terms of the draft require presentation for payment within 180 days of issuance, exclusive of days of grace, and it is drawn to finance the purchase of goods with maturity and payment in accordance with the terms of the purchase agreement;

     (2) the terms of the draft require presentation for payment within 180 days of issuance, exclusive of days of grace, and it is secured by shipping documents transferring or securing title to goods, or by receipt of a licensed or bonded warehouse securing title to readily marketable goods; or

     (3) the draft is drawn by a bank outside the continental limits of the United States for the purpose of furnishing dollar exchange for trade and its terms require presentation for payment within 90 days of issuance.

 (c) [Repealed, § 102 ch 26 SLA 1993.]




Sec. 06.05.277. Providing services as agent.
 (a) If a state bank complies with this section and if the department approves the provision of the services under this section, the state bank may agree to provide banking services as an agent for a depository institution.

 (b) A state bank that proposes to enter into an agency agreement under this section shall file with the department at least 60 days before the effective date of the agreement a request that the department approve the provision of the banking service. The request must include a
     (1) notice of intention to enter into an agency agreement with a depository institution;

     (2) description of the services proposed to be provided under the agency agreement; and

     (3) copy of the agency agreement

 (c) Except as provided by (d) of this section, the commissioner shall decide whether to approve a request submitted under (b) of this section and shall issue a decision within 60 days after receipt of the request. The department may ask for additional information after reviewing a request received under (b) of this section. If the department asks for additional information, the 60 days is calculated from the date the department receives the additional information.

 (d) When making its decision under (c) of this section, the department may consider the safety and soundness of the particular state bank and depository institution and whether providing the service is consistent with applicable federal and state law and with safe and sound banking practices.

 (e) Before approval under (c) or (f) of this section, the department shall give appropriate notice to the public of each request submitted to the department under (b) of this section.

 (f) If the department does not take action on a request submitted under (b) of this section within the time limit established in (c) of this section, the request is considered to have been approved by the department.

 (g) Notwithstanding the other provisions of this section, a state bank may not, under an agency agreement, provide by itself through an agent an activity that the state bank may not conduct under applicable state and federal law.

 (h) The department may order a state bank or another depository institution subject to this title to cease acting as an agent or principal under an agency agreement subject to this section if the department determines that the activity is inconsistent with safe and sound banking practices.




Sec. 06.05.280. Fees connected with obtaining mortgage loans.
 (a) [Repealed, § 102 ch 26 SLA 1993.]
 (b) [Repealed, § 102 ch 26 SLA 1993.]
 (c) A director, officer, or employee of a bank may not receive a fee or other compensation of any kind in connection with obtaining a mortgage loan from a bank, except for services actually rendered as provided in this chapter.




Article 4. Organization, Incorporation, Certification, Capital Structure, and General Powers, Limitations, and Requirements.


Sec. 06.05.300. General corporate powers. [Repealed, § 102 ch 26 SLA 1993.]
Sec. 06.05.301. Applicability of corporations code.
 (a) Except for national banks with a principal place of business in the state, and interstate state banks and international banks with a certificate of authority under AS 06.05.555, a corporation may not engage in the banking business unless the corporation is organized under AS 10.06 (Alaska Corporations Code) and this title.

 (b) The provisions of AS 10.06 (Alaska Corporations Code) apply to state banks, except those provisions inconsistent with this chapter. The provisions inconsistent with this chapter include AS 10.06.010(4) — (8), 10.06.105(a) and (d), 10.06.325, 10.06.356, 10.06.358 — 10.06.360, 10.06.370, 10.06.385 — 10.06.388, 10.06.420(i), 10.06.430, 10.06.453, 10.06.460(b), 10.06.485, 10.06.522 — 10.06.868, 10.06.915, 10.06.960, and 10.06.990(30) and (37).




Sec. 06.05.305. Capital structure.
 (a) A corporation may not commence and operate a banking business in the state in a community with a population of 35,000 or more unless the corporation has paid-in capital in an amount acceptable to the department, but not less than $2,000,000, and paid-in surplus equal to 20 percent of paid-in capital. A corporation may not commence and operate as a bank in the state in a community with a population less than 35,000 unless the corporation has paid-in capital in an amount acceptable to the department, but not less than $1,000,000, and paid-in surplus equal to 20 percent of paid-in capital. A bank may not operate any branches unless it has an aggregate paid-in capital and paid-in surplus in amounts acceptable to the department.

 (b) The capital of a state bank may not be reduced to an amount less than is required by the department for capital under (a) of this section. A reduction of capital or the liability of the shareholders is not valid until it is approved by the department.

 (c) If a state bank fails to maintain its total capital accounts and loan loss reserves in an amount equal to the assets classified as substandard by the Federal Deposit Insurance Corporation or by the state in the bank’s latest report of examination, the department shall consider the failure as endangering the safety of depositors and may direct the bank’s directors to increase the capital accounts in an amount sufficient to cover substandard assets.




Sec. 06.05.307. Capital notes or debentures.
 (a) A bank organized under the laws of this state may, with the approval of stockholders owning two-thirds of the stock of the bank entitled to vote or without this approval if authorized by its articles of incorporation, issue convertible or nonconvertible capital notes or debentures with the written consent of the department. The principal amount of notes and debentures outstanding at any time may not exceed 33 1/3 percent of the capital stock and surplus fund of the bank at the date of issue. The rate and term are subject to the approval of the department but in no event may the term be more than 20 years after the date of issue.

 (b) A bank may not retire capital notes or debentures if the retirement creates an impairment of its capital. Capital notes and debentures are subordinated in right of payment in the event of insolvency or liquidation of the bank to the prior payment of all deposits and all claims of other creditors except the holders of securities on a parity with the capital notes and debentures and the holders of securities expressly subordinated to the capital notes and debentures.

 (c) Bank assets may not be pledged to secure capital notes and debentures, but the bank may, for the security and the protection of the holders of the capital notes and debentures, agree through its board of directors to restrict the payment of dividends.

 (d) [Repealed, § 102 ch 26 SLA 1993.]
 (e) [Repealed, § 102 ch 26 SLA 1993.]




Sec. 06.05.310. Correction of impairment of capital.
If the department determines that the order is necessary for the protection of depositors, the department may issue an order under AS 06.01.030 to require a state bank to increase its capital accounts or to reduce its deposits. In making a decision whether to issue an order under this section, the department shall consider the
     (1) quality of management;

     (2) quality and liquidity of assets;

     (3) history of earnings and retention of earnings;

     (4) quality and character of ownership;

     (5) potential volatility of deposit structure;

     (6) quality and cost of bank operations; and

     (7) capacity to meet present and future needs of the area served, considering the bank’s competition.




Sec. 06.05.315. Double stockholder liability. [Repealed, § 54 ch 169 SLA 1978.]
Sec. 06.05.320. Bank purchases of own shares.
Except in accordance with written approval of the department, a bank may not purchase its own capital stock.


Sec. 06.05.325. Bank stock as personalty. [Repealed, § 102 ch 26 SLA 1993.]
Sec. 06.05.327. Change in outstanding voting shares.
Before a change may occur in the outstanding voting shares of a state bank that will result in a change in the control of the bank, or before any sales or transfers by or to a person, corporation or other legal entity of the aggregate of 10 percent or more of the voting shares of a state bank may be made, the transaction must be approved by the department.


Sec. 06.05.330. Incorporators. [Repealed, § 102 ch 26 SLA 1993.]
Sec. 06.05.335. Notice of intention to incorporate, establish branch bank or relocate. [Repealed, § 54 ch 169 SLA 1978.]
Sec. 06.05.340. Certain remuneration prohibited.
A bank may not pay directly or indirectly a fee, commission, or bonus of any kind for its promotion and organization or for securing a subscription to the original capital or to any increase in capital. However, this section does not prohibit the payment of reasonable compensation for legal, accounting, and econometric services, or payments to a securities broker-dealer registered under AS 45.55 for services that have been performed in connection with the sale of bank securities.


Sec. 06.05.342. Subscriptions for shares.
 (a) Subscription agreements and accompanying prospectuses or offering circulars, whether for a proposed state bank or for an increase in capital of an existing state bank, shall be submitted to the department for approval before their use. The department shall determine whether the subscription agreements or offering circulars provide full and accurate disclosure of the material terms of the offering. The department may order the incorporators not to accept any stock subscriptions or to cease accepting subscriptions if the department determines that the incorporators are not acting lawfully or in good faith.

 (b) In the case of a proposed state bank, the incorporators shall submit a list of subscribers, providing the name, residence address, and occupation of each subscriber and the number of shares for which the person has subscribed.




Sec. 06.05.344. Application for approval of state bank.
 (a) Before the department issues a certificate of incorporation under AS 10.06.910 for a state bank, the incorporators of a proposed state bank shall obtain the approval of the department. In applying for the approval, the incorporators shall file with the department
     (1) an application in the form and containing the information the department requires, including
          (A) for each incorporator and proposed director, and for each preincorporation subscriber of more than five percent of the capital stock, any past and present connection with a bank other than as a customer on terms generally available to the public;

          (B) the name, residence, and occupation of each preincorporation subscriber and the number of shares subscribed for by the subscriber;

          (C) the address of the proposed place of business of the bank or, if an address is not available, a legal description of the proposed place of business; and

     (2) the proposed articles of incorporation; and

     (3) all applicable fees, payable to the department, for the filing.

 (b) Investigation expenses incurred by the department in processing an application for approval of a proposed bank shall be charged to and paid by the applicant under AS 06.01.010. When submitting the application to the department, the applicant shall pay to the department $2,000 in partial payment of the investigation expenses incurred by the department. If the investigation expenses incurred by the department are less than $2,000, the department shall promptly refund the excess to the applicant.

 (c) The department shall notify the incorporators of its decision whether to accept an application for a proposed state bank. If the application and accompanying documents required by (a) of this section do not conform to the requirements of this chapter and the regulations adopted under this chapter, the department shall return the documents with an explanation of the defects. If the department does not act within 30 days of receipt of the application, the application is considered to be accepted. Acceptance of the application does not constitute approval.

 (d) The incorporators shall publish notice of the department’s acceptance of the application for a proposed state bank and acceptance of the articles of incorporation once each week for two successive weeks in a newspaper of general circulation published in the community proposed as the bank’s principal place of business. If there is no newspaper of general circulation in the community, the notice shall be published in a newspaper of general circulation near the community. The first publication of the notice must appear within 15 days after the application and articles of incorporation have been accepted by the department. The notice must state
     (1) the name of the proposed state bank;

     (2) that the proposed bank is to be incorporated under this chapter and AS 10.06;

     (3) the purpose of the proposed bank; and

     (4) the names and addresses of the incorporators and the initial board of directors as the names and addresses appear in the articles of incorporation.

 (e) To prove that the publication required by (d) of this section was made, the incorporators shall file with the department an affidavit of the publisher of the newspaper in which the notice was published.

 (f) Upon acceptance of an application for approval of a proposed state bank, the department shall conduct an investigation to determine whether
     (1) the convenience and needs of the public will be served by the bank;

     (2) the population density and economic characteristics of the area primarily to be served by the bank afford reasonable promise of adequate support for the bank;

     (3) the character and fitness of the incorporators and the members of the initial board of directors command the confidence of the community and warrant the belief that the business of the bank will be honestly and efficiently conducted;

     (4) the proposed capital structure of the bank meets the requirements set by the department under AS 06.05.305;

     (5) the bank will have personnel with adequate knowledge and experience to conduct its business and officers of good character and financial responsibility;

     (6) the addition of the bank is not detrimental to a sound and competitive banking system; and

     (7) other relevant facts and circumstances exist that bear on the bank and its relation to the community.

 (g) The department shall approve or deny an application within six months after the application for approval has been accepted. The time may be extended by up to six additional months when the department determines that an extension is warranted by exceptional circumstances. Within 60 days after the second publication of the notice required by (d) of this section, a person opposing approval of the application may file written objections with the department. When it approves or denies the application, the department shall notify the incorporators and a person who requested in writing to be notified, and, if the application is denied, the department shall state the reasons for its decision and return all copies of the articles of incorporation.

 (h) If the department approves the application, the department shall endorse the approval on the articles of incorporation, file the articles of incorporation, and issue a certificate of incorporation under AS 10.06.910.




Sec. 06.05.345. Articles of incorporation.
 (a) In addition to those items required under AS 10.06.208, the articles of incorporation of a state bank must specify
     (1) the judicial district in which the bank is to be located and the community where the bank is to conduct its principal place of business;

     (2) the amount of its capital stock, which shall be divided into shares having a par value of not less than $1 each;

     (3) that there will be at least five but no more than 25 directors; and

     (4) the period for which the bank is organized, if limited.

 (b) [Repealed, § 102 ch 26 SLA 1993.]
 (c) [Repealed, § 102 ch 26 SLA 1993.]
 (d) [Repealed, § 102 ch 26 SLA 1993.]
 (e) [Repealed, § 102 ch 26 SLA 1993.]
 (f) [Repealed, § 102 ch 26 SLA 1993.]
 (g) [Repealed, § 102 ch 26 SLA 1993.]
 (h) [Repealed, § 102 ch 26 SLA 1993.]
 (i) [Repealed, § 102 ch 26 SLA 1993.]
 (j) [Repealed, § 102 ch 26 SLA 1993.]
 (k) [Repealed, § 102 ch 26 SLA 1993.]
 (l) A bank may amend its articles of incorporation in a manner consistent with its articles and bylaws, AS 10.06, and this chapter by a vote of its shareholders representing at least a majority of the capital at a regular meeting or at a special meeting called for the purpose.




Sec. 06.05.350. Certificate of authority.
 (a) At any time after receiving a certificate of incorporation, a bank may apply to the department for a certificate of authority to engage in the banking business. Before receiving a certificate of authority, a bank may not perform an act other than to perfect its organization, obtain and equip a place of business, obtain subscriptions and payment for its shares, and otherwise prepare to do business. If a bank violates this subsection by transacting business before it receives a certificate of authority, the directors and officers who wilfully authorized or participated in the action are personally, jointly, and severally liable for the debts and liabilities of the bank incurred before the certificate of authority is issued.

 (b) The department shall issue a certificate of authority to engage in the banking business to a proposed state bank if, upon review of the information required by this chapter, including the following, it approves the application:
     (1) certification by an officer by affidavit that the capital and surplus required by the department have been fully paid in cash;

     (2) a list of all shareholders, giving the name, address, and number of shares held by each;

     (3) bylaws of the corporation;

     (4) evidence satisfactory to the department that the bank has complied with all the requirements of this chapter and any conditions imposed by the department and has advised the department in writing of any changes that have occurred in the facts reflected in the material it filed under AS 06.05.344.

 (c) If the rights conferred by a certificate of authority are not exercised within one year from the date of its issuance, the certificate lapses.

 (d) Except as authorized under this section, a person may not
     (1) engage in the business of receiving deposits, discounting evidences of indebtedness, or receiving money for transmission;

     (2) represent that the person is a bank; or

     (3) use any form of the word “bank” in the person’s name unless the person is a state bank formed under this title or a bank formed under the authority of another state or an agency of the federal government, or unless it is clear that the use does not represent that the person is a bank; the prohibition in this paragraph does not apply to a food bank, blood bank, or similar organization that cannot readily be confused with a bank.

 (e) A person prohibited by (d)(3) of this section from using any form of the word “bank” in its name may apply to the commissioner for authority to use a form of the word “bank” in its name.




Sec. 06.05.355. Deposit insurance required.
 (a) The department may require a state bank, either at the time the bank applies for a certificate of authority or during the bank’s existence, to become a member of the Federal Deposit Insurance Corporation.

 (b) A bank that is a member of the Federal Deposit Insurance Corporation may not voluntarily relinquish membership without the consent of the department. Request for the consent must be made at least 180 days before the proposed date of relinquishment.

 (c) Relinquishment of membership without giving notice and obtaining the department’s consent, involuntary loss of membership, or failure to become a member after the department directs the bank to become a member constitutes cause for the department to take possession of the bank in the manner provided by this chapter.




Sec. 06.05.360. Foreign persons engaged in banking. [Repealed, § 102 ch 26 SLA 1993.]
Sec. 06.05.365. Application for charter. [Repealed, § 54 ch 169 SLA 1978.]
Sec. 06.05.367. Banks of foreign nationals engaging in a banking business in the state. [Repealed, § 102 ch 26 SLA 1993.]
Secs. 06.05.370 — 06.05.375. Charters; subscription calls. [Repealed, § 54 ch 169 SLA 1978.]
Sec. 06.05.380. Affidavit of capital paid in. [Repealed, § 102 ch 26 SLA 1993.]
Sec. 06.05.385. Organizational meeting; bylaws.
 (a) A state bank may not call an organizational meeting under AS 10.06.223 until all capital and surplus have been fully paid.

 (b) Bylaws shall be adopted and may be amended by a vote of the holders of a majority of the outstanding voting shares voted at a meeting of the shareholders. If not provided in the articles of incorporation, the bylaws must indicate the organizational structure of the bank and specifically designate the offices that will be held by the executive or managing officers of the bank. The bank shall file with the department copies of the original bylaws of the bank and any amendments adopted for the bylaws.




Secs. 06.05.390 , 06.05.395. Reimbursement of officer, director or employee for expenses in defending suits; certificate of authority required. [Repealed, § 102 ch 26 SLA 1993.]
Sec. 06.05.399. Application for certificate of authority for branch bank or change of location.
 (a) Before operating a branch bank at a permanent location or a mobile facility branch bank, or changing the location of the principal office or a branch of the bank at a permanent location, a state bank must apply to the department for a certificate of authority to do so. The application must be in the form and contain the information the department requires to enable the department to determine whether a certificate of authority should be issued, including the address at which the state bank or branch at a permanent location will operate. Investigation expenses incurred by the department in processing applications shall be charged to and paid by the applicant as provided in AS 06.01.010. At the time of submitting the application to the department, the applicant shall pay to the department $1,000 in partial payment of those investigation expenses incurred by the department. If the investigation expenses incurred by the department do not exceed $1,000, the remainder shall be promptly refunded to the applicant. In this subsection, “mobile facility branch bank” means a branch bank that moves from one location to another to provide banking services and that is located in or serves remote areas of the state not being adequately served by permanently located banks or bank branches.

 (b) The department shall notify the state bank of its action on the application for a branch bank or for a change of location. If the application and the accompanying documents do not conform to the requirements of (a) of this section, the department shall return them with an explanation of the defects in them. If the department does not respond within 30 days of its receipt of the application, the application shall be considered to have been accepted.

 (c) The state bank shall publish notice of the application for a branch bank or for a change in location in the manner provided in AS 06.05.344(d) — (e). The notice shall state the proposed location for the facility.

 (d) Upon acceptance of an application for a certificate of authority to operate a branch bank or for approval to change location, the department shall conduct an investigation to ascertain whether
     (1) the addition of the proposed facility in the community is consistent with a sound and competitive banking system;

     (2) the population density and other economic characteristics of the area primarily to be served afford reasonable promise of adequate support for the proposed facility;

     (3) the capital structure of the state bank is adequate in relation to the anticipated business and costs of operating at the proposed location;

     (4) the name is not deceptively similar to that of another branch or bank and is not otherwise misleading.

 (e) No later than 150 days after the application for a certificate of authority to operate a branch bank or to change location has been accepted, the department shall make a determination whether to approve the application. Within 30 days after the second publication of the notice referred to in (c) of this section, a person opposing the pending application may file written objections with the department. When it approves or denies the application, the department shall notify the bank and any other person who requested in writing to be notified; and if the application is denied, the department shall state the reasons for its decision.

 (f) The department shall issue a certificate of authority to operate a branch bank or to change location if
     (1) all conditions imposed by the department in granting the certificate have been fulfilled; and

     (2) the requirements of this chapter are satisfied.

 (g) If the rights conferred by a certificate of authority are not exercised within one year from the date of its issuance under this section, the certificate lapses.




Secs. 06.05.400 — 06.05.425. Certificate of authority. [Repealed, § 54 ch 169 SLA 1978. For current law, see AS 06.05.350, 06.05.399, and 06.05.466.]
Sec. 06.05.426. Automated teller machines.
 (a) A state bank may establish, maintain, and operate an automated teller machine on the premises of the main office or a branch office of the bank.

 (b) A state bank may establish, maintain, and operate an automated teller machine at a location other than bank premises by notifying the department 30 days before the date of establishment. An automated teller machine operated off bank premises shall be made available on a nondiscriminatory basis for use by depositors of other depository institutions authorized to do business in the state, upon the agreement of the other depository institutions to pay a fair and equitable amount for the use of the machine.

 (c) The notice required in (b) of this section must include
     (1) the location and general description of the surrounding area, including a description of the business establishment, if any, in which the machine will be located;

     (2) the manner of operation and the kinds of transactions that the machine will perform;

     (3) the names of the other depository institutions that will share the machine’s services; and

     (4) other information required by the department.

 (d) A state bank may invest in a corporation organized to operate machines that perform automated teller services for two or more depository institutions.

 (e) A person may not establish or operate an automated teller machine that accepts deposits unless those deposits are insured by the Federal Deposit Insurance Corporation or another agency of the United States that insures deposits.




Article 5. Conduct of Corporate Affairs.


Sec. 06.05.430. Meetings of stockholders. [Repealed, § 102 ch 26 SLA 1993.]
Sec. 06.05.435. Directors.
 (a) The affairs of every bank incorporated under this chapter shall be managed by not less than five directors, nor more than 25. A majority of the board of directors shall be bona fide residents of the state, and a majority constitutes a quorum for the transaction of business.

 (b) [Repealed, § 102 ch 26 SLA 1993.]
 (c) Unless otherwise approved by the department, each director of a state bank shall own, in the director’s own right or jointly with the director’s spouse, free of any encumbrance, common or preferred stock of the state bank or of an entity that controls the state bank that has an aggregate par value of at least $1,000, an aggregate shareholder’s equity of at least $1,000, or an aggregate fair market value of at least $1,000.

 (d) Each director shall take an oath that the director will faithfully and honestly perform the duties of the office and will not violate or permit to be violated any provisions of this chapter. The oath shall be filed annually in the office of the department.

 (e) [Repealed, § 102 ch 26 SLA 1993.]
 (f) A bank shall report within 30 days to the department a change in directors, including a statement of the business and professional affiliations of new directors.

 (g) The department may issue an order under AS 06.01.030 removing a person from the board of directors or prohibiting a person from being on the board, if the department determines that
     (1) due to the competence, experience, character, or integrity of the person, it is not in the best interests of the depositors or the public for the person to be or remain on the board;

     (2) the person is dishonest or reckless in managing the affairs of the bank;

     (3) the person has persistently violated this title, the regulations adopted under this title, or the orders of the department under this title or under the regulations adopted under this title;

     (4) the person has been indicted for a felony or other crime involving moral turpitude or breach of trust; or

     (5) the person has filed a petition in bankruptcy either in an individual capacity or in the name of a corporation in which the person owns a majority of the shares.

 (h) In the case of an entity that owns more than one bank, a director may use the director’s equity interest in the controlling entity to satisfy, in whole or in part, the equity interest requirement for one or all of the controlled banks.

 (i) The value of the common or preferred stock held by a director of a state bank or of an entity that controls the state bank is valued as of the date purchased, or as of the date on which the individual became a director, whichever value is greater.




Sec. 06.05.437. Officers.
 (a) The officers of a bank shall be chosen by the board of directors. An officer may not be appointed to serve for a period longer than one year. If a president of a bank or other chief officer responsible for the management of the bank is not a director, the officer must be an ex officio member of the board of directors without the power to vote.

 (b) A bank shall report within 30 days to the department any changes among executive officers, including in its report a statement of the business and professional affiliations of new executive officers.

 (c) If the department determines that an officer or employee of the bank has been negligent, dishonest, reckless, or incompetent in the performance of official duties, the department may order the board to remove the officer or employee from office, after giving the board and the officer or employee an opportunity for a hearing under AS 06.01.030. If the board neglects or refuses to remove the officer or employee from office and if losses due to the negligence, dishonesty, recklessness, or incompetence of the officer or employee accrue to the bank after the neglect or refusal, the order of the department is conclusive evidence of the negligence of the board under this subsection in an action brought against the board, or a member of the board, for recovery of the losses.




Sec. 06.05.438. Directors, meetings, and duties.
 (a) The board of directors of each bank shall hold a meeting at least once each month for at least 10 months in each calendar year.

 (b) The board of directors shall elect a secretary who shall keep a correct record of the minutes of each board meeting. The minutes shall state the date of each meeting, the names of the directors present, and the votes taken. The record of the meeting of the board of directors shall be subscribed to by the presiding officer and the secretary. The minutes shall be read and approved at the next succeeding meeting, and the minutes of that meeting shall show that fact. It is the duty of the bank examiner to examine the minutes of the board at the time of the bank’s examination and to include in the report of examination any failure of the bank to comply with this section.

 (c) The board of directors shall designate at least one officer of the bank to prepare and submit to the board at each board meeting a report of the loans, overdrafts, and investments made by the bank in the preceding month or since the last report. The board of directors shall examine and pass upon the report and make it a part of the record of the meeting by recording the report in full in the minutes.

 (d) The board of directors shall appoint annually an examining committee of no less than three directors of which no more than one may be an active officer of the bank. The committee shall examine or cause to be examined the condition of the bank. A copy of the report shall be submitted to the department within 60 days after completion of the examination.

 (e) Unless prohibited by the articles or bylaws of the state bank, the board of directors or a committee of the board may validly conduct a meeting by communicating simultaneously with each other by means of conference telephones or similar communications equipment.

 (f) The department may require a meeting of the board of directors of a state bank to be held in the manner and at the time and place the department directs when, in the judgment of the department, a violation of this title has occurred or is about to occur. A report of an examination required or allowed by this title, the conclusions drawn from the examination by the department, recommendations made by the department, and other matters concerning the operation and condition of the bank may be presented to the board of directors by the department. If the department presents a report of examination or other information is presented to the board, each member of the board of directors shall furnish to the department a statement, on forms to be supplied by the department, that the member has read and is familiar with the recommendations of the department.




Sec. 06.05.440. Authority to declare dividends.
The directors of a bank transacting business in the state may declare a dividend out of the net profits, subject to any restrictions under AS 06.05.307(c) and after complying with AS 06.05.441 — 06.05.445.


Sec. 06.05.441. Conditions precedent to dividend declaration and payment.
 (a) Before a bank dividend is declared or the net profits for the period covered by the dividend disposed of, and after the restoration of any undivided profits or surplus under AS 06.05.442, not less than one-fifth of these net profits shall be carried to the bank surplus account until the surplus account equals 100 percent of the paid-in capital of the bank.

 (b) The department may require a bank to suspend the payment of any dividends until all orders or requirements of this section and AS 06.05.442 have been complied with.




Sec. 06.05.442. Excess losses; restoration of surplus; payment of dividends.
A loss sustained by a bank in excess of its undivided profits and any capital contingency reserves shall be charged to its surplus account or, with the approval of the department, carried as negative undivided profits. The bank’s undivided profits and surplus account shall thereafter be reimbursed from earnings, and no dividends may be declared or paid by the bank until any negative undivided profits are eliminated and the surplus account is restored to at least the amount from which the surplus was originally reduced.


Sec. 06.05.443. Limitation on dividends. [Repealed, § 102 ch 26 SLA 1993.]
Sec. 06.05.445. Net undivided profits and dividends.
 (a) A bank may not declare or pay a dividend in an amount greater than its net undivided profits then on hand.

 (b) In determining net profits for the purpose of declaring a dividend, a bank may not include in its calculations
     (1) loan loss reserves and losses in excess of reserves, including loans or other credits upon which interest for a period of six months is due and unpaid, unless the loan or credit is well secured and in the process of collection;

     (2) interest accrued but not collected on loans or other credits upon which the interest due is more than 90 days delinquent;

     (3) interest collected but not earned;

     (4) assets or depreciation that the department has required to be charged off;

     (5) the appreciation of any asset above its actual cost to the bank; and

     (6) any accrued expenses, interest or taxes due from the bank.




Sec. 06.05.450. Shareholders list.
Each bank shall keep a record of the name and residence of each shareholder of the bank, the class and number of shares held by each, the time when each person became a shareholder, and all transfers of stock, stating the time when made, the number of shares, and by whom transferred. A list of current shareholders shall be available for inspection in the bank office by any shareholder on demand.


Sec. 06.05.455. Deposit insurance. [Repealed, § 54 ch 169 SLA 1978.]
Sec. 06.05.460. Report upon inactive deposit accounts. [Repealed, § 14 ch 133 SLA 1986.]
Sec. 06.05.462. Conversions, mergers, and consolidations.
 (a) A national bank located in the state may convert to a state bank or merge or consolidate with a state bank, and a state bank may merge or consolidate with another state bank, if the merger or consolidation is consistent with federal and state law and approved by the department.

 (b) Before merger or consolidation under (a) of this section, banks shall file with the department an application and other information and reports that the department requires.

 (c) The department, in the exercise of its power to approve or disapprove applications for merger or consolidation, shall act in the interests of promoting and maintaining a sound banking system, the security of deposits and customers, the preservation of the liquid position of banks, and in the interest of preventing injurious credit expansions and contractions.

 (d) A state bank converting to or merging or consolidating with a national bank shall submit a copy of the application for national charter or application to convert, merge, or consolidate to the department at the time those documents are forwarded to the comptroller of the currency.




Sec. 06.05.463. [Renumbered as AS 06.05.120.]

Article 6. Dissolution, Reorganization, Liquidation, and Department Possession.


Sec. 06.05.465. Voluntary liquidation; requirements for approval. [Repealed, § 102 ch 26 SLA 1993.]
Sec. 06.05.466. Dissolution before commencement of business.
If the department discovers, after it approves the articles of incorporation for a bank but before it issues a certificate of authority to the bank, a reason why a bank should not have been incorporated, or if a certificate of authority is not issued within the later of one year after the issuance of the certificate of incorporation or the time the department allows for satisfaction of conditions precedent to the issuance of a certificate of authority, the bank shall voluntarily dissolve under AS 10.06.605 — 10.06.625 or may be involuntarily dissolved by the department under AS 10.06.633.


Sec. 06.05.468. Department takeover.
 (a) A state bank may be closed and the department may take possession of the bank if the bank voluntarily places its affairs and assets under the department’s control, or if the department finds
     (1) the bank has violated an order of the department;

     (2) the bank has violated a provision of this chapter or a regulation of the department adopted under this chapter;

     (3) the bank’s capital is impaired or the bank is otherwise in an unsafe or unsound condition;

     (4) the bank’s business is being conducted in an unlawful, unsafe, or unsound manner;

     (5) the bank is insolvent;

     (6) the bank is unable to continue normal operations;

     (7) a department examination of the bank is obstructed or impeded;

     (8) the bank holding company that controls the bank refuses to permit an examination as provided in AS 06.05.235; or

     (9) the bank has lost, or received notice of the termination or suspension of, its membership in the Federal Deposit Insurance Corporation or has relinquished its membership in the Federal Deposit Insurance Corporation without the consent of the department.

 (b) Except as provided in (d) of this section, before the department may take possession of a bank the department shall issue a notice to the board of directors of the bank under AS 06.01.030(a) of the problems identified by the department and issue an order to the board under AS 06.01.030(b) to correct the problems. The notice must also specify that failure to comply with the order may result in the department taking possession of the bank.

 (c) If a bank fails to comply with an order issued under (b) of this section, the department may take possession of the bank by posting upon the bank premises a notice stating that the department is assuming possession under this chapter. Department possession begins when the notice is posted. The notice shall also be filed in the superior court of the judicial district in which the bank is located. The department shall notify the local federal reserve bank if the bank is a member of the Federal Reserve System.

 (d) Notwithstanding the provisions of this section and AS 06.01.030, if, in the opinion of the department, an emergency exists that will result in serious losses to the depositors, the department may take possession of a bank without prior hearing. Within two days after the department takes possession under this subsection, an interested party may file with the department an application for an order vacating the possession. The department shall grant the application if the department finds that the department’s action was not authorized under this chapter.




Sec. 06.05.470. Department in possession.
 (a) [Repealed, § 102 ch 26 SLA 1993.]
 (b) When the department has taken possession of a state bank, it is vested with the full and exclusive power of management and control, including the power to continue or discontinue the business, to stop or limit the payment of the bank’s obligations, to employ necessary assistants, to execute any instrument in the name of the bank, to commence, defend, and conduct in the bank’s name any action or proceeding in which the bank may be a party, to terminate the possession by restoring the bank to its board of directors, and to reorganize or liquidate the bank under this chapter. As soon as practicable after taking possession, the department shall make an inventory of the assets and file a copy of the inventory with the superior court.

 (c) When the department has taken possession, there shall be a postponement, until six months after the commencement of that possession, of the date upon which any period of limitation fixed by a statute or agreement would otherwise expire on a claim or right of action of the bank, or upon which an appeal must be taken or a pleading or other document must be filed by the bank in any pending action or proceeding.

 (d) [Repealed, § 102 ch 26 SLA 1993.]
 (e) [Repealed, § 4 ch 8 SLA 1987.]
 (f) [Repealed, § 102 ch 26 SLA 1993.]
 (g) A judgment, lien, or attachment may not be enforced against any asset of the bank while it is in possession of the department. Upon the election of the department in connection with a liquidation or reorganization,
     (1) any lien or attachment, other than an attorney’s or mechanic’s lien, obtained upon any asset of the bank during the department’s possession or within four months before commencement of that possession, may be vacated, except liens created by the department while in possession; and

     (2) any transfer of an asset of the bank made after or in contemplation of its insolvency or in anticipation of the department’s takeover, with intent to effect a preference of one creditor over another creditor or to prevent the distribution of the bank’s assets according to law, is void.

 (h) The department may borrow money in the name of the bank in its possession and may pledge assets of the bank as security for the loan.

 (i) All necessary and reasonable expenses resulting from the department’s possession of a bank and of its reorganization or liquidation shall be paid from the assets of the bank.

 (j) [Repealed, § 102 ch 26 SLA 1993.]
 (k) [Repealed, § 102 ch 26 SLA 1993.]
 (l) [Repealed, § 102 ch 26 SLA 1993.]
 (m) [Repealed, § 102 ch 26 SLA 1993.]
 (n) [Repealed, § 102 ch 26 SLA 1993.]
 (o) [Repealed, § 102 ch 26 SLA 1993.]
 (p) [Repealed, § 102 ch 26 SLA 1993.]
 (q) [Repealed, § 102 ch 26 SLA 1993.]
 (r) [Repealed, § 102 ch 26 SLA 1993.]
 (s) [Repealed, § 102 ch 26 SLA 1993.]
 (t) [Repealed, § 102 ch 26 SLA 1993.]
 (u) [Repealed, § 102 ch 26 SLA 1993.]
 (v) [Repealed, § 102 ch 26 SLA 1993.]
 (w) [Repealed, § 102 ch 26 SLA 1993.]
 (x) [Repealed, § 102 ch 26 SLA 1993.]
 (y) [Repealed, § 102 ch 26 SLA 1993.]
 (z) [Repealed, § 102 ch 26 SLA 1993.]




Sec. 06.05.471. Reorganization.
 (a) If the department decides to reorganize a state bank, the department, after according a hearing to all interested parties, shall enter an order proposing a reorganization plan. The department shall send a copy of the plan to each depositor and creditor who will not receive payment of a claim in full under the plan, and a notice that, unless within 30 days the plan is disapproved in writing by persons holding one-third or more of the aggregate amount of the claims, the department will reorganize the bank.

 (b) A plan of reorganization may not be prescribed under this chapter unless, in the opinion of the department,
     (1) the plan is fair to all classes of depositors, creditors, and shareholders;

     (2) subject to a fair adjustment for new capital that a class will pay under the plan, the face amount of the interest accorded to a class of depositors, creditors, or shareholders under the plan does not exceed the value of the assets at liquidation less the full amount of the claims of all prior classes;

     (3) the plan provides for the issuance of common stock in an amount that will provide an adequate ratio to deposits;

     (4) any exchange of new common stock for obligations or stock of the bank will be made
          (A) in the inverse order of the priorities in liquidation of the classes that will retain an interest in the bank; and

          (B) upon terms that adjust in a fair manner any change in the relative interest of the respective classes that will be produced by the exchange;

     (5) the plan assures the removal of a director, officer, or employee responsible for a problem identified by the department under AS 06.05.468(a) — (b), including an unsafe, unsound, or unlawful action or the existence of an unsafe or unsound condition;

     (6) any merger or consolidation provided by the plan complies with this chapter.

 (c) When in the course of reorganization, supervening conditions render a plan of reorganization unfair or its execution impractical, the department may modify the plan or liquidate the bank.




Sec. 06.05.472. Liquidation.
 (a) In liquidating a state bank, the department may exercise any power incidental to liquidating a bank, but it may not, without the approval of the superior court,
     (1) sell an asset of the bank having an appraised value in excess of $100,000;

     (2) compromise or release a claim that exceeds $100,000, exclusive of interest;

     (3) make full payment on a claim, other than a claim upon an obligation incurred by the department, before preparing and filing a schedule of the department’s determinations under AS 06.05.473(d)(3).

 (b) Within six months after beginning the liquidation of a bank, the department may terminate an executory contract for services or advertising to which the bank is a party or an obligation of the bank as a lessee. A lessor who receives 60 days’ notice of the department’s decision to terminate a lease does not have a claim for rent, other than rent accrued to the date of termination, or for damages due to the termination.

 (c) As soon as practical after beginning the involuntary liquidation of a bank, the department shall take the steps necessary to terminate all fiduciary positions held by the bank, to surrender all property held by the bank as a fiduciary, and to settle the fiduciary accounts of the bank.




Sec. 06.05.473. Claims.
 (a) As soon as practical after beginning the liquidation of a state bank, the department shall
     (1) mail notice of the liquidation proceedings to the last known post office address of each depositor, creditor, lessee of a safe deposit box, or bailor of property;

     (2) post notice of the proceedings conspicuously on the premises of the bank; and

     (3) publish notice that the department determines to be appropriate for the proceedings.

 (b) The department shall mail with the notice sent under (a)(1) of this section a statement of the amount shown on the bank’s books to be the claim of the depositor or creditor. The notice must also include a demand that a person who is entitled to property held by the bank as bailee or in a safe deposit box of the bank withdraw the property within 30 days. The notice must direct those depositors and creditors who claim amounts different from the amounts in the notice to file their claims with the bank under the procedure described in the notice and before a specified date. The specified day may not be less than 60 days from the date of the first publication of the notice.

 (c) A safe deposit box whose contents have not been removed within 30 days after demand shall be opened. The department shall retain the contents of the box and the other unclaimed property held by the bank as bailee until the conclusion of the liquidation proceedings. At the conclusion of the liquidation proceedings, the property held by the department under this subsection is considered abandoned, and the department shall turn the property over to the Department of Revenue for handling under AS 34.45.110 — 34.45.780.

 (d) Within six months after the last day specified in the notice for the filing of claims, or within a longer period if allowed by the superior court, the department shall
     (1) reject a claim that it determines to be invalid;

     (2) determine the amount, if any, owing to each known creditor or depositor and the priority class of the person’s claim under this chapter;

     (3) prepare a schedule of its determinations for filing in the superior court;

     (4) publish a notice in a newspaper once each week for three successive weeks, of the times and places where the schedule of determinations will be available for inspection and the date when the department will file its schedule in court; the date may not be sooner than 30 days after the first publication.

 (e) Within 30 days after the filing with the superior court of the department’s schedule under (d)(3) of this section, a creditor, depositor, or stockholder may file with the court an objection to a determination. The court shall hear and determine the filed objections after the notice to the department and interested claimants that the court establishes. If the court sustains an objection, the court shall direct that the schedule be modified appropriately.

 (f) After filing its schedule, the department may make partial distribution to the holders of the claims that are undisputed or are allowed by the court, if an adequate reserve is established for the payment of disputed claims. As soon as practicable after the determination of all objections, the department shall make the final distribution.

 (g) The following claims have priority in liquidation proceedings, in the order listed:
     (1) obligations incurred by the department in liquidating the bank;

     (2) wages and salaries of officers and employees earned during the three-month period preceding the department’s possession in an amount not exceeding $3,000 for each person;

     (3) fees and assessments owed by the bank to the department;

     (4) deposits;

     (5) claims secured by assets pledged under AS 06.05.260(a).

 (h) After the payment of all other claims, including interest at the rate of 10.5 percent a year, the department shall pay claims that are otherwise valid but that were not filed within the time prescribed.

 (i) If the sum available for a class of creditors is insufficient to provide payment in full, the sum shall be distributed pro rata to the claimants in the class.

 (j) When the department has liquidated a bank, any assets remaining after all claims have been paid shall be distributed to the shareholders in accordance with their respective interests.

 (k) Unclaimed funds remaining after the completion of the liquidation by the department shall be handled under AS 34.45.110 — 34.45.780.

 (l) When the assets have been distributed in accordance with this chapter, the department shall file an accounting with the superior court. Upon approval of the account, the department is relieved of liability in connection with the liquidation, and the court shall cancel the certificate of authority of the bank and enter an order of dissolution. When the order is filed, the department shall issue a certificate of dissolution of the corporation.




Sec. 06.05.474. Federal Deposit Insurance Corporation as receiver or liquidator.
The department may appoint the Federal Deposit Insurance Corporation as receiver for a state bank that the department has taken possession of, if the deposits of the bank are insured by that corporation. Upon filing with the court a certificate indicating the acceptance of the appointment by the Federal Deposit Insurance Corporation, the possession of and title to all the assets, business, and property of the bank are transferred to that corporation. The department is then relieved of all responsibility and liability with respect to the reorganization or liquidation of the bank. The Federal Deposit Insurance Corporation may liquidate, reorganize, merge, or consolidate the bank in the manner permitted by the laws of the United States or by this chapter, and possesses all the rights, powers, duties, and obligations of the department in the liquidation, reorganization, merger, or consolidation of the bank under this chapter.


Sec. 06.05.475. Subrogation of rights of depositors. [Repealed, § 54 ch 169 SLA 1978.]
Secs. 06.05.480 — 06.05.510. Prohibited practices. [Repealed, § 102 ch 26 SLA 1993.]
Sec. 06.05.515. Slander and libel of bank. [Repealed, § 21 ch 166 SLA 1978.]
Secs. 06.05.520 — 06.05.530. Penalty; injunction; effect on existing banks. [Repealed, § 102 ch 26 SLA 1993.]
Sec. 06.05.532. [Renumbered as AS 06.05.548.]
Sec. 06.05.535. [Renumbered as AS 06.05.910.]
Sec. 06.05.537. [Renumbered as AS 06.05.900.]
Sec. 06.05.540. [Renumbered as AS 06.05.990.]
Sec. 06.05.545. [Renumbered as AS 06.05.995.]

Article 7. International and Interstate Banks and Out-of-State Bank Holding Companies and Depository Institutions; Relationship with In-State Depository Institutions.


Sec. 06.05.548. Concentration of deposits.
 (a) Unless expressly otherwise allowed under this title, an acquisition, a merger, or an ownership transaction is not permitted between a depository institution in this state and a depository institution in another state, if upon consummation of the acquisition, merger, or transaction the resulting depository institution, whether organized under state or federal law, controls 50 or more percent of the total amount of the deposits held by all depository institutions in this state.

 (b) The department may by regulation adopt a procedure that allows the department to waive the restriction in (a) of this section if the department finds that the purposes of this title will be fulfilled and the acquisition, merger, or transaction is in the public interest.




Sec. 06.05.550. Authority of international bank, interstate state bank, or interstate national bank to branch.
 (a) An international bank, an interstate state bank, or an interstate national bank whose deposits are insured by the Federal Deposit Insurance Corporation may acquire a branch bank as the result of a merger or consolidation of the international bank, interstate state bank, or interstate national bank with, or the purchase of all or substantially all of the assets of, a state bank, a national bank with its principal office in this state, or a branch of the state bank or national bank, unless the state bank or national bank is a recently formed bank.

 (b) An international bank may establish a new branch bank in this state or acquire a recently formed bank if the department approves the establishment or acquisition before the establishment or acquisition occurs. An interstate state bank or interstate national bank may not establish a branch bank in this state unless the establishment occurs through an acquisition under (a) of this section of a bank located in the state. An interstate state bank or interstate national bank may not establish a new branch bank in this state.

 (c) An interstate state bank, interstate national bank, or international bank that opens, occupies, or maintains a branch bank in the state has the same powers under the laws of the state as a state or national bank of the same type.




Sec. 06.05.555. Certificate of authority for interstate state bank and international bank branching.
 (a) Before acquiring a branch bank under AS 06.05.550(a) or establishing a branch bank under AS 06.05.550(b), an interstate state bank or international bank shall file an application with the department for and receive a certificate of authority to operate a branch bank. The application must include
     (1) all information and fees required under AS 06.05.399;

     (2) the name of the bank and the address of its principal office;

     (3) if an international bank, the country under whose laws it is organized;

     (4) the amount of the bank’s capital actually paid in cash and the amount subscribed for and unpaid;

     (5) a complete and detailed statement of the bank’s financial condition;

     (6) the names of all other states and countries in which the bank is admitted or qualified to do business;

     (7) a copy of the bank’s charter, articles of incorporation, and bylaws, as applicable;

     (8) if an international bank, evidence satisfactory to the department that the bank is authorized to conduct a banking business under the laws of the country of its organization, and the nature of the bank’s business;

     (9) a properly executed designation of the department as the bank’s agent for service of process in an action or proceeding arising out of a transaction involving the branch bank; the designation must include the name and address of the officer, agent, or other person to whom the department is to forward the process; and

     (10) other information necessary or appropriate for the department to determine whether the bank is entitled to a certificate of authority from the department.

 (b) The department shall notify the interstate state bank or international bank of its action on the application. If the application and the accompanying documents do not comply with the requirements of (a) of this section, the department shall return them with an explanation of the noncompliance. If the department does not respond within 30 days of its receipt of the application, the application is considered to be accepted.

 (c) The interstate state bank or international bank shall publish notice of the application in the manner provided in AS 06.05.344(d) — (e). The notice must state the proposed location of the branch bank.

 (d) Upon acceptance of the application, the department shall conduct an investigation to determine that
     (1) if an interstate state bank,
          (A) the laws of the home state of the bank authorize a state bank of this state to acquire a branch bank in the home state without conditions or restrictions on the operations of the branch bank; and

          (B) the bank supervisor of the home state of the bank has agreed to provide to the department the examination reports that the department determines sufficient to permit the department to determine on a current basis the financial condition of the bank;

     (2) the proposal is consistent with a sound and competitive banking system;

     (3) the capital structure of the bank is adequate in relation to the anticipated business and costs of operating the branch bank;

     (4) the name of the bank is not deceptively similar to the name of another branch bank or state bank and is not otherwise misleading; and

     (5) the other requirements of this chapter have been met.

 (e) Not later than 150 days after the department accepts an application by an interstate state bank or international bank for a certificate of authority to operate a branch bank, the department shall make a determination whether to approve the application. Within 30 days after the second publication of the notice referred to in (c) of this section, a person opposing the pending application may file written objections with the department. When it approves or denies the application, the department shall notify the bank and any other person who requested in writing to be notified, and, if the application is denied, the department shall state the reasons for its decision.

 (f) The department shall issue a certificate of authority to an interstate state bank or international bank to operate a branch bank if
     (1) the conditions imposed by the department in granting the certificate have been fulfilled; and

     (2) the requirements of this chapter are satisfied.

 (g) If the rights conferred by a certificate of authority issued under this section are not exercised within one year from the date of the issuance of the certificate under this section, the certificate lapses.




Sec. 06.05.557. Notice filing for interstate national banks.
An interstate national bank acquiring a branch in this state under AS 06.05.550 shall file a notice of the acquisition with the department along with a copy of the application filed with the agency that primarily regulates the interstate national bank. The notice and copy of the application shall be filed with the department at the same time the application is filed with the agency that primarily regulates the interstate national bank.


Sec. 06.05.560. Asset requirements for international banks.
 (a) An international bank that operates one or more branch banks in the state shall maintain in the state assets in an amount acceptable to the department, except that the amount may not be less than the amount of deposits payable at or through the branch banks.

 (b) The department shall determine the value of the assets maintained by the international bank for purposes of this section. In making its determination, the department may include as assets currency, bonds, notes, debentures, drafts, bills of exchange, and other evidences of indebtedness owed by persons in the United States and collectible in the United States in United States currency or, with the approval of the department, in currency freely convertible into United States currency, but the department may not include as assets prepaid expenses, customers’ liability on prepaid expenses, or amounts due from other offices, branches, or wholly owned subsidiaries of the international bank.

 (c) When the department takes possession of a branch bank of an international bank under AS 06.05.468 and 06.05.470, the assets of the international bank in the state shall be turned over to the department and disbursed as provided in AS 06.05.470 — 06.05.473.




Sec. 06.05.565. Applicability of title to interstate state banks, interstate national banks, international banks, and bank holding companies.
 (a) An interstate state bank or international bank operating a branch bank in the state is subject to the provisions of this title and the regulations adopted and orders issued under this title, except for the residency requirements in AS 06.05.435(a).

 (b) In meeting the reserve requirements of AS 06.05.200(a) and applicable regulations, the bank shall maintain the required reserve fund in the state, except that assets held to meet the requirements of AS 06.05.560(a) may be applied to meet the requirements of AS 06.05.200.

 (c) A branch bank of an interstate state bank or international bank operating in the state is subject to examination under AS 06.01.015 and assessments under AS 06.01.010. Assessments under AS 06.01.010(d) are based on the branch bank’s total deposits in the state.

 (d) When the department considers it necessary to protect the public interest, the department or a competent person designated by the department may examine an interstate state bank or international bank with a branch in the state. The interstate state bank or international bank shall pay an examination fee established under AS 06.01.010.

 (e) The department may require periodic reports from an interstate state bank or an interstate national bank that maintains a branch in this state and from a bank holding company that controls the interstate state bank or interstate national bank. The reports shall be made under oath and filed as frequently as required by the department. The reports must contain the information and detail that the department determines to be appropriate to assure continuing compliance of the interstate state bank or interstate national bank with the provisions of this title.

 (f) The department may enter into cooperative, coordinating, or information-sharing agreements with other depository institution supervisory agencies or with an organization affiliated with or representing depository institution supervisory agencies, to handle the periodic examination or other supervision of a depository institution branch that is located in this state and owned by a depository institution organized in another state, or of a depository institution branch that is located in a host state and owned by a depository institution organized in this state. Under the agreements, the department may accept reports of examination and reports of investigation instead of conducting the department’s own examinations or investigations. The department may enter into joint enforcement action agreements with other depository institution supervisory agencies having concurrent jurisdiction over a depository institution branch that is located in this state and owned by a depository institution organized in another state, or over a depository institution branch that is located in a host state and owned by a depository institution organized in this state. Notwithstanding the existence of an agreement under this subsection, the department may at any time make an examination or take supervisory or enforcement action independently if the department determines that the examination or action is necessary or appropriate to carry out the department’s responsibilities under this title or to ensure compliance with the laws of this state. In this subsection, “host state” means a state, other than the state where the depository institution is organized, in which a depository institution maintains, or seeks to establish and maintain, a branch.

 (g) An interstate national bank operating a branch bank in this state is subject to the provisions of AS 06.05.548 and 06.05.550 and the regulations adopted and orders issued under those sections.




Sec. 06.05.570. Out-of-state bank holding companies.
 (a) An out-of-state bank holding company may acquire and own all or a portion of the voting securities or other capital stock of, or all or substantially all of the assets of, one or more state banks, domestic bank holding companies, or national banks conducting a banking business in the state, unless the state bank or national bank is a recently formed bank. Before an out-of-state bank holding company may acquire a state bank or bank holding company of a state bank doing business in this state, the out-of-state bank holding company shall apply for and obtain a permit from the department. In considering whether to issue a permit, the department shall consider the benefits to the public, the preservation of a competitive banking industry, and the maintenance of a safe and sound bank industry. To assure full protection of the public, the department may require an out-of-state bank holding company that directly or indirectly owns, holds, or controls stock in a state bank or domestic bank holding company to post a bond with the department under conditions established by the department. The amount of the bond may not be more than the product obtained by multiplying the amount of paid-in capital and paid-in surplus of the state bank or domestic bank holding company by the percentage of state bank or domestic bank holding company stock directly or indirectly owned, held, or controlled by the out-of-state bank holding company.

 (b) When the department considers it necessary, the department or a competent person designated by the department may examine an out-of-state bank holding company directly or indirectly owning, holding, or controlling state bank stock or domestic bank holding company stock. The out-of-state bank holding company shall pay an examination fee established under AS 06.01.010.

 (c) The provisions of this section do not apply to a company that
     (1) acquires or holds voting securities or other capital stock of a bank or bank holding company for only a reasonable period of time in connection with the underwriting of securities;

     (2) is an agency of the United States or of a state, or if the majority of the company is owned by the United States or a state;

     (3) is an independent federal financial regulatory agency or a trustee or agent of an independent federal financial regulatory agency; or

     (4) under a plan of financial restructuring that is intended to prevent the failure of a state bank and that is approved by the department,
          (A) acquires or receives 25 percent or more of a class of voting securities or other capital stock of the bank or bank holding company subject to the plan, and owns, controls, or holds, with the power to vote, the securities acquired or received in excess of 24.99 percent of that class for a period of time that permits the distribution or resale of the securities or other capital stock on a reasonable basis; or

          (B) purchases or receives securities under the plan and, after the purchase or receipt, owns, controls, or holds, with a power to vote, less than 25 percent of a class of voting securities or other capital stock of the bank or bank holding company subject to the plan, if subsequently, solely through the action or inaction of others, including the bank or bank holding company, owns, controls, or holds, with a power to vote, 25 percent or more of a class of voting securities or other capital stock of the bank or bank holding company; the exemption in this subparagraph does not apply if the department determines, after notice and opportunity for hearing under AS 06.01.030, that the ownership, control, or holding of the securities or stock exceeding 24.99 percent of a class, other than under a plan to promptly dispose of the securities or stock under the supervision of the department, would permit the organization in any manner to control the election of a majority of the board of directors or trustees, or to directly or indirectly exercise a controlling influence over the management or policies of the bank or bank holding company.




Article 8. General Provisions.


Sec. 06.05.900. Copies of records for child support purposes.
If a copy of a record concerning an individual who owes or is owed child support, including a record concerning assets and liabilities of the individual, prepared or maintained by a bank of this state is requested by the child support services agency established in AS 25.27.010 or the child support enforcement agency of another state, the bank shall provide the requesting agency with a certified copy of the record. If information is prepared or maintained by the bank in an electronic data base, the bank may provide the requesting agency a copy of the electronic record and a statement certifying its contents. The agency receiving information under this section may use the information only for child support purposes authorized under law.


Sec. 06.05.910. Construction with subsequent legislation.
No part of this chapter shall be considered to be impliedly repealed by subsequent legislation not specifically repealing it if that construction can be avoided.


Sec. 06.05.990. Definitions.
In this chapter, unless the context otherwise requires,
     (1) “automated teller machine,” means a staffed or unstaffed electronic device or terminal that permits a bank customer to accomplish various financial transactions, including depositing or withdrawing funds, making loans, and transferring funds between accounts, and includes a similar device or facility known or referred to by another name or designation, including customer-bank communication terminal, electronic fund transfer device, or 24-hour teller, but does not include a machine that is operated by more than one bank;

     (2) “bank” means a person doing a banking business, including persons subject to the law of this or another jurisdiction;

     (3) “banking” means performing activities that
          (A) include, at a minimum, soliciting, receiving, or accepting money or its equivalent on deposit, whether the deposit is made subject to a check or is evidenced by a certificate of deposit, passbook, note, receipt, or other writing; in this subparagraph, “deposit” does not include a deposit made by an agent for a principal; and

          (B) may also include the negotiation for and discounting of promissory notes or other evidences of indebtedness, selling and buying money or its equivalent, lending money on personal or real property or other security, or performing other similar financial operations;

     (4) “branch bank” includes an office, agency, or other place of business located in the state and at which deposits are received, checks are paid, or money is lent, but does not include either the principal office of a bank or an automated teller machine;

     (5) “capital” means the amount of outstanding common stock plus outstanding and perpetual preferred stock;

     (6) “capital accounts” includes capital, surplus, undivided profits, and capital notes and debentures not maturing within one year from the date of the loan;

     (7) “commissioner” means the commissioner of commerce, community, and economic development or a designee of the commissioner;

     (8) “community” means a city, town, unincorporated village, or, in the absence of one of the foregoing, a trade area;

     (9) “department” means the Department of Commerce, Community, and Economic Development;

     (10) “depository institution” means a financial institution whose deposits are insured by an agency of the federal government; in this paragraph, “financial institution” includes institutions from outside the state that are not subject to the regulation of the department under this title;

     (11) “domestic bank holding company” means a corporation that maintains its principal office and place of business in the state and that has control over a bank or another domestic bank holding company in one of the following ways:
          (A) the corporation directly or indirectly or acting through one or more other persons owns, controls, or has power to vote 25 percent or more of a class of voting securities of the bank or holding company;

          (B) the corporation controls in any manner the election of a majority of the directors or trustees of the bank or holding company; or

          (C) the department determines, after notice and opportunity for hearing, that the corporation directly or indirectly exercises a controlling influence over the management of the policies of the bank or holding company;

     (12) “extension of credit” means a negotiable instrument, and includes promissory notes, acknowledgments of advance, due bills, invoices, overdrafts, acceptances, and similar written or oral obligations or evidence of debt whether secured or unsecured; in this paragraph, “negotiable instrument” has the meaning given in AS 45.03.104;

     (13) “fiduciary” means a trustee, agent, executor, administrator, committee, guardian or conservator for a minor or other incompetent person, a receiver, a trustee in bankruptcy, an assignee for creditors, or the holder of a similar position of trust;

     (14) “financial holding company” means an existing, or newly formed, domestic bank holding company that has been approved as a financial holding company by the Federal Reserve System and not denied that status by the department under AS 06.05.237;

     (15) “financial institution” means an institution subject to the regulation of the department under this title; in this paragraph, “institution” includes a commercial bank, savings bank, credit union, premium finance company, small loan company, bank holding company, financial holding company, trust company, and savings and loan association;

     (16) “good faith” means honesty in fact in the transaction and a reasonable ground for belief that the transaction is lawful, proper, or authorized;

     (17) “impaired capital” or “impairment of capital” means that the value of the bank’s assets is less than the bank’s liabilities plus 120 percent of the amount of the bank’s paid-in capital;

     (18) “insolvent” means
          (A) bank assets having a value less than the bank’s liabilities, other than liability on account of capital stock, capital notes, and debentures;

          (B) failure to increase total adjusted capital accounts or reserves after being ordered to do so under AS 06.05.305(c); or

          (C) inability to meet obligations or demands as they become due in the ordinary course of business;

     (19) “international bank” means a corporation, partnership, or association that is organized and operates under the laws of a country other than the United States and that is authorized by its license or charter to carry on a banking business;

     (20) “interstate national bank” means a national bank whose principal office, as designated in its articles of incorporation, is not located in this state;

     (21) “interstate state bank” means a person organized under the laws of another state and holding a charter, license, or certificate of authority from another state to engage in a banking business;

     (22) “loan” includes an extension of credit resulting from direct or indirect negotiations between a lender and a debtor;

     (23) “national bank” means a bank chartered by the United States;

     (24) “out-of-state bank holding company” means a company that
          (A) is a bank holding company as defined in 12 U.S.C. 1841 (Bank Holding Company Act); is registered as a bank holding company with the Board of Governors of the Federal Reserve System, with the federal reserve bank of the Federal Reserve District in which the operations of the bank holding company are principally conducted, or with a Federal Reserve Bank that the Board of Governors may designate; maintains its principal office and place of business outside the state; and principally conducts its operations out of the state, as measured by total deposits held or controlled by it on the date on which it becomes an out-of-state bank holding company; or

          (B) a corporation, partnership, or association organized and operating under the laws of a country other than the United States;

     (25) “recently formed bank” means a state bank or national bank that conducts a banking business in the state and that commenced the banking business in the state on or after July 1, 1982, and that has not been in existence and continuously operating in the state for a period of three years or more; “recently formed bank” does not include
          (A) a bank organized solely for the purpose of facilitating acquisition of a bank that either has been in existence and continuously operating in the state as a bank for a three-year period, or was conducting a banking business in the state on or before June 30, 1982;

          (B) a state bank that the department determines was not created directly or indirectly by an acquiring interstate state bank, interstate national bank, international bank, or out-of-state bank holding company, and that does not have the capacity to continue to conduct its business independently in a manner consistent with the public interest and the interest of depositors, creditors, and shareholders; or

          (C) a national bank that the board of governors of the Federal Reserve System, or their designee, determines is not chartered directly or indirectly by an acquiring out-of-state bank holding company, and that does not have the capacity to conduct its business independently in a manner consistent with the public interest of depositors, creditors, and shareholders;

     (26) “state bank” means a bank organized under this chapter;

     (27) “state financial institution” means a financial institution that is organized under this title or that is subject to examination by the department under this title;

     (28) “subsidiary” means a corporation in which a bank owns more than 50 percent of the voting power of the corporation either directly or indirectly through one or more other subsidiaries of the bank;

     (29) “surplus” includes amounts paid in for stock in excess of the par value of the stock, which are generally called capital surplus or paid-in surplus, plus any amounts transferred to the account from undivided profits, which are generally called earned surplus;

     (30) “undivided profits” means the accumulated, undistributed net profit of a bank, including any residue after
          (A) provision for payment of taxes and expenses of operations;

          (B) transfers to reserves allocated to a particular asset or class of assets;

          (C) losses estimated or sustained on a particular asset or class of assets in excess of the amount of reserves allocated for the asset;

          (D) transfers to surplus and capital; and

          (E) amounts declared as dividends to shareholders;

     (31) “unsafe or unsound condition,” with respect to a bank, means insolvency; impairment of capital; operating in violation of law, order of the department, or its articles or bylaws; having less than the statutory or regulatory requirements for capital, surplus, or reserves; or another condition that the department determines threatens the safety of depositors or the soundness of the state banking system.




Sec. 06.05.995. Short title.
This chapter may be cited as the Alaska Banking Code.


Chapter 10. Model Foreign Bank Loan Act.

Sec. 06.10.010. Exemption of foreign banks from laws and taxation.
A foreign bank that does not maintain a place of business in this state for the receipt of deposits and that complies with this chapter does not by engaging in this state in any or all of the activities specified in AS 06.10.020 violate the laws of this state relating to doing business or doing a banking business or become subject to any taxation that would otherwise be imposed for doing business or doing a banking business in this state.


Sec. 06.10.020. Authorized activities.
 (a) The activities referred to in AS 06.10.010 are
     (1) making loans;

     (2) receiving security for loans;

     (3) acquiring by assignment or otherwise partial or entire interests in loans or in security for loans;

     (4) servicing, collecting, enforcing or otherwise realizing upon loans or upon security for loans or upon interests therein, and holding, managing or disposing of proceeds therefrom; and

     (5) entering into and performing contracts and doing other acts necessary or appropriate for or preliminary or incident to any of the foregoing activities.

 (b) Loans within the meaning of this section may be
     (1) evidenced by negotiable instruments or otherwise; and

     (2) unsecured or secured by a lien upon or a pledge of real or personal property or both inside or outside this state.




Sec. 06.10.030. Filing statement.
Before engaging in this state in any of the activities specified in AS 06.10.020, a foreign bank shall execute and file with the commissioner of commerce, community, and economic development a statement. The statement shall list its name, state of incorporation or organization and principal place of business and shall appoint irrevocably the commissioner of commerce, community, and economic development and the commissioner’s successors its agents upon whom may be served process against it in any proceeding or cause of action arising out of its engaging in this state in any of the activities referred to in AS 06.10.020. Until the statement is filed the immunities provided by this chapter do not become operative, but failure to file the statement has no other effect.


Sec. 06.10.035. [Renumbered as AS 06.05.367.]
Sec. 06.10.040. Definitions.
In this chapter,
     (1) “foreign bank” means a bank, trust company, savings bank, industrial bank, building and loan association, savings and loan association, credit union or other similar lending organization the principal office of which is in another state whether incorporated or unincorporated and whether acting in its individual capacity or in a fiduciary capacity, but does not include small loan companies of the general character covered by AS 06.20 (Alaska Small Loans Act);

     (2) “state” means any state in the United States, the District of Columbia, Guam, the Commonwealth of Puerto Rico and the Virgin Islands.




Sec. 06.10.050. Short title.
This chapter may be cited as the Model Foreign Bank Loan Act.


Article 1. Formation and Management of Mutual Banks.


Chapter 15. Mutual Savings Bank Act.

Sec. 06.15.010. Declaration of policy.
In providing authority for the establishment of mutual savings banks it is the intent of the legislature to make available the benefits of mutual savings banking, thereby encouraging the practice of thrift and promoting the accumulation of funds for investment to develop the economy. For the accomplishment of these purposes, the legislature intends by this chapter to vest in mutual banks those powers generally possessed by state-chartered mutual savings banks and to grant authority to the Department of Commerce, Community, and Economic Development to define powers and to adopt regulations designed to enable mutual savings banks to perform their functions and to carry out the above purposes, subject to the provisions of AS 06.05 (Alaska Banking Code) that are not inconsistent with this chapter.


Sec. 06.15.020. Chartering of mutual banks.
Upon written application by five signatories from among not less than 21 individuals acting in the capacity of qualified corporators named in the application, the department may issue a charter for a mutual bank.


Sec. 06.15.030. Issuance of charter.
A charter shall be issued if the department finds that a mutual bank will serve a useful purpose in the community in which it is proposed to be established, that there is reasonable expectation of its financial success, and that its operation will not unduly injure existing banking institutions.


Sec. 06.15.040. Qualification of corporators.
 (a) Each corporator shall be an individual, not of unsound mind or capacity, whom the department finds to be of financial responsibility and good character. Without in any way limiting, by enactment of this section, the general regulatory power granted the department by this or any other act, the department may regulate the activities of corporators and prescribe standards of conduct for corporators in their dealings with their mutual bank.

 (b) At least a majority of the corporators shall be residents of this state.




Sec. 06.15.050. Corporators.
At their organizational meeting, the corporators shall adopt rules governing their activities as corporators, and may amend the rules from time to time. The rules shall establish the number of corporators and shall prescribe that any number of corporators not less than one-quarter of those at the time in office shall constitute a quorum for the purpose of doing business. At the organizational meeting, or an adjournment thereof, the corporators shall, by majority vote of those present, elect one-third of the total number of corporators to serve for a term of four years, one-third to serve for a term of seven years, and one-third to serve for a term of 10 years. Thereafter each corporator shall be elected for a term of 10 years so that the term of not more than one-third of the corporators will expire in any three-year period. The office of any corporator who becomes of unsound mind and capacity becomes vacant. Successor and additional corporators shall be elected by a majority vote of the corporators present at a duly constituted meeting. A corporator may be removed from office for cause upon the affirmative vote of two-thirds of the total number of corporators.


Sec. 06.15.060. Trustees.
The corporators shall elect a board of trustees from among their number, consisting of not less than seven nor more than 25, or one-half of all the corporators minus one, whichever is less. A majority of the trustees shall be residents of this state.


Sec. 06.15.070. Terms of trustees.
The corporators shall, by a majority vote of those present at their organizational meeting, elect a board of trustees in the following manner: one-third for a term of one year; one-third for a term of two years; and one-third for a term of three years. Thereafter trustees shall be elected to serve for a term of three years. The office of any trustee becomes vacant if the trustee ceases to hold office as a corporator.


Sec. 06.15.080. Management and control of mutual bank; bylaws.
The management and control of the affairs of a mutual bank is vested in the board of trustees. The board of trustees may adopt, amend and repeal bylaws governing the affairs of the mutual bank.


Sec. 06.15.090. Failure to attend meetings.
The office of a trustee becomes vacant if the trustee fails to attend regular meetings of the trustees for a period of six months, unless excused during that period by a resolution adopted by the trustees.


Sec. 06.15.100. Prohibited conduct of trustees.
A trustee may not
     (1) receive remuneration as trustee except reasonable fees for attendance at meetings of trustees or for services as a member of a committee of trustees;

     (2) use the position as trustee, or knowingly allow it to be used, to obtain preferential terms in dealings with the mutual bank for which the person is trustee;

     (3) use the position as trustee, or knowingly allow it to be used, to induce an actual or prospective borrower from the mutual bank for which the person is trustee to purchase goods or services at a direct or indirect profit to the trustee.




Sec. 06.15.105. Trustee borrowing.
A person may borrow money from the mutual bank for which the person is trustee to the same extent that a director may borrow money under AS 06.05.210.


Sec. 06.15.110. Trustee as officer or attorney.
Nothing contained in AS 06.15.100 prohibits or limits any right of a trustee who is also an officer or attorney of the mutual bank from receiving compensation for services as an officer or attorney.


Sec. 06.15.120. Exceptions.
Upon application by a mutual bank, an exception may be granted to any prohibition contained in AS 06.15.100 following a determination by the department that the exception sought is equitable, is supported by evidence, and is in the best interests of the depositors of the mutual bank.


Sec. 06.15.130. Deposit of funds.
A mutual bank may not deposit any of its funds except with a depositary approved by vote of a majority of all the trustees, exclusive of any trustee who is an officer, partner, director or trustee of the depositary.


Sec. 06.15.140. Commencement of operation.
 (a) A mutual bank may not begin operation until the department has given its approval to do so. The department may not grant approval to begin operation until the mutual bank has qualified as an insured bank under the Federal Deposit Insurance Act and complied with the provisions of AS 06.05 (Alaska Banking Code) that are not inconsistent with this chapter. A mutual bank that ceases to be qualified under this subsection shall immediately stop operation.

 (b) A mutual bank may not commence operation until it has deposited in cash to its credit as an expense fund such sums as the department may require. The deposit shall be evidenced by transferable deferred payment certificates.




Article 2. Banking Practices.


Sec. 06.15.150. Surplus requirements.
The department may not issue a charter until there is deposited not less than $50,000 in cash to the credit of the mutual bank. The amount of the deposit constitutes the initial surplus. All amounts advanced as initial surplus shall be evidenced by transferable deferred payment certificates. The department shall approve the maturity, amount of installment repayment, and interest rate of each certificate.


Sec. 06.15.160. Additions to surplus.
As soon as practicable after the close of each fiscal year during its first 10 years of operation, each mutual bank shall credit to surplus at least 10 percent of its net earnings before interest for the preceding fiscal year. At the close of each fiscal year thereafter, each mutual bank shall credit to surplus a proportion of its net earnings for the preceding fiscal year, not exceeding 10 percent, as the department may prescribe by regulation. These credits to surplus shall be made only until surplus equals 12 percent of deposit liabilities. Thereafter and so long as surplus equals 12 percent of deposit liabilities the mutual bank may credit further amounts to surplus as it may determine.


Sec. 06.15.170. Limitation on use of surplus.
The surplus of an operating mutual bank may be used only for the purpose of meeting losses.


Sec. 06.15.180. Borrowing.
A mutual bank may borrow from any source and in any manner amounts without limit that are required to satisfy its obligations to its depositors. It may borrow for other purposes an aggregate outstanding amount not to exceed
     (1) five percent of its total assets at the time of borrowing, exclusive of any sums borrowed under AS 06.15.140 — 06.15.170;

     (2) 15 percent of its total assets if borrowing from the Federal Home Loan Bank.




Sec. 06.15.190. Deposits.
A mutual bank may accept savings deposits to be held solely and absolutely in its own right by or in trust or other fiduciary capacity for any person, including an adult or minor individual, male or female, single or married, a partnership, nonprofit organization, association, fiduciary, corporation, or political subdivision or public or governmental unit. The bank may issue a passbook or other evidence of its obligation to repay the savings deposits.


Sec. 06.15.210. Right to reject, repay, and classify deposits.
A mutual bank may
     (1) reject any sums offered for deposit;

     (2) repay any deposit at any time; and

     (3) classify and differentiate among deposits on any bases that it may determine.




Sec. 06.15.220. Interest on deposits.
A mutual bank may pay interest on deposits from net earnings and undivided profits at the rates and intervals that its trustees approve.


Sec. 06.15.230. Withdrawal of deposits.
A mutual bank may at a time by resolution of its board of trustees require that up to 90 days’ advance notice be given to it by each depositor before the withdrawal of any deposit or portion thereof. If the board of trustees adopts a resolution, a deposit does not need to be paid until the expiration of the notice period specified in the resolution. A mutual bank shall notify the department in writing on the day of the adoption of the resolution. Notwithstanding adoption of the resolution, a mutual bank may permit withdrawal of all or a part of any deposit prior to the expiration of the notice period prescribed by the resolution. The resolution may be rescinded at any time.


Sec. 06.15.240. Investments authorized.
Subject to the provisions of this chapter and regulations under this chapter, a mutual bank may invest in
     (1) obligations of the United States and those for which the faith of the United States is pledged to provide for the payment of the interest and principal, obligations for which annual contributions to be paid under contract by the United States government or any of its instrumentalities in accordance with an Act of Congress entitled the “Housing Act of 1949,” are pledged as security for the payment of the interest and principal, and obligations of any agency of the United States;

     (2) obligations of any state of the United States and those for which the faith of any state of the United States is pledged to provide for the payment of the interest and principal;

     (3) obligations of a city, village, town, county, department, agency, district, authority, commission or other public body of any state of the United States, subject to the exercise of the same degree of care and prudence that persons prompted by self-interest generally exercise in their own affairs;

     (4) any property improvement note issued under the provisions of Title I of the National Housing Act and any other real property improvement note in a principal amount not in excess of $15,000, not including interest;

     (5) obligations of the Dominion of Canada or provinces of the Dominion of Canada payable in United States funds;

     (6) the stocks, bonds, and other securities of
          (A) a corporation licensed under AS 10.13; or

          (B) a corporation attempting to become licensed under AS 10.13 if the corporation intends to use the proceeds to fulfill the tasks necessary to become licensed under AS 10.13.




Sec. 06.15.250. Investment in first mortgages.
 (a) Subject to the provisions of this chapter and regulations under this chapter, a mutual bank may invest in first mortgages on unencumbered real property, including leasehold estates, subject to the following limitations:
     (1) an investment in mortgages executed by any one mortgagor may not exceed in the aggregate two percent of the assets of the mutual bank at the time the investment is made, or $37,500 on a single family dwelling or $50,000 on a multiple family dwelling or other improved realty, whichever is greater;

     (2) an investment in any one mortgage may not exceed two percent of the assets of the mutual bank at the time the investment is made, or as specified in (1) of this subsection, whichever is greater, or more than 80 percent of the appraised value of a one- to four-family residence securing a conventional loan; however, a mutual bank may make 95 percent of appraised value loans if the term of the loan does not exceed 30 years from the date of the first payment, and if the first payment date is no later than 60 days following final disbursement of the loan, and the loan is secured by an amortized mortgage, deed of trust, or other instrument under the terms of which the installment payments are sufficient to amortize the entire principal of the loan within the period ending on the date of its maturity and, in addition, the loan is either
          (A) insured by mortgage insurance in an amount equal to 20 percent of the loan issued by a mortgage insurer authorized to do business in Alaska; or

          (B) the loan is secured in addition to the amortized mortgage by a savings account held by the lending institution in an amount equal to 10 percent of the loan or other collateral acceptable to the department;

     (3) except as provided in (2) of this subsection, an investment may not be made in a conventional loan secured by a mortgage on a one- to four-family residence unless the mortgaged property is located inside this state and the mortgage has a maturity not exceeding 30 years from the date of the first payment, and if the first payment date is no later than 60 days following final disbursement of the loan;

     (4) an investment may not be made in a conventional loan if the aggregate unpaid principal of all conventional loans exceeds 80 percent of deposits plus all borrowings from the Federal Home Loan Bank;

     (5) participation in mortgage loans with others as co-mortgagees may not be permitted except with one or more financial institutions, trusts, or pension funds;

     (6) an investment may not be made in a mortgage upon a leasehold unless
          (A) the leasehold has an unexpired term of not less than 21 years;

          (B) the principal amount of the mortgage loan is not in excess of 70 percent of the appraised value of the leasehold; and

          (C) provision is made for complete amortization of the loan within an unexpired term by periodic payments as the department may prescribe.

 (b) In this section, “real property” includes a manufactured home that has become real property under AS 34.85.010. In this subsection, “manufactured home” has the meaning given in AS 45.29.102.




Sec. 06.15.260. Investment in bankers’ acceptances.
Subject to the provisions of this chapter and regulations under this chapter a mutual bank may invest in bankers’ acceptances that have been accepted by a bank, trust company, national bank, investment company, or banking corporation organized under the laws of the United States or of any state, which is a member of the Federal Reserve System.


Sec. 06.15.270. Investment in corporate securities.
 (a) Subject to the provisions of this chapter and regulations under this chapter a mutual bank may invest in corporate securities, subject to the exercise of the same degree of care and prudence that persons prompted by self-interest generally exercise in their own affairs, and subject to the following limitations:
     (1) a mutual bank may not invest in any corporate obligation, other than under AS 06.15.280, that will mature by its terms within one year from the date of its issuance, or if issued or made in series or repayable in installments, has an average maturity of less than one year;

     (2) a mutual bank may not invest in
          (A) stocks an amount greater than 10 percent of its assets or 100 percent of its surplus and undivided profits, whichever is less;

          (B) common stock an amount greater than six percent of its assets or 60 percent of its surplus and undivided profits, whichever is less;

          (C) the common and preferred stocks of one issuer an amount greater than one percent of its assets; or

          (D) more than two percent of the total issued and outstanding shares of stock of any one issuer.

 (b) The limitations of this section do not apply to a mutual bank’s investments in a wholly owned subsidiary corporation that owns or leases real or personal property for the purpose of providing a building and facilities to be used primarily for the conduct of the authorized banking activities of the mutual bank.




Sec. 06.15.280. Investment in promissory notes.
Subject to the provisions of this chapter and regulations under this chapter, a mutual bank may invest in a promissory note, subject to the following limitations:
     (1) a promissory note payable to the order of the mutual bank that is
          (A) secured by the assignment of one or more mortgages in which a mutual bank may invest if the amount so invested in the note does not exceed 90 percent of the principal sum secured by the mortgages; the assignment of a mortgage taken as security for the note shall be recorded or registered in the office of the proper recording officer of the recording precinct in which the real property described in the mortgage is located;

          (B) secured by any of the bonds or other securities in which a mutual bank may invest if the amount invested in the note does not exceed 90 percent of the market value of the bonds or other securities at the time of the investment;

          (C) secured by an insurance policy to the extent of the policy’s cash surrender value;

          (D) made by a savings and loans association that has been incorporated three years or more and has an accumulated capital of at least $50,000;

     (2) a promissory note payable to the order of the mutual bank within one year from its date that is secured by the assignment of a deposit in a federally insured thrift institution if the amount of the investment in the note is not in excess of the amount of the deposit.




Article 3. Branches, Conversion, Merger, and Consolidation.


Sec. 06.15.290. Establishment of branches.
A mutual bank may, with the approval of the department, establish and operate branches inside the state. Before approving the establishment and operation of a branch office, the department shall make the findings required before the granting of a charter to a mutual bank with respect to the branch proposed.


Sec. 06.15.300. Conversion of thrift institution to mutual bank.
Any thrift institution other than a mutual bank may, with the approval of the department, convert itself into a mutual bank upon the affirmative vote of not less than a majority of the votes cast by those entitled to vote upon its affairs at a duly called and held meeting and shall thereupon possess the powers of and be subject to the duties imposed upon mutual banks under the provisions of this chapter. Before approving a conversion, the department shall determine that the thrift institution seeking conversion has the ability to discharge the duties and conform to the restrictions upon mutual banks and has previously so conformed to the extent required by the department. However, the institution may retain and service all accounts lawfully held by it on the date of its conversion.


Sec. 06.15.310. Conversion of mutual bank to thrift institution.
A mutual bank may, with the approval of the regulatory authority having jurisdiction over the creation of the thrift institution and upon the affirmative vote of a majority of its corporators, convert itself into a thrift institution organized under federal law or the laws of this state.


Sec. 06.15.320. Merger and consolidation of mutual banks.
Two or more mutual banks may, with the approval of the department, and upon the affirmative vote of not less than two-thirds of the corporators of each such mutual bank, enter into an agreement of merger or consolidation. Thereafter the merger or consolidation shall be effective under the terms of the agreement.


Sec. 06.15.330. Condition of department approval.
Before approving a merger or consolidation the department shall give consideration to the purposes of this chapter and the prospects of the surviving or consolidated mutual bank for financial success and its ability to discharge the duties and conform to the restrictions imposed upon a mutual bank.


Sec. 06.15.340. Transfer and exercise of rights.
All rights, franchises, and property interests of the merged or consolidating mutual banks are transferred to and vested in the surviving or consolidated mutual bank by virtue of the merger or consolidation without the requirement under this chapter of a deed or other instrument of transfer. The surviving or consolidated mutual bank may exercise all rights and privileges of the merged or consolidating mutual banks in accordance with the terms of the merger or consolidation agreement. The surviving or consolidated mutual bank is responsible for all debts and obligations of the merged or consolidating mutual bank under the terms of the merger or consolidation agreement.


Article 4. General Powers of Mutual Banks.


Sec. 06.15.350. General powers.
A mutual bank
     (1) shall have indefinite succession;

     (2) may adopt and use a seal;

     (3) may sue and be sued;

     (4) may adopt, amend, and repeal rules and regulations governing the manner in which its business may be conducted and the manner in which the powers vested in it may be exercised;

     (5) may make and carry out contracts and agreements, provide benefits to its personnel, and take other action, as it considers necessary or desirable in the conduct of its business;

     (6) may appoint and fix the compensation of officers, attorneys, and employees desirable for the conduct of its business, define their authority and duties, delegate to them the powers the trustees determine, require bonds of them as the trustees designate and fix their penalties and pay the premiums on the bonds;

     (7) may acquire by purchase or lease real property or interest therein as the trustees consider necessary or desirable for the conduct of its business, and sell, lease, or otherwise dispose of real property or interest therein;

     (8) may exercise the powers of a bank granted under AS 06.05 (Alaska Banking Code); and

     (9) may convert from a mutual bank to a capital stock bank under a plan approved by the department.




Sec. 06.15.360. Additional powers.
The enumeration of powers in AS 06.15.350 does not exclude other powers appropriate for the achievement of the objects and purposes of a mutual bank under this chapter. With the approval of the department, a mutual bank may provide for the exercise of other powers in its bylaws, rules, or regulations.


Article 5. General Provisions.


Sec. 06.15.370. Definitions.
In this chapter,
     (1) “conventional loan” means a loan secured by a first mortgage on unencumbered real property or leasehold estate other than a loan guaranteed or insured by a federal agency;

     (2) “department” means the Department of Commerce, Community, and Economic Development;

     (3) “financial institution” means a thrift institution, a commercial bank, a trust company, or an insurance company;

     (4) “mutual bank” means a mutual savings bank chartered under this chapter;

     (5) “thrift institution” means a cooperative bank, a homestead association, a mutual savings and loan association, or a mutual bank.




Sec. 06.15.380. Short title.
This chapter may be cited as the Mutual Savings Bank Act.


Article 1. Licensing.


Chapter 20. Alaska Small Loans Act.

Sec. 06.20.010. License required.
 (a) A person may not engage in the business of making loans of money, credit, goods, or things in action in the amount or of the value of $25,000 or less and charge, contract for, or receive on the loan a greater rate of interest, discount, or consideration than the lender would be permitted by law to charge if the person were not a licensee under this chapter, except as authorized by this chapter and without first obtaining a license from the department.

 (b) A person who is doing business under and as permitted by any law of the state or of the United States relating to banks, savings banks, trust companies, building and loan associations, or credit unions and who is exempt from the licensing requirement in (a) of this section shall comply with all other provisions of this chapter.




Sec. 06.20.020. Application for license; disclosure for child support purposes.
 (a) Application for a license shall be in writing under oath, and in the form prescribed by the department, and must contain the name and the residence and business address of the applicant, the district and municipality with street and number, if any, where the business is to be conducted and other information as the department may require. If the applicant is a copartnership or association, the application must contain the residence and business address of each member; if the applicant is a corporation, the application must contain the residence and business address of each officer and director.

 (b) In addition to the requirements in (a) of this section, if a natural person makes application for a license, the applicant shall supply the applicant’s social security number to the department. Upon request, the department shall provide the social security number to the child support services agency created in AS 25.27.010, or the child support enforcement agency of another state, for child support purposes authorized under law.




Sec. 06.20.030. Fees and charges.
 (a) Investigation expenses incurred by the department in processing an application for licensure shall be charged to and paid by the applicant under AS 06.01.010. At the time of submitting the application to the commissioner, the applicant shall pay to the department $1,000 in partial payment of those investigation expenses incurred by the department.

 (b) An applicant shall pay to the department at the time of submitting an application a sum, in addition to that specified in (a) of this section, of $500 for a single office license, or $2,000 for a multiple office license as an annual license fee for a period terminating on the last day of the current calendar year.

 (c) The license fee required by this section is in place of the fee under AS 43.70 (Alaska Business License Act).




Sec. 06.20.040. Liquid assets required.
An applicant shall prove, in form satisfactory to the department, that the applicant has available for the operation of the business at the location specified in the application, liquid assets of at least $25,000, or, in the case of a multiple office license, that the equivalent amount is available to each office from a central account maintained by the applicant.


Sec. 06.20.050. Bond.
The applicant shall file with the application a bond to be approved by the department in which the applicant shall be the obligor, in the sum of $25,000 with one or more sureties. Only one bond is required for an application for a multiple office license. The bond shall be for the use of the state and any person who may have a cause of action against the obligor under this chapter. The bond must state that the obligor will faithfully conform to and abide by the provisions of this chapter and of all regulations lawfully adopted by the department, and will pay to the state and to any person all money that may become due or owing to the state or to the person from the applicant under this chapter.


Sec. 06.20.060. Issuance of license.
Upon the filing of the application, the payment of the fees and the approval of the bond, the department shall issue a license to the applicant if it finds upon investigation that (1) the financial responsibility, experience, character, and general fitness of the applicant and of its members if the applicant is a copartnership or association, and of its officers and directors if the applicant is a corporation, are such as to command the confidence of the community and to warrant belief that the business will be operated honestly, fairly, and efficiently within the purposes of this chapter, and (2) allowing the applicant to engage in business at the location will provide accessibility and convenience for borrowers of money, and (3) the applicant has available for the operation of the business at the specific location liquid assets of at least $25,000, or, in the case of a multiple office license, that the equivalent amount is available to each office from a central account maintained by the applicant. The foregoing facts are conditions precedent to the issuance of a license under this chapter. The license permits the applicant to make loans in accordance with this chapter at the location or locations specified in the application. The license remains in full force and effect until it is surrendered by the licensee or revoked or suspended. If the department denies the application, it shall notify the applicant of the denial, bill the applicant for any outstanding expenses incurred by the department during the investigation and return the bond if those expenses have been paid. The department shall approve or deny every application for license within 60 days from the filing of the application with the fees and the approved bond. If the application is denied, the department shall, within 20 days thereafter, serve upon the applicant a copy of the written decision and findings. The decision and findings may be reviewed in the manner provided in AS 44.62.560 and 44.62.570 (Administrative Procedure Act).


Sec. 06.20.070. Form, posting, and transfer of license.
The license must state the address at which the business is to be conducted and the full name of the licensee. If the licensee is a copartnership or association, the license must state the names of its members, and if a corporation, the date and place of its incorporation. The license shall be conspicuously posted in the place of business of the licensee. The license is not transferable or assignable.


Sec. 06.20.080. Additional bond.
If at any time the department finds that the bond is unsatisfactory for any reason, it may require the licensee to file, within 10 days after the receipt of a written demand therefor, an additional bond complying with the provisions of AS 06.20.050.


Sec. 06.20.090. Places of business.
 (a) A licensee may maintain only one place of business under a single office license, or up to 10 places of business under each multiple office license. The department may issue more than one license to the same licensee upon compliance with the provisions of this chapter governing the original issuance of a license.

 (b) If a licensee changes the place of business to another location within the same municipality, the licensee shall give written notice to the department in advance. Upon approval, the department shall issue an amended license for the new location. A licensee may not change the place of business to a location outside the municipality in which the licensee is authorized to do business.




Sec. 06.20.100. New bond.
On or before December 20 of each year, each licensee shall file a new bond that complies with AS 06.20.050.


Article 2. Revocation, Suspension, Surrender, and Reinstatement of Licenses.


Sec. 06.20.110. Grounds for revocation of license.
The department shall, under the Administrative Procedure Act (AS 44.62), revoke any license issued under this chapter if it finds that
     (1) the licensee has failed to pay the annual license fee or to maintain the required bond in effect or has failed to comply with any lawful demand, ruling, or requirement of the department made under and within the authority of this chapter;

     (2) the licensee has violated a provision of this chapter or a regulation lawfully adopted by the department under and within the authority of this chapter; or

     (3) any fact or condition exists that, if it had existed at the time of the original application for the license, clearly would have constituted ground for denial of the issuance of the license.




Sec. 06.20.120. Revocation or suspension where licensee has branches.
Where a licensee holds more than one license, the department may revoke or suspend any license for which grounds for the action exist.


Sec. 06.20.130. Surrender.
A licensee may surrender a license by delivering written notice of the surrender to the department. The surrender does not affect the licensee’s civil or criminal liability for acts committed before the surrender.


Sec. 06.20.140. Effect of revocation, suspension, or surrender.
A revocation, suspension, or surrender of a license does not impair or affect the legally enforceable obligation of any pre-existing contract between the licensee and any borrower.


Sec. 06.20.150. Status of license; reinstatement.
Every license remains in force and effect until it is surrendered, revoked, or suspended as provided in this chapter. The department may reinstate, suspend licenses, or issue new licenses to a licensee whose license has been revoked if no fact or condition exists that clearly would have constituted ground for denial of the issuance of the license by the department.


Article 3. Inspections, Examinations, Records, and Reports.


Sec. 06.20.160. Inspection and examination of licensees.
For the purpose of discovering violations of this chapter or securing information required by it under this chapter, the department or its duly designated representative may investigate at any time the loans and business and examine the books, accounts, records, and files used in the business, of every licensee and of every person engaging in the business described in AS 06.20.010, whether the person acts or claims to act as principal or agent, or under or without the authority of this chapter. For that purpose the department and its duly designated representative have free access to the office and place of business, books, accounts, papers, records, files, safes, and vaults of all such persons. The department and all persons duly designated by it may require the attendance and examination under oath of all persons whose testimony it may require relative to the business.


Sec. 06.20.170. Periodic examination.
The department shall examine the affairs, business, office, and records of each licensee at least once every 18 months. Examination fees are to be charged to and paid by the licensee in accordance with AS 06.01.010. The department may maintain an action for the recovery of the costs in any court of competent jurisdiction, with recourse to the bonds referred to in AS 06.20.050 and 06.20.080.


Sec. 06.20.180. Books and records of licensees.
Each licensee shall keep and use in the licensed premises those books, accounts, and records that will enable the department to determine whether the licensee is complying with this chapter and with the regulations lawfully adopted by the department under this chapter. The maintenance of separate books and records for another business authorized by the department under AS 06.20.210 is not required. The method of tracking and numbering the loans shall be determined by the licensee, as long as the system enables the department to perform the department’s obligations under this title. The licensee shall preserve the books, accounts, and records, including cards used in the card system, if any, for two years after making the final entry on any recorded loan.


Sec. 06.20.190. Annual reports of licensees.
Each licensee shall, on or before March 15 of each year, file a report with the department containing information as the department may reasonably require concerning the business and operations during the preceding calendar year of each licensed place of business conducted by the licensee inside the state. The report shall be made under oath and shall be in the form prescribed by the department, and shall be kept available as a public record.


Article 4. Business Practices.


Sec. 06.20.200. Advertising of misleading statements prohibited.
 (a) A person may not advertise, print, display, publish, distribute, or broadcast or cause or permit to be advertised, printed, displayed, published, distributed, or broadcast, in any manner any statement or representation with regard to the rates, terms, or conditions for the lending of money, credit, goods, or things in action in the amount or of the value of $25,000 or less, which is false, misleading, or deceptive. The department may order a licensee to desist from conduct that it finds to be in violation of this section.

 (b) The department may require rates of charge stated by a licensee to be stated fully and clearly in the manner considered necessary to prevent misunderstanding by prospective borrowers.




Sec. 06.20.210. Use of premises restricted.
A licensee may not conduct the business of making loans under this chapter within an office, room, or place of business in which another business is solicited or engaged in, or in association or conjunction therewith, except as may be authorized in writing by the department upon its finding that the character of the other business is such that the granting of authority would not facilitate evasions of this chapter or the regulations lawfully adopted under this chapter.


Sec. 06.20.220. Transactions limited to licensed premises.
A licensee may not transact business or make any loan under this chapter under any name or at any place of business other than that named in the license.


Sec. 06.20.230. Maximum interest permitted.
 (a) A licensee may lend any sum of money not exceeding $25,000 and may charge, contract for, and receive on the loan interest at a rate not exceeding three percent a month on that part of the unpaid principal balance of a loan not in excess of $850; two percent a month on the unpaid principal balance exceeding $850 but not exceeding $10,000; and at a rate agreed by contract on the remainder of any unpaid principal balance exceeding $10,000 but not exceeding $25,000.

 (b) Notwithstanding the provisions of (a) of this section, a licensee who makes open-end loans under this chapter may charge, contract for, and receive interest at a rate not exceeding three percent a month on that part of the unpaid principal balance of a loan not in excess of $850; two percent a month on the unpaid principal balance exceeding $850 but not exceeding $10,000; and at a rate agreed by contract on the remainder of any unpaid principal balance exceeding $10,000 but not exceeding $25,000.

 (c) Interest on loans under (b) of this section shall be computed according to the actuarial method on the entire unpaid principal balance as determined under AS 06.20.285(b).




Sec. 06.20.240. Loans for purpose of obtaining higher interest.
A licensee may not induce or permit a person, or a husband and wife jointly or severally, to split up or divide a loan or to become obligated, directly or contingently or both, under more than one loan contract at the same time, for the purpose or with the result of obtaining a higher rate of interest than would otherwise be permitted by AS 06.20.230. However, a licensee may enter into new or different loan transactions with the borrower or the borrower’s spouse at a different time so long as the purpose of the additional transaction does not violate this section.


Sec. 06.20.250. Payments and interest.
 (a) Interest may not be paid, deducted, or received in advance. Except for open-end loans made under AS 06.20.285, interest shall be computed and paid only on unpaid principal balances and may not be compounded; however, if part or all of the consideration for a loan contract is the unpaid principal balance of a prior loan, the principal amount payable under the loan contract may include any unpaid charges on the prior loan that have accrued within 60 days before the making of the loan contract. The maximum interest permitted on loans made under this chapter shall be computed on the basis of the number of days actually elapsed. For the purpose of these computations a month is any period of 30 consecutive days.

 (b) A licensee may compute interest for a loan as provided in this chapter on an interest-bearing or actuarial basis either at the rates stated in AS 06.20.230 or at the single annual percentage rate that would earn the same finance charge as the rates stated in AS 06.20.230 when the debt is paid according to the agreed terms and the calculations made according to the actuarial method.

 (c) Except for open-end loans under AS 06.20.285, a licensee may not enter into a contract for a loan that provides for a scheduled repayment of principal over more than the maximum terms set out below opposite the respective size of loans.
     Principal amount of loan     Maximum term           up to $1,000 ...................24 and ½ months           Over $1,000 to $2,500 ...................48 and ½ months           Over $2,500 to $5,000 ...................60 and ½ months           Over $5,000 to $25,000 ...................as agreed to by the parties      (d) Loan contracts must provide for substantially equal payments, and the payments must be due at least once a month, with the first payment beginning not later than 45 days from the date the loan is made.

 (e) If the irregular payment is confirmed in writing by the borrower, and the method of repayment is consistent with the maximum term and annual interest rate provided in this chapter, and if a borrower demonstrates sufficient seasonal or extraordinary income to support repayment of a loan, the loan contract may provide for irregular payments and first payment extensions greater than 45 days from the date the loan is made.




Sec. 06.20.260. Charges prohibited.
 (a) A further or other charge or amount for an examination, service, brokerage commission, expense, fee, bonus, or other thing may not be directly or indirectly charged, contracted for, or received except
     (1) lawful fees actually paid out by the licensee to a public officer for filing, recording, or releasing any instrument securing the loan, or premiums payable for insurance in lieu of perfecting a security interest if the premiums do not exceed the fees that would otherwise normally be incurred for perfecting, filing, recording, and releasing the security interest, or for transferring certificate of title to a motor vehicle securing the lien or noting a lien on that certificate;

     (2) premiums actually paid out for insurance on any one or combination of the following: pledged property of the borrower, or consumer credit insurance; in this paragraph, “consumer credit insurance” has the meaning given in AS 21.57.160;

     (3) taxable costs and expenses to which the licensee becomes entitled under general law in any court proceedings to collect a loan or to realize on the security after default;

     (4) for loans of $10,000 or less that are secured by an interest in real estate, reasonable costs and fees paid by a licensee for appraisals, surveys, and title insurance or reports;

     (5) for loans over $10,000, whether or not secured by an interest in real estate, reasonable costs and fees paid by a licensee for appraisals, surveys, title insurance or reports, and credit reports;

     (6) a late payment fee of not more than 10 percent of the payment that is due or $25, whichever is less;

     (7) a fee for dishonored checks not to exceed $25 for each dishonored check;

     (8) reasonable attorney fees, actual expenses, and costs incurred in connection with the collection of a delinquent debt or a foreclosure if the collection or foreclosure is referred to an attorney who is not a salaried employee of the licensee and the balance then owing on the debt exceeds $5,000;

     (9) actual expenses and costs incurred in connection with a repossession.

 (b) A licensee may collect the charges permitted under (a) of this section at the time when the loan is made or at any time thereafter. If any interest, consideration, or charges in excess of those permitted by AS 06.20.230 are charged, contracted for, or received, except as the result of an accidental and bona fide error in computation, the contract of loan is modified as follows: all interest, consideration, or charges involved are voided and a like amount credited to the debtor on the principal of the loan. If the unpaid principal is less than the total of the interest, consideration, and charges, the difference shall be refunded by the lender to the borrower.




Sec. 06.20.270. Requirements for making and payment of loans.
Except as provided in AS 06.20.285 for open-end loans, every licensee shall
     (1) deliver to the borrower at the time a loan is made a statement containing a printed copy of AS 06.20.230 — 06.20.260 in the English language and showing in clear and distinct terms the amount and date of the loan and its maturity, the nature of the security, if any, for the loan, the name and address of the borrower and the licensee, and the agreed rate of charge;

     (2) give to the borrower a plain and complete receipt for all payments made on account of the loan at the time payments are made, specifying the amount applied to interest and the amount, if any, applied to principal, and stating the unpaid principal balance, if any, of the loan;

     (3) permit payment to be made in advance in any amount on a contract of loan at any time, but the licensee may apply the advance payment first to all interest in full at the agreed rate up to the date of payment;

     (4) upon repayment of the loan in full, mark indelibly every obligation and security signed by the borrower with the word “Paid” or “Cancelled,” and release any mortgage, restore any pledge, cancel and return any note, and cancel and return any assignment given to the licensee by the borrower;

     (5) display prominently in each licensed place of business a full and accurate schedule, approved by the department, of the charges to be made and the method of computing them.




Sec. 06.20.280. Maximum charge by licensee.
A licensee may not directly or indirectly charge, contract for, or receive any interest, discount, or consideration greater than that which the licensee would be permitted by law to charge if the person were not a licensee under this chapter, upon the loan, use or forbearance of money, goods, or things in action, or upon the loan, use, or sale of credit, of the amount or value of more than $25,000. This section applies to any licensee who permits any person, as borrower or endorser, guarantor, or surety for any borrower, or otherwise, to owe directly or contingently or both to the licensee at any time a sum of more than $25,000 on principal.


Sec. 06.20.285. Open-end loans.
 (a) A licensee may make open-end loans not exceeding an aggregate total of $25,000 and may contract for and receive interest on open-end loans as provided in AS 06.20.230, and for other charges permitted under this chapter. Interest on open-end loans may be computed daily or monthly on the unpaid principal balance or the average unpaid principal balance if the interest charged as a result of these computations does not exceed the rates stated in AS 06.20.230 when the interest is computed according to the interest-bearing or actuarial method.

 (b) The billing cycle for open-end loans is monthly, and the unpaid principal balance on a certain day is computed by adding to the balance unpaid on the beginning of that day, or the average unpaid daily balance for that billing cycle, all advances and other permissible amounts charged to the borrower and deducting all payments and other credits made or received that day.

 (c) A licensee may secure the payment of an open-end loan in the same manner as other loans under this chapter may be secured.

 (d) The licensee shall deliver a copy of the open-end loan agreement to the borrower at the time the open-end loan account is opened. The open-end loan agreement must contain the name and address of the licensee and the borrower and must contain disclosures of finance charges and agreed terms as may be required by regulations adopted by the department and the Board of Governors of the Federal Reserve System.

 (e) At the end of each billing cycle in which there is an outstanding balance in the account for which a finance charge is imposed, the licensee shall deliver to the borrower a statement in the form required by regulations adopted by the department and the Board of Governors of the Federal Reserve System. This subsection does not apply to accounts that the licensee considers uncollectible or for which an action to collect past due amounts has been filed.




Sec. 06.20.287. Insurance on open-end loans.
 (a) A licensee may obtain consumer credit, credit loss of income, and property insurance on open-end loans under this chapter. The consumer credit insurance obtained by a licensee shall satisfy the requirements of AS 21.57. The property insurance obtained by a licensee shall satisfy the requirements of AS 21.39 and AS 21.42. The licensee shall comply with AS 21.36.160 and 21.36.319 during all transactions with borrowers involving consumer credit, credit loss of income, and property insurance.

 (b) The licensee shall calculate the charge for credit life, credit loss of income, or disability insurance in each billing cycle by adding to the unpaid balance in the borrower’s account the current monthly premium rate for the coverage required at the rate set under AS 21.57, using the method specified in the loan agreement for determining the unpaid balance.

 (c) A licensee may not cancel credit life, credit loss of income, or disability insurance obtained for an open-end loan if the borrower is delinquent in paying the monthly installments unless an installment is delinquent for 90 days or longer. The licensee shall advance to the insurer amounts necessary to keep the policy in force until the 90-day delinquency period has elapsed, and the borrower’s account may be charged for the amounts advanced to the insurer.




Sec. 06.20.290. Purchase of wages or other compensation for $25,000 or less.
For purposes of this chapter, the payment of $25,000 or less in money, credit, goods, or things in action, as consideration for the sale or assignment of, or order for, the payment of wages, salary, commissions, or other compensation for services, whether earned or to be earned, is considered a loan, and the difference between the payment and the amount of the compensation sold or assigned is considered interest or a charge upon the loan from the date of payment to the date the compensation is payable. Such a transaction is governed by this chapter.


Sec. 06.20.300. Maximum charges by nonlicensee on loans.
 (a) Except as authorized in this chapter, a person may not directly or indirectly charge, contract for, or receive any interest, discount, or consideration greater than that which the person would be permitted by law to charge if the person were not a licensee, upon the loan, use, or forbearance of money, goods, or things in action, or upon the loan, use, or sale of credit of the amount or value of $25,000 or less.

 (b) The provisions of (a) of this section apply to any person who, by any device, subterfuge, or pretense whatsoever charges, contracts for, or receives greater interest, consideration, or charges than are authorized by this chapter.




Article 5. General Provisions.


Sec. 06.20.310. Effect of illegal interest rate.
A loan of the amount or value of $25,000 or less for which a greater rate of interest, consideration, or charge than is permitted by this chapter has been charged, contracted for, or received, wherever made, may not be enforced in the state, and every person participating in such a loan in the state is subject to this chapter. This section does not apply to loans legally made in a state or territory of the United States that has in effect a regulatory small loan law similar in principle to this chapter.


Sec. 06.20.320. Civil penalties.
 (a) A licensee or lender who, in the making or collection of a loan contract, does any act that violates AS 06.20.230 — 06.20.260 or 06.20.280 — 06.20.310 shall at the option of the commissioner reimburse the portion of the interest and charges in excess of that provided in those sections, or, in the case of repeated violations of those sections by the licensee, the commissioner may, upon a hearing, require the licensee to adjust the loan contract interest or other charges down to the contract interest limitation specified in AS 45.45.010(a).

 (b) [Repealed, § 102 ch 26 SLA 1993.]
 (c) If a penalty for failure to comply with financing disclosure requirements under regulations adopted by the Board of Governors of the Federal Reserve System is imposed by the federal authorities, the department may not impose a civil penalty under this section for the same act or omission.




Sec. 06.20.330. Exemptions.
 (a) [Repealed, § 55 ch 75 SLA 2002.]
 (b) This chapter does not apply to individual loans by
     (1) pawnbrokers where separate and individual loans do not exceed $750; in this paragraph, “pawnbroker” means a person who is regulated under AS 08.76.100 — 08.76.590; or

     (2) loan shops where separate and individual loans do not exceed $500.




Sec. 06.20.340. Regulations, rulings, demands, and findings; service of notice.
 (a) The department may adopt general regulations and make specific rulings, demands, and findings consistent with this chapter as may be necessary for the proper conduct of business and the enforcement of this chapter.

 (b) All notices required or authorized by this chapter to be given or served by the department may be given or served by registered mail and service is considered complete when a true copy is deposited in the post office properly addressed and stamped.




Sec. 06.20.350. Amendment or repeal of chapter.
This chapter may be modified, amended, or repealed so as to effect a cancellation or alteration of a license or right of a licensee hereunder, but the cancellation or alteration may not impair or affect the obligation of a pre-existing lawful contract between a licensee and a borrower.


Sec. 06.20.360. [Renumbered as AS 06.20.920.]
Sec. 06.20.900. Definitions.
In this chapter, unless the context otherwise requires,
     (1) “commissioner” means the commissioner of commerce, community, and economic development or a designee of the commissioner;

     (2) “department” means the Department of Commerce, Community, and Economic Development;

     (3) “open-end loan” means a loan made by a licensee under this chapter under an agreement between the licensee and a borrower which provides that
          (A) the borrower may obtain advances of money from the licensee from time to time or the licensee may advance money on behalf of the borrower from time to time as directed by the borrower;

          (B) the amount of each advance and interest and charges will be added to the borrower’s open-end loan account and payments and other credits are deducted from that account;

          (C) interest will be computed on the unpaid principal balance or the average unpaid principal balance of the open-end loan account;

          (D) the borrower may pay all or any part of the unpaid principal balance of the borrower’s open-end loan account or, if the account is not in default, in monthly installments of fixed amounts as provided in the loan agreement; and

          (E) the agreement covers open-end loans under this chapter.




Sec. 06.20.920. Short title.
This chapter may be cited as the Alaska Small Loans Act.


Chapter 25. Trust Companies.

[Repealed, § 8 ch 77 SLA 2002.]

Article 1. General Authority.


Chapter 26. Revised Alaska Trust Company Act.

Sec. 06.26.010. Persons authorized to act as fiduciaries.
 (a) Notwithstanding other provisions of law and except as provided in AS 06.26.020, a person may not act as a fiduciary in this state unless the person is
     (1) a trust company organized under this chapter;

     (2) a private trust company that has received an exemption under AS 06.26.200;

     (3) a state financial institution;

     (4) a national bank having its principal office in this state and authorized by the United States Comptroller of the Currency to act as a fiduciary;

     (5) a federally chartered savings association having its principal office in this state and authorized by its federal chartering authority to act as a fiduciary;

     (6) an international bank that has a branch bank in this state established or maintained under AS 06.05.550; in this paragraph, “international bank” has the meaning given in AS 06.05.990;

     (7) an interstate national bank with a branch bank in this state established or maintained under AS 06.05.550; in this paragraph, “interstate national bank” means a national bank whose principal office, as designated in the bank’s articles of incorporation, is not located in this state;

     (8) an entity that
          (A) is organized under the laws of a state of the United States other than this state;

          (B) holds a charter, license, certificate, or other type of authorization from this or another state of the United States to engage in banking; and

          (C) has a branch bank located in this state established or maintained under AS 06.05.550;

     (9) an interstate state trust company or international trust company with a trust office authorized by the department under AS 06.26.810 — 06.26.895;

     (10) a trustee of only charitable trusts, does not offer fiduciary services to the general public with regard to noncharitable trusts, and observes the requirements applicable to trustees under AS 13.36.225 — 13.36.290 (Alaska Uniform Prudent Investor Act); or

     (11) a federally chartered credit union having its principal office in this state and authorized by the National Credit Union Administration to act as a fiduciary.

 (b) In this section, “branch bank” has the meaning given in AS 06.05.990.




Sec. 06.26.020. Exemptions.
 (a) Notwithstanding any other provision of this chapter, a person does not act as a fiduciary under this chapter if the person
     (1) is licensed to practice law in this state, the person is acting within the scope of the license, and the person and any law firm of the person are not trustees of more trusts than the number established for the person and law firm by the department by regulation or order; in this paragraph, “law firm” means a partnership, a professional corporation organized under AS 10.45, or another association organized for the practice of law and in which the person practices law;

     (2) acts as trustee under a deed of trust delivered only as security for the payment of money or for the performance of another act;

     (3) receives and distributes on behalf of a principal rents and proceeds of sales as a real estate broker or other licensee under AS 08.88;

     (4) engages in securities business activity or investment advisory business activity as a registered broker-dealer, a broker-dealer agent, a state investment adviser, or an investment adviser representative, or as a federal covered adviser who has made a notice filing under AS 45.55.040(h), the person is acting within the scope of the person’s registration or notice filing, and the activity is regulated by the department under AS 45.55 or by the United States Securities and Exchange Commission; in this paragraph, “agent,” “broker-dealer,” “federal covered adviser,” “investment adviser representative,” “investment advisory business,” “securities business,” and “state investment adviser” have the meanings given in AS 45.55.990;

     (5) engages in the sale and administration of an insurance product as an insurance company licensed under AS 21 or an insurance producer licensed under AS 21 and is acting within the scope of that license;

     (6) handles escrow transactions and is a title insurance company that has a certificate of authority issued under AS 21.09, a title insurance limited producer that is licensed as required by AS 21.66.270, or an employee of the title insurance company or title insurance producer when acting in the scope of the employee’s employment; in this paragraph,
          (A) “escrow transaction” has the meaning given in AS 34.80.090;

          (B) “title insurance company” has the meaning given in AS 21.66.480;

          (C) “title insurance limited producer” has the meaning given in AS 21.66.480;

     (7) is a cemetery association organized and acting under AS 10.30;

     (8) is a trustee for a voting trust under AS 10.06 and is acting in that capacity;

     (9) has a certified public accountant license issued under AS 08.04.105 or 08.04.195, the person is acting within the scope of the license, and the person and any accounting firm of the person are not trustees of more trusts than the number established for the person and accounting firm by the department by regulation or order; in this paragraph, “accounting firm” means a partnership, a professional corporation organized under AS 10.45, or another association organized for the practice of public accounting and in which the person practices public accounting;

     (10) holds real property in trust for the primary purpose of subdivision, development, or sale or to facilitate a business transaction with respect to the real property;

     (11) serves as a trustee of a trust created by the person’s family members;

     (12) holds money or other assets as a homeowners’ association or similar organization to pay maintenance and other related costs for commonly owned property; in this paragraph, “homeowners’ association” includes an association of apartment owners under AS 34.07.450 and a unit owners’ association or master association under AS 34.08.990;

     (13) holds money or other assets in connection with the collection of debts or payments on loans by a person acting solely as the agent or representative at the sole direction of the person to whom the debt or payment is owed, including engaging in the business of an escrow agent;

     (14) acts as a conservator if the person is appointed by a court of this or another state or is qualified to act as a conservator under AS 13.26.580;

     (15) acts as a personal representative if the person is appointed a personal representative by a court of this or another state or is qualified to act as a personal representative under AS 13.21.035;

     (16) acts as a guardian or receiver if the person is appointed as a guardian or receiver by a court of this or another state;

     (17) is a business partner acting with regard to the business, or a co-owner of property acting with regard to the co-owned property;

     (18) serves as a trustee of one or more trusts in which the settlor is not a family member of the person, except that the person may not at any one time serve as a trustee for trusts that cumulatively have more than 10 different settlors; however, the department may change by regulation or order the maximum number of settlors allowed for this exemption; in this paragraph, a husband and wife who create a joint trust are considered to be one settlor.

 (b) When establishing the number of trusts that are allowed for an exemption under (a)(1) or (9) of this section or when changing the maximum number of settlors that are allowed for an exemption under (a)(18) of this section, the department shall consider the protection of the public, the effect on efficient delivery of trust services at a reasonable cost, and the likelihood that the particular exemption can make the trust services available to the persons who need the service.

 (c) In addition to the exemptions identified in (a) of this section, the department may by regulation or order grant an exemption to a person if the person demonstrates good cause for needing the exemption and the department determines that the exemption would not conflict with public order or convenience.

 (d) In addition to any other requirements established for the exemption, to maintain an exemption under this section, a person who is exempt under (a) or (c) of this section may not offer fiduciary services to the general public.




Sec. 06.26.030. Location of operation.
 (a) A trust company may act as a fiduciary in this state, another state, or a foreign country, subject to complying with applicable laws of the state or foreign country, at an office or branch established and maintained under this chapter.

 (b) A trust company may conduct any activities at an office outside this state that are permissible for a trust company chartered by the host state, except to the extent those activities are expressly prohibited by the laws of this state or by a regulation or order of the department applicable to the trust company.




Article 2. Name, Powers, Organization, and Capitalization.


Sec. 06.26.040. Name of trust company.
 (a) A person may not use the words “trust” or “trust company” or any other words in a manner that could reasonably be expected to convey the impression that the person is acting as a fiduciary unless the person is authorized to act as a fiduciary under AS 06.26.010.

 (b) This section does not prohibit the use of the words “trust” or “trust company” in the name of a corporation that is in existence as of January 1, 2003 and that is not subject to this chapter if the corporation was originally organized under the laws of this state and has not, since the date of its original organization, amended or restated its articles of incorporation to delete from its name the words “trust” or “trust company.”




Sec. 06.26.050. Powers of trust company.
 (a) A trust company may perform any act as a fiduciary that a state financial institution, or a national bank exclusively exercising trust powers, may perform, including
     (1) acting as trustee under a written agreement;

     (2) receiving money and other property as trustee for investment in real or personal property;

     (3) acting as a trustee and performing the fiduciary duties committed or transferred to it by a court;

     (4) receiving money or other assets under AS 06.35;

     (5) acting as an executor, an administrator, or a trustee of the estate of a deceased person;

     (6) acting as a custodian, guardian, conservator, or trustee for a minor or an incapacitated person;

     (7) acting as a successor fiduciary to a depository;

     (8) receiving for safekeeping any type of personal property;

     (9) acting as a custodian, an assignee, a transfer agent, an escrow agent, a registrar, or a receiver;

     (10) acting as an investment adviser, an agent, or an attorney-in-fact in any agreed upon capacity;

     (11) exercising additional powers expressly authorized by a regulation adopted under this chapter; and

     (12) exercising an incidental power that is reasonably necessary to enable it to fully exercise the powers expressly conferred according to commonly accepted fiduciary customs and usage.

 (b) A trust company may exercise the powers of a business incorporated under the laws of this state that are reasonably necessary to enable the exercise of its specific powers under this chapter.

 (c) A trust company may contribute to community solicitations, or to charitable, philanthropic, or benevolent instrumentalities that operate to promote public welfare, amounts that its board considers appropriate and in the interests of the trust company.

 (d) Subject to AS 06.26.370, a trust company may deposit trust money or other assets with itself.

 (e) Subject to the approval of the department and to being insured by the Federal Deposit Insurance Corporation or its successor, a trust company may accept deposits from the public.

 (f) A trust company organized under this chapter may apply for a certificate of authority under AS 06.05.

 (g) A trust company organized under this chapter with a certificate of authority issued under AS 06.05 may exercise all powers granted to it under AS 06.05 to the extent the powers do not conflict with this chapter. A trust company with a certificate of authority issued under AS 06.05 is subject to all of the provisions of AS 06.05. In case of a conflict between the provisions of this chapter and AS 06.05, the provisions of this chapter apply.

 (h) In (a) of this section, “national bank exclusively exercising trust powers” means a person issued a charter by the United States Comptroller of the Currency if the charter confers only trust powers.




Sec. 06.26.060. Organizers.
One or more persons may organize a trust company.


Sec. 06.26.070. Incorporation.
 (a) A trust company shall be incorporated under AS 10.06.

 (b) In addition to the items required under AS 10.06.208 to be included in articles of incorporation, the articles of incorporation of a trust company must specify
     (1) the judicial district where the trust company will be located and the community where the trust company will locate its principal place of business;

     (2) the amount of the trust company’s stock, which must be divided into shares having a par value of not less than $1 each;

     (3) that there will be at least five but not more than 25 directors;

     (4) the period for which the trust company is organized, whether limited or perpetual;

     (5) the name by which the trust company will be known, which must contain the words “trust company” as a part of the name; and

     (6) a declaration that each incorporator will, if elected, accept the responsibilities and faithfully discharge the duties of a director.




Sec. 06.26.080. Amendment of articles or bylaws.
 (a) A trust company may amend its articles of incorporation or bylaws in a manner consistent with its articles, its bylaws, AS 10.06, and this chapter by a vote of its shareholders representing at least a majority of the capital at a regular meeting or at a special meeting called for that purpose. The trust company shall file a written notice of an amendment with the department.

 (b) The department has 60 days from the date that the department receives a notice under (a) of this section to review the amendment, and the amendment becomes effective on the 61st day after the department receives the notice unless the department specifies a different date. The department may extend the 60-day period of review if the department determines that the notice raises significant issues that require additional information or if the department needs additional time for analysis. If the 60-day period of review is extended, the amendment becomes effective only when the department approves the amendment in writing.




Sec. 06.26.085. Certificate of authority required.
A person may not act as a trust company until a certificate of authority is received from the department.


Sec. 06.26.090. Application for certificate of authority.
 (a) An application for a certificate of authority shall be made in the form required by the department and must be supported by the information, data, records, and opinions of counsel required by the department. The application must be accompanied by all fees and deposits required by this chapter.

 (b) The department may grant a certificate of authority only if the department receives evidence from the applicant that the department determines demonstrates that the establishment of the proposed trust company will serve public convenience and well-being. The evidence must address the following factors:
     (1) the market to be served;

     (2) whether the proposed organizational structure, capital structure, and amount of initial capitalization are adequate for the proposed trust company and its location;

     (3) whether the anticipated volume and nature of the proposed trust company indicates a reasonable probability of success and profitability based on the market sought to be served;

     (4) whether, as a group, the proposed officers, directors, and employees have sufficient fiduciary experience, ability, standing, competence, trustworthiness, and integrity to justify a belief that the proposed trust company will operate in compliance with the law and that success of the proposed trust company is probable;

     (5) whether each principal shareholder has sufficient experience, ability, standing, competence, trustworthiness, and integrity to justify a belief that the proposed trust company will be free from improper or unlawful influence or interference with respect to the trust company’s operation in compliance with the law; and

     (6) whether the persons organizing the trust company are acting in good faith.

 (c) The applicant for a certificate of authority bears the burden of establishing that public convenience and well-being will be served by the establishment of the trust company. The failure of an applicant to furnish required information, data, opinions of counsel, other material, the required fee, or a required deposit is considered an abandonment of the application.

 (d) An applicant shall pay under AS 06.01.010 the investigation expenses incurred by the department in processing an application for a certificate of authority. When submitting an application to the department, the applicant shall pay the department $2,000 as an advance payment of the investigation expenses incurred by the department. If the investigation expenses incurred by the department are less than $2,000, the department shall promptly refund the excess to the applicant. If the investigation expenses incurred by the department are greater than $2,000, the department may obtain reimbursement from the applicant.

 (e) The department shall determine whether all of the applicable requirements of this section have been satisfied and shall enter an order granting or denying the certificate of authority. The department may deny the application if the department determines that the requirements of this chapter have not been met. The department may set conditions on the certificate of authority and shall include any conditions in the order granting the certificate of authority.

 (f) If a protest of the application is not filed with the department on or before the 15th day after the last date that the notice is published under AS 06.26.100, the department may immediately determine whether the application meets the requirements of this section based on the application and investigation.




Sec. 06.26.100. Department notices regarding application.
 (a) The department shall notify the organizers of a proposed trust company when the application under AS 06.26.090 is complete and accepted for filing and all required fees and deposits have been paid. Promptly after notification, the organizers shall publish in a form specified by the department notice of the filing of the application in a newspaper of general circulation published in the community proposed as the trust company’s principal place of business. If a newspaper of general circulation is not published in the community, the organizers shall publish the notice in a newspaper of general circulation near the community. The department may require the organizers to publish the notice at other locations reasonably necessary to solicit the views of potentially affected persons. The notice must include a solicitation of comments and protests.

 (b) To prove that the publication required by (a) of this section has been accomplished, the organizers shall file with the department an affidavit of publication from the newspaper in which the notice was published.




Sec. 06.26.110. Issuance of certificate of authority; required operation.
 (a) The department may not deliver a certificate of authority to a person to act as a trust company until the person has
     (1) received cash or marketable securities in at least the full amount of the capital required under AS 06.26.120 from subscriptions for the issuance of shares;

     (2) elected or qualified the initial officers and directors named in the application for the certificate of authority or other officers and directors approved by the department; and

     (3) complied with all other requirements of this chapter related to the organization of a trust company.

 (b) A person who receives a certificate of authority, including a certificate of authority with conditions, shall open a home office and begin providing fiduciary services within six months after the date that the person receives the certificate of authority or by the end of any extension of the six-month period allowed by the department. If the person does not open the home office or begin providing fiduciary services within the six months or by the end of any extension, the department shall revoke the certificate of authority.




Sec. 06.26.120. Required capital; change in outstanding capital and surplus.
 (a) A trust company may not act as a fiduciary unless the trust company has paid-in capital in an amount acceptable to the department, but not less than $400,000, and paid-in surplus equal to 20 percent of paid-in capital. The trust company shall hold its unimpaired capital as security for the faithful discharge of the fiduciary duties undertaken by the trust company and for the claims of creditors.

 (b) The department may by order require or permit adjustment to capital for a proposed or existing trust company if the department finds the condition and operations of an existing trust company or the proposed scope or type of operations of a proposed trust company requires adjustment to capital to protect the safety and soundness of the trust company. The safety and soundness factors to be considered by the department in the exercise of its discretion to adjust capital include
     (1) the nature and type of business conducted;

     (2) the nature and degree of liquidity of the assets held by the trust company other than trust assets;

     (3) the amount of fiduciary assets being managed;

     (4) the type of fiduciary assets held and the depository of those assets;

     (5) the complexity of the fiduciary duties and degree of discretion undertaken;

     (6) the competence and experience of management;

     (7) the extent and adequacy of internal controls;

     (8) the presence or absence of annual unqualified audits by an independent certified public accountant;

     (9) the reasonableness of the trust company’s plans for retaining or acquiring additional capital; and

     (10) the existence and adequacy of insurance held by the trust company to protect its customers, beneficiaries, and grantors.

 (c) If the department orders a trust company to increase or adjust its capital, the order must state the date by which the increase or adjustment must be made. An order under this subsection does not prohibit the trust company from later applying to the department to reduce capital requirements for the trust company under (b) of this section.

 (d) Subject to (b) of this section, a trust company to which the department issues a certificate of authority shall at all times maintain capital in at least the amount required under (a) of this section, as increased or decreased under (b) of this section.

 (e) A trust company may not reduce or increase its outstanding capital through dividend, redemption, issuance of shares, or otherwise without the prior written approval of the department, unless otherwise permitted by this chapter.

 (f) Prior approval by the department is not required for a decrease in surplus caused by incurred losses that exceed undivided profits. A decrease to surplus as a result of losses shall be replaced before payment of further dividends.




Sec. 06.26.130. Capital notes or debentures.
 (a) A trust company may, with the written consent of the department, and if authorized by its articles of incorporation or approved by persons owning two-thirds of the stock of the trust company entitled to vote, issue convertible or nonconvertible capital notes or debentures. The principal amount of notes and debentures outstanding at any time may not exceed 33 1/3 percent of the capital stock and surplus fund of the trust company on the date of issuance. The rate and term are subject to the approval of the department, but the term may not exceed 20 years.

 (b) A trust company may not retire capital notes or debentures if the retirement creates an impairment of its capital. Capital notes and debentures are subordinated in right of payment in the event of insolvency or liquidation of the trust company to the prior payment of all deposits and all claims of other creditors except the holders of securities on a parity with the capital notes and debentures and the holders of securities expressly subordinated to the capital notes and debentures.




Sec. 06.26.140. Cumulative voting.
Shareholders may not use cumulative voting in the election of directors unless cumulative voting is allowed by the trust company’s articles of incorporation.


Article 3. Operation of Offices.


Sec. 06.26.150. Trust company home office.
 (a) A trust company shall continuously maintain in this state a home office where the trust company operates and keeps its records. At least one executive officer shall maintain an office at the home office.

 (b) Each executive officer at the home office is an agent of the trust company for service of process.

 (c) A trust company may change its home office to any of its offices existing at the time of the change within this state by filing a written notice with the department setting out the name of the trust company, the street address of its home office before the change, the street address to which the home office is to be changed, and a copy of a resolution adopted by the trust company’s board authorizing the change.

 (d) The change of the location of a home office takes effect on the 61st day after the date the department receives the notice under (c) of this section, unless the department establishes a different date or unless, before the 61st day, the department notifies the trust company that the trust company shall establish to the satisfaction of the department that the relocation is consistent with the original determination made under AS 06.26.090 for the establishment of a trust company at that location, in which event the change of home office takes effect when approved by the department.




Sec. 06.26.160. Trust company branch offices.
 (a) A trust company may establish branch offices anywhere in the state by
     (1) filing a written notice with the department setting out the name of the trust company, the street address of the proposed branch office, and a description of the activities proposed to be conducted at the branch office;

     (2) filing with the department a copy of a resolution adopted by the trust company’s board authorizing the establishment or acquisition of the branch office; and

     (3) paying the filing fee established by the department by regulation.

 (b) The department has 60 days from the date the department receives the notice under (a) of this section to review the proposal for the branch office, and the trust company may begin operating the branch office on the 61st day after the date the department receives the notice, unless the department specifies a different date.

 (c) The department may extend the 60-day period of review provided by (b) of this section if the department determines that the proposed branch office raises issues that require additional information or if the department needs additional time for analysis. If the 60-day period of review is extended, the trust company may establish the branch office only after the department approves the branch office in writing. The department may deny the trust company permission to establish a branch office if the department has safety or soundness concerns.




Sec. 06.26.170. Trust company representative offices.
 (a) A trust company may establish or acquire representative trust offices anywhere in this state. To establish or acquire a representative office, a trust company shall
     (1) file a written notice with the department that sets out the name of the trust company and the location of the proposed representative office;

     (2) file with the department a copy of a resolution adopted by the trust company’s board authorizing the establishment or acquisition of the representative office; and

     (3) pay the filing fee established by the department by regulation.

 (b) The department has 60 days from the date the department receives the notice filed under (a) of this section to review the establishment or acquisition of a representative office, and the trust company may begin operating the representative office on the 61st day after the date the department receives the notice, unless the department specifies a different date.

 (c) The department may extend the 60-day period of review provided by (b) of this section if the department determines that the written notice raises issues that require additional information or if the department needs additional time for analysis. If the 60-day period of review is extended, the trust company may establish the representative office only after the department approves the office in writing. The department may deny permission to establish or acquire a representative office of the trust company if the department has safety or soundness concerns.




Sec. 06.26.180. Offices outside the state.
 (a) With the prior written approval of the department, a trust company may establish a branch office or a representative office outside this state. To establish a branch office or representative office outside this state, a trust company shall
     (1) submit an application to the department specifying the location of the proposed office, the business to be conducted at the proposed office, and the laws of the jurisdiction where the office will be located that permit the office to be established;

     (2) file with the department a copy of a resolution adopted by the trust company’s board authorizing the establishment or acquisition of the office; and

     (3) pay the filing fee established by the department by regulation.

 (b) The department may approve an application under (a) of this section for a branch office or representative office if the department finds that
     (1) the laws of the jurisdiction in which the office is to be located permit the establishment of the office; and

     (2) the department does not have a significant supervisory or regulatory concern regarding the proposed office.

 (c) If a trust company submits with the application a certified statement of the governmental regulator for the jurisdiction in which the office is to be located expressly permitting the establishment of the office, the trust company may establish the office by following the procedures under AS 06.26.090, except that the trust company may not establish the office before the 91st day after the date the department receives the notice filed under AS 06.26.160(a) unless the department notifies the trust company that the trust company may establish the office on an earlier date.

 (d) The department may deny a trust company permission to establish a branch office or representative office outside this state if the department has safety or soundness concerns regarding
     (1) the market to be served;

     (2) whether the proposed organizational structure, capital structure, and amount of capitalization are adequate;

     (3) whether the anticipated volume and nature of the proposed office indicate a reasonable probability of success and profitability based on the market sought to be served;

     (4) whether, as a group, the officers, directors, and employees have sufficient fiduciary experience, ability, standing, competence, trustworthiness, and integrity to justify a belief that the proposed office will operate in compliance with law.




Sec. 06.26.190. Hours of operation.
 (a) A trust company and an interstate state trust company or an international trust company maintaining a trust office under AS 06.26.810 — 06.26.895 may close on the legal holidays described in AS 44.12.010 — 44.12.025. A notice of holiday closings shall be made available to the trust company’s customers by mail, by the Internet, or by other means.

 (b) A trust company and an interstate state trust company or international trust company maintaining a trust office under AS 06.26.810 — 06.26.895 may close on any business day if the trust company
     (1) notifies the department in advance of the closure; and

     (2) makes a closure notice available to its customers by mail, by the Internet, or by other means.

 (c) The hours of operation, and any changes in the hours of operation, of a trust company and an interstate state trust company or international trust company maintaining a trust office under AS 06.26.810 — 06.26.895 must be submitted to the department and must be made available to the trust company’s customers by mail, by the Internet, or by other means.

 (d) Notwithstanding this section, the hours of operation of a trust company with a certificate of authority issued under AS 06.05 are subject to AS 06.05.166.




Article 4. Private Trust Companies.


Sec. 06.26.200. Private trust companies.
 (a) Unless the department expressly in writing exempts the person under this section from all or some of the provisions of this chapter, a private trust company shall comply with the provisions of this chapter applicable to a trust company.

 (b) A person may apply in writing for an exemption from specific provisions of this chapter. The department may grant the exemption, in whole or in part, if the department finds that the person qualifies under (c) of this section and does not and will not offer fiduciary services to the general public.

 (c) To qualify as a private trust company, a person shall be a corporation organized under AS 10.06, a limited liability company organized under AS 10.50, or a limited partnership formed under AS 32.11, and the person’s
     (1) articles of incorporation, articles of organization, or partnership agreement must prohibit the person from acting as a fiduciary of a trust, except for a trust created during the lifetime or upon the death of
          (A) one named individual;

          (B) a child, grandchild, or greatgrandchild of the individual identified in (A) of this paragraph, but not including a stepchild, stepgrandchild, or stepgreatgrandchild;

          (C) a spouse or former spouse, including a person divorced from the individual, of an individual identified in (A) and (B) of this paragraph; and

     (2) headquarters must be located in this state, or the person must have in force a contract with a qualified entity to represent the person on an exclusive or nonexclusive basis in this state, including maintaining a set of records for each trust for which the person acts as a fiduciary and receiving legal process on behalf of the person; in this paragraph, “qualified entity” has the meaning given to “qualified person” in AS 13.36.390(3)(B) and (C).

 (d) At the expense of the applicant, the department may examine or investigate the applicant in connection with an application for an exemption under this section. Unless the application presents novel or unusual questions, the department shall approve or deny the application for exemption not later than the 61st day after the date that the department considers the application complete and accepted for filing. If the application presents novel or unusual questions, the department may extend the time for approving or denying the application. The department may require the applicant to submit additional information the department considers necessary to make an informed decision.

 (e) The department may make an exemption under this section subject to conditions or limitations imposed by the department that are consistent with this chapter.

 (f) The department may adopt regulations that are consistent with this chapter defining the activities that do not constitute providing or offering fiduciary services to the general public, specifying the provisions of this chapter that are subject to an exemption under this section, and establishing procedures and requirements for obtaining, maintaining, or revoking an exemption granted under this section.




Sec. 06.26.210. Requirements to apply for and maintain status as a private trust company.
 (a) To obtain an exemption under AS 06.26.200, a person shall file an application with the department containing
     (1) a nonrefundable application fee established by the department by regulation;

     (2) information that demonstrates that the person qualifies under AS 06.26.200(c);

     (3) a detailed statement under oath showing the applicant’s assets and liabilities as of the end of the month that precedes the date of the filing of the application with the department;

     (4) a statement under oath of the reason for requesting the exemption;

     (5) a statement under oath that the applicant currently does not offer fiduciary services to the general public and that the applicant will not offer fiduciary services to the general public without the prior written permission of the department;

     (6) the current street address of the physical location in this state where the applicant will maintain its records, the applicant’s current telephone number at that location, and a statement under oath that the address given is true and correct and not a United States Postal Service post office box or a private commercial mail drop;

     (7) a list of the specific provisions of this chapter or regulations adopted under this chapter from which the applicant requests an exemption.

 (b) The department may not approve an exemption under this section unless the application complies with (a) of this section.

 (c) To maintain its exemption under AS 06.26.200, a private trust company
     (1) may not offer fiduciary services to the general public;

     (2) shall continue to qualify under AS 06.26.200(c); and

     (3) shall file an annual certification on or before December 31 of each year on a form provided by the department that the private trust company is maintaining the conditions and limitations of its exempt status; the annual certification must be accompanied by a fee established by the department by regulation.

 (d) The annual certification required under (c) of this section is valid only if it bears an acknowledgment stamped by the department. The department has 60 days from the date it receives the annual certification to review the annual certification and return a copy of the acknowledged annual certification to the private trust company. The burden is on the exempt private trust company to notify the department of a failure to return a copy of an acknowledged annual certification within the 60-day period.

 (e) The department may examine or investigate the private trust company periodically as necessary to verify the annual certification.

 (f) Notwithstanding having an exemption under AS 06.26.200, a private trust company shall comply with the home office provisions of AS 06.26.150 and shall report to the department any change of address or telephone number within 30 days after the change.




Sec. 06.26.220. Transfer of control.
Control of an exempt private trust company may not be sold or otherwise transferred with an exemption under AS 06.26.200. In any change of control, the exempt status of the private trust company automatically terminates on the effective date of the transfer, and the person acquiring control must comply with this chapter. After transfer of control, a separate application for an exemption under AS 06.26.200 must be filed with the department if the acquiring person wishes to obtain or continue an exemption under AS 06.26.200.


Sec. 06.26.230. Revocation of exemption.
 (a) The department may revoke an exemption under AS 06.26.200 if the exempt private trust company
     (1) makes a false statement under oath on any document required to be filed by this chapter;

     (2) fails to submit to an examination as required by AS 06.26.200;

     (3) withholds requested information from the department; or

     (4) violates a provision of this chapter applicable to exempt private trust companies.

 (b) If the department determines from examination or other credible evidence that an exempt private trust company has violated a requirement of this chapter, the department may by personal delivery or registered or certified mail, return receipt requested, notify the exempt private trust company in writing that the department will revoke the private trust company’s exemption as of a stated date, which may not be before the fifth calendar day after the date that the notification is delivered or mailed. The notification must state the grounds for the revocation with reasonable certainty. After a revocation takes effect, the revocation is final, and the private trust company is subject to all of the requirements and provisions of this chapter that are applicable to private trust companies not exempt under AS 06.26.200.

 (c) A private trust company shall comply with the provisions of this chapter from which it was formerly exempt within five calendar days after the effective date of a revocation of its exemption under this section. However, if the department determines at the time of revocation that the private trust company has been engaging in or attempting to engage in acts intended or designed to deceive or defraud, the department may, in the department’s sole discretion, shorten or eliminate the five-calendar-day compliance period.

 (d) If, within the time allowed under (c) of this section, the private trust company does not comply with all of the provisions of this chapter, including the capitalization requirements that have been determined by the department as necessary to assure the safety and soundness of the private trust company, the department may
     (1) file a court action or pursue another remedy provided by this chapter; or

     (2) refer the private trust company to the attorney general for institution of appropriate legal proceedings against the private trust company.




Sec. 06.26.240. Conversion to trust company.
 (a) A private trust company may not offer fiduciary services to the general public as a trust company until the private trust company satisfies the requirements of this section.

 (b) The private trust company shall file a notice with the department on a form prescribed by the department, furnish a copy of a resolution adopted by the board authorizing the private trust company to offer fiduciary services to the general public, pay any filing fee established by the department by regulation, and comply with the requirements of this chapter for trust companies. The notice must provide the name of the private trust company and acknowledge that any exemption granted or otherwise applicable to the private trust company under AS 06.26.200 ceases to apply on the effective date of the notice.

 (c) The department has 60 days after the department receives the notice under (a) of this section to review the conversion, and a private trust company may begin providing or offering fiduciary services to the general public on the 61st day after the date that the department receives a notice under (a) of this section from the private trust company, unless the department specifies a different date.

 (d) The department may extend the 60-day period of review provided by (c) of this section if the department determines that the notice raises issues that require additional information or if the department needs additional time for analysis. If the 60-day period of review is extended, the private trust company may offer fiduciary services to the general public only after written approval by the department.

 (e) The department may deny a private trust company permission to offer fiduciary services to the general public as a trust company if the department finds that the private trust company does not meet the requirements of this chapter for trust companies.




Sec. 06.26.245. Trust company authority.
The provisions of AS 06.26.200 — 06.26.240 may not be interpreted to prevent a trust company from providing fiduciary services as a private trust company.


Article 5. Investments, Loans, and Deposits.


Sec. 06.26.250. Regulations on investments.
The department may adopt regulations to establish limits, requirements, or exemptions for particular classes or categories of investment, or limit or expand investment authority for trust companies for particular classes or categories of securities or other property.


Sec. 06.26.260. Pledge of assets.
 (a) A trust company may not pledge or create a lien on any of the assets belonging to the trust company except to secure
     (1) the repayment of money borrowed;

     (2) trust deposits as specifically authorized or required by AS 06.26.370 or by regulations adopted under this chapter; or

     (3) deposits made by the United States government, the state, or a municipality, or an agency of those governmental bodies.

 (b) An act, a deed, a conveyance, a pledge, or a contract that violates this section is void.




Article 6. Trust Assets.


Sec. 06.26.370. Deposits of trust assets.
 (a) A trust company may deposit trust money or other trust assets with itself as an investment if the settlor or the beneficiary authorizes the deposit and if
     (1) the trust company maintains as security for the deposits a separate fund of securities that may be used for trust investments and that are under the control of a federal reserve bank or a clearing corporation in this state or elsewhere; in this paragraph, “clearing corporation” has the meaning given in AS 45.08.102;

     (2) the total market value of the security fund maintained under (1) of this subsection is at all times at least equal to the deposit;

     (3) the security fund maintained under (1) of this subsection is expressly designated as a security fund; and

     (4) the security fund maintained under (1) of this subsection is maintained under the control of a person listed in AS 06.26.010(a).

 (b) A trust company may make periodic withdrawals from or additions to the security fund required by (a) of this section if the trust company maintains the value required by (a) of this section for the security fund. Income from the securities in the security fund belongs to the trust company.

 (c) Notwithstanding (a) of this section, security under (a) of this section for a deposit is not required to the extent the deposit is insured by the Federal Deposit Insurance Corporation or its successor.




Sec. 06.26.380. Common investment funds.
Subject to regulations adopted by the department, a trust company may invest trust assets in common investment funds.


Sec. 06.26.390. Fee determination; investment and management costs.
 (a) A trust company shall deal at arm’s length with a person when arranging the compensation to be paid by the person for the services of the trust company. Any compensation paid to the trust company must be a reasonable amount with respect to the services rendered.

 (b) When investing and managing trust assets, a trust company may only incur costs that are appropriate and reasonable in relation to the assets, the purposes of the trust, and the skills of the trust company.




Sec. 06.26.400. Disclosure of conflicts of interest.
Before accepting appointment as a trustee, a trust company shall disclose any conflict of interest that may reasonably be expected to arise in the relationship.


Sec. 06.26.410. Requirements for handling trust assets.
A trust company, its representatives, and its appointees shall observe the requirements applicable to trustees under AS 13.36.225 — 13.36.290 (Alaska Uniform Prudent Investor Act).


Article 7. Ownership.


Sec. 06.26.450. Acquisition of control.
 (a) Except as expressly otherwise permitted under this chapter, a person may not, without the prior written approval of the department, directly or indirectly acquire control of a trust company through a change in a legal or beneficial interest in voting securities of a trust company or a corporation or other person who owns voting securities of a trust company.

 (b) This section does not apply to
     (1) the acquisition of securities in connection with the exercise of a security or other interest in full or partial satisfaction of a debt previously contracted for in good faith if the acquiring person files written notice of acquisition with the department before the person votes the securities acquired;

     (2) the acquisition of voting securities in any class or series by a person in control who has previously complied with and received approval to acquire control under AS 06.26.450 — 06.26.480 or who was identified as a person in control in an earlier application filed with and approved by the department;

     (3) an acquisition or transfer by operation of law, a will, or intestate succession if the acquiring person files written notice of acquisition with the department before the person votes the securities acquired; or

     (4) a transaction exempted by the department by regulation or order because the transaction is not within the purposes of AS 06.26.450 — 06.26.480.




Sec. 06.26.460. Application for acquisition of control.
 (a) A proposed transferee seeking approval under AS 06.26.450 to acquire control of a trust company shall file with the department
     (1) an application in the form prescribed by the department;

     (2) the filing fee established by the department by regulation; and

     (3) all information required by regulation or that the department requires for a particular application in order to make an informed decision to approve or reject the proposed acquisition.

 (b) If the proposed transferee under (a) of this section includes a group of persons acting together, the department may require each member of the group to provide information to the department.

 (c) If the proposed transferee is not a resident of the state, a corporation organized under AS 10.06, or a foreign corporation qualified under AS 10.06 to transact business in this state, the proposed transferee shall file with the department a written consent to service of process on a resident of this state for any court action arising out of or connected with the proposed acquisition of control.

 (d) Promptly after the department accepts the application as complete, the proposed transferee shall publish notice of the application, the date of filing the application, and the identity of each participant in the acquisition of control in the form specified by the department in a newspaper of general circulation published in the community proposed as the trust company’s principal place of business. If a newspaper of general circulation is not published in the community, the notice shall be published in a newspaper of general circulation near the community. Publication of notice of an application may be deferred for up to 31 days after the date the application is filed if
     (1) the proposed transferee requests confidential treatment and represents that a public announcement of the tender offer and the filing of appropriate forms with the United States Securities and Exchange Commission or the appropriate federal banking agency, as applicable, will occur within the period of deferral; and

     (2) the department determines that public interest will not be harmed by the requested confidential treatment.

 (e) The department may waive the requirement that a notice be published or permit delayed publication of the notice if the department makes a written determination that waiver or delay is in the public interest.




Sec. 06.26.470. Decision on application for acquisition of control.
 (a) The department shall approve or deny an application for acquisition of control not later than the 60th day after the date that the notice regarding acquisition of control is published under AS 06.26.460.

 (b) If the department approves an application filed under AS 06.26.460, the applicant may acquire control. Any written commitment from the proposed transferee offered to and accepted by the department as a condition for approval of the application is enforceable against the trust company and the transferee.




Sec. 06.26.480. Objection to other transfer.
AS 06.26.450 — 06.26.480 may not be construed to prevent the department from investigating, commenting on, or seeking to enjoin or set aside a transfer of voting securities that evidence a direct or indirect interest in a trust company if the department considers the transfer to be against the public interest.


Article 8. Governance.


Sec. 06.26.500. Voting securities held as trust assets.
 (a) Voting securities of a trust company held by the trust company as trust assets under a will or trust, whether registered in the trust company’s own name or in the name of its nominee, may not be voted in the election of directors or on a matter affecting the compensation of directors, officers, or employees of the trust company unless
     (1) under the terms of the will or trust, the manner in which the voting securities are to be voted may be determined by a donor or beneficiary of the will or trust and the donor or beneficiary actually makes the determination in the matter at issue;

     (2) the terms of the will or trust expressly direct the manner in which the securities must be voted to the extent that no discretion is vested in the trust company as fiduciary; or

     (3) the securities are voted solely by a person who is a joint fiduciary, but who is not a person who is affiliated with the trust company, as if the joint fiduciary were the sole fiduciary.

 (b) Voting securities of a trust company that may not be voted under this section are considered to be authorized but unissued for the purpose of determining the procedures for and results of the vote under this section.




Sec. 06.26.510. Board of directors.
 (a) The board of directors of a trust company shall consist of at least five but not more than 25 directors, and the majority of the directors must be residents of this state. The principal executive officer of the trust company is a member of the board and the board’s presiding officer unless the board elects a different presiding officer. The presiding officer shall perform the duties designated by the board.

 (b) Unless the department consents in writing, a person may not serve as a director of a trust company if
     (1) the trust company incurs an unreimbursed loss attributable to a charged-off obligation of the person or holds a judgment against the person or against another person who was controlled by the person when the loan that gave rise to the judgment or charged-off obligation was funded and went into default;

     (2) the person has been convicted of a felony, or of another crime involving moral turpitude or breach of trust; or

     (3) the person, acting as a personal representative, made a loan of trust money or other assets, or a purchase or sale of trust assets, that is voidable under AS 13.16.400 and the person has not corrected the situation.

 (c) If a trust company does not elect directors before the 61st day after the date of its regular annual meeting, the department may appoint a person to operate the trust company and elect directors. If the appointed person is unable to locate or elect persons willing and able to serve as directors, the department may close the trust company for liquidation.

 (d) A vacancy on a board that reduces the number of directors to fewer than five shall be filled not later than the 30th day after the date that the vacancy occurs. If the vacancy on the board is not filled within 30 days after the date that the vacancy occurs, the department may appoint a person to operate the trust company and elect a board of at least five persons. If the appointed person is unable to locate or elect five persons willing and able to serve as directors, the department may close the trust company for liquidation.

 (e) Before beginning each term to which a person is elected to serve as a director of a trust company, the person shall submit an affidavit to be filed with the minutes of the trust company stating that the person, to the extent applicable,
     (1) accepts the position and is not disqualified from serving in the position;

     (2) will not violate or knowingly permit a director, an officer, or an employee of the trust company to violate any law applicable to the conduct of business of the trust company; and

     (3) will diligently perform the duties of the position.




Sec. 06.26.520. Board meetings and review of reports.
 (a) The board of directors of a trust company shall meet at least once every three months. The department or a director may call a special meeting of the board. A majority of the board constitutes a quorum. The board shall keep minutes of each board meeting, including a record of attendance and a record of all votes.

 (b) At least once every three months, the board of directors of a trust company shall review written reports prepared by the president, other officers of the trust company, or a trust committee appointed under AS 06.26.550. The reports must include the accounts that have been opened or closed during the calendar quarter before the meeting and the trust accounts subject to annual review during the calendar quarter before the meeting.




Sec. 06.26.530. Officers.
 (a) The board shall annually appoint the officers of the trust company. The officers serve at the pleasure of the board.

 (b) The president of the trust company is the principal executive officer primarily responsible for the execution of board policies and operation of the trust company. The trust company shall have an officer responsible for the maintenance and storage of all records of the trust company and for required attestation of signatures. These positions may not be held by the same person. The board may appoint other officers of the trust company as the board considers necessary.




Sec. 06.26.540. Prohibition of certain action by officer or employee.
Unless expressly authorized by a resolution of the board recorded in the minutes of the board, an officer or employee may not create or dispose of a trust company asset or create or incur a liability on behalf of the trust company.


Sec. 06.26.550. Trust committee.
 (a) The board may appoint a trust committee to act for the company in matters dealing with the initial and annual reviews of accounts, account acceptance, and investment strategies. A trust committee shall consist solely of directors, officers, or employees of the trust company, or any combination of these positions. The trust committee shall keep a record of its actions and shall report in writing to the board on all actions taken by the trust committee since the previous board meeting. The board shall ratify or rescind each action.

 (b) The trust committee shall meet at least once a month to review existing accounts and to ratify or rescind newly accepted accounts. The trust committee may not ratify a new account unless it is approved by a majority of the members of the trust committee present at the meeting at which the new account is considered.

 (c) A trust committee may elect one or more officers to accept new accounts, subject to the requirements of (b) of this section.




Sec. 06.26.560. Prohibited acts.
 (a) A director, an officer, an employee, or a shareholder of a trust company may not
     (1) conceal information or a fact, or remove, destroy, or conceal a book or record of the trust company, for the purpose of concealing information or a fact from the department or an agent of the department; or

     (2) for the purpose of concealing, remove or destroy a book or record of the trust company that is material to a pending or anticipated court or administrative proceeding.

 (b) A director, an officer, or an employee of a trust company may not make a false entry in the records, a report, or a statement of the trust company.




Sec. 06.26.570. Transactions with management and affiliates; penalties.
 (a) Without the prior approval of a disinterested majority of the board recorded in the minutes, or, if a disinterested majority cannot be obtained, the prior written approval of the department, a trust company may not directly or indirectly
     (1) sell or lease an asset of the trust company to a director, an officer, a principal shareholder, or an affiliate of the trust company;

     (2) purchase or lease property in which a director, an officer, a principal shareholder, or an affiliate of the trust company has an interest; or

     (3) extend credit to a director, an officer, a principal shareholder, or an affiliate of the trust company.

 (b) In addition to the requirements of (a) of this section, a lease transaction described in (a)(2) of this section involving real property may not be consummated, renewed, or extended by the trust company without the prior written approval of the department.

 (c) A trust company may not extend credit to a director, an officer, an employee, a principal shareholder, or an affiliate of the trust company unless the extension of credit
     (1) is made on substantially the same terms, including interest rates and collateral requirements, as the terms prevailing at the time for comparable transactions by the trust company with persons who are not directors, officers, employees, principal shareholders, or affiliates of the trust company;

     (2) does not involve more than the normal risk of loss or present other unfavorable features; and

     (3) follows credit underwriting procedures that are as stringent as the underwriting procedures applicable to comparable transactions by the trust company with persons who are not directors, officers, employees, principal shareholders, or affiliates of the trust company.

 (d) The department may adopt regulations to implement this section, including regulations to establish limits, requirements, or exemptions other than those specified by this section for particular categories of transactions.

 (e) In this section, “affiliate” does not include a subsidiary of the trust company.




Sec. 06.26.580. Trust asset transactions involving certain securities, assets, or information.
 (a) Except as provided in this chapter, or as authorized under the instrument creating the relationship, a trust company may not invest trust assets in the stock or obligations of, or use trust assets to acquire property from, the trust company or any of the trust company’s officers, directors, or employees. A trust company may not sell trust assets to the trust company or to any of the trust company’s directors, officers, or employees.

 (b) A trust company may not use material inside information in connection with a decision or recommendation to purchase or sell a security that is a trust asset.




Sec. 06.26.585. Policies and procedures.
A trust company shall adopt written policies and procedures regarding decisions or recommendations to purchase or sell a security that is a trust asset to facilitate compliance with federal and state securities laws. These policies and procedures must include the prohibition in AS 06.26.580(b).


Sec. 06.26.590. Fiduciary responsibility.
The board of a trust company is responsible for the proper exercise of fiduciary powers by the trust company and for each matter that is related to the exercise of fiduciary powers, including
     (1) the determination of policies;

     (2) the investment and disposition of trust assets; and

     (3) the direction and review of the actions of each officer, employee, and committee employed or used by the trust company in the exercise of its fiduciary powers.




Sec. 06.26.600. Trust account record keeping.
A trust company shall keep its trust assets records separate and distinct from other records of the trust company in the manner required by state and federal law. The trust assets records must contain all material information relating to each trust assets account, as appropriate under the circumstances.


Sec. 06.26.610. Customer records confidential.
 (a) The trust company records relating to customers are confidential and may not be made public unless
     (1) disclosure is compelled by a court or administrative order;

     (2) disclosure is required by federal or state law;

     (3) disclosure is authorized in writing by the customer;

     (4) disclosure is made to the holder of a negotiable instrument drawn on the trust company as to whether the drawer has sufficient money or other assets in the financial institution to cover the instrument; or

     (5) an inquiry has been made by a state financial institution, or by a credit-reporting agency regulated under 15 U.S.C. 1681 — 1681v (Fair Credit Reporting Act) solely for the express purpose of determining the credit worthiness of the customer as an applicant for credit, and the information disclosed by the trust company, state financial institution, or credit-reporting agency relates only to the payment habits of the customer in connection with loans or other credit accommodations and does not pertain to records concerning deposit balances in savings or checking accounts.

 (b) When disclosure of trust company records is required or allowed under (a)(1) or (2) of this section, the trust company shall notify the customer of the disclosure. If notification before disclosure is not possible, the trust company shall immediately notify the customer of the disclosure or inquiry. However, the trust company may not notify the customer if disclosure is made under a search warrant or under a court order issued at the request of a grand jury.

 (c) When disclosure of trust company records is compelled by a court order under (a)(1) of this section, the court may provide in the order for the reimbursement of the trust company for the costs allowed by the rules of court and incurred by the trust company to comply with the order.




Sec. 06.26.620. Insurance; bonds.
 (a) The board of directors of a trust company shall maintain bonding and other insurance for the trust company against dishonesty, fraud, defalcation, forgery, theft, embezzlement, burglary, robbery, and other similar insurable losses and hazards as required by the department by regulation. The board shall obtain the bonding and other insurance from a person authorized under AS 21 to act as an insurer or a surety insurer in this state.

 (b) The board of directors shall procure errors and omissions insurance in the amount of at least $500,000.

 (c) At least once each year, the board of directors shall review the bonding and other insurance required by this section to determine whether the coverage is adequate in relation to the exposure of the trust company. The minimum amount of insurance required by this section does not automatically represent adequate bonding and insurance coverage in relation to the exposure. Immediately after procuring the bonding and other insurance, the board shall file copies of the documents representing the bonding and other insurance with the department.




Sec. 06.26.630. Reports of apparent crime.
 (a) A trust company that is the victim of a robbery, that has a shortage of money or other assets in excess of $5,000, or that is the victim of an apparent or suspected misapplication of its money or other assets in any amount by a director, an officer, or an employee shall report the robbery, shortage, or apparent or suspected misapplication to the department within 48 hours after it is discovered. The initial report may be oral if the trust company promptly confirms the report in writing to the department. The trust company or a director, an officer, an employee, or an agent of the trust company is not liable for defamation to or subject to any another cause of action based on supplying the information in the report.

 (b) A trust company may satisfy the requirements of (a) of this section by filing with the department a copy of a written report filed with the appropriate law enforcement agency.




Article 9. Organic Change.


Sec. 06.26.650. General provisions for conversions, mergers, and consolidations.
 (a) A national bank whose main office is located in the state or a state bank whose main office is located in the state may convert to a trust company or merge or consolidate with a trust company, and a trust company may merge or consolidate with another trust company, if the conversion, merger, or consolidation is consistent with federal and state law and approved by the department. The requirements of AS 06.26.650 — 06.26.670 are in addition to the merger and consolidation requirements of AS 10.06.

 (b) Before merger or consolidation under (a) of this section, a trust company shall file with the department a merger or consolidation application and other information and reports that the department requires under AS 06.26.660.

 (c) The department, in the exercise of its power to approve or disapprove applications for merger or consolidation under (a) of this section, shall act in the interests of promoting and maintaining a sound trust company system, promoting the security of deposits and customers, preserving of the liquid position of trust companies, and preventing injurious credit expansions and contractions.

 (d) A trust company converting to or merging or consolidating with a national bank shall submit to the department a copy of any application to the United States Comptroller of the Currency for a national bank charter or any other application to the United States Comptroller of the Currency to convert, merge, or consolidate when the applications are forwarded to the United States Comptroller of the Currency.




Sec. 06.26.660. Merger or consolidation.
 (a) To merge or consolidate under AS 06.26.650, the merging persons shall file with the department the original articles of merger or consolidation, a number of copies of the articles of merger or consolidation equal to the number of trust companies involved in the merger or consolidation, and an application in the form required by the department. The department may require the submission of additional information it considers necessary to make an informed decision.

 (b) The department may approve a merger or a consolidation if
     (1) the surviving or new trust company will be solvent and have adequate capitalization for its operations and location;

     (2) the surviving or new trust company has in all respects complied with the statutes and regulations governing the organization of a trust company in this state;

     (3) all obligations and liabilities of each trust company that is a party to the merger or consolidation have been properly discharged or otherwise lawfully assumed or retained by a trust company or other fiduciary;

     (4) a surviving or new trust company is not authorized to act as a fiduciary under this chapter, will not act as a fiduciary, and has otherwise complied with the laws of this state;

     (5) the surviving or new trust company satisfies the provisions in AS 06.26.090 that the department determines apply to the trust company; and

     (6) all conditions imposed by the department have been satisfied.

 (c) If the department approves the merger or consolidation and finds that all investigative expenses incurred by the department and all required filing fees have been paid, the department shall issue a certificate of merger or consolidation.




Sec. 06.26.670. Rights of dissenters.
In addition to the dissenter’s rights under AS 10.06 for a merger or consolidation, if a shareholder of a trust company objects to a conversion of the trust company, the dissenting shareholder’s rights shall be exercised under and governed by AS 10.06.574 — 10.06.582 as if the conversion were a merger.


Sec. 06.26.680. Authority to purchase assets of another trust company.
 (a) A trust company with the prior written approval of the department may purchase all or substantially all of the assets of another trust company, including the right to control accounts established with the trust accounts. Except as otherwise expressly provided by another statute, the purchase by a trust company of all or part of the assets of another trust company does not make the purchasing trust company responsible for a liability or obligation of the selling trust company that the purchasing trust company does not expressly assume. Except as otherwise provided by statute, AS 06.26.450 — 06.26.480 do not govern or prohibit the purchase by a trust company of all or part of the assets of a person who is not a trust company or an exempt private trust company.

 (b) To purchase assets under (a) of this section, a trust company shall file with the department an application in the form required by the department. The department shall investigate the condition of the purchaser and seller and may require the submission of additional information it considers necessary to make an informed decision. The department shall approve the purchase if
     (1) the purchasing trust company will be solvent after the purchase and have sufficient capitalization for its operations and location;

     (2) the purchasing trust company has complied with all applicable statutes and regulations in this state;

     (3) all fiduciary obligations and liabilities of the purchasing trust company and selling trust company have been properly discharged or otherwise lawfully assumed by the purchasing trust company;

     (4) all conditions imposed by the department have been satisfied or otherwise resolved; and

     (5) all expenses incurred by the department and all required fees have been paid.

 (c) A purchase under this section is effective on the date the department approves the purchase unless the purchase agreement provides for, and the department consents to, a different effective date.




Sec. 06.26.690. Authority to act as disbursing agent.
A purchasing trust company may hold the purchase price and any additional money or other assets delivered to it by the selling trust company in trust for the selling trust company and may act as an agent of the selling trust company in disbursing the money or other assets by paying the creditors of the selling trust company. If the purchasing trust company acts under a written contract of agency approved by the department that specifically names each creditor and the amount to be paid each creditor, and if the agency is limited to the purely ministerial act of paying creditors the amounts due them as determined by the selling trust company and reflected in the contract of agency and does not involve discretionary duties or authority other than the identification of the creditors named, the purchasing trust company
     (1) may rely on the contract of agency and the instructions included in it; and

     (2) is not responsible for
          (A) an error made by the selling trust company when determining its liabilities, the creditors to whom the liabilities are due, or the amounts due to the creditors; or

          (B) a preference that results from the payments made under the contract of agency and the instructions included in the contract.




Sec. 06.26.700. Liquidation of selling trust company.
If a selling trust company is at any time after the sale of assets voluntarily or involuntarily closed for liquidation by a state or federal regulatory agency, the purchasing trust company shall pay to the receiver of the selling trust company the balance of the money or other assets held by the purchasing trust company in trust for the selling trust company and not yet paid to the creditors of the selling trust company. Without further action, the purchasing trust company is then discharged of all responsibilities to the selling trust company and the selling trust company’s receiver, creditors, and shareholders.


Sec. 06.26.710. Payment to creditors.
A purchasing trust company may pay a creditor of the selling trust company the amount to be paid the creditor under the terms of the contract of agency entered into under AS 06.26.690 by opening an agency account in the name of the creditor, crediting the account with the amount to be paid the creditor under the terms of the agency contract, and mailing or personally delivering a duplicate of the written evidence of the credit to the creditor at the creditor’s address shown in the records of the selling trust company. With regard to the creditor, the purchasing trust company is an agent of the selling trust company only to the extent of the credit reflected by the written evidence of the credit.


Sec. 06.26.720. Sale of assets.
 (a) The board of a trust company, with the department’s approval, may cause a trust company to sell all or substantially all of its assets, including the right to control accounts established with the trust company for trust assets, without shareholder approval if the department finds
     (1) the interests of the trust company’s creditors and depositors and other customers are not jeopardized because of an unsafe or unsound condition of the trust company;

     (2) the sale is in the best interest of the trust company’s creditors and depositors and other customers; and

     (3) the Federal Deposit Insurance Corporation or its successor approves the transaction unless the deposits of the trust company are not insured by the Federal Deposit Insurance Corporation or its successor.

 (b) A sale under this section must include an assumption and promise by the purchaser to pay or otherwise discharge
     (1) all of the trust company’s liabilities to customers;

     (2) all of the trust company’s liabilities for the salaries of the trust company’s employees incurred before the date of the sale;

     (3) the obligations incurred by the department arising out of the supervision or sale of the trust company; and

     (4) the fees and any other payment due to the department under this chapter and assessments due to the department under AS 06.01.010.

 (c) This section does not limit the incidental power of a trust company to buy and sell assets in the ordinary course of its operations.

 (d) The sale by a trust company of all or substantially all of its assets with shareholder approval is considered a voluntary dissolution and liquidation and is governed by AS 06.26.730 — 06.26.800.




Article 10. Dissolution and Liquidation.


Sec. 06.26.730. Voluntary liquidation.
 (a) Without department approval, a trust company may not cease acting as a fiduciary in this state and voluntarily surrender its certificate of authority and as a consequence be relieved of the necessity to comply with the requirements of this chapter.

 (b) A trust company proposing to cease acting as a fiduciary in this state shall submit to the department
     (1) a certified copy of a resolution of the trust company’s board of directors reflecting the board’s decision that the trust company should cease acting as a fiduciary in this state; and

     (2) the trust company’s plan adopted by its board for winding up its fiduciary operations in this state.

 (c) The department may approve or disapprove the trust company’s plan for winding up its fiduciary operations in this state based on the department’s evaluation of whether the plan provides adequate protection for those persons and interests for whom the trust company acts as a fiduciary. The department’s approval may be subject to any condition the department determines appropriate under the circumstances.

 (d) During the implementation of a trust company’s plan for winding up its fiduciary operations in this state, the department retains the authority to supervise the trust company and may conduct any examination relating to either the trust company or the plan for winding up that the department considers necessary or appropriate.

 (e) If the department has reason to conclude that the trust company is not safely or expeditiously implementing the approved plan for winding up the trust company’s fiduciary operations in this state, the department may
     (1) begin revocation proceedings under AS 06.26.740;

     (2) take possession of the trust company’s trust business in this state in the same manner, with the same effect, and subject to the same rights accorded to the trust company under AS 06.26.750.

 (f) The department shall cancel the trust company’s certificate of authority if the department approves the trust company’s plan for winding up its fiduciary operations in this state and if all of the following conditions that apply to the trust company have been met:
     (1) the trust company has completed its plan for winding up its fiduciary operations in this state consistent with any conditions that the department imposed on the plan under (c) of this section;

     (2) the trust company has been relieved under all applicable laws of all duties as trustee, executor, administrator, registrar of stocks and bonds, or any other type of fiduciary position under court, private, or other appointment that the trust company had accepted;

     (3) if the trust company has its principal place of business in this state, the trust company has, under all applicable laws, wound up its fiduciary operations in each of the other jurisdictions where the trust company solicited appointment or served as a fiduciary, or otherwise acted as a fiduciary;

     (4) if the trust company has its principal place of business in this state and is not authorized to engage in activities other than acting as a fiduciary, the trust company is being liquidated under AS 06.26.760 — 06.26.800.

 (g) Upon the department’s canceling the trust company’s certificate of authority, the trust company may not without obtaining a new certificate of authority act as a fiduciary in this state, or in any jurisdiction.




Sec. 06.26.740. Revocation.
 (a) If the department determines that any of the following factors exist, the department may revoke, consistent with AS 06.01.030 and regulations adopted by the department under AS 06.01.030 and this chapter, a trust company’s certificate of authority:
     (1) the existence of the trust company, or its authority to act as a fiduciary, has been terminated or suspended under the laws of the state or other jurisdiction in which the trust company is organized;

     (2) the trust company’s authority to act as fiduciary has been terminated or suspended under the laws of the state or other jurisdiction in which the trust company is organized, or its license to act as a fiduciary has been terminated or suspended under the laws of any other jurisdiction in which the trust company had been authorized to act as a fiduciary;

     (3) a receiver, liquidator, or conservator has been appointed for the trust company under the laws of the state or other jurisdiction in which the trust company is organized, or for its operation in any other jurisdiction in which the trust company operates;

     (4) the trust company is violating or has violated or the department has reasonable cause to believe is about to violate
          (A) a law or regulation;

          (B) a condition imposed by the department in writing in connection with approving an application or notice under this chapter or granting any other request of the trust company under this chapter;

          (C) a written agreement that the trust company entered into with the department;

          (D) a cease and desist order issued by the department under AS 06.01.030;

     (5) the trust company is engaging in or has engaged in, or the department has reasonable cause to believe the trust company is about to engage in an unsafe or unsound practice;

     (6) the trust company has ceased to pay its debts in the ordinary course of business, is incapable of paying its debts as they mature, has liabilities in excess of its assets, or is subject to or has applied for an adjudication in bankruptcy, reorganization, or other relief under any bankruptcy, reorganization, insolvency, or moratorium law;

     (7) the trust company has ceased to act as a fiduciary in this state;

     (8) the trust company has failed to pay any fees, charges, forfeitures, penalties, or other payment due to the department under this title.

 (b) If the department has reasonable cause to believe any of the factors identified in (a) of this section is true, and if the department determines it is necessary to protect the persons and interests in this state for whom the trust company acts as a fiduciary or to protect the property in this state to which the trust company holds title as a fiduciary or in which the trust company holds an interest as a fiduciary, the department may immediately suspend the trust company’s certificate of authority.




Sec. 06.26.750. Authority to take possession.
If the department revokes a trust company’s certificate of authority under AS 06.26.740(a), the department may take possession of the trust company’s fiduciary operations in this state and may appoint a receiver for the liquidation of the trust company’s fiduciary operations in this state. If the trust company has its principal place of business in this state, the department may take possession of, and appoint a receiver for the liquidation of all the trust company’s fiduciary operations wherever they are conducted.


Sec. 06.26.760. Department in possession.
 (a) When the department has taken possession of a trust company, it is vested with the full and exclusive power of management and control, including the power to act as a trustee for trust assets, to continue or discontinue the operation of the trust company, to stop or limit the payment of the trust company’s obligations, to employ necessary assistants, to execute an instrument in the name of the trust company, to commence, defend, and conduct in the trust company’s name any action or proceeding to which the trust company may be a party, to terminate the possession by restoring the trust company to its board, and to reorganize or liquidate the trust company under this chapter. As soon as practicable after taking possession, the department shall make an inventory of the trust assets and the trust company assets and file a copy of the inventory with the superior court.

 (b) When the department has taken possession, the following dates are postponed until six months after the possession begins:
     (1) notwithstanding other provisions of law, the date on which any period of limitation fixed by a statute or agreement would otherwise expire on a claim or right of action of the trust company; or

     (2) the date on which an appeal must be taken or a pleading or other document must be filed by the trust company in any pending court action or other proceeding.

 (c) A judgment, lien, or attachment may not be enforced against trust company assets while the assets are in possession of the department. Upon the election of the department in connection with a liquidation or reorganization,
     (1) any lien or attachment, other than an attorney’s or mechanic’s lien, obtained upon a trust company asset during the department’s possession or within four months before beginning that possession may be vacated, except liens created by the department while in possession; and

     (2) any transfer of trust company assets made after or in contemplation of the trust company’s insolvency or in anticipation of the department’s takeover, with intent to effect a preference of one creditor over another creditor or to prevent the distribution of the trust company assets according to law, is void.

 (d) The department may borrow money in the name of the trust company in the department’s possession and may pledge trust company assets as security for the loan.

 (e) All necessary and reasonable expenses resulting from the department’s possession of a trust company and of its reorganization or liquidation shall be paid from trust company assets.




Sec. 06.26.770. Reorganization.
 (a) If the department decides to reorganize a trust company, the department, after providing an opportunity for a hearing to all interested parties, shall enter an order proposing a reorganization plan. The department shall send a copy of the plan to each depositor and other customers and to each creditor who will not receive payment of a claim in full under the plan and a notice that, unless within 30 days the plan is disapproved in writing by persons holding one-third or more of the aggregate amount of the claims, the department will reorganize the trust company.

 (b) A plan of reorganization may not be established under this chapter unless, in the opinion of the department,
     (1) the plan is fair to all classes of depositors, other customers, creditors, and shareholders;

     (2) subject to a fair adjustment for new capital that a class will pay under the plan, the face amount of the trust company asset interest provided to a class of depositors, other customers, creditors, or shareholders under the plan does not exceed the value of the assets at liquidation less the full amount of the claims of all prior classes;

     (3) the plan provides for the issuance of common stock in an amount that will provide an adequate ratio to deposits;

     (4) any exchange of new common stock for obligations or stock of the trust company will be made
          (A) in the inverse order of the priorities in liquidation of the classes that will retain an interest in the trust company; and

          (B) upon terms that adjust in a fair manner any change in the relative interest of the respective classes that will be produced by the exchange;

     (5) the plan assures the removal of a director, an officer, or an employee responsible for a problem identified by the department, including an unsafe, unsound, or unlawful action or the existence of an unsafe or unsound condition;

     (6) any merger or consolidation provided by the plan complies with this chapter.

 (c) When in the course of reorganization, supervening conditions render a plan of reorganization unfair or its execution impractical, the department may modify the plan or liquidate the trust company.




Sec. 06.26.780. Involuntary liquidation powers.
 (a) When liquidating a trust company, the department may exercise any power incidental to liquidating a trust company, but it may not, without the approval of the superior court,
     (1) sell trust company assets having an appraised value in excess of $100,000;

     (2) compromise or release a claim that exceeds $100,000 exclusive of interest;

     (3) make full payment on a claim, other than a claim upon an obligation incurred by the department, before preparing and filing a schedule of the department’s determinations under AS 06.26.790(d)(3).

 (b) Within six months after beginning the liquidation of a trust company, the department may terminate an executory contract for services or advertising to which the trust company is a party or an obligation of the trust company as a lessee. A lessor who receives 60 days’ notice of the department’s decision to terminate a lease does not have a claim for rent other than rent accrued to the date of termination or for damages due to the termination.

 (c) As soon as practical after beginning the involuntary liquidation of a trust company, the department shall take the steps necessary to terminate all fiduciary positions held by the trust company, to surrender all property held by the trust company as a fiduciary, and to settle the trust accounts of the trust company.




Sec. 06.26.790. Claims.
 (a) As soon as practical after beginning the liquidation of a trust company, the department shall
     (1) mail a notice of the liquidation proceedings to the last known post office address of each depositor, creditor, lessee of a safe deposit box, bailor of property, and trustor and beneficiary of trust assets held by the trust company;

     (2) post a notice of the proceedings conspicuously on the premises of the trust company; and

     (3) publish a notice that the department determines to be appropriate for the proceedings.

 (b) The department shall mail with the notice sent under (a)(1) of this section a statement of the amount shown on the trust company’s records to be the claim of the depositor or creditor. The notice must also include a demand that a person who is entitled to property held by the trust company as bailee or trustee or in a safe deposit box of the trust company withdraw the property within 30 days. The notice must direct those depositors and creditors who claim amounts different from the amounts in the notice to file their claims with the trust company under the procedure described in the notice and before a specified date. The specified day may not be less than 60 days from the date of the first publication of the notice.

 (c) A safe deposit box whose contents have not been removed within 30 days after demand shall be opened. The department shall retain the contents of the box and the other unclaimed property held by the trust company as bailee until the conclusion of the liquidation proceedings. At the conclusion of the liquidation proceedings under this section, the property held by the department under this subsection is considered abandoned, and the department shall deliver the property to the Department of Revenue under AS 34.45.110 — 34.45.780.

 (d) Within six months after the last day specified in the notice for the filing of claims, or within a longer period if allowed by the superior court, the department shall
     (1) reject a claim that it determines to be invalid;

     (2) determine the amount, if any, owing to each known creditor or depositor and the priority class of the person’s claim under this chapter;

     (3) prepare a schedule of its determinations for filing in the superior court;

     (4) publish a notice in a newspaper once each week for three successive weeks, of the times and places where the schedule of determinations will be available for inspection and the date when the department will file its schedule in court; the date may not be sooner than 30 days after the first publication.

 (e) Within 30 days after the filing with the superior court of the department’s schedule under (d)(3) of this section, a creditor, depositor, or stockholder may file with the court an objection to a determination. The court shall hear and determine the filed objections after the notice to the department and interested claimants that the court establishes. If the court sustains an objection, the court shall direct that the schedule be modified appropriately.

 (f) After filing its schedule, the department may make partial distribution to the holders of the claims that are undisputed or are allowed by the court if an adequate reserve is established for the payment of disputed claims. As soon as practicable after the determination of all objections, the department shall make the final distribution.

 (g) The following claims have priority in liquidation proceedings, in the order listed:
     (1) obligations incurred by the department in liquidating the trust company;

     (2) wages and salaries of officers and employees earned during the three-month period preceding the department’s possession in an amount not exceeding $3,000 for each person;

     (3) fees and assessments owed by the trust company to the department;

     (4) deposits;

     (5) claims secured by trust company assets.

 (h) After the payment of all other claims, including interest at the rate of 10.5 percent a year, the department shall pay claims that are otherwise valid but that were not filed within the time prescribed.

 (i) If the sum available for a class of creditors is insufficient to provide payment in full, the sum shall be distributed pro rata to the claimants in the class.

 (j) Unclaimed property remaining after the completion of the liquidation proceedings under this section is presumed abandoned, and the property shall be delivered to the Department of Revenue for handling under AS 34.45.110 — 34.45.780.

 (k) After payment of the expenses of the liquidation and the claims against the trust company arising from its fiduciary obligations in this state under AS 06.26.760 — 06.26.800, the receiver shall distribute any remaining money or other assets from the liquidation of the trust company’s fiduciary operations in this state equitably among, as applicable, the receivers for liquidation of the trust company’s fiduciary operations in other states of the United States and under the laws of the United States, for payment of the expenses of liquidation and claims against the trust company’s fiduciary operations. If the trust company’s fiduciary operations are not being liquidated in another state or under the laws of the United States, the receiver shall, after satisfying the requirements of AS 06.26.760 — 06.26.800, pay any remaining money or other assets from the liquidation of the trust company’s fiduciary operations in this state to the trust company.

 (l) When the receiver has completed the liquidation of the trust company’s fiduciary operations in this state, the receiver shall, with notice to the department, petition the court for an order declaring the trust company’s fiduciary operations in this state properly wound up under AS 06.26.760 — 06.26.800. Upon the filing of the petition, the court shall proceed as provided in AS 06.26.760 — 06.26.800.

 (m) An order issued by the court under a petition filed under (l) of this section may only declare the trust company’s fiduciary operations in this state have been properly wound up and may not declare the trust company is dissolved. The court may make whatever additional orders and grant whatever additional relief that the court determines is proper under the evidence submitted.

 (n) After an order is issued under (m) of this section declaring the trust company’s fiduciary operations in this state are properly wound up,
     (1) the trust company shall, except for any further winding up, cease acting as a fiduciary in this state or in any jurisdiction; and

     (2) the receiver shall promptly file with the department a copy of the order certified by the clerk of the court.




Sec. 06.26.800. Federal Deposit Insurance Corporation as receiver or liquidator.
The department may appoint the Federal Deposit Insurance Corporation or its successor as receiver for a trust company that the department has taken possession of if the deposits of the trust company are insured by that corporation or its successor. Upon filing with the court a certificate indicating the acceptance of the appointment by the Federal Deposit Insurance Corporation or its successor, the possession of and title to all the assets, business, and property of the trust company are transferred to that corporation. The department is then relieved of all responsibility and liability with respect to the reorganization or liquidation of the trust company. The Federal Deposit Insurance Corporation or its successor may liquidate, reorganize, merge, or consolidate the trust company in the manner permitted by the laws of the United States or by this chapter, and possesses all the rights, powers, duties, and obligations of the department in the liquidation, reorganization, merger, or consolidation of the trust company under this chapter.


Article 11. Interstate State Trust Company, Interstate National Trust Company, and International Trust Company Offices.


Sec. 06.26.810. Fiduciary operations at a branch or trust office.
 (a) An interstate state trust company, interstate national trust company, or international trust company may not act as a fiduciary in this state unless the trust company maintains a trust office in this state as permitted under AS 06.26.810 — 06.26.895.

 (b) If an interstate state trust company, interstate national trust company, or international trust company establishes or acquires a trust office in this state under AS 06.26.810 — 06.26.895, the trust company may conduct at the trust office any activity that a trust company may conduct at a trust office under this chapter.




Sec. 06.26.820. Establishing or acquiring a trust office.
If an interstate state trust company, interstate national trust company, or international trust company that does not operate a trust office in this state meets the requirements of AS 06.26.810 — 06.26.895, the trust company may establish a new trust office in this state or acquire a trust office in this state that is in existence at the time of acquisition.


Sec. 06.26.830. Requirement of notice.
To establish a new trust office or acquire a trust office that is in existence at the time of acquisition in this state under AS 06.26.810 — 06.26.895, an interstate state trust company, interstate national trust company, or international trust company shall provide, or cause its home jurisdiction regulator to provide, written notice of the proposed transaction to the department on or after the date on which the trust company applies to its home jurisdiction regulator for approval to establish or acquire the trust office. The trust company shall file with the notice and maintain a copy of a resolution adopted by the board of the trust company authorizing the establishment or acquisition of the office and shall pay the filing fee established by the department by regulation.


Sec. 06.26.840. Conditions for approval.
 (a) An interstate state trust company or international trust company may not establish or acquire a trust office in this state under AS 06.26.810 — 06.26.895 unless
     (1) the trust company confirms in writing to the department that, while the trust company maintains a trust office in this state, the trust company will comply with all applicable laws of this state, including, except where the context or this section indicates otherwise, the provisions of this chapter applicable to trust companies organized under this chapter;

     (2) the trust company provides satisfactory evidence to the department of compliance with the
          (A) requirements for foreign corporations under AS 10.06; and

          (B) applicable requirements of its home jurisdiction regulator for establishing or acquiring and maintaining the office;

     (3) the department, acting within 90 days after receiving notice under AS 06.26.830, certifies to the home jurisdiction regulator that the requirements of AS 06.26.810 — 06.26.895 have been met and the notice has been approved or, if applicable, that any conditions imposed by the department under (b) of this section have been satisfied;

     (4) the department receives evidence from the trust company that the department determines clearly demonstrates that the establishment or acquisition will serve the public interest and well-being; the evidence must address the factors listed in AS 06.26.090(b); and

     (5) the department has received all required fees and the affidavit of publication required by AS 06.26.100(b).

 (b) An interstate state trust company or international trust company may begin acting as a fiduciary at a trust office on the 91st day after the date that the department receives the notice under (a) of this section for the trust office unless the department specifies a different date.

 (c) The department may extend the 90-day period of review provided by (a) of this section if the department determines that the written notice raises issues that require additional information or additional time for analysis by the department. If the department extends the 90-day period of review, the trust company may establish the trust office only after written approval by the department.

 (d) The department may deny an interstate state trust company or international trust company permission to establish or acquire the trust office if the department finds that the trust company lacks sufficient financial resources to undertake the proposed expansion without adversely affecting its safety or soundness or that the proposed trust office would be contrary to the public interest. When acting on the notice provided under (a) of this section, the department shall consider the views of the home jurisdiction regulator.

 (e) If an interstate state trust company or international trust company is not required by AS 10.06 or another law of this state to maintain a registered agent in this state, the trust company shall file a written consent with the department permitting the commissioner to act as the agent for the trust company for service of process in a court action arising out of or connected with the proposed trust office.

 (f) An interstate national trust company may not establish or acquire a trust office in this state unless the trust company provides satisfactory evidence to the department of compliance with the applicable requirements of its home jurisdiction regulator for establishing or acquiring and maintaining the office.




Sec. 06.26.850. Representative office business; registration.
 (a) An interstate state trust company, interstate national trust company, or international trust company may not provide fiduciary services, but may otherwise engage in trust business, at a representative office as permitted by AS 06.26.810 — 06.26.895.

 (b) Subject to the requirements contained in AS 06.26.810 — 06.26.895, an interstate state trust company, interstate national trust company, or international trust company may establish or acquire representative offices in any location in this state.

 (c) If an interstate state trust company or international trust company that does not maintain a trust office in this state wants to establish or acquire a representative office in this state, the trust company shall file a notice with the department on a form prescribed by the department. The trust company shall furnish a copy of a resolution adopted by its board authorizing the establishment or acquisition of the representative office and shall pay the filing fee established by the department by regulation. The notice required under this subsection must provide the name of the trust company, the location of the proposed representative office, and satisfactory evidence that the trust company is chartered or otherwise organized in another jurisdiction to act as a fiduciary.

 (d) An interstate state trust company or international trust company may commence business at a representative office on the 61st day after the date that the department receives the notice required under (c) of this section unless the department specifies a different date.

 (e) The department may extend the 60-day period of review provided by (d) of this section if the department determines that the written notice raises issues that require additional information or additional time for analysis by the department. If the 60-day period of review is extended, the trust company may establish the representative office only after written approval by the department.

 (f) In addition to the other requirements of this section, in order to receive permission to establish or acquire a representative office in this state, an interstate state trust company or international trust company must have sufficient financial resources to undertake the proposed expansion without adversely affecting its safety or soundness and the proposed representative office may not be contrary to the public interest. When acting on the notice provided under (c) of this section, the department shall consider the views of the home jurisdiction regulator.

 (g) The department may determine by order that an interstate state trust company or international trust company does not meet the requirements for establishing or acquiring a representative office in this state under this section. An order issued under this subsection is effective on the date of its issuance or on another date as the department may determine.

 (h) An interstate national trust company shall give the department notice of its intent to establish or acquire a representative office in this state.




Sec. 06.26.860. Additional trust offices.
If an interstate state trust company or international trust company maintains a trust office in this state under AS 06.26.810 — 06.26.895, the trust company may establish or acquire additional trust offices or representative offices in this state to the same extent and in the same manner that a trust company may establish or acquire branch offices in this state under the procedures for establishing or acquiring branch offices under AS 06.26.160.


Sec. 06.26.870. Examinations; periodic reports; cooperative agreements; assessment of fees.
 (a) When the department considers it necessary to protect the public interest, the department or a competent person designated by the department may examine an interstate state trust company or international trust company that has a trust office or a representative office in the state. The trust company shall pay a fee established under AS 06.01.010 for the examination.

 (b) The department may require periodic reports from an interstate state trust company or international trust company if the trust company maintains a trust office in this state and from a bank holding company that controls the trust company. The reports shall be made under oath and filed as frequently as required by the department. The reports must contain the information and detail that the department determines to be appropriate as required under regulations adopted by the department.

 (c) If an interstate state trust company or international trust company maintains a trust office or a representative office in this state, the trust company may be assessed and, if assessed, shall pay supervisory and examination fees as required by the laws of this state and regulations of the department. Fees may be shared with other governmental regulators or any organization affiliated with or representing governmental regulators under agreements between the department and the regulators or organization.




Sec. 06.26.880. Enforcement.
 (a) Consistent with AS 06.01.030 and regulations adopted by the department under AS 06.01.030 or this chapter, the department may determine that
     (1) an office maintained by an interstate state trust company or international trust company is being operated in violation of a provision of the laws of this state or in an unsafe and unsound manner; or

     (2) an interstate state trust company or international trust company is engaged in an activity that the trust company may not engage in under this chapter.

 (b) If either of the conditions in (a) of this section exists, the department may take the enforcement actions it would be empowered to take if the office or the company were a trust company established under this chapter, including issuing an order temporarily or permanently prohibiting the trust company from acting as a fiduciary in this state.

 (c) If a matter involves extraordinary circumstances that require immediate action, the department may take any action permitted by this section without providing notice or an opportunity for a hearing before taking the action. The department shall promptly give notice to the home jurisdiction regulator of each enforcement action taken against an interstate state trust company or international trust company and, to the extent practicable, shall consult and cooperate with the home jurisdiction regulator when pursuing and resolving an enforcement action.




Sec. 06.26.890. Notice of subsequent merger, consolidation, or closing.
If an interstate state trust company, interstate national trust company, or international trust company maintains a trust office or a representative office in this state under this chapter, the trust company shall give at least 60 days’ prior written notice, or, in the case of an emergency transaction, shorter notice that is consistent with applicable state and federal law, to the department of
     (1) a merger, consolidation, or other transaction that would cause a change of control with respect to the trust company or any bank holding company that controls the trust company if an application would be required to be filed under 12 U.S.C. 1817(j) (Change in Bank Control Act of 1978) or 12 U.S.C. 1841 — 1850 (Bank Holding Company Act of 1956);

     (2) a transfer of all or substantially all of the trust accounts or trust assets of the trust company to another person;

     (3) the closing or other disposition of any trust office of the trust company in this state.




Sec. 06.26.895. Definitions.
In AS 06.26.810 — 06.26.895,
     (1) “international trust company” means an international trust company whose home office is not located in this state;

     (2) “interstate national trust company” means an interstate national trust company whose home office is not located in this state;

     (3) “interstate state trust company” means an interstate state trust company whose home office is not located in this state.




Article 12. Miscellaneous Provisions.


Sec. 06.26.900. Powers of department.
The department may
     (1) exercise general supervision over trust companies, interstate trust companies, and international trust companies, and the subsidiaries and affiliated corporations of trust companies, interstate state trust companies, and international trust companies;

     (2) in addition to other authority in this chapter to adopt regulations, adopt regulations necessary to interpret and implement this chapter, including regulations providing for the retention and preservation of records;

     (3) review and approve or disapprove applications for trust companies under AS 06.26.090, trust company branch offices under AS 06.26.160, representative offices under AS 06.26.170, and trust offices and representative offices under AS 06.26.810 — 06.26.895;

     (4) issue permits authorizing trust company holding companies to do business in this state;

     (5) determine for each trust company the amount of paid-in capital necessary to operate under AS 06.26.120;

     (6) review and approve transfers of trust company ownership under AS 06.26.450;

     (7) perform examinations of trust companies, branch offices, representative offices, subsidiaries of trust companies, private trust companies, and subsidiaries of private trust companies under AS 06.01.015 and this chapter;

     (8) relieve a trust company from the examination requirements of AS 06.01.015 if the trust company’s deposits are insured by the Federal Deposit Insurance Corporation, a successor of the Federal Deposit Insurance Corporation, or another agency of the United States that insures trust company deposits;

     (9) approve under AS 06.26.190 the operation of a branch trust company on a schedule different than normal banking days;

     (10) approve the operation by a trust company of an automated teller machine in accordance with AS 06.05;

     (11) approve certain trust company subsidiaries;

     (12) approve the acceptance by a trust company of the trust company’s stock or of the stock of the trust company’s holding company as security for a loan under circumstances approved by the department;

     (13) restrict the withdrawal of deposits from a trust company if the department finds that extraordinary circumstances make restriction necessary for the proper protection of depositors;

     (14) require a trust company to
          (A) maintain its capital and reserve accounts in amounts determined appropriate by the department;

          (B) observe the methods and standards that the trust company adopts for determining the value of various types of assets;

          (C) charge off part or all of an asset that has not been lawfully acquired;

          (D) write down an asset to its market value;

          (E) record liens and other interests in property;

          (F) obtain a financial statement from a borrower or prospective borrower to the extent that the trust company can obtain the statement;

          (G) obtain insurance against damage to real property taken as security;

          (H) search or obtain insurance on the title to real property taken as security;

          (I) maintain adequate insurance against risks as the department determines necessary and appropriate for the protection of depositors and the public;

          (J) charge off that portion of an asset classified as a loss, or charge off or reserve up to 50 percent of loans classified as doubtful, in a state or federal report of examination; or

          (K) charge off all debts owed to the trust company in which interest is past due and unpaid for a period of six months, unless the debt principal is adequately secured and the trust company is in the process of collection;

     (15) require the board of directors of a trust company to hold a meeting under AS 06.26.520;

     (16) order the removal of a board member of a trust company under AS 06.26.510;

     (17) order a trust company to suspend the payment of dividends under AS 06.26.120 and regulations adopted by the department;

     (18) require a trust company to increase its capital accounts under AS 06.26.120;

     (19) take possession of a trust company in the manner provided in AS 06.26.730 — 06.26.750, and operate, reorganize, or liquidate the trust company after taking possession;

     (20) issue an order under AS 06.01.030 that the department determines is necessary to ensure compliance with this chapter; and

     (21) exercise other powers expressly or implicitly granted under this chapter.




Sec. 06.26.905. Cooperative agreements.
 (a) The department may enter into cooperative, coordinating, or information-sharing agreements with other governmental regulators or with an organization affiliated with or representing governmental regulators to handle the periodic examination or other supervision of a trust office that is located in this state and owned by an interstate state trust company or of a trust office that is located in a host state and owned by a trust company. Under the agreements, the department may accept reports of examination and reports of investigation instead of conducting the department’s own examinations or investigations.

 (b) The department may enter into joint enforcement action agreements with other governmental regulators having concurrent jurisdiction over a trust company that is located in this state and owned by an interstate state trust company organized in another state or over a trust office that is located in a host state and owned by a trust company.

 (c) Notwithstanding the existence of an agreement under this section, the department may at any time make an examination or take independent supervisory or enforcement action if the department determines that the examination or action is necessary or appropriate to carry out the department’s responsibilities under this chapter or to ensure compliance with the laws of this state.




Sec. 06.26.910. Appeals.
 (a) A person may appeal to the department
     (1) a denial of an application under AS 06.26.090(e);

     (2) an order under AS 06.26.120 to increase or adjust capital;

     (3) a denial under AS 06.26.150 of a change of the location of a home office under AS 06.26.150;

     (4) a denial under AS 06.26.160 of permission for a trust company to establish a branch office;

     (5) a denial under AS 06.26.170 of permission to establish or acquire a representative office;

     (6) a denial under AS 06.26.180(d) of permission to establish an office outside this state;

     (7) a denial of a private trust company exemption under AS 06.26.200 and 06.26.210;

     (8) the conditions or limitations established for an exemption under AS 06.26.200(e);

     (9) the revocation of an exemption under AS 06.26.230;

     (10) a denial of permission for a private trust company to convert to a trust company under AS 06.26.240;

     (11) a denial under AS 06.26.470 of an application to acquire control of a trust company;

     (12) the disapproval under AS 06.26.650 of a conversion, merger, or consolidation;

     (13) a denial under AS 06.26.840(d) of permission to establish or acquire a trust office in this state;

     (14) a denial under AS 06.26.850(g) of permission to establish or acquire a representative office in this state; and

     (15) a denial under AS 06.26.860 of permission for additional trust offices or representative offices.

 (b) The department shall adopt regulations, consistent with the provisions of this chapter, establishing the procedures for appeals allowed under (a) of this section.

 (c) The provisions of AS 44.62 (Administrative Procedure Act), including judicial review under AS 44.62.560, apply to an appeal under this chapter to the extent the provisions of AS 44.62 do not conflict with the procedures established under (b) of this section or other provisions of this chapter.




Sec. 06.26.920. Civil enforcement.
The department may bring any appropriate civil court action against a person who the department determines has committed or is about to commit a violation of this chapter.


Sec. 06.26.930. Trust company reports to the department; publication of reports.
 (a) A trust company shall make at least four reports of its condition each year to the department as required by and on forms prescribed by the department. Each report shall be signed by a duly authorized officer of the trust company verified by at least one independent director, and each verifying director shall certify under oath that the director has personal knowledge of the facts stated in the report and that the facts are true. Each report must exhibit in detail and under appropriate headings the resources and liabilities of the trust company and must be received by the department within 30 calendar days after the end of the period covered by the report.

 (b) The department may require that a trust company submit special reports whenever the department considers a report necessary in order to obtain full knowledge of the trust company’s condition.

 (c) In addition to the other reports required by this section, a trust company shall make at least one report of income and dividends to the department each year. The trust company shall submit the report to the department within 30 calendar days after the end of the calendar or fiscal year covered by the report.

 (d) All of the reports of condition required by this section shall be made available to all customers on request and at no charge to the customer.




Sec. 06.26.940. Remedy of person damaged by violation.
In addition to any other remedies available under law to the person, a person who suffers damages as a result of a violation of this chapter by a person subject to this chapter may bring an action in court against the person violating this chapter to recover the damages. In this section, “person subject to this chapter” means a trust company, a private trust company, an exempt private trust company, a person who is required to obtain a certificate of authority under AS 06.26.090, and an interstate state trust company or international trust company.


Sec. 06.26.950. Limitation on powers.
This chapter does not allow a trust company to engage in banking.


Article 13. General Provisions.


Sec. 06.26.960. Application of laws relating to general business corporations.
 (a) Unless expressly authorized by this chapter, a trust company may not take an action that is authorized by AS 10.06 regarding its corporate status, capital structure, or a matter of corporate governance and for which AS 10.06 requires a filing with the department unless the trust company first makes the required filing with the department and receives the department’s approval.

 (b) The department may adopt regulations to alter or supplement the procedures and requirements of AS 10.06 applicable to an act taken under this chapter by a trust company.




Sec. 06.26.990. Definitions.
 (a) In this chapter, unless the context otherwise requires,
     (1) “banking” has the meaning given in AS 06.05.990;

     (2) “board” means board of directors;

     (3) “certificate of authority” means the certificate of authority issued to a corporation under AS 06.26.110;

     (4) “chapter” includes regulations adopted under this chapter;

     (5) “commissioner” means the commissioner of commerce, community, and economic development;

     (6) “customer” means a person using the services of a trust company or a private trust company, and includes a depositor;

     (7) “department” means the Department of Commerce, Community, and Economic Development;

     (8) “depository” means a person authorized by state or federal law to accept deposits of trust assets;

     (9) “exempt private trust company” means a private trust company that has received an exemption under AS 06.26.200;

     (10) “family member” means an individual who is related, including relation established by adoption, within the fourth degree by blood or marriage, to the individual whom the relationship is measured;

     (11) “fiduciary” means a person to whom the property of another person is entrusted for a purpose specified in a trust instrument or by a court order;

     (12) “fiduciary operations” means operations performed by a fiduciary;

     (13) “fiduciary services” means services of a fiduciary;

     (14) “financial institution” has the meaning given in AS 06.05.990;

     (15) “governmental regulator” means a governmental agency responsible for regulating persons who act as fiduciaries;

     (16) “home jurisdiction regulator” means the governmental agency responsible for regulating an interstate state trust company, interstate national trust company, or international trust company in the jurisdiction where the trust company is chartered or otherwise organized;

     (17) “insider” has the meaning given in 12 C.F.R. 215.2;

     (18) “international trust company” means an organization that provides fiduciary services and has offices in countries other than the country in which the home office of the entity is located;

     (19) “interstate national trust company” means an organization
          (A) that is chartered as a bank by the United States;

          (B) whose powers are limited to providing fiduciary services; and

          (C) that has offices in a state of the United States other than the state in which the home office of the organization is located;

     (20) “interstate state trust company” means an organization that
          (A) provides fiduciary services;

          (B) holds a charter, license, certificate, or other type of authorization from this or another state of the United States that authorizes the organization to provide fiduciary services; and

          (C) has offices in a state of the United States other than the state in which the home office of the organization is located;

     (21) “issuer” has the meaning given in AS 45.55.990;

     (22) “national bank” has the meaning given in AS 06.05.990;

     (23) “offer fiduciary services to the general public” means to advertise fiduciary services, solicit fiduciary services work, or market fiduciary services in any medium, including an electronic medium, regardless of whether a fee, commission, or any other type of remuneration is charged or received;

     (24) “personal representative” has the meaning given in AS 13.06.050;

     (25) “private trust company” means a person who acts as a fiduciary, is not exempt under AS 06.26.020(a) or (c), and qualifies under AS 06.26.200(c);

     (26) “purchasing trust company” means a trust company purchasing all or substantially all of the assets of another trust company;

     (27) “representative office” means an office that provides support services for a trust company, but at which the trust company does not provide fiduciary services;

     (28) “resident of this state” means an individual who is physically present in Alaska and who intends to remain indefinitely in Alaska;

     (29) “selling trust company” means a trust company selling all or substantially all of its assets;

     (30) “state bank” has the meaning given in AS 06.05.990;

     (31) “state financial institution” means an institution organized under this title if the deposits of the institution are insured by an agency of the federal government;

     (32) “trust account” means an account at a trust company for trust assets;

     (33) “trust assets” means assets held in trust for another person;

     (34) “trust company” means a person who is organized under this chapter to act as a fiduciary and to provide fiduciary services to the general public;

     (35) “trust company assets” means assets that are not trust assets and that are owned by a trust company;

     (36) “trust holding company” means an organization formed for the purpose of owning a trust company;

     (37) “trust office” means an office that provides fiduciary services;

     (38) “within the fourth degree” means a child, a grandchild, a great-grandchild, a parent, a sister, a brother, a niece, a nephew, a grandniece, a grandnephew, a grandparent, an aunt, an uncle, a first cousin, a great-grandparent, a great-aunt, a great-uncle, and a great-great-grandparent.

 (b) In AS 06.26.220, 06.26.450 — 06.26.470, 06.26.510, 06.26.870, and 06.26.890, “control” means owning, or holding with the power to vote, 25 percent or more of the voting securities or other capital stock.




Sec. 06.26.995. Short title.
This chapter may be cited as the Revised Alaska Trust Company Act.


Chapter 30. Alaska Savings Association Act.

[Repealed, § 102 ch 26 SLA 1993.]

Chapter 35. Uniform Common Trust Fund Act.

Sec. 06.35.010. Common trust funds.
 (a) A bank or trust company that is qualified to act as a fiduciary in this state, or in another state if affiliated with a bank or trust company that is qualified to act as a fiduciary in this state, may establish common trust funds for the purpose of furnishing investments to
     (1) itself as fiduciary;

     (2) itself and others as cofiduciaries; or

     (3) its affiliated bank or trust company as fiduciary.

 (b) A bank or trust company may invest, as fiduciary or cofiduciary, in the common trust funds it establishes under (a) of this section, the funds that the bank or trust company lawfully holds for investment, if the investment is not prohibited by the instrument, court judgment, court decree, or court order creating the fiduciary relationship, and if, in the case of cofiduciaries, the bank or trust company procures the consent of its cofiduciary or cofiduciaries to the investment.

 (c) Notwithstanding (a) and (b) of this section, a bank or trust company that is qualified to act as a fiduciary in the state where the bank or trust company is organized or otherwise formed and that is not a member of the Federal Reserve System shall in the establishment of or investment in a common trust fund under (a) — (b) of this section comply with the law regulating financial institutions in the state where the bank or trust company is organized or otherwise formed.

 (d) The Department of Commerce, Community, and Economic Development may adopt regulations under AS 44.62 (Administrative Procedure Act) to implement this section.

 (e) In this section,
     (1) “affiliated” means two or more banks or trust companies in which
          (A) 25 percent or more of the voting shares, excluding shares owned by the United States or by a corporation or other entity wholly owned by the United States, is directly or indirectly owned or controlled by a holding company; or

          (B) the election of a majority of the directors is controlled in any manner by a holding company;

     (2) “bank” means an organization that is authorized by the United States Comptroller of the Currency, or by the director of banking or the equivalent position in the state of organization, to accept deposits and to make commercial loans, and whose deposits are insured by the Federal Deposit Insurance Corporation;

     (3) “trust company” means a financial institution, corporation, or other legal entity, authorized to exercise general trust powers, but does not include a natural person.




Sec. 06.35.020. Accounting to court.
Unless ordered by a court of competent jurisdiction, a bank or trust company operating a common trust fund is not required to render a court accounting with regard to the fund. A bank or trust company may, by application to the superior court, secure approval of an accounting it makes with regard to a common trust fund on the conditions the court establishes.


Sec. 06.35.030. Procedure for accounting to court.
When an accounting of a common trust fund is presented to the superior court under AS 06.35.020 for approval, the court shall assign a time and place for hearing and order notice of the hearing by
     (1) publication once a week for three weeks, the first publication to be not less than 20 days before the date of the hearing, of a notice in a newspaper having a circulation in the judicial district in which the bank or trust company or branch thereof operating the common trust fund is located;

     (2) mailing not less than 14 days before the date of the hearing a copy of the notice to all beneficiaries of the trust participating in the common trust fund whose names are known to the bank or trust company from the records kept by it in the regular course of business in the administration of the participating trusts, directed to them at the addresses shown by the records; and

     (3) such further notice as the court may order.




Sec. 06.35.040. Uniformity of interpretation.
This chapter shall be so interpreted and construed as to effectuate its general purpose to make uniform the law of those states which enact it.


Sec. 06.35.050. Short title.
This chapter may be cited as the Uniform Common Trust Fund Act.


Article 1. Licensing.


Chapter 40. Premium Financing Act.

Sec. 06.40.010. License required.
Except as provided in AS 06.40.020, a person may not engage in the business of entering into premium finance agreements on insurance sold in this state or risks located in this state, either directly or indirectly, or otherwise act as a premium finance company in this state without being licensed by the department.


Sec. 06.40.020. Applicability.
This chapter does not apply to
     (1) an insurer authorized to transact business in this state with respect to premiums on policies that the insurer issues;

     (2) a bank, trust company, savings association, or other financial institution subject to the other chapters of this title and authorized to transact business in this state that does not possess or acquire any right, title, or interest with respect to the insurance policy for which the premiums are financed other than in the proceeds of it in the event of loss;

     (3) the inclusion of a charge for insurance in connection with an installment sale under AS 45.10; and

     (4) persons licensed under AS 21.27 financing only their own accounts if they are in compliance with AS 21.36.490.




Sec. 06.40.030. Bond.
 (a) The applicant shall file with the application a bond to be approved by the department in which the applicant is the obligor, in the sum of $5,000 with one or more sureties. The bond shall be for the use of the state and any person who may have a cause of action against the obligor under this chapter. The bond must state that the obligor will faithfully conform to and abide by the provisions of this chapter and of all regulations lawfully adopted by the department, and will pay to the state and to any person all money that may become due or owing to the state or to the person from the applicant under this chapter. The aggregate liability of the surety for all breaches of the bond condition may not exceed the penal sum of the bond, and the bond may be cancelled by the surety on 30 days notice to the commissioner.

 (b) If at any time the commissioner finds that the bond is unsatisfactory for any reason, the commissioner may require the licensee to file, within 10 days after the receipt of a written demand for it, an additional bond complying with the provisions of (a) of this section.




Sec. 06.40.040. Annual license fee.
On or before December 20 of each year, each licensee shall pay a fee of $200 to the department as an annual license fee for the next succeeding calendar year. At that same time the licensee shall file with the department a new bond that complies with AS 06.40.030.


Sec. 06.40.050. Application for license; fee; disclosure for child support purposes; interrogatories; refusal to issue or continue license.
 (a) Application for a license under this chapter shall be in writing and in the form prescribed by the department. If the applicant is a natural person, the application form must require submission of the applicant’s social security number.

 (b) All reasonable investigation expenses incurred by the department in processing an application for approval of a proposed premium finance company shall be charged to and paid by the applicant in accordance with AS 06.01.010. At the time of submitting the application to the department, the applicant shall pay to the department $500 in partial payment of the investigation expenses incurred by the department. If the investigation expenses incurred by the department do not exceed $500, the remainder shall be promptly refunded to the applicant.

 (c) The person to whom the license may be or is issued shall file sworn answers to interrogatories required by the commissioner. The commissioner shall have authority, at any time, to require the licensee fully to disclose the identity of all directors, partners, officers, and managerial employees. The commissioner may refuse to issue or continue a license in the name of any firm or corporation if the commissioner determines that any officer, employee, stockholder, or partner of the firm or corporation who may materially influence the licensee’s conduct does not meet the requirements of this chapter.

 (d) All premium finance licenses shall continue in force until suspended or revoked, subject to the payment by the licensee of the annual license fee and to the licensee being in compliance with other provisions of this chapter.

 (e) Upon request, the department shall provide a social security number submitted under (a) of this section to the child support services agency created in AS 25.27.010, or the child support agency of another state, for child support purposes authorized under law.




Sec. 06.40.060. Place of business.
 (a) A licensee may maintain only one place of business under a license. The department may issue more than one license to the same licensee upon application and compliance by the licensee with the provisions of this chapter governing the original issuance of a license.

 (b) If a licensee changes the place of business to another location, the licensee shall give written notice to the department. The department shall attach the written notice of the change to the license together with the date. Thereafter, the licensee may operate the business under the license at the new location.




Sec. 06.40.070. Investigation; qualifications for license.
 (a) Upon the filing of an application and payment of the investigation fee specified in AS 06.40.050(b), the commissioner shall conduct an investigation of an applicant and shall issue a premium finance company license if the applicant meets the requirements of this chapter. If the commissioner does not so find, the commissioner shall, within 30 days after receipt of the application, at the request of the applicant, give the applicant a full hearing.

 (b) The commissioner shall issue a license to an applicant when the commissioner is satisfied that the applicant
     (1) is competent and trustworthy and intends to act in good faith in the capacity involved by the license applied for;

     (2) has a good business reputation and has had experience, training, or education so as to be qualified in the business for which the license is applied; and

     (3) if a corporation, is a corporation incorporated under the laws of this state or a foreign corporation authorized to transact business in this state.




Sec. 06.40.080. Revocation or suspension of license.
The commissioner may revoke or suspend the license of any licensee when, upon completion of an investigation, the commissioner determines that
     (1) the license issued to the company was obtained by fraud;

     (2) there was misrepresentation in the application for the license;

     (3) the holder of the license has otherwise proven to be untrustworthy or incompetent to act as a premium finance company; or

     (4) the licensee has violated any of the provisions of this chapter.




Article 2. Operations.


Sec. 06.40.090. Misleading statements prohibited; disclosure of interest rate.
 (a) A person may not advertise, print, display, publish, distribute, or broadcast, or cause or permit to be advertised, printed, displayed, published, distributed, or broadcast, in any manner, any statement or representation with regard to the rates, terms, or conditions for the lending of money, credit, goods, or things in action which is false, misleading, or deceptive.

 (b) The licensee or lender shall state the interest rate charged in a premium finance agreement fully and clearly as an annual percentage rate.




Sec. 06.40.100. Record keeping; examination of records; report.
 (a) A licensee shall maintain records of its premium finance transactions, including the insurance agents through which the licensee provides loans to residents of this state, and the records shall be open to examination and investigation by the commissioner at the office of the licensee. All records pertaining to insurance contracts financed by state residents shall be maintained or readily available in the licensee’s office. The commissioner may, at any reasonable time, require the licensee to bring records pertaining to premium finance agreements to the commissioner’s office for examination. The expenses incurred by the department in conducting an examination shall be charged to and paid by the licensee in accordance with AS 06.01.010.

 (b) A licensee shall preserve its records of premium finance transactions, including cards used in a card system, for at least three years after making the final entry relating to any premium finance agreement. The preservation of records in photographic form constitutes compliance with this requirement.

 (c) Each licensee shall, on or before March 15 of each year, file a report with the department containing information as the department may reasonably require concerning the business and operations during the preceding calendar year of each licensed place of business conducted by the licensee. The report shall be made under oath, shall be in the form prescribed by the department, and shall be kept available as a public record.




Sec. 06.40.110. Contents of premium finance agreement; deficiency balances.
 (a) A premium finance agreement must
     (1) be dated, signed by the borrower, and the printed portion of it shall be in at least eight-point type;

     (2) contain the name and place of business of the insurance agent negotiating the related insurance policy, the name and residence or the place of business of the borrower as specified by the borrower, the name and place of business of the licensee to which payments are to be made, an identification of the insurance policy involved, and the amount of the premium charged for it; and

     (3) set out the following items where applicable:
          (A) the total amount of the premiums;

          (B) the amount of the down payment;

          (C) the principal balance (the difference between (A) and (B) of this paragraph);

          (D) the annual percentage rate of interest; and

          (E) the number of payments required, the amount of each payment expressed in dollars, and the due date or period of it.

 (b) The items set out in (a)(3) of this section do not need to be stated in the sequence or order in which they appear in (a) of this section, and additional items may be included to explain the computations made in determining the amount to be paid by the insured.

 (c) The repayment schedule relating to dwelling fire, homeowner, private passenger automobile, boats not used for commercial purposes, owner-occupied mobile homes, and fire insurance policies covering owner-occupied multiple unit dwellings for four families or less shall be such that the total amount due the licensee at any time does not exceed the unearned premium on the policy being financed at that time. A deficiency balance may not be established or collected from the borrower. This section does not preclude the licensee from establishing or collecting a deficiency balance to the extent the insurer offsets unearned premiums on the policy financed by premiums earned by reason of endorsements to that same policy not paid for by the insured or financed by the licensee.

 (d) The licensee or the insurance agent shall deliver to the borrower, or mail to the borrower at the address shown in the agreement, a complete copy of the agreement.




Sec. 06.40.120. Service charge; interest rate; prepayment.
 (a) A premium finance company may not charge, contract for, receive, or collect a service charge other than as permitted by this chapter.

 (b) The service charge is to be computed on the balance of the premiums due, after subtracting the down payment made by the borrower in accordance with the premium finance agreement, from the effective date of the insurance coverage for which the premiums are being advanced, to and including the date when the final payment of the premium finance agreement is payable.

 (c) The service charge may not exceed interest at the nominal annual rate of 15 percent plus an additional charge of $10 per premium finance agreement which need not be refunded upon cancellation or prepayment. However, any borrower may prepay a premium finance agreement in full at any time before the due date of the final payment and in that event the unearned service charge shall be refunded. The amount of any refund shall be calculated in accordance with regulations adopted by the commissioner.




Sec. 06.40.130. Delinquency charge; separate financing.
 (a) A premium finance agreement may provide for the payment by the borrower of a delinquency charge for any payment that is in default for a period of 10 days or more. The charge may be made for each month or fraction of a month that the payment is in default. The amount of the charge may be a minimum of $1 and as a maximum shall be subject to the following limits:
     (1) for delinquent payments of less than $250, five percent of the payment or $5, whichever is less; or

     (2) for delinquent payments of $250 or more, two percent of the payment.

 (b) A borrower has the option to separate the financing of the premiums for one insurance policy from a premium finance agreement by requesting in writing that the premium finance company provide that service and by paying a $10 separate charge.




Sec. 06.40.140. Cancellation of policy.
 (a) When a premium finance agreement contains a power of attorney enabling the licensee to cancel the insurance policy listed in the agreement, the insurance policy may not be cancelled by the licensee unless the cancellation is effectuated under this section.

 (b) The licensee shall give not less than 10 days’ written notice to the borrower, by mailing by certified mail or documented by an affidavit of mailing, of the licensee’s intent to cancel the insurance policy unless the default is cured within that 10-day period. A copy of the notice shall also be mailed by certified mail or documented by an affidavit of mailing to the insurance agent indicated on the premium finance agreement.

 (c) After expiration of the 10-day period specified in (b) of this section, the licensee may, in the name of the borrower, cancel the insurance policy by mailing by certified mail or documented by an affidavit of mailing to the insurer a notice of cancellation. The insurance policy shall be cancelled as if the notice of cancellation had been submitted by the borrower, but without requiring the return of the insurance policy. The licensee shall also mail by certified mail or documented by an affidavit of mailing a notice of cancellation to the borrower at the borrower’s last-known address and to the insurance agent indicated on the premium finance agreement.

 (d) All statutory, regulatory, and contractual restrictions providing that the insurance policy may not be cancelled unless notice is given to a governmental agency, mortgagee, or other third party shall apply where cancellation is effected under this section. The insurer shall give the prescribed notice on behalf of itself or the borrower to any governmental agency, mortgagee, or other third party on or before the fifth business day after the day it receives the notice of cancellation from the licensee and shall determine the effective date of cancellation taking into consideration the number of days notice required to complete the cancellation.




Sec. 06.40.150. Return of unearned premiums.
 (a) If a financed insurance policy is cancelled and provided the insurer has been notified of the assignment of interest of the insured to the licensee, the insurer within 60 days of the effective date of cancellation shall take the steps that are necessary to have any gross unearned premiums that are due under the insurance policy returned to the licensee for the account of the borrower if the licensee has complied with the notice provisions of AS 06.40.140(b).

 (b) If the crediting of return premiums to the account of the borrower results in a surplus over the amount due from the borrower, the licensee shall refund the excess to the borrower; however, a refund is not required if it amounts to less than $1.




Article 3. General Provisions.


Sec. 06.40.160. Consequences of violations.
 (a) A lender who, in the making of any contract, loan, or premium finance agreement or the collection of interest or charges, does any act that violates AS 06.40.010 — 06.40.020, 06.40.090, or 06.40.110 — 06.40.130 shall at the option of the commissioner reimburse that portion of the interest and charges in excess of that provided in those sections, or, in the case of repeated violations of those sections by the lender, the lender shall adjust the contract, loan, or premium finance agreement interest and other charges down to the contract interest limitation specified in AS 45.45.010(a).

 (b) [Repealed, § 102 ch 26 SLA 1993.]




Sec. 06.40.170. Filing not required to perfect validity of agreement.
A filing under AS 45.29 of the premium finance agreement is not necessary to perfect the validity of the agreement as a secured transaction against creditors, subsequent purchasers, pledgees, encumbrancers, successors, or assigns.


Sec. 06.40.180. Regulations, orders.
The commissioner shall adopt regulations necessary to carry out this chapter, and the commissioner may order any person to cease violation of this chapter or a regulation adopted under it.


Sec. 06.40.190. Definitions.
In this chapter, unless the context otherwise requires,
     (1) “commissioner” means the commissioner of commerce, community, and economic development or a designee of the commissioner;

     (2) “department” means the Department of Commerce, Community, and Economic Development;

     (3) “premium finance agreement” means an agreement by which a borrower or prospective borrower promises to pay to a licensee or to its assignee the amount advanced or to be advanced under the agreement to an insurer or to an insurance agent or broker in payment of premiums on an insurance policy sold in this state or covering risks located in this state together with a service charge, and as a security for it the premium finance company receives an assignment of the unearned premium; however, a mortgage, conditional sale contract, or other security agreement covering property which authorizes the lienholder to pay or advance premiums for insurance under the mortgage, contract, or other security agreement is not considered to be a premium finance agreement;

     (4) “premium finance company” means a person engaged in the business of entering into premium finance agreements with borrowers or of acquiring premium finance agreements from insurance agents, brokers or other premium finance companies.




Chapter 45. Alaska Credit Union Act.

Sec. 06.45.010. Responsibility of commissioner.
 (a) The commissioner shall administer this chapter.

 (b) The commissioner may by regulation define the powers of credit unions formed under this chapter and adopt regulations to carry out the purposes of credit unions consistent with this chapter and AS 06.01.020.

 (c) The commissioner may delegate any authority, power, or function granted by this chapter.

 (d) The records of credit unions shall be kept and reports shall be made in accordance with regulations adopted by the commissioner.

 (e) A person appointed or elected by a credit union to a position requiring the receipt, payment, or custody of money or personal property owned by a credit union or in its custody or control as collateral or otherwise shall give bond in a corporate surety company approved by the commissioner on a form approved by the commissioner and in an amount prescribed by the commissioner. The commissioner may approve the use of a form of schedule or blanket bond which covers all the officers and employees of a credit union whose duties include the receipt, payment, or custody of money or other personal property for or on behalf of the credit union. The commissioner may approve the use of a form of excess coverage bond under which a credit union may obtain coverage in excess of the basic surety coverage.




Sec. 06.45.020. Formation of credit union.
 (a) Seven or more natural persons who desire to form a credit union shall subscribe before an officer competent to administer oaths, articles of incorporation in duplicate that must state
     (1) the name of the credit union;

     (2) the location of the credit union and the territory in which it will operate;

     (3) the names and addresses of the subscribers to the certificate and the number of shares each subscribed;

     (4) the par value of the shares, which must be a minimum of $5 each;

     (5) the proposed field of membership specified in detail;

     (6) the term of the existence of the credit union, which may be perpetual; and

     (7) the fact that the articles of incorporation are adopted to enable the persons to avail themselves of the advantages of this chapter.

 (b) The articles of incorporation must also include provisions required by the commissioner for the management of the business of the credit union, for the conduct of its affairs, and relating to the powers of its directors, officers, or stockholders.

 (c) At the time of presenting the articles of incorporation to the commissioner the incorporators shall also submit proposed bylaws to the commissioner for approval. Except to the extent the articles of incorporation provide the structure and designate the offices, the bylaws shall provide the organizational structure of the credit union and specifically designate those offices that will be held by the executive or managing officers of the credit union. Copies of the original bylaws of the credit union and any amendments of the bylaws shall be filed with the commissioner.

 (d) The commissioner may prepare form articles of incorporation and form bylaws, consistent with this chapter, which may be used by credit union incorporators and shall be supplied to them on request.




Sec. 06.45.030. Approval of articles of incorporation and issuance of certificate of authority.
 (a) The articles of incorporation shall be presented to the commissioner for approval. Before the certificate of authority is issued, the commissioner shall determine
     (1) whether the articles of incorporation and bylaws conform to the provisions of this chapter and to regulations of the commissioner;

     (2) the general character and fitness of the subscribers; and

     (3) the economic advisability of establishing the proposed credit union.

 (b) A certificate of authority shall be delivered by the commissioner to the credit union if the required fee has been paid. On issuance of the certificate of authority, the credit union is a body corporate and is subject to the limitations of this chapter, and is vested with all of the powers and charged with all of the liabilities conferred and imposed by this chapter upon credit unions organized under it.




Sec. 06.45.040. Fees.
 (a) The commissioner shall assess a credit union a fee for expenses under AS 06.01.010 in processing an application
     (1) for approval of articles of incorporation and bylaws and the issuance of a certificate of authority for a credit union;

     (2) for the approval of a branch of a credit union;

     (3) for a merger or conversion of a credit union; or

     (4) for an examination under AS 06.45.050.

 (b) Failure of a credit union to pay a fee required by (a)(2), (3), or (4) of this section within 30 days of receipt of billing from the commissioner is grounds for the revocation of the certificate of authority of the credit union.




Sec. 06.45.050. Reports and examinations.
A credit union organized under this chapter is under the supervision of the commissioner and shall make an annual financial report to the commissioner and shall make other financial reports required by regulations adopted by the commissioner. A credit union is subject to examination by the commissioner.


Sec. 06.45.060. Powers of a credit union; remedy for interest violations.
 (a) A credit union has succession in its corporate name during its existence and may
     (1) enter into a contract;

     (2) sue and be sued;

     (3) adopt, use, and alter a common seal;

     (4) purchase, hold, and dispose of property;

     (5) make loans, the maturities of which may not exceed 20 years except as provided in this chapter, and extend lines of credit to its members, to other credit unions, and to credit union organizations and participate with other credit unions, credit union organizations, or financial organizations in making loans to credit union members in accordance with the following:
          (A) loans to members shall be made in conformity with regulations adopted by the commissioner, except that
               (i) a residential real estate loan that is made to finance the acquisition of a one- to four-family dwelling for the principal residence of a credit union member that is secured by a first lien on the dwelling may have a maturity not exceeding 30 years;

               (ii) a loan to finance the purchase of a manufactured home that is secured by a first lien on the manufactured home, to be used as the residence of a credit union member, or for the repair, alteration, or improvement of a residential dwelling that is the residence of a credit union member must have a maturity not to exceed 20 years unless the loan is insured or guaranteed under (iii) of this subparagraph;

               (iii) a loan secured by the insurance or guarantee of the federal government, of a state government, or an agency of either may be made for the maturity and under the terms and conditions specified in the law under which the insurance or guarantee is provided;

               (iv) a loan or aggregate of loans to a director or member of the supervisory or credit committee of the credit union making the loan that exceeds $20,000 plus pledged shares shall be approved by the board of directors;

               (v) loans to other members for which directors or members of the supervisory or credit committee act as guarantor or endorser shall be approved by the board of directors when the loans standing alone or when added to an outstanding loan or loans of the guarantor or endorser exceed $20,000;

               (vi) the rate of interest may not exceed the greater of 15 percent a year or the rate specified in AS 45.45.010(b);

               (vii) the taking, receiving, reserving, or charging of a rate of interest greater than is allowed by this paragraph, when knowingly done, is considered a forfeiture of the entire interest that the note, bill, or other evidence of debt carries with it, or that has been agreed to be paid on the note, bill, or other evidence of debt; if a greater rate of interest has been paid, the person by whom it has been paid or the person’s legal representatives may recover back from the credit union taking or receiving it the entire amount of interest paid, but the action must be commenced within two years from the time the usurious collection was made;

               (viii) a borrower may repay a loan before maturity in whole or in part on any business day without penalty;

               (ix) loans shall be paid or amortized under regulations adopted by the commissioner that consider the needs or conditions of the borrowers, the amounts and duration of the loans, the interests of the members and the credit union, and other factors established in regulations adopted by the commissioner;

               (x) the total dollar amount of real estate loans and manufactured home loans outstanding may not exceed 25 percent of the assets of the credit union without the written approval of the commissioner;

               (xi) a credit union with assets of less than $3,000,000 may make real estate loans with maturities in excess of 15 years only with the approval of the commissioner;

          (B) a self-replenishing line of credit to a borrower may be established to a stated maximum amount on terms and conditions that may be different from terms and conditions established for another borrower;

          (C) loans to other credit unions require the approval of the board of directors of the loaning credit union;

          (D) loans to credit union associations require the approval of the board of directors of the credit union and may not exceed one percent of the paid-in and unimpaired capital and surplus of the credit union;

          (E) participation loans with other credit unions, credit union associations, or financial organizations shall be made in accordance with written policies of the board of directors of the credit union, except that a credit union that originates a loan for which participation arrangements are made in accordance with this section shall retain an interest not less than 10 percent of the face amount of the loan;

     (6) receive from its members and from others payments on shares that may be issued at varying dividend rates, and payments on share certificates that may be issued at varying dividend rates and maturities, and establish share draft accounts, subject to terms, rates, and conditions as may be established by the board of directors of the credit union, within limitations prescribed by the commissioner;

     (7) invest its funds
          (A) in loans exclusively to members;

          (B) in obligations of the United States or securities fully guaranteed as to principal and interest by the United States;

          (C) in loans to other credit unions in the total amount not exceeding 25 percent of its paid-in and unimpaired capital and surplus in accordance with regulations adopted by the commissioner;

          (D) in shares or accounts of savings and loan associations or mutual savings banks that are insured by the Federal Deposit Insurance Corporation;

          (E) in obligations issued by banks for cooperatives, federal land banks, federal intermediate credit banks, federal home loan banks, the Federal Home Loan Bank Board, or a corporation designated in 31 U.S.C. 9101 as a wholly owned federal government corporation; in obligations, participations, or other instruments of or issued by or fully guaranteed as to principal and interest by the Federal National Mortgage Association or the Government National Mortgage Association; in mortgages, obligations, or other securities that are or have been sold by the Federal Home Loan Mortgage Corporation under 12 U.S.C. 1454 or 12 U.S.C. 1455 (Federal Home Loan Mortgage Corporation Act); or in obligations or other instruments or securities of the Student Loan Marketing Association;

          (F) in participation certificates evidencing beneficial interests in obligations, or in the right to receive interest and principal collections from obligations, that have been subjected by one or more federal agencies to a trust or trusts for which an executive department, agency, or instrumentality of the United States or its head has been named to act as trustee;

          (G) in shares or deposits of a central credit union in which such investments are authorized by the board of directors of the credit union making the investment;

          (H) in shares, share certificates, or share deposits of federally insured credit unions;

          (I) in the shares, stocks, or obligations of another organization providing services that are associated with the routine operations of credit unions, up to one percent of the total paid-in and unimpaired capital and surplus of the credit union with the approval of the commissioner;

          (J) in the capital stock of the National Credit Union Central Liquidity Facility;

          (K) in the stocks, bonds, and other securities of
               (i) a corporation licensed under AS 10.13; or

               (ii) a corporation attempting to become licensed under AS 10.13 if the corporation intends to use the proceeds to fulfill the tasks necessary to become licensed under AS 10.13;

          (L) in bankers’ acceptances issued by a financial institution whose accounts are insured by an agency of the federal government;

          (M) in stock of a federal home loan bank; the investment must be limited to the minimum amount of stock required for membership in the federal home loan bank, plus any additional stock purchase required to obtain an advance of funds from a federal home loan bank; and

          (N) in obligations of, or issued by, a state or political subdivision of the state, except that a credit union may not invest more than 10 percent of its unimpaired capital and surplus in the obligations of any one issuer, exclusive of general obligations of the issuer; in this subparagraph, “political subdivision of the state” includes an agency, corporation, or instrumentality of a state or political subdivision;

     (8) make deposits in national banks and in state banks, trust companies, and mutual savings banks operating in accordance with the laws of the state;

     (9) borrow in accordance with regulations adopted by the commissioner from any source, in an aggregate amount not exceeding 50 percent of its paid-in and unimpaired capital and surplus, except that a credit union may discount with or sell to a federal intermediate credit bank an eligible obligation up to the amount of its paid-in and unimpaired capital;

     (10) levy late charges, in accordance with the bylaws, for failure of members to meet promptly their obligations to the credit union;

     (11) levy and enforce a lien upon the shares and dividends of a member to the extent of a loan made to, and any dues or charges payable by, the member;

     (12) in accordance with regulations adopted by the commissioner, sell to members negotiable checks, travelers checks, and money orders, and cash checks and money orders for members, for a fee which does not exceed the direct and indirect costs incident to providing the service;

     (13) in accordance with regulations adopted by the commissioner, purchase, sell, pledge, discount, or otherwise receive or dispose of, in whole or in part, eligible obligations of its members and purchase from a liquidating credit union notes made by individual members of the liquidating credit union at prices agreed upon by the board of directors of the liquidating credit union and the board of directors of the purchasing credit union; a purchase may not be made under authority of this paragraph if, upon the making of the purchase, the aggregate of the unpaid balances of notes purchased under authority of this paragraph exceeds five percent of the unimpaired capital and surplus of the credit union;

     (14) sell all or a part of its assets to another credit union, purchase all or part of the assets of another credit union, and assume the liabilities of the selling credit union and those of its members subject to regulations of the commissioner;

     (15) issue solicited or unsolicited credit cards or other similar credit granting devices to a member for obtaining money, goods, services or anything else of value; notwithstanding (5)(A)(vi) of this subsection and AS 45.45.010, when credit is extended under this section, the credit union may impose a service charge at a monthly rate as agreed upon by contract between the credit union and the member receiving the credit granting device, but the credit union may not hold the member liable for charges made on a credit card or other credit granting device before its acceptance by the member; before an unsolicited card is considered accepted by the member, the member shall execute and furnish to the credit union a written statement of acceptance; in addition, a credit union may charge fees for credit cards or other similar credit granting devices; and

     (16) exercise incidental powers as are necessary or required to enable it to carry on effectively the business for which it is incorporated.

 (b) In this section, “manufactured home” has the meaning given in AS 45.29.102.




Sec. 06.45.070. Membership.
Credit union membership consists of the incorporators and other persons and incorporated and unincorporated organizations, to the extent permitted by regulations adopted by the commissioner, elected to membership. Each member shall subscribe to at least one share of the stock of the credit union and pay the initial installment on the stock and a uniform entrance fee if required by the board of directors of the credit union. Credit union membership is limited to groups having a common bond of occupation or association, or to groups within a well-defined neighborhood, community, or rural district. Shares may be issued in joint tenancy with right of survivorship with a person designated by the credit union member. A joint tenant may not be permitted to vote, obtain loans, or hold office, unless the joint tenant is within the field of membership and is qualified for membership.


Sec. 06.45.080. Meetings of members.
The fiscal year of a credit union ends December 31. The annual meeting of a credit union shall be held within three months after the end of the fiscal year at a place its bylaws prescribe. Special meetings may be held under the bylaws. A member may not vote by proxy, but a member other than a natural person may vote through an agent designated for the purpose. A member may not have more than one vote.


Sec. 06.45.090. Management of credit union.
 (a) The business affairs of a credit union are managed by (1) a board of not less than five directors; (2) a credit committee of not less than three members; and (3) a supervisory committee of not less than three members or more than five members. The members of the board of directors shall be elected at the annual members meeting by and from the members. The supervisory committee shall be appointed by the board of directors, and a vacancy in the supervisory committee shall be filled by the board of directors. One of the members of the supervisory committee may be a member of the board of directors, other than the treasurer. The credit committee consists of an uneven number of three or more members appointed by the board of directors for the terms established by the bylaws. Members of the board of directors and of the credit and supervisory committees hold office for terms as the bylaws may provide.

 (b) A record of the names and addresses of the members of the board, the committees, and the officers of the credit union shall be filed with the commissioner within 10 days after election or appointment.




Sec. 06.45.100. Compensation.
A member of the board of directors or of the credit or supervisory committees may not be compensated for service on the board of directors or credit or supervisory committees. Reasonable health, accident, and similar insurance protection is not compensation under this section and may be provided under regulations adopted by the commissioner.


Sec. 06.45.110. Executive officers.
 (a) At its first meeting after the annual meeting of the members, the board of directors shall elect from its membership the executive officers of the credit union.

 (b) An executive officer, other than the treasurer, may not be compensated as an officer.

 (c) The offices of secretary and treasurer may be held by the same person.

 (d) The duties of the officers are determined by the bylaws.

 (e) The treasurer shall give bond with good and sufficient surety, in an amount and character to be determined by the board of directors in compliance with regulations adopted by the commissioner.

 (f) The board of directors shall appoint a president to act as chief executive officer of the credit union and to be actively in charge of the operations of the credit union.




Sec. 06.45.120. Board of directors.
 (a) The board of directors shall meet at least once a month and shall have the general direction and control of the business affairs of the credit union. Minutes of all meetings shall be kept.

 (b) The board of directors shall
     (1) act upon applications for membership;

     (2) require an officer or employee having custody of or handling funds to give bond with good and sufficient surety in an amount and character to be determined by the board of directors in compliance with regulations adopted by the commissioner and authorize the payment of the premium by the credit union;

     (3) fill vacancies in the board of directors until successors elected at the next annual meeting have qualified;

     (4) have charge of investments other than loans to members; the board of directors may designate a committee of not less than two to act as an investment committee that has charge of making investments under rules and procedures established by the board of directors;

     (5) determine the maximum number of shares and share certificates and the classes of shares and share certificates that may be held;

     (6) subject to the limitations of this chapter, determine the interest rates on loans, the security, and the maximum amount that may be loaned or provided in lines of credit;

     (7) subject to regulations adopted by the commissioner, authorize an interest refund to members of record at the close of business on the last day of any dividend period in proportion to the interest paid by the members during the dividend period; and

     (8) provide for compensation of officers and employees.

 (c) The board of directors may appoint an executive committee of not less than three directors to exercise authority delegated to it under the conditions and limitations prescribed by the board of directors.




Sec. 06.45.130. Applications for membership.
 (a) The board of directors shall establish procedures for the review and approval of applications for membership in the credit union.

 (b) Each month the board of directors shall review a list of applications for membership acted on during the preceding month.

 (c) If an application for membership is denied, the reasons for the denial shall be furnished to the applicant on request.

 (d) The board of directors may appoint a membership officer from the members of the credit union or the executive committee of the board of directors to review applications for membership. A treasurer, assistant treasurer, or loan officer may not review applications for membership.




Sec. 06.45.140. Powers and duties of credit committee.
 (a) The credit committee shall hold meetings to consider applications for loans and lines of credit as the business of the credit union may require but not less frequently than once a month. Reasonable notice of the meetings shall be given to members of the credit committee.

 (b) Except for the loans or lines of credit required to be approved by the board of directors under AS 06.45.060(a)(5), a majority of the entire credit committee may approve an application.

 (c) The credit committee may delegate to a loan officer the power to approve loans and lines of credit. A loan officer shall furnish to the credit committee a record of each approved or unapproved application within seven days of the filing of the application.

 (d) An application not approved by a loan officer shall be acted on by the credit committee.

 (e) An individual may not disburse funds of a credit union for a loan, line of credit, or application that the individual approved in the capacity of loan officer.

 (f) Applications for loans and lines of credit shall be made on forms prepared by the credit committee.




Sec. 06.45.150. Loan restriction.
A loan may not be made to a member if, on the making of the loan, the member would be indebted to the credit union on loans from the credit union in an amount exceeding 10 percent of the unimpaired capital and surplus of the credit union.


Sec. 06.45.160. Security.
For the purposes of loans made under this chapter, an assignment of shares or the endorsement of a note constitutes security, and, subject to regulations adopted by the commissioner, insurance obtained under Title 1 of the National Housing Act is adequate security.


Sec. 06.45.170. Powers and duties of supervisory committee; suspension of committee members.
 (a) The supervisory committee shall conduct an annual audit of the accounts of the credit union and submit a report of the audit to the board of directors and a summary of the audit to the members at the next annual members meeting of the credit union. The supervisory committee may conduct supplementary audits as it considers necessary or as ordered by the commissioner, and submit reports of the supplementary audits to the board of directors.

 (b) The supervisory committee shall verify the passbooks and accounts of the members with the records of the treasurer from time to time, but not less frequently than once every two years. In this subsection, “passbook” includes a book, statement of account, or other record approved by the commissioner for use by credit unions.

 (c) The supervisory committee may by a unanimous vote suspend an officer of the credit union or a member of the credit committee or the board of directors until the next meeting of the members, which shall be held not less than seven or more than 14 days after the suspension under this subsection. A suspension shall be acted upon by the members.

 (d) The supervisory committee may call by a majority vote a special meeting of the members to consider a violation of this chapter, the articles of incorporation or bylaws, or a practice of the credit union considered unsafe or unauthorized by the supervisory committee.

 (e) The board of directors may by a majority vote suspend a member of the supervisory committee until the next meeting of the members, which shall be held not less than seven or more than 14 days after the suspension. A suspension shall be acted upon by the members.




Sec. 06.45.180. Reserves.
 (a) At the end of each accounting period the gross income of the credit union shall be determined. From this amount, there shall be set aside as a regular reserve against losses on loans and against other losses specified in regulations adopted by the commissioner under this chapter sums in accordance with the following schedule:
     (1) a credit union in operation for more than four years and having assets of $500,000 or more shall set aside
          (A) 10 percent of gross income until the regular reserve equals four percent of the total of outstanding loans and risk assets; then

          (B) five percent of gross income until the regular reserve equals six percent of the total of outstanding loans and risk assets;

     (2) a credit union in operation less than four years or having assets of less than $500,000 shall set aside
          (A) 10 percent of gross income until the regular reserve equals seven and one-half percent of the total of outstanding loans and risk assets; then

          (B) five percent of gross income until the regular reserve equals 10 percent of the total of outstanding loans and risk assets;

     (3) when the regular reserve falls below the stated percent of the total of outstanding loans and risk assets, it shall be replenished by regular contributions in amounts as may be needed to maintain the stated reserve goals.

 (b) The commissioner may decrease the reserve requirement in (a) of this section when the decrease is necessary or desirable. The commissioner may also require special reserves to protect the interests of members either by general regulation or for an individual credit union.




Sec. 06.45.190. Dividends.
At intervals as the board of directors may authorize and after provision for required reserves, the board of directors may declare, under regulations adopted by the commissioner, a dividend to be paid at different rates on different types of shares and at different rates and maturity dates in the case of share certificates. Dividend credit may be accrued on various types of shares and share certificates as authorized by the board of directors.


Sec. 06.45.200. Expulsion and withdrawal of members.
A member may be expelled by a two-thirds vote of the members of a credit union present at a special meeting called for the purpose, but only after the member has been given an opportunity to be heard. Withdrawal or expulsion of a member does not discharge the liability of the member to the credit union. The amount to be paid a withdrawing or expelled member by a credit union shall be determined and paid in the manner specified in the bylaws.


Sec. 06.45.210. Minors or trusts.
Shares of a credit union may be issued in the name of a minor or in trust, subject to conditions prescribed by the bylaws. When shares are issued in trust, the name of the beneficiary shall be disclosed to the credit union.


Sec. 06.45.220. Suspension, conditional operation, and liquidation.
 (a) The commissioner, upon a finding that the credit union is bankrupt, insolvent, or is operating in an unsafe or unsound manner or that the credit union has violated the provisions of its articles of incorporation or bylaws, this chapter, or regulations adopted by the commissioner, may exercise the powers granted under AS 06.01.030 and temporarily suspend the operations of the credit union.

 (b) The commissioner, under the regulations adopted by the commissioner, may permit operations to continue under conditions and procedures established by the commissioner, or direct the credit union to cease operations and appoint a liquidating agent to liquidate the credit union.




Sec. 06.45.230. Exemption from taxation.
A credit union organized under this chapter, its property, franchises, capital, reserves, surpluses, and other funds, and its income are exempt from taxation by the state or a political subdivision of the state, except that real property and tangible personal property owned by a credit union is subject to taxation to the same extent that similar property is taxed. This section does not prevent holdings in a credit union organized under this chapter from being included in the valuation of the personal property of the owners or holders under taxes imposed by the state or a political subdivision of the state.


Sec. 06.45.240. Conversions.
 (a) A federal credit union may convert into a credit union organized under this chapter by complying with applicable federal law and by qualifying under this chapter.

 (b) A credit union organized under this chapter may convert into a federal credit union by complying with this chapter and by qualifying under federal law.




Sec. 06.45.250. Insurance of member accounts.
A credit union organized under this chapter shall, under regulations adopted by the commissioner, participate in insurance of member accounts under programs offered by the National Credit Union Administration Board or a program of comparable insurance approved by the commissioner.


Sec. 06.45.260. Liquidity facility participation.
A credit union organized under this chapter may, under regulations adopted by the commissioner, participate in the programs offered by the National Credit Union Central Liquidity Facility.


Sec. 06.45.270. Conflict of interest.
 (a) A member of the board of directors or a member of the credit committee or supervisory committee or an employee of a credit union may not participate in the deliberation or the determination of a question affecting the person’s own pecuniary interest or the pecuniary interest of a corporation, partnership, or association in which the person is interested.

 (b) A person who violates (a) of this section may not thereafter serve as an officer, agent, or employee of a credit union.




Sec. 06.45.280. Merger.
 (a) A credit union may merge with another credit union under a plan agreed upon by a majority of the board of directors of each credit union and approved by a majority of the members of each credit union present at meetings called to approve the plan.

 (b) The commissioner may by regulation establish further procedures governing mergers.




Sec. 06.45.290. Branch offices.
A credit union may establish a branch office under regulations of the commissioner.


Sec. 06.45.295. Automated teller machines.
 (a) A state credit union may establish, maintain, and operate an automated teller machine on the premises of the main office or a branch office of the state credit union.

 (b) A state credit union may establish, maintain, and operate an automated teller machine at a location other than credit union premises by notifying the department 30 days before the date of establishment. An automated teller machine operated off credit union premises shall be made available on a nondiscriminatory basis for use by depositors of other depository institutions authorized to do business in the state, upon the agreement of the other depository institutions to pay a fair and equitable amount for the use of the machine.

 (c) The notice required by (b) of this section must include
     (1) the location and general description of the surrounding area, including a description of the business establishment, if any, in which the machine will be located;

     (2) the manner of operation and the kinds of transactions that the machine will perform;

     (3) the names of the other depository institutions that will share the machine’s services; and

     (4) other information required by the department.

 (d) A state credit union may invest in a corporation organized to operate machines that perform automated teller services for two or more depository institutions.

 (e) A person may not establish or operate an automated teller machine that accepts deposits unless those deposits are insured by the National Credit Union Share Insurance Fund or another agency of the United States that insures deposits.




Sec. 06.45.300. Unauthorized conduct of credit union business.
It is a class A misdemeanor for a natural person to conduct business under a name or title that contains the words “credit union” or a derivation of them or to represent to be conducting business as a credit union.


Sec. 06.45.310. Transfer of credit union’s property to preferred creditor is void.
The transfer of property, money, or assets by a credit union after it becomes insolvent, to prefer one creditor over another, or to prevent the equal distribution of its property and assets among its creditors is void.


Secs. 06.45.320 , 06.45.330. Unlawful deceit of commissioner or examiners; receipt of deposits while insolvent. [Repealed, § 102 ch 26 SLA 1993.]
Sec. 06.45.340. Limitations on credit unions.
A credit union may not acquire control directly or indirectly of another financial institution or invest in shares, stocks, or obligations of an insurance company, trade association, liquidity facility, or any other similar organization, corporation, or association except as expressly provided by this chapter.


Sec. 06.45.400. Definitions.
In this chapter,
     (1) “commissioner” means the commissioner of commerce, community, and economic development;

     (2) “credit union” means a cooperative association organized in accordance with the provisions of this chapter for the purpose of promoting thrift among its members and creating a source of credit for provident or productive purposes;

     (3) “credit union association” means an organization established primarily to serve the needs of its member credit unions under regulations adopted by the commissioner.




Article 1. Licensing.


Chapter 50. Deferred Deposit Advances.

Sec. 06.50.010. License required.
A person, including a person doing business from outside this state, may not engage in the business of making or offering to make deferred deposit advances in this state without having a license under this chapter. A separate license is required for each physical location or Internet website from which the person conducts the business.


Sec. 06.50.020. Qualifications for license.
 (a) To qualify for a license, an applicant shall
     (1) have cash assets of at least $25,000, as determined under generally accepted accounting principles, except that an applicant who wants to engage in the business of making advances at more than one location in the state shall have cash assets of at least $25,000 for each location;

     (2) demonstrate the financial responsibility, financial condition, business experience, character, and general fitness that reasonably warrant the department’s belief that the applicant’s business will be conducted lawfully and fairly; when determining whether this qualification has been met, and for the purpose of investigating compliance with this chapter, the department may review
          (A) the relevant business records of the applicant and the adequacy of the capital of the applicant;

          (B) the competence, experience, integrity, and financial ability of the applicant, and, if the applicant is an entity, of any person who is a member, partner, director, senior officer, or owner of 10 percent or more of the equity of the applicant; and

          (C) a record, on the part of the applicant or a person described in (B) of this paragraph, of
               (i) a conviction for criminal activity, fraud, or other act of personal dishonesty;

               (ii) an act, an omission, or a practice that constitutes a breach of a fiduciary duty; or

               (iii) a suspension, a revocation, a removal, or an administrative act by an agency or a department of the United States or a state limiting the applicant’s or person’s participation in the conduct of a business;

     (3) if the person has a physical business location in the state, have a physical business location that is accessible by and convenient to the public;

     (4) have a current business license issued under AS 43.70; and

     (5) if applicable, have a certificate of incorporation under AS 10.06.218, have a certificate of authority under AS 10.06.705, have a copy of articles of organization that satisfies AS 10.50.090, be registered under AS 10.50.605, have a statement of foreign qualification filed under AS 32.06.922, have a certificate of limited partnership filed under AS 32.11.060, or be registered under AS 32.11.420.

 (b) The requirements in (a) of this section are continuing in nature and may be reviewed periodically by the department.




Sec. 06.50.030. Application.
 (a) An application for a license must be in writing and under oath, in a form prescribed by the department by regulation, and include at least
     (1) the legal name, residence, and business address of the applicant and, if the applicant is not a natural person, of each member, partner, director, senior officer, or owner of 10 percent or more of the equity of the applicant;

     (2) the address and physical location of the principal place of business named in the application; and

     (3) other information the department may require with respect to the applicant and, if the applicant is not a natural person, about the applicant’s members, partners, directors, senior officers, or owners of 10 percent or more of the equity of the applicant.

 (b) The applicant shall submit with the application the bond required by AS 06.50.040 and a nonrefundable application fee in an amount that is established by the department by regulation and that does not exceed $3,000. The application fee for the initial license may not be prorated.




Sec. 06.50.040. Bond.
 (a) An applicant for a license shall file with the application a bond
     (1) in a form to be approved by the department;

     (2) in which the applicant is the obligor; and

     (3) in the sum of $25,000 for a business with one location and $50,000 for a business with more than one location.

 (b) Only one bond is required for an application for a business with more than one location.

 (c) The bond required by (a) of this section is for the use of the state and a person who may have a cause of action against the obligor under this chapter.

 (d) The bond must state that the obligor will
     (1) faithfully conform to and abide by the provisions of this chapter and regulations adopted by the department under this chapter; and

     (2) pay to the state and to a person all money that may become due or owing to the state or to the person from the applicant under this chapter.

 (e) The bond must remain in effect for three years following the denial of a renewal of a license or the expiration of a license.

 (f) If, at any time, the department finds that a bond filed under (a) of this section is unsatisfactory for any reason, the department may require the licensee to file, within 10 days after the receipt of a written demand, an additional bond to comply with this section.

 (g) The licensee shall file a new bond that complies with this section each time a license is renewed.




Sec. 06.50.050. Investigation by department.
Within 60 days after an applicant files a completed application, the bond, and an application fee, the department shall investigate whether the applicant satisfies the qualifications of AS 06.50.020(a). If the department finds that the applicant satisfies the qualifications, it shall approve the application and issue the applicant a license to engage in the business of making deferred deposit advances.


Sec. 06.50.060. Conditions precedent to license.
The requirements of AS 06.50.030 — 06.50.050 are conditions precedent to the issuance of a license under this chapter. The license permits the applicant to make advances under this chapter at the location specified in the application.


Sec. 06.50.070. Duration of license.
A license issued under this chapter is valid for two calendar years. Each license remains in force through the calendar year after the calendar year in which the license was issued unless surrendered, suspended, or revoked under this chapter.


Sec. 06.50.080. Renewal of license.
A license issued under this chapter shall be renewed on or before the date set by the department by submitting to the department a completed renewal application on a form established by the department and paying a nonrefundable renewal fee established by the department, which may not exceed $3,000.


Sec. 06.50.090. Denial of license or renewal.
 (a) If the department determines that an applicant is not qualified to receive a license or a license renewal, the department shall notify the applicant in writing within 20 days that the application has been denied and state the basis for the denial.

 (b) The decision of the department to deny an application or a renewal may be reviewed in the manner provided in AS 44.62.330 — 44.62.630 (Administrative Procedure Act).

 (c) If the denial of a renewal is upheld, the former licensee shall return the license to the department within 10 days after the former licensee receives notice of the denial.

 (d) A license application shall be considered withdrawn within the meaning of this section if the applicant fails to respond to a written notification of a deficiency in the application within 60 days after the date of the notification.

 (e) If a license renewal is denied or if a license is surrendered, suspended, or revoked, all accounts of the licensee remain subject to this chapter until paid in full.




Article 2. License Transfer, Assignment, Control, and Change.


Sec. 06.50.200. Transfer or assignment.
Except for the transfer of a license to a new location under AS 06.50.220, a licensee may not transfer or assign the licensee’s license.


Sec. 06.50.210. Change in control.
The prior written approval of the department is required for the continued operation of a licensee’s deferred deposit advance business when a change in control of the licensee is proposed. The department may require the information it considers necessary to determine whether a new application is required. The licensee requesting approval of the change in control shall pay all reasonable expenses incurred by the department to investigate and approve or deny the change in control.


Sec. 06.50.220. Change in location or name.
A licensee shall notify the department in writing at least 15 days before any proposed change in the licensee’s business location or name, and shall provide the department with the information described in AS 06.50.030(a).


Sec. 06.50.230. Conduct of other business.
A licensee may conduct other business at a location where it engages in making advances unless it conducts the other business for the purpose of evading or violating the provisions of this chapter.


Article 3. Department Supervision.


Sec. 06.50.300. Suspension or revocation of license.
 (a) The department may suspend or revoke a license under AS 44.62 (Administrative Procedure Act) if the department finds that
     (1) the licensee has failed to pay the license fee, failed to maintain the required bond in effect, or failed to comply with a demand, ruling, or requirement of the department made under this chapter;

     (2) the licensee has violated a provision of this chapter or a regulation adopted by the department under this chapter; or

     (3) a fact or condition exists that, if it had existed at the time of the original application for the license, clearly would have constituted ground for denial of the issuance of the license.

 (b) If the reason for suspension or revocation of a licensee’s license at one location applies generally to all locations operated by the licensee, the department may suspend or revoke all licenses issued to the licensee.




Sec. 06.50.310. Reports to department.
 (a) On or before March 15 of each year, a licensee shall file with the department a composite annual report for the preceding calendar year in the form prescribed by the department relating to all advances made by the licensee. The department may require that the report be submitted under oath or affirmation, or with notice that false statements made are punishable as unsworn falsification in the second degree under AS 11.56.210.

 (b) The report must include
     (1) the total number and dollar amount of advances made by the licensee;

     (2) the total number of individual customers who received advances;

     (3) the minimum, maximum, and average amount of advances;

     (4) the average annual percentage rate of the fee charged for advances;

     (5) the average number of days of the advances;

     (6) the total number and dollar amount of returned checks;

     (7) the total number and dollar amount of checks paid by advance recipients;

     (8) the total number and dollar amount of checks charged off as a loss;

     (9) the total dollar amount of outstanding advances as of the last day of the calendar year;

     (10) the total number of outstanding advances as of the last day of the calendar year; and

     (11) any other information the department determines is required to conduct its review.

 (c) Within 15 days after the occurrence of any of the following events, a licensee shall file a written report with the department describing the event and its expected effect on the activities of the licensee in the state:
     (1) filing for bankruptcy or reorganization by the licensee;

     (2) institution of suspension or revocation proceedings against the licensee by a state or other governmental authority;

     (3) a felony indictment or felony conviction of the licensee and, if the licensee is not a natural person, of a member, partner, director, senior officer, or holder of 10 percent or more of the licensee’s equity; and

     (4) other events that the department determines and identifies by regulation that may impair the ability of the licensee to operate its business under this chapter.

 (d) In the discretion of the department, the occurrence of an event in (c) of this section may constitute grounds for suspension or revocation of a license.




Sec. 06.50.320. Records.
 (a) A licensee shall maintain all records relating to this chapter at the location for which the licensee has a license. The records must conform to generally accepted accounting principles and practices in a manner that will enable the department to determine whether the licensee is complying with the provisions of this chapter. The department shall have unrestricted access to the records of the licensee.

 (b) A licensee shall retain records relating to an advance for at least two years after the last entry on the advance, unless otherwise required by the department.

 (c) A licensee shall retain records of an advance that is the subject of a court action for at least two years after a judgment or settlement of the court action.




Sec. 06.50.330. Examinations and investigations.
 (a) The department shall examine the business records of a licensee at intervals the department considers appropriate. In addition, for the purpose of discovering violations of this chapter or securing information lawfully required, the department may, at any time, investigate the advances, business transactions, and records of a licensee. For these purposes, the licensee shall provide the department with unrestricted access to the offices, places of business, and records of the licensee. Within 30 days after the department requests payment, the licensee shall pay the department the cost of examination at a rate of $75 an hour for each examiner.

 (b) For the purposes of this section, the department may administer oaths or affirmations and, upon its own motion or upon request of a party, may subpoena witnesses, compel the attendance of witnesses, take evidence, and require the production of material that is relevant to the investigation, including the existence, description, nature, custody, condition, and location of books, documents, and other tangible items, and the identity and location of persons having knowledge of relevant facts, or other material reasonably calculated to lead to the discovery of admissible evidence.

 (c) Upon failure without lawful excuse to obey a subpoena or to give testimony, and upon reasonable notice to all persons affected by the failure, the department may apply to the superior court for an order compelling compliance.




Article 4. Licensee Practices and Recipient Rescission and Payment.


Sec. 06.50.400. Advance agreement.
 (a) An advance shall be documented in a written agreement that is signed by the advance recipient and on a form approved by the department.

 (b) The agreement must clearly and conspicuously disclose
     (1) the name of the licensee;

     (2) the date of the advance;

     (3) the principal amount of the advance;

     (4) a statement of the total amount of fees that may be charged under AS 06.50.460(a) as a condition of making the advance, expressed both as a dollar amount and as an annual percentage rate;

     (5) the repayment terms;

     (6) the due date;

     (7) an itemization of all disbursements, including disbursements to third parties;

     (8) the name and title of the employee who signs the agreement on behalf of the licensee; and

     (9) any other item required to be disclosed under state or federal law.

 (c) The written agreement required by (a) of this section may not require an advance recipient to waive any rights under 15 U.S.C. 1692 — 1692o (Fair Debt Collection Practices Act) or other state or federal laws that regulate debt collection practices.




Sec. 06.50.410. Maximum amount of advances.
A licensee, including a licensee with more than one location, may not make advances to an advance recipient that exceed $500 outstanding in advances to the recipient at one time.


Sec. 06.50.420. Prohibition on dividing advance amount or increasing number of advances.
A licensee may not induce or permit an advance recipient to divide the amount of an advance, or to become obligated, directly, contingently, or both, for more than one advance at the same time, if the purpose or result is to obtain additional origination fees under AS 06.50.460(a)(1).


Sec. 06.50.430. Prohibition on collateral and services.
The licensee may not accept collateral or services as security for or payment of an advance.


Sec. 06.50.440. Duration of advances.
The minimum duration of an advance is 14 days.


Sec. 06.50.450. Prohibition on advances on behalf of another.
A licensee may not make an advance to a person who purports to be acting on behalf of another person.


Sec. 06.50.460. Fees.
 (a) Notwithstanding any other provision of law, except for the fee allowed under AS 06.50.510(b)(3) and where federal law provides otherwise, a licensee may only charge
     (1) a nonrefundable origination fee in an amount not to exceed $5; and

     (2) a fee that does not exceed $15 for each $100 of an advance, or 15 percent of the total amount of the advance, whichever is less.

 (b) A licensee may not charge a fee other than the fees allowed under (a) of this section.

 (c) The fees allowed by (a) of this section are considered earned at the time of the transaction and may not be prorated.

 (d) A licensee may not charge the advance recipient an additional fee to access the proceeds of an advance.




Sec. 06.50.470. Renewal of advance.
 (a) The minimum term of a renewal of an advance is 14 days.

 (b) A licensee may not renew an advance more than two consecutive times, after which the licensee shall require the advance recipient to repay the advance in full.

 (c) A licensee may not renew an advance for fees greater than the fees under AS 06.50.460(a).




Sec. 06.50.480. Rescission.
A person who receives an advance may rescind an advance without cause and without cost, except for the nonrefundable origination fee, at any time before the close of business on the business day following the day on which the advance was made by paying the principal amount of the advance to the licensee in cash or other immediately available funds.


Sec. 06.50.490. Prohibited arbitration requirement.
A licensee may not require a recipient to agree to mandatory arbitration.


Sec. 06.50.500. Posted fee notice.
A licensee shall post a notice in each business location that discloses the fees that the licensee charges for advances. The fees in the notice must be expressed as a dollar amount, as an annual percentage rate for 14 days for each $100, and as an annual percentage rate for 30 days for each $100. The notice must also contain any other reasonably necessary information required by the department by regulation. The notice shall be posted so that it is conspicuous to an advance recipient or a potential advance recipient. The lettering in the notice must be legible and at least one inch in height.


Sec. 06.50.510. Required disclosures before disbursement.
 (a) Before disbursing funds under an advance, a licensee shall provide a clearly written statement that is separate from the written advance agreement required by AS 06.50.400(a). This disclosure statement must be reviewed and signed by the advance recipient. The licensee shall keep the signed original in the advance file for the recipient and give a copy to the recipient.

 (b) The disclosure statement required by (a) of this section must
     (1) indicate the advance is intended to address short-term, not long-term, financial needs;

     (2) include an explanation of all fees for advances and renewals of advances;

     (3) state that the licensee may charge an advance recipient a bad check fee for costs as allowed under AS 09.68.115(a)(2) if a payment is returned unpaid;

     (4) state that, in the event of the advance recipient’s default, the licensee may sue the recipient and recover up to $700 over the amount of the payment and, if the payment is a check, recover as permitted under AS 06.50.550(b);

     (5) give the department’s address and telephone number for receiving calls regarding customer complaints and concerns;

     (6) state that the licensee may not accept collateral or services for an advance;

     (7) state that the check given as security for the advance may be negotiated as part of the advance;

     (8) state that
          (A) the advance recipient may rescind the advance without cause at any time before the close of business on the business day following the day on which the licensee makes the advance by paying the principal amount of the advance to the licensee in cash or other immediately available funds;

          (B) if the advance recipient rescinds under this paragraph, the origination fee is not refundable, but the licensee may not charge the recipient another fee, except for a bad check fee for costs as allowed under AS 09.68.115(a)(2) if the payment is returned unpaid;

     (9) state that a criminal action may not be brought against the advance recipient for failure to pay the advance; and

     (10) include other information reasonably required by the department to inform and protect advance recipients.




Sec. 06.50.520. Payment by licensee.
 (a) A licensee may give an advance recipient the amount of the advance in cash, by the licensee’s business check, by a money order, or by a reasonable electronic payment mechanism, including an electronic funds transfer to the advance recipient’s account.

 (b) A licensee may not use another form of payment than the form of payment authorized in (a) of this section to make an advance to an advance recipient. In this subsection, “another form of payment” includes coupons, merchandise, services, or chattel of any kind.




Sec. 06.50.530. Payment by advance recipient.
 (a) An advance recipient may repay an advance
     (1) in cash;

     (2) by negotiation of the recipient’s check that secures the advance; or

     (3) with the agreement of the licensee, a debit card, a cashier’s check, an electronic funds transfer from the recipient’s bank account, or a reasonable electronic payment mechanism to which the parties agree.

 (b) An advance is paid in full when the advance recipient repays the advance under (a) of this section, or when the advance recipient rescinds the advance under AS 06.50.480.

 (c) A licensee may not accept payment of an advance from the proceeds of another advance provided by the same licensee.




Sec. 06.50.540. Default fees.
If a payment received from an advance recipient is returned unpaid to a licensee, the licensee may not collect the fees allowed by this chapter unless the fees are disclosed in the agreement for the advance under AS 06.50.400.


Sec. 06.50.550. Collection or court action after default.
 (a) If an advance recipient defaults, before assigning the payment obligation to a third party for collection and before initiating a court action against the recipient, a licensee
     (1) shall attempt in good faith to contact the advance recipient at reasonable times by telephone or mail to discuss the delinquency and to offer the recipient a payment plan under (2) of this subsection;

     (2) shall offer the recipient a payment plan under which
          (A) the recipient may repay the delinquent advance over an extended period of time, which may not exceed six months;

          (B) at least five percent of the outstanding balance is due when the payment plan is signed;

          (C) an additional fee by the licensee is not allowed, except for a bad check fee for costs as allowed under AS 09.68.115(a)(2);

     (3) in addition to the contact required by (1) of this subsection, shall send a certified letter to the recipient’s last known address at least 15 days before the action that makes the offer described in (2) of this subsection and that informs the recipient of the licensee’s intent to proceed with a court action.

 (b) The licensee may initiate a court action against a defaulting recipient to recover damages and costs allowed under AS 09.68.115 if the licensee has complied with (a) of this section. Notwithstanding AS 09.68.115, the total of all damages and costs, including damages recovered under AS 09.68.115(a), may not exceed the amount of the payment by $700.




Sec. 06.50.560. Threat of criminal action prohibited.
A licensee may not threaten an advance recipient with criminal action as a result of the recipient’s default.


Article 5. Miscellaneous Provisions.


Sec. 06.50.600. Regulations.
The department may adopt regulations under AS 44.62 (Administrative Procedure Act) to implement this chapter.


Sec. 06.50.610. Relationship to federal and other state law.
 (a) If a provision of this chapter is preempted by or conflicts with federal law in a particular situation, the provision does not apply to the extent of the preemption or conflict.

 (b) If a provision of this chapter conflicts with another state law in a particular situation, the provision in this chapter governs to the extent of the conflict.




Article 6. General Provisions.


Sec. 06.50.900. Definitions.
In this chapter, unless the context requires otherwise,
     (1) “advance” means a deferred deposit advance;

     (2) “advance recipient” means a borrower to whom an advance is made;

     (3) “control,” in the case of a person who is not a natural person, means direct or indirect ownership, the right to vote or otherwise control 10 percent or more of the governance interests of the entity, or the ability of a person to elect a majority of the directors;

     (4) “deferred deposit advance” means a transaction in which a person
          (A) accepts a dated check from a person seeking an advance;

          (B) agrees to hold the check for a specified period of time before depositing or otherwise negotiating the check; and

          (C) pays to the advance recipient, credits to the account of the advance recipient, or pays to another person on behalf of the advance recipient the amount of the check less the charges allowed under this chapter;

     (5) “department” means the Department of Commerce, Community, and Economic Development;

     (6) “license” means a license issued under this chapter;

     (7) “licensee” means a person to whom a license has been issued under this chapter.




Article 1. Money Transmission Licenses.


Chapter 55. Alaska Uniform Money Services Act.

Sec. 06.55.101. License required.
 (a) A person may not engage in the business of money transmission or advertise, solicit, or hold the person out as providing money transmission unless the person
     (1) holds a money transmission license; or

     (2) is an authorized delegate of a person who holds a money transmission license.

 (b) A money transmission license is not transferable or assignable.




Sec. 06.55.102. Application for license.
 (a) A person applying for a money transmission license shall apply in a form and in a medium prescribed by the department. The application must state or contain
     (1) the legal name and residential and business addresses of the applicant and any fictitious or trade name used by the applicant in conducting the applicant’s business;

     (2) a list of any criminal convictions of the applicant and any material litigation in which the applicant has been involved in the 10-year period next preceding the submission of the application;

     (3) a description of any money services previously provided by the applicant and the money services that the applicant seeks to provide in this state;

     (4) a list of the applicant’s proposed authorized delegates and the locations in this state where the applicant and its authorized delegates propose to engage in money transmission or provide other money services;

     (5) a list of other states in which the applicant is licensed to engage in money transmission or provide other money services and any license revocations, suspensions, or other disciplinary action taken against the applicant in another state;

     (6) information concerning any bankruptcy or receivership proceedings affecting the applicant;

     (7) a sample form of contract for authorized delegates, if applicable, and a sample form of payment instrument or instrument on which stored value is recorded, if applicable;

     (8) the name and address of any bank through which the applicant’s payment instruments and stored value will be paid;

     (9) a description of the source of money and credit to be used by the applicant to provide money services; and

     (10) any other information the department reasonably requires with respect to the applicant.

 (b) If an applicant is a corporation, a limited liability company, a partnership, or another entity, the applicant shall also provide
     (1) the date of the applicant’s incorporation or formation and state or country of incorporation or formation;

     (2) if applicable, a certificate of good standing from the state or country in which the applicant is incorporated or formed;

     (3) a brief description of the structure or organization of the applicant, including any parent or subsidiary of the applicant, and whether any parent or subsidiary is publicly traded;

     (4) the legal name, any fictitious or trade name, all business and residential addresses, and the employment, in the 10-year period next preceding the submission of the application of each executive officer, manager, director, or person who has control of the applicant;

     (5) a list of any criminal convictions and material litigation in which any executive officer, manager, director, or person in control of the applicant has been involved in the 10-year period next preceding the submission of the application;

     (6) a copy of the applicant’s audited financial statements for the most recent fiscal year and, if available, for the two-year period next preceding the submission of the application;

     (7) a copy of the applicant’s unconsolidated financial statements for the current fiscal year, whether audited or not, and, if available, for the two-year period next preceding the submission of the application;

     (8) if the applicant is publicly traded, a copy of the most recent report filed with the United States Securities and Exchange Commission under 15 U.S.C. 78m (Securities Exchange Act of 1934);

     (9) if the applicant is a wholly owned subsidiary of
          (A) a corporation publicly traded in the United States, a copy of audited financial statements for the parent corporation for the most recent fiscal year or a copy of the parent corporation’s most recent report filed under 15 U.S.C. 78m (Securities Exchange Act of 1934); or

          (B) a corporation publicly traded outside the United States, a copy of documentation that is similar to the documentation required by (A) of this paragraph and that is filed with the regulator of the parent corporation’s domicile outside the United States;

     (10) if the applicant has a registered agent in this state, the name and address of the applicant’s registered agent in this state; and

     (11) any other information the department reasonably requires with respect to the applicant.

 (c) A nonrefundable application fee and a license fee must accompany an application for a money transmission license. The license fee shall be refunded if the application is denied.

 (d) The department may waive a requirement of (a) and (b) of this section or permit an applicant to submit other information instead of the required information.

 (e) In this section,
     (1) “material litigation” means litigation that, according to generally accepted accounting principles, is significant to an applicant’s or a money transmission licensee’s financial health and would be required to be disclosed in the applicant’s or money transmission licensee’s annual audited financial statements, report to shareholders, or similar records;

     (2) “money transmission license” does not include an approval under AS 06.55.103.




Sec. 06.55.103. Approval to engage in money transmission when licensed in another state.
 (a) A person who is licensed to engage in money transmission in at least one other state, with the approval of the department and under this section, may engage in money transmission, currency exchange, or both money transmission and currency exchange in this state without being licensed under AS 06.55.102 if
     (1) the state in which the person is licensed has enacted the Uniform Money Services Act or the department determines that the money transmission laws of the state in which the person is licensed are substantially similar to those imposed by this chapter;

     (2) the person submits to, and in the form required by, the department
          (A) in a record, an application for approval to engage in money transmission, currency exchange, or both money transmission and currency exchange in this state without being licensed under AS 06.55.102;

          (B) a nonrefundable application fee;

          (C) a fee for the first year of operating with the approval given under this section; this fee shall be refunded if the application is denied; and

          (D) a certification of license history in the other state.

 (b) Before granting a person approval under this section to engage in money transmission, currency exchange, or both money transmission and currency exchange in this state, the department shall make findings and conclusions as required by regulation.

 (c) When an application for approval under this section is complete, the department shall promptly notify the applicant, in a record, of the date on which the request was determined to be complete, and
     (1) the department shall approve or deny the request within 120 days after that date; or

     (2) if the request is not approved or denied within 120 days after that date,
          (A) the request is approved; and

          (B) the approval takes effect as of the first business day after expiration of the 120-day period.

 (d) An applicant whose application under this section is denied by the department may appeal, within 30 days after receipt of the notice of the denial, and request a hearing.




Sec. 06.55.104. Security.
 (a) Except as otherwise provided in (b) of this section, a surety bond, a letter of credit, or another similar security acceptable to the department in the amount of $25,000 plus $5,000 for each location, not exceeding a total addition of $125,000, must accompany an application for a money transmission license.

 (b) Security must be in a form satisfactory to the department and payable to the state for the benefit of a claimant against the money transmission licensee to secure the faithful performance of the obligations of the money transmission licensee with respect to money transmission.

 (c) The aggregate liability on a surety bond may not exceed the principal sum of the bond. A claimant against a money transmission licensee may maintain an action on the bond, or the department may maintain an action on behalf of the claimant.

 (d) A surety bond must cover claims for as long as the department specifies, but for at least five years after the money transmission licensee ceases to provide money services in this state. However, the department may permit the amount of security to be reduced or eliminated before the expiration of that time to the extent the amount of the money transmission licensee’s payment instruments or stored-value obligations outstanding in this state is reduced. The department may permit a money transmission licensee to substitute another form of security acceptable to the department for the security effective at the time the money transmission licensee ceases to provide money services in this state.

 (e) Instead of the security prescribed in this section, an applicant for a money transmission license or a money transmission licensee may provide security in a form prescribed by the department.

 (f) The department may increase the amount of security required to a maximum of $500,000 if the financial condition of a money transmission licensee requires the increase, as evidenced by reduction of net worth, financial losses, or other relevant criteria.




Sec. 06.55.105. Issuance of license.
 (a) When an application is filed under AS 06.55.102, the department shall investigate the applicant’s financial condition and responsibility, financial and business experience, character, and general fitness. The department may conduct an on-site investigation of the applicant, the reasonable cost of which the applicant shall pay. The department shall issue a license to an applicant under AS 06.55.102 if the department finds that all of the following conditions have been fulfilled:
     (1) the applicant has complied with AS 06.55.102, 06.55.104, and 06.55.107; and

     (2) the financial condition and responsibility, financial and business experience, character, and general fitness of the applicant, and the competence, experience, character, and general fitness of the executive officers, managers, directors, and persons in control of the applicant indicate that it is in the interest of the public to permit the applicant to engage in money transmission.

 (b) When an application for an original money transmission license under AS 06.55.102 is complete, the department shall promptly notify the applicant in a record of the date on which the application was determined to be complete, and
     (1) the department shall approve or deny the application within 120 days after that date; or

     (2) if the application is not approved or denied within 120 days after that date,
          (A) the application is approved; and

          (B) the money transmission license takes effect as of the first business day after expiration of the 120-day period.

 (c) The department may for good cause extend the application period.

 (d) An applicant whose application under AS 06.55.102 is denied by the department under AS 06.55.101 — 06.55.107 may appeal, within 30 days after receipt of the notice of the denial, and request a hearing.

 (e) In this section, “money transmission license” does not include an approval under AS 06.55.103.




Sec. 06.55.106. Renewal of license.
 (a) A money transmission licensee shall pay an annual renewal fee not later than 30 days before the anniversary of the issuance of the money transmission license or, if the last day is not a business day, on the next business day.

 (b) A money transmission licensee shall submit a renewal report with the renewal fee, in a form and in a medium prescribed by the department. The renewal report must state or contain
     (1) a copy of the money transmission licensee’s most recent audited annual financial statement or, if the money transmission licensee is a wholly owned subsidiary of another corporation, the most recent audited consolidated annual financial statement of the parent corporation or the money transmission licensee’s most recent audited consolidated annual financial statement;

     (2) the number and monetary amount of payment instruments and stored value sold by the money transmission licensee in this state that have not been included in a renewal report, and the monetary amount of payment instruments and stored value currently outstanding;

     (3) a description of each material change in information submitted by the money transmission licensee in its original license application that has not been reported to the department on any required report;

     (4) a list of the money transmission licensee’s permissible investments and a certification that the money transmission licensee continues to maintain permissible investments according to the requirements set out in AS 06.55.501 and 06.55.502;

     (5) proof that the money transmission licensee continues to maintain adequate security as required by AS 06.55.104; and

     (6) a list of the locations in this state where the money transmission licensee or an authorized delegate of the money transmission licensee engages in money transmission or provides other money services.

 (c) If a money transmission licensee does not file a renewal report or pay its renewal fee by the renewal date or any extension of time granted by the department, the department shall send the money transmission licensee a notice of suspension. Unless the money transmission licensee files the report and pays the renewal fee before expiration of 10 days after the notice is sent, the money transmission licensee’s license is suspended 10 days after the department sends the notice of suspension. The suspension shall be lifted if, within 20 days after its money transmission license is suspended, the money transmission licensee
     (1) files the report and pays the renewal fee; and

     (2) pays a late fee for each day after suspension that the department did not receive the renewal report and the renewal fee.

 (d) The department for good cause may grant an extension of the renewal date.




Sec. 06.55.107. Net worth.
A money transmission licensee shall maintain a net worth of at least $25,000 determined under generally accepted accounting principles.


Article 2. Currency Exchange Licenses.


Sec. 06.55.201. License required.
 (a) A person may not engage in currency exchange or advertise, solicit, or hold the person out as providing currency exchange for which the person receives revenues equal or greater than five percent of total revenues unless the person
     (1) holds a currency exchange license;

     (2) holds a money transmission license; or

     (3) is an authorized delegate of a person who holds a money transmission license.

 (b) A currency exchange license is not transferable or assignable.




Sec. 06.55.202. Application for license.
 (a) A person applying for a currency exchange license under AS 06.55.201 — 06.55.204 shall apply in a form and in a medium prescribed by the department. The application must state or contain
     (1) the legal name and residential and business addresses of the applicant if the applicant is an individual or, if the applicant is not an individual, the name of each partner, executive officer, manager, and director;

     (2) the location of the principal office of the applicant;

     (3) the complete addresses of other locations in this state where the applicant proposes to engage in currency exchange, including all mobile locations;

     (4) a description of the source of money and credit to be used by the applicant to engage in currency exchange; and

     (5) other information the department reasonably requires with respect to the applicant, but not more than the department may require under AS 06.55.101 — 06.55.107.

 (b) A nonrefundable application fee and a currency exchange license fee must accompany an application for a currency exchange license. The currency exchange license fee shall be refunded if the application is denied.




Sec. 06.55.203. Issuance of license.
 (a) When an application for a currency exchange license is filed under AS 06.55.201 — 06.55.204, the department shall investigate the applicant’s financial condition and responsibility, financial and business experience, character, and general fitness. The department may conduct an on-site investigation of the applicant, the reasonable cost of which the applicant shall pay. The department shall issue a currency exchange license to an applicant under AS 06.55.201 — 06.55.204 if the department finds that all of the following conditions have been fulfilled:
     (1) the applicant has complied with AS 06.55.202; and

     (2) the financial condition and responsibility, financial and business experience, character, and general fitness of the applicant, and the competence, experience, character, and general fitness of the executive officers, managers, directors, and persons in control of the applicant indicate that it is in the interest of the public to permit the applicant to engage in currency exchange.

 (b) When an application for an original currency exchange license under AS 06.55.201 — 06.55.204 is complete, the department shall promptly notify the applicant in a record of the date on which the application was determined to be complete, and
     (1) the department shall approve or deny the application within 120 days after that date; or

     (2) if the application is not approved or denied within 120 days after that date,
          (A) the application is approved; and

          (B) the department shall issue the currency exchange license under AS 06.55.201 — 06.55.204 to take effect as of the first business day after expiration of the period.

 (c) The department may for good cause extend the application period.

 (d) An applicant whose application is denied by the department under AS 06.55.201 — 06.55.204 may appeal, within 30 days after receipt of the notice of the denial, from the denial and request a hearing.




Sec. 06.55.204. Renewal of license.
 (a) A currency exchange licensee shall pay a biennial renewal fee not later than 30 days before each biennial anniversary of the issuance of the currency exchange license or, if the last day is not a business day, on the next business day.

 (b) A currency exchange licensee under AS 06.55.201 — 06.55.204 shall submit a renewal report with the renewal fee, in a form and in a medium prescribed by the department. The renewal report must state or contain
     (1) a description of each material change in information submitted by the currency exchange licensee in its original currency exchange license application that has not been reported to the department on any required report; and

     (2) a list of the locations in this state where the currency exchange licensee or an authorized delegate of the currency exchange licensee engages in currency exchange, including mobile locations.

 (c) If a currency exchange licensee does not file a renewal report and pay its renewal fee by the renewal date or any extension of time granted by the department, the department shall send the currency exchange licensee a notice of suspension. Unless the currency exchange licensee files the report and pays the renewal fee before expiration of 10 days after the notice is sent, the currency exchange license is suspended 10 days after the department sends the notice of suspension.

 (d) The department for good cause may grant an extension of the renewal date.




Article 3. Authorized Delegates.


Sec. 06.55.301. Relationship between licensee and authorized delegate.
 (a) A contract between a money services licensee and an authorized delegate must require the authorized delegate to operate in full compliance with this chapter. The money services licensee shall furnish in a record to each authorized delegate policies and procedures sufficient for compliance with this chapter.

 (b) An authorized delegate shall remit all money owing to the money services licensee under the terms of the contract between the money services licensee and the authorized delegate. In this subsection, “remit” means to make direct payments of money to a money services licensee or its representative authorized to receive money or to deposit money in a bank in an account specified by the money services licensee.

 (c) If a money services license is suspended or revoked or a money services licensee does not renew its money services license, the department shall notify all authorized delegates of the money services licensee whose names are in a record filed with the department of the suspension, revocation, or nonrenewal. After notice is sent or publication is made, an authorized delegate shall immediately cease to provide money services as an authorized delegate of the money services licensee.

 (d) An authorized delegate may not provide money services outside the scope of activity permissible under the contract between the authorized delegate and the money services licensee, except activity in which the authorized delegate is authorized to engage under AS 06.55.101 — 06.55.204. An authorized delegate of a money services licensee holds in trust for the benefit of the money services licensee all money net of fees received from money transmission.

 (e) An authorized delegate may not use a subdelegate to conduct money services on behalf of a money services licensee.




Sec. 06.55.302. Unauthorized activities.
A person may not act as an authorized delegate for, or otherwise provide money services on behalf of, a person who does not hold a money services license under this chapter.


Article 4. Examinations, Reports, Records.


Sec. 06.55.401. Authority to conduct examinations.
 (a) The department may conduct an annual examination of a money services licensee or of any of its authorized delegates upon 45 days’ notice in a record to the money services licensee.

 (b) The department may examine a money services licensee or its authorized delegate, at any time, without notice, if the department has reason to believe that the money services licensee or authorized delegate is engaging in an unsafe or unsound practice or has violated or is violating this chapter or a regulation adopted or an order issued under this chapter.

 (c) If the department concludes that an on-site examination is necessary under (a) of this section, the money services licensee shall pay the reasonable cost of the examination.

 (d) Information obtained during an examination under this chapter may be disclosed only as provided in AS 06.55.407.




Sec. 06.55.402. Cooperation.
The department may consult and cooperate with other state money services regulators in enforcing and administering this chapter. The department and other state money service regulators may jointly pursue examinations and take other official action that they are otherwise empowered to take.


Sec. 06.55.403. Reports.
 (a) A money services licensee shall file with the department within 15 business days any material changes in information provided in a money services licensee’s application as prescribed by the department.

 (b) A money services licensee shall file with the department within 45 days after the end of each fiscal quarter a current list of all authorized delegates and locations in this state where the money services licensee or an authorized delegate of the money services licensee provides money services, including mobile locations. The money services licensee shall state the name and street address of each location and authorized delegate.

 (c) A money services licensee shall file a report with the department within one business day after the money services licensee has reason to know of the occurrence of any of the following events:
     (1) the filing of a petition by or against the money services licensee under 11 U.S.C. 101 — 110 (Bankruptcy Code) for bankruptcy or reorganization;

     (2) the filing of a petition by or against the money services licensee for receivership, the commencement of any other judicial or administrative proceeding for its dissolution or reorganization, or the making of a general assignment for the benefit of its creditors;

     (3) the commencement of a proceeding to revoke or suspend its money services license in a state or country in which the money services licensee engages in business or is licensed;

     (4) the cancellation or other impairment of the money services licensee’s bond or other security;

     (5) a charge against or conviction of the money services licensee or of an executive officer, manager, director, or person in control of the money services licensee for a felony; or

     (6) a charge against or conviction of an authorized delegate for a felony.




Sec. 06.55.404. Change of control.
 (a) A money services licensee shall
     (1) give the department notice in a record of a proposed change of control within 15 days after learning of the proposed change of control;

     (2) request approval of the acquisition; and

     (3) submit a nonrefundable fee with the notice.

 (b) After review of a request for approval under (a) of this section, the department may require the money services licensee to provide additional information concerning the proposed persons in control of the money services licensee. The additional information must be limited to the same types required of the money services licensee or persons in control of the money services licensee as part of its original money services license or renewal application.

 (c) The department shall approve a request for change of control under (a) of this section if, after investigation, the department determines that the person or group of persons requesting approval has the competence, experience, character, and general fitness to operate the money services licensee or person in control of the money services licensee in a lawful and proper manner and that the public interest will not be jeopardized by the change of control.

 (d) When an application for a change of control under AS 06.55.401 — 06.55.407 is complete, the department shall notify the money services licensee in a record of the date on which the request was determined to be complete, and
     (1) the department shall approve or deny the request within 120 days after that date; or

     (2) if the request is not approved or denied within 120 days after that date,
          (A) the request is approved; and

          (B) the department shall permit the change of control under this section, to take effect as of the first business day after expiration of the period.

 (e) The department, by regulation or order, may exempt a person from any of the requirements of (a)(2) and (3) of this section if it is in the public interest to exempt the person.

 (f) The provisions of (a) of this section do not apply to a public offering of securities.

 (g) Before filing a request for approval to acquire control of a money services licensee or person in control of a money services licensee, a person may request in a record a determination from the department as to whether the person would be considered a person in control of a money services licensee upon consummation of a proposed transaction. If the department determines that the person would not be a person in control of a money services licensee, the department shall enter an order to that effect, and the proposed person and transaction are not subject to the requirements of (a) — (c) of this section.




Sec. 06.55.405. Records.
 (a) A money services licensee shall maintain the following records for determining its compliance with this chapter for at least three years:
     (1) a record of each payment instrument or stored-value obligation sold;

     (2) a general ledger posted at least monthly containing all asset, liability, capital, income, and expense accounts;

     (3) bank statements and bank reconciliation records;

     (4) records of outstanding payment instruments and stored-value obligations;

     (5) records of each payment instrument and stored-value obligation paid within the three-year period;

     (6) a list of the last known names and addresses of all of the money services licensee’s authorized delegates; and

     (7) any other records the department reasonably requires by regulation.

 (b) The items specified in (a) of this section may be maintained in any form of record.

 (c) Records may be maintained outside this state if they are made accessible to the department on seven business days’ notice that is sent in a record.

 (d) All records maintained by the money services licensee as required in (a) — (c) of this section are open to inspection by the department under AS 06.55.401.




Sec. 06.55.406. Money laundering reports.
 (a) A money services licensee and an authorized delegate shall file with the attorney general all reports required by federal currency reporting, record keeping, and suspicious transaction reporting requirements as set out in 31 U.S.C. 5311, 31 C.F.R. 103, and other federal and state laws pertaining to money laundering.

 (b) The timely filing of a complete and accurate report required under (a) of this section with the appropriate federal agency is compliance with the requirements of (a) of this section, unless the department notifies the money services licensee that the attorney general has notified the department that reports of this type are not being regularly and comprehensively transmitted by the federal agency to the attorney general.




Sec. 06.55.407. Confidentiality.
 (a) Except as otherwise provided in (b) of this section, all information or reports obtained by the department from an applicant, a licensee, or an authorized delegate are confidential and not subject to disclosure under AS 40.25.100 — 40.25.295, including
     (1) all information contained in or related to examination, investigation, operating, or condition reports prepared by, on behalf of, or for the use of the department; and

     (2) financial statements, balance sheets, and authorized delegate information.

 (b) The department may disclose information that is not otherwise subject to disclosure under (a) of this section to representatives of state or federal agencies who promise in a record that they will maintain the confidentiality of the information or if the department finds that the release is reasonably necessary for the protection of the public and in the interests of justice, and the money services licensee has been given previous notice by the department of its intent to release the information.

 (c) This section does not prohibit the department from disclosing to the public a list of money services licensees or the aggregated financial data concerning those money services licensees.

 (d) A money services licensee or an authorized delegate may not disclose to another person financial information provided to the money services licensee or the authorized delegate by a customer except when, and only to the extent that, the disclosure is
     (1) authorized in writing by the customer;

     (2) required by federal, state, or local law;

     (3) required by an order issued by a court or an administrative agency; or

     (4) part of the money services transaction ordered by the customer.

 (e) In (d) of this section, “financial information” means an individual’s social security number, individual taxpayer identification number, account number, credit card account number, debit card account number, personal identification number, payment instrument number, or access code.




Article 5. Permissible Investments.


Sec. 06.55.501. Maintenance of permissible investments.
 (a) A money services licensee shall maintain at all times permissible investments that have a market value computed under generally accepted accounting principles of not less than the aggregate amount of all of its outstanding payment instruments and stored value obligations issued or sold in all states and money transmitted from all states by the money services licensee.

 (b) The department, with respect to any money services licensees, may limit the extent to which a type of investment within a class of permissible investments may be considered a permissible investment, except for money and certificates of deposit issued by a bank. The department by regulation may prescribe or by order allow other types of investments that the department determines to have a safety substantially equivalent to other permissible investments.

 (c) Permissible investments, even if commingled with other assets of the money services licensee, are held in trust for the benefit of the purchasers and holders of the money services licensee’s outstanding payment instruments and stored value obligations in the event of bankruptcy or receivership of the money services licensee.




Sec. 06.55.502. Types of permissible investments.
 (a) Except to the extent otherwise limited by the department under AS 06.55.501, the following investments are permissible under AS 06.55.501:
     (1) cash, a certificate of deposit, or a senior debt obligation of an insured depository institution; in this paragraph, “insured depository institution” has the meaning given in 12 U.S.C. 1813 (Federal Deposit Insurance Act);

     (2) banker’s acceptance or bill of exchange that is eligible for purchase on endorsement by a member bank of the Federal Reserve System and is eligible for purchase by a Federal Reserve Bank;

     (3) an investment bearing a rating of one of the three highest grades as defined by a nationally recognized organization that rates securities;

     (4) an investment security that is an obligation of the United States or a department, agency, or instrumentality of the United States, an investment in an obligation that is guaranteed fully as to principal and interest by the United States, or an investment in an obligation of a state or a governmental subdivision, agency, or instrumentality of a state;

     (5) receivables that are payable to a money services licensee from its authorized delegates, in the ordinary course of business, under contracts that are not past due or doubtful of collection if the aggregate amount of receivables under this paragraph does not exceed 20 percent of the total permissible investments of a money services licensee and the money services licensee does not hold at one time receivables under this paragraph in any one person aggregating more than 10 percent of the money services licensee’s total permissible investments; and

     (6) a share or a certificate issued by an open-end management investment company that is registered with the United States Securities and Exchange Commission under 15 U.S.C. 80a-1 — 80a-64 (Investment Company Act of 1940), and whose portfolio is restricted by the management company’s investment policy to investments specified in (1) — (4) of this subsection.

 (b) The following investments are permissible under AS 06.55.501, but only to the extent specified:
     (1) an interest-bearing bill, note, bond, or debenture of a person whose equity shares are traded on a national securities exchange or on a national over-the-counter market, if the aggregate of investments under this paragraph does not exceed 20 percent of the total permissible investments of a money services licensee and the money services licensee does not at one time hold investments under this paragraph in any one person aggregating more than 10 percent of the money services licensee’s total permissible investments;

     (2) a share of a person traded on a national securities exchange or a national over-the-counter market or a share or a certificate issued by an open-end management investment company that is registered with the United States Securities and Exchange Commission under 15 U.S.C. 80a-1 — 80a-64 (Investment Company Act of 1940), and whose portfolio is restricted by the management company’s investment policy to shares of a person traded on a national securities exchange or a national over-the-counter market, if the aggregate of investments under this paragraph does not exceed 20 percent of the total permissible investments of a money services licensee and the money services licensee does not at one time hold investments in any one person aggregating more than 10 percent of the money services licensee’s total permissible investments;

     (3) a demand-borrowing agreement made to a corporation or a subsidiary of a corporation whose securities are traded on a national securities exchange, if the aggregate of the amount of principal and interest outstanding under demand-borrowing agreements under this paragraph does not exceed 20 percent of the total permissible investments of a money services licensee and the money services licensee does not at one time hold principal and interest outstanding under demand-borrowing agreements under this paragraph with any one person aggregating more than 10 percent of the money services licensee’s total permissible investments; and

     (4) any other investment the department designates, to the extent specified by the department.

 (c) The aggregate of investments under (b) of this section may not exceed 50 percent of the total permissible investments of a money services licensee calculated under AS 06.55.501.




Article 6. Enforcement.


Sec. 06.55.601. Suspension and revocation; receivership.
 (a) The department may suspend or revoke a money services license, place a money services licensee in receivership, or order a money services licensee to revoke the designation of an authorized delegate if
     (1) the money services licensee violates this chapter or a regulation adopted or an order issued under this chapter;

     (2) the money services licensee does not cooperate with an examination or investigation by the department;

     (3) the money services licensee engages in fraud, intentional misrepresentation, or gross negligence;

     (4) an authorized delegate is convicted of a violation of a state or federal anti-money laundering statute, or violates a regulation adopted or an order issued under this chapter, as a result of the money services licensee’s wilful misconduct or wilful blindness;

     (5) the competence, experience, character, or general fitness of the money services licensee, authorized delegate, person in control of a money services licensee, or responsible person of the money services licensee or authorized delegate indicates that it is not in the public interest to permit the person to provide money services;

     (6) the money services licensee engages in an unsafe or unsound practice;

     (7) the money services licensee is insolvent, suspends payment of its obligations, or makes a general assignment for the benefit of its creditors; or

     (8) the money services licensee does not remove an authorized delegate after the department issues and serves upon the money services licensee a final order including a finding that the authorized delegate has violated this chapter.

 (b) In determining whether a money services licensee is engaging in an unsafe or unsound practice, the department may consider the size and condition of the money services licensee’s money transmission, the magnitude of the loss, the gravity of the violation of this chapter, and the previous conduct of the person involved.




Sec. 06.55.602. Suspension and revocation of authorized delegates.
 (a) The department may issue an order suspending or revoking the designation of an authorized delegate if the department finds that
     (1) the authorized delegate violated this chapter or a regulation adopted or an order issued under this chapter;

     (2) the authorized delegate did not cooperate with an examination or investigation by the department;

     (3) the authorized delegate engaged in fraud, intentional misrepresentation, or gross negligence;

     (4) the authorized delegate is convicted of a violation of a state or federal anti-money laundering statute;

     (5) the competence, experience, character, or general fitness of the authorized delegate or a person in control of the authorized delegate indicates that it is not in the public interest to permit the authorized delegate to provide money services; or

     (6) the authorized delegate is engaging in an unsafe or unsound practice.

 (b) In determining whether an authorized delegate is engaging in an unsafe or unsound practice, the department may consider the size and condition of the authorized delegate’s provision of money services, the magnitude of the loss, the gravity of the violation of this chapter or a regulation adopted or order issued under this chapter, and the previous conduct of the authorized delegate.




Sec. 06.55.603. Orders to cease and desist.
 (a) If the department determines that a violation of this chapter or of a regulation adopted or an order issued under this chapter by a money services licensee or authorized delegate is likely to cause immediate and irreparable harm to the money services licensee, its customers, or the public as a result of the violation, or cause insolvency or significant dissipation of assets of the money services licensee, the department may issue an order requiring the money services licensee or authorized delegate to cease and desist from the violation. The order becomes effective on service of it on the money services licensee or authorized delegate.

 (b) The department may issue an order against a money services licensee to cease and desist from providing money services through an authorized delegate who is the subject of a separate order by the department.

 (c) An order to cease and desist remains effective and enforceable pending the completion of an administrative proceeding under AS 06.55.601 or 06.55.602.

 (d) A money services licensee or an authorized delegate who is served with an order to cease and desist may petition the superior court for a judicial order setting aside, limiting, or suspending the enforcement, operation, or effectiveness of the order pending the completion of an administrative proceeding under AS 06.55.601 or 06.55.602.

 (e) An order to cease and desist expires unless the department commences an administrative proceeding under AS 06.55.601 or 06.55.602 within 10 days after it is issued.




Sec. 06.55.604. Consent orders.
The department may enter into a consent order at any time with a person to resolve a matter arising under this chapter or a regulation adopted or order issued under this chapter. A consent order shall be signed by the person to whom it is issued or by the person’s authorized representative and must indicate agreement with the terms contained in the order. A consent order may provide that it does not constitute an admission by a person that this chapter or a regulation adopted or an order issued under this chapter has been violated.


Sec. 06.55.605. Civil penalties.
The department may assess a civil penalty against a person who violates this chapter or a regulation adopted or an order issued under this chapter in an amount not to exceed $1,000 each day for each day the violation is outstanding.


Sec. 06.55.606. Criminal penalties.
 (a) A person who intentionally makes a false statement, misrepresentation, or false certification in a record filed or required to be maintained under this chapter or who intentionally makes a false entry or omits a material entry in a record filed or required to be maintained under this chapter is guilty of a class C felony.

 (b) A person who knowingly engages in an activity for which a money services license is required under this chapter without being licensed as a money services licensee and who receives more than $500 in compensation within a 30-day period from this activity is guilty of a class C felony.

 (c) A person who knowingly engages in an activity for which a money services license is required under this chapter without being licensed as a money services licensee and who receives no more than $500 in compensation within a 30-day period from this activity is guilty of a class A misdemeanor.




Sec. 06.55.607. Unlicensed persons.
 (a) If the department has reason to believe that a person has violated or is violating AS 06.55.101 or 06.55.201, the department may issue an order to show cause why an order to cease and desist should not issue requiring that the person cease and desist from the violation of AS 06.55.101 or 06.55.201.

 (b) In an emergency, the department may petition the superior court for the issuance of a temporary restraining order.

 (c) An order to cease and desist becomes effective upon service of it upon the person.

 (d) An order to cease and desist remains effective and enforceable pending the completion of an administrative proceeding under AS 06.55.701 and 06.55.702.

 (e) A person who is served with an order to cease and desist for violating AS 06.55.101 or 06.55.201 may petition the superior court for a judicial order setting aside, limiting, or suspending the enforcement, operation, or effectiveness of the order pending the completion of an administrative proceeding under AS 06.55.701 and 06.55.702.

 (f) An order to cease and desist expires unless the department commences an administrative proceeding within 10 days after it is issued.




Article 7. Administrative Procedures.


Sec. 06.55.701. Administrative proceedings.
All administrative proceedings under this chapter shall be conducted under AS 44.62 (Administrative Procedure Act), except that hearings shall be conducted by the office of administrative hearings (AS 44.64.010).


Sec. 06.55.702. Hearings.
 (a) Except as otherwise provided in AS 06.55.603 and 06.55.607 and in (b) of this section, the department may not suspend or revoke a money services license, place a money services licensee in receivership, issue an order to cease and desist, suspend or revoke the designation of an authorized delegate, or assess a civil penalty without notice and an opportunity to be heard. The department shall also hold a hearing when requested to hold a hearing by an applicant whose application for a money services license is denied.

 (b) Under AS 06.55.106(c) and 06.55.204(c), the department may suspend a money services license without a hearing unless the money services licensee requests a hearing.




Sec. 06.55.703. Investigative powers.
 (a) In its investigations under this chapter, the department may administer oaths or affirmations and, on its own motion or on the request of a party to a proceeding, may subpoena witnesses, compel the attendance of witnesses, take evidence, and require the production of material that is relevant to the investigation, including the existence, description, nature, custody, condition, and location of books, documents, and other tangible items, and the identity and location of persons having knowledge of relevant facts or other material reasonably calculated to lead to the discovery of admissible evidence.

 (b) If a person fails without a lawful excuse to obey a subpoena, and after reasonable notice to all persons affected by the failure, the department may apply to the superior court for an order compelling the person to obey the subpoena.




Article 8. Miscellaneous Provisions.


Sec. 06.55.801. Uniformity of application and construction.
In applying and construing this chapter, consideration shall be given to the need to promote uniformity of the law with respect to its subject matter among states that enact it.


Sec. 06.55.802. Exclusions.
This chapter does not apply to
     (1) the United States or a department, an agency, or an instrumentality of the United States;

     (2) money transmission by the United States Postal Service or by a contractor on behalf of the United States Postal Service;

     (3) a state, a municipality, a county, or another governmental agency or governmental subdivision of a state;

     (4) a bank, a bank holding company, an office of an international banking corporation, a branch of a foreign bank, a corporation organized under 12 U.S.C. 1861 — 1867 (Bank Service Company Act), or a corporation organized under 12 U.S.C. 611 — 633 (Edge Act) under the laws of a state or the United States, if it does not issue, sell, or provide payment instruments or stored value through an authorized delegate who is not a bank, a bank holding company, an office of an international banking corporation, a branch of a foreign bank, a corporation organized under 12 U.S.C. 1861 — 1867 (Bank Service Company Act), or a corporation organized under 12 U.S.C. 611 — 633 (Edge Act) under the laws of a state or the United States;

     (5) electronic funds transfer of governmental benefits for a federal, state, or municipal agency or a state political subdivision by a contractor on behalf of
          (A) the United States or a department, an agency, or an instrumentality of the United States; or

          (B) a state, or a department, an agency, or an instrumentality of a state;

     (6) a board of trade or a person who, in the ordinary course of business, provides clearance and settlement services for a board of trade, to the extent of the operation of the person for a board of trade; in this paragraph, “board of trade” means a board of trade designated as a contract market under 7 U.S.C. 1 — 27f (Commodity Exchange Act);

     (7) a registered futures commission merchant under the federal commodities laws, to the extent of the merchant’s operation as a registered futures commission merchant under the federal commodities laws;

     (8) a person who provides clearance or settlement services under a registration as a clearing agency or an exemption from the registration granted under the federal securities laws, to the extent of the person’s operation as a provider of clearance or settlement services under a registration as a clearing agency or an exemption from the registration granted under the federal securities laws;

     (9) an operator of a payment system to the extent that the operator provides processing, clearing, or settlement services, between or among persons excluded by this section, in connection with wire transfers, credit card transactions, debit card transactions, stored-value transactions, automated clearinghouse transfers, or similar funds transfers; or

     (10) a person registered as a securities broker-dealer under federal or state securities laws, to the extent of the person’s operation as a securities broker-dealer under federal or state securities laws.




Sec. 06.55.810. Notices required.
 (a) A money services licensee shall display a sign at each location where the money services licensee
     (1) provides money services under this chapter; and

     (2) has not designated an authorized delegate to provide money services on behalf of the money services licensee at the location.

 (b) An authorized delegate shall display a sign at each location where the authorized delegate provides money services under this chapter.

 (c) The sign required by (a) or (b) of this section shall be displayed at all times in full view of persons visiting the location and shall give the department’s address and the department’s telephone number for receiving calls regarding complaints and other concerns about money services licensees, authorized delegates, and the money services provided by money services licensees and authorized delegates.




Sec. 06.55.820. Transmission.
Within 10 business days after receiving the money or equivalent value for money transmission, unless otherwise ordered by the customer or unless the money transmission licensee has reason to believe a crime has occurred, is occurring, or may occur as a result of the money transmission, a money transmission licensee shall
     (1) transmit after the deduction of fees the monetary equivalent of all money or equivalent value received for the money transmission; or

     (2) issue instructions making the money or its monetary equivalent available to the person designated by the customer.




Sec. 06.55.830. Receipt.
 (a) A money transmission licensee who receives money or equivalent value for a money transmission shall provide a receipt to the customer that clearly states the amount of the money or the equivalent value presented by the customer for the money transmission and the total fees charged by the money transmission licensee.

 (b) If a money transmission licensee fixes, when the money transmission is initiated, the rate of exchange for a money transmission to be paid in the currency of another government, the receipt provided by (a) of this section must disclose the rate of exchange for the transaction and any limit on the length of time that the payment will be made at that fixed rate of exchange.

 (c) If a money transmission licensee does not fix the rate of exchange for a money transmission to be paid in the currency of another government, the receipt provided under (a) of this section must disclose that the rate of exchange for the money transmission will be set when the person designated by the customer to receive the money takes possession of the money.




Sec. 06.55.840. Refunds.
Within 10 days after receiving a written request for a refund, a money transmission licensee shall refund to a customer money equal to the money or equivalent value received from the customer for a money transmission, unless
     (1) before receiving the written request
          (A) the money has been transmitted to the person designated by the customer to receive the money transmission and the person has taken possession of the money; in this section, “transmitted” means made available to the person designated by the customer to receive the money, whether or not the person designated by the customer has taken possession of the money; or

          (B) instructions have been given making a monetary equivalent available to the person designated by the customer to receive the money transmission;

     (2) the money transmission licensee has reason to believe that a crime has occurred, is occurring, or may occur as a result of transmitting or refunding the money as requested by the customer; or

     (3) the money transmission licensee is otherwise prohibited by law from making a refund.




Sec. 06.55.850. Establishment of fees and other charges.
 (a) The department shall adopt regulations that establish the amount and manner of payment of fees required under this chapter.

 (b) The department shall establish fee levels under (a) of this section so that the total amount of fees collected for both money transmission licenses and currency exchange licenses under this chapter approximately equals the department’s actual total regulatory costs for both money transmission licenses and currency exchange licenses. The department shall set the fee levels so that the fee levels for both money transmission licenses and currency exchange licenses are the same.

 (c) The department shall annually review each fee level to determine whether the regulatory costs are approximately equal to fee collections. If the review indicates that fee collections and regulatory costs are not approximately equal, the department shall calculate fee adjustments and adopt regulations under (a) of this section to implement the adjustments.

 (d) In January of each year, the department shall report to the office of management and budget all fee levels and revisions made for the previous year under this section.

 (e) In this section,
     (1) “fee” means an application fee, a money services license fee, a first-year operation fee under AS 06.55.103(a)(2)(C), a renewal fee, the daily late fee for not submitting a renewal report and paying the renewal fee under AS 06.55.106, investigation costs under AS 06.55.105 and 06.55.203, an examination cost under AS 06.55.401, and a fee for approving a change of control under AS 06.55.404;

     (2) “regulatory costs” means the costs of the department that are attributable to regulation of money services licensing under this chapter.




Sec. 06.55.890. Definitions.
In AS 06.55.820 — 06.55.840,
     (1) “fees” does not include revenue that a money services licensee generates from a money transmission when converting the currency of one government into the currency of another government;

     (2) “monetary equivalent” means, for money transmissions that will be redeemed in a currency other than the currency that the customer uses to purchase the money transmission, the amount of money in the currency of the government that the recipient of the money transmission is to receive, as converted at the retail exchange rate offered by the money transmission licensee to the customer for the money transmission;

     (3) “money transmission licensee” means a person who holds a money services license and a person who is an authorized delegate.




Article 9. General Provisions.


Sec. 06.55.990. Definitions.
In this chapter, unless the context indicates otherwise,
     (1) “authorized delegate” means a person whom a money services licensee designates to provide money services on behalf of the money services licensee;

     (2) “bank” means an institution organized under federal or state law that
          (A) accepts demand deposits or deposits that the depositor may use for payment to third parties and engages in the business of making commercial loans; or

          (B) engages in credit card operations and maintains only one office that accepts deposits, does not accept demand deposits or deposits that the depositor may use for payments to third parties, does not accept a savings or time deposit less than $100,000, and does not engage in the business of making commercial loans;

     (3) “control” means
          (A) the ownership of, or the power to vote, directly or indirectly, at least 25 percent of a class of voting securities or voting interests of a money services licensee or person in control of a money services licensee;

          (B) the power to elect a majority of executive officers, managers, directors, trustees, or other persons exercising managerial authority of a money services licensee or person in control of a money services licensee; or

          (C) the power to exercise directly or indirectly, a controlling influence over the management or policies of a money services licensee or person in control of a money services licensee;

     (4) “currency exchange” means receipt of revenues from the exchange of money of one government for money of another government;

     (5) “currency exchange license” means a license under AS 06.55.201 — 06.55.204;

     (6) “currency exchange licensee” means a person who holds a currency exchange license;

     (7) “department” means the Department of Commerce, Community, and Economic Development;

     (8) “executive officer” means a president, a chair of the executive committee, a chief financial officer, a responsible individual, or another individual who performs similar functions; in this paragraph, “responsible individual” means an individual who is employed by a money services licensee and has principal managerial authority over the provision of money services by the money services licensee in this state;

     (9) “mobile location” means a vehicle or a movable facility where currency exchange occurs;

     (10) “monetary value” means a medium of exchange, whether or not redeemable in money;

     (11) “money” means a medium of exchange that is authorized or adopted by the United States or a foreign government, including a monetary unit of account established by an intergovernmental organization or by agreement between two or more governments;

     (12) “money services” means money transmission or currency exchange;

     (13) “money services license” means a currency exchange license or a money transmission license;

     (14) “money services licensee” means a person who holds a currency exchange license or a money transmission license;

     (15) “money transmission” means selling or issuing payment instruments or stored value, or receiving money or monetary value for transmission, but does not include the provision solely of delivery, online services, telecommunications services, or network access;

     (16) “money transmission license” means a license under AS 06.55.101 — 06.55.107 or an approval under AS 06.55.103;

     (17) “money transmission licensee” means a person who holds a money transmission license;

     (18) “outstanding” with respect to a payment instrument, means issued or sold by or for the money services licensee and reported as sold but not yet paid by or for the licensee;

     (19) “payment instrument” means a check, a draft, a money order, a traveler’s check, or another instrument for the transmission or payment of money or monetary value, whether or not negotiable, but does not include a credit card voucher, a letter of credit, or an instrument that is redeemable by the issuer in goods or services;

     (20) “person” means an individual, a corporation, a business trust, an estate, a trust, a partnership, a limited liability company, an association, a joint venture, a government, a governmental subdivision, an agency, or an instrumentality, a public corporation, or any other legal or commercial entity;

     (21) “record” means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form;

     (22) “state” means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or a territory or insular possession subject to the jurisdiction of the United States;

     (23) “stored value” means monetary value that is evidenced by an electronic record;

     (24) “unsafe or unsound practice” means a practice or conduct by a money transmission licensee or an authorized delegate of the money transmission licensee if the practice creates the likelihood of material loss, insolvency, or dissipation of the money transmission licensee’s assets, or otherwise materially prejudices the interests of the money transmission licensee’s customers.




Sec. 06.55.995. Short title.
This chapter may be cited as the Alaska Uniform Money Services Act.


Article 1. Licensing.


Chapter 60. Mortgage Licensing.

Sec. 06.60.010. Mortgage lender or mortgage broker license required.
 (a) Unless exempt under AS 06.60.015, a person may not operate in the state as a mortgage lender or mortgage broker with respect to a dwelling located in the state unless the person is licensed as a mortgage lender or mortgage broker under this chapter.

 (b) A mortgage lender or mortgage broker required to be licensed under this chapter shall register with the registry and maintain a valid unique identifier issued by the registry.

 (c) A mortgage license may cover more than one location of a mortgage licensee.

 (d) A person who operates as both a mortgage lender and a mortgage broker is only required to obtain one mortgage license.




Sec. 06.60.012. Mortgage loan originator license required.
 (a) Unless exempt under AS 06.60.015, an individual may not operate in the state as a mortgage loan originator with respect to a dwelling located in the state unless the individual is licensed as a mortgage loan originator under this chapter.

 (b) An individual required to be licensed as a mortgage loan originator shall
     (1) register with the registry and maintain a valid unique identifier issued by the registry;

     (2) work under
          (A) an exclusive contract for, or as an employee of, a mortgage licensee; or

          (B) an exclusive contract for a registered depository institution; and

     (3) be sponsored in the registry by a mortgage licensee under a sponsorship approved in the registry by the department or be sponsored by a registered depository institution under AS 06.60.014; in this paragraph, “sponsored” means authorized to conduct business as a mortgage loan originator under the supervision of a mortgage licensee or a registered depository institution.




Sec. 06.60.013. Loan processors or underwriters.
 (a) A loan processor or underwriter who is an independent contractor may not operate as a loan processor or underwriter unless the independent contractor loan processor or underwriter is licensed as a mortgage loan originator under this chapter. An independent contractor loan processor or underwriter licensed as a mortgage loan originator shall register with the registry and maintain a valid unique identifier issued by the registry.

 (b) An individual engaged solely in loan processor or underwriter activities who is not an independent contractor is not required to be licensed as a mortgage loan originator under this chapter if the individual does not represent to the public, through advertising or other means of communicating or providing information, including the use of the Internet, business cards, stationery, brochures, signs, rate lists, or other promotional items, that the individual can or will perform any of the activities of a mortgage loan originator.




Sec. 06.60.014. Registered depository institutions.
 (a) A depository institution may sponsor a mortgage loan originator under AS 06.60.012(b) if the depository institution is registered with the department under this section, has an exclusive written contract to sponsor a mortgage loan originator licensed under this chapter, is otherwise in compliance with this chapter, and satisfies the other requirements of this section. Registration under this section does not affect the exemption of the depository institution under AS 06.60.015(a).

 (b) To register under (a) of this section, a depository institution shall
     (1) complete a registration form established by the department; the form must identify the mortgage loan originator to be sponsored by the depository institution and each mortgage lending location of the registered depository institution; and

     (2) pay a registration fee established by the department.

 (c) Registration under (b) of this section expires after one year. To renew a registration, the depository institution shall file a renewal application with the department and pay a renewal fee established by the department.

 (d) The department may deny an initial or renewal registration under this section or may suspend or revoke the registration of a depository institution that is registered under (b) of this section if the department determines that the depository institution
     (1) failed to satisfy a requirement of this section;

     (2) failed to supervise its sponsored mortgage loan originator adequately; or

     (3) made a material misstatement or withheld information on the application for registration, on an application for the renewal of the registration, or on another document required to be filed with the department.




Sec. 06.60.015. Exemptions.
 (a) The following persons are exempt from the mortgage lender or mortgage broker licensing requirements of this chapter:
     (1) a depository institution;

     (2) a subsidiary that is
          (A) owned and controlled by a depository institution; and

          (B) regulated by a federal banking agency;

     (3) an institution regulated by the Farm Credit Administration; or

     (4) a federal, state, or local government agency, including an agency that arranges or provides financing for mortgage loans.

 (b) The following individuals are exempt from the mortgage loan originator licensing requirements of this chapter:
     (1) a registered mortgage loan originator, when acting for an entity described in (a)(1), (2), or (3) of this section;

     (2) an individual who offers or negotiates terms of a residential mortgage loan with or on behalf of an immediate family member of the individual; in this paragraph, “immediate family member” means a spouse, child, stepchild, sibling, stepsibling, parent, stepparent, grandparent, or grandchild;

     (3) an individual seller who offers or negotiates terms of a residential mortgage loan secured by a dwelling that serves as the individual’s residence;

     (4) a licensed attorney who negotiates the terms of a residential mortgage loan on behalf of a client as an ancillary matter to the attorney’s representation of the client, unless the attorney is compensated by a lender, a mortgage broker, or another mortgage loan originator or by an agent of a lender, a mortgage broker, or another mortgage loan originator.




Sec. 06.60.016. Registry.
 (a) The department may participate in the registry and pay the fees required for participation in the registry.

 (b) The department
     (1) may establish relationships or contracts with the registry or other entities designated by the registry to collect and maintain records and process transaction fees or other fees related to licensees or other persons subject to this chapter;

     (2) shall require mortgage licensees and mortgage loan originators to register with the registry; and

     (3) shall establish by regulation a process that allows mortgage licensees and mortgage loan originators to challenge information entered into the registry by the department.

 (c) The department may adopt emergency regulations under AS 44.62 (Administrative Procedure Act) to implement this section, including emergency regulations for the assessment of fees.




Sec. 06.60.017. Small mortgage lenders and originators. [Repealed, § 87 ch 61 SLA 2010.]
Sec. 06.60.020. Application for license.
 (a) An application for a license under this chapter must
     (1) be on the form prescribed by the department and the registry;

     (2) contain complete information regarding the applicant;

     (3) include fingerprints of the applicant, as needed to conduct a background check; and

     (4) contain other information or supporting material that the department may require concerning the applicant, including the organization and operations of an applicant for a mortgage license and the financial responsibility, background, experience, and activities of the applicant.

 (b) In this section, “applicant” includes a control person of an applicant for a mortgage license.




Sec. 06.60.025. Application for originator license. [Repealed, § 87 ch 61 SLA 2010.]
Sec. 06.60.026. Transfer of mortgage loan originator license.
A person who holds a mortgage loan originator license may not transfer or assign the mortgage loan originator license.


Sec. 06.60.027. Background checks.
 (a) To apply for a mortgage loan originator license or a mortgage license, the applicant shall, at a minimum, furnish information concerning the applicant’s identity to the registry or the department, including
     (1) fingerprints for submission to the Federal Bureau of Investigation and any governmental agency or entity authorized to receive that information for a state, national, and international criminal history background check; and

     (2) personal history and experience in a form prescribed by the registry and authorization for the registry and the department to obtain
          (A) an independent credit report from a consumer reporting agency; and

          (B) information related to administrative, civil, or criminal findings by a governmental jurisdiction.

 (b) For the purposes of this section, the department may use the registry as an agent for requesting information from and distributing information to the United States Department of Justice, another governmental agency, or another source directed by the department.

 (c) As part of the investigation of an application for a license under this chapter, the department or the registry shall
     (1) submit fingerprints of the applicant and a control person of the applicant to the governmental agency or entity authorized to receive the fingerprints for a state, national, or international criminal history background check under (a)(1) of this section; and

     (2) obtain an independent credit report and other information related to administrative, civil, or criminal findings regarding the applicant and each control person of the applicant under (a)(2) of this section.




Sec. 06.60.030. Investigation.
The department shall investigate an applicant for a license to determine if the applicant satisfies the requirements of this chapter for the license.


Sec. 06.60.035. Fees and expenses.
 (a) When an applicant submits an application for a license under this chapter to the department, the applicant shall pay to the department
     (1) an application fee in partial payment of those investigation expenses incurred by the department; and

     (2) an annual license fee for the period that terminates on December 31 after the date the license is issued; after this payment, the annual license fee is due every year, subject to renewal by the department.

 (b) An applicant shall pay all reasonable costs and reasonable investigative fees incurred by the department before the department issues a license.

 (c) The fees imposed by this section are in addition to the fees charged by the registry and the business license fees assessed under AS 43.70 (Alaska Business License Act).

 (d) The department may establish by regulation the amount and manner of payment of application fees, examination fees, license fees, permit fees, investigation fees, and all administrative or other fees or penalties under this chapter. The fees established under this chapter are nonrefundable.




Sec. 06.60.038. Prelicensing and relicensing education of mortgage loan originators.
 (a) Before being licensed as a mortgage loan originator, an individual shall complete at least 20 hours of education approved under (b) of this section. At a minimum, the education must include
     (1) three hours of instruction in federal statutes and regulations relating to mortgage origination, fraud prevention, consumer protection, the nontraditional mortgage marketplace, and fair lending;

     (2) three hours of instruction in ethics, including instruction on issues related to fraud prevention, consumer protection, and fair lending; and

     (3) two hours of training related to lending standards for the nontraditional mortgage product marketplace.

 (b) For the purposes of (a) of this section, a prelicensing education course must be approved under 12 U.S.C. 5104(c)(2) (Secure and Fair Enforcement for Mortgage Licensing Act of 2008). Review and approval of a prelicensing education course includes review and approval of the course provider.

 (c) Nothing in this section precludes a prelicensing education course that is approved under (b) of this section and that is provided by the employer of the applicant, an entity affiliated with the applicant, or a subsidiary or affiliate of an employer or entity affiliated with the applicant.

 (d) Prelicensing education may be offered in a classroom, on-line, or by other means approved under 12 U.S.C. 5104(c)(2) (Secure and Fair Enforcement for Mortgage Licensing Act of 2008).




Sec. 06.60.040. Testing of mortgage loan originators.
 (a) Before being licensed as a mortgage loan originator, an individual shall pass, under the standards established by this section, a qualified written test on appropriate subject areas, including federal and state law, under 12 U.S.C. 5104(d) (Secure and Fair Enforcement for Mortgage Licensing Act of 2008).

 (b) The department shall treat a written test as a qualified written test for purposes of (a) of this section if the department finds that the test adequately measures the applicant’s knowledge and comprehension in appropriate subject areas, including
     (1) ethics; and

     (2) federal and state statutes and regulations relating to mortgage origination, fraud prevention, consumer protection, the nontraditional mortgage marketplace, and fair lending.

 (c) This section does not prohibit a test provider approved by the registry from providing a test at the location of the employer of the applicant, the location of a subsidiary or affiliate of the employer of the applicant, or the location of an entity with which the applicant holds an exclusive arrangement to conduct the business of a mortgage loan originator.

 (d) To pass a qualified written test, an applicant must answer at least 75 percent of the questions correctly.

 (e) An individual may retake a test three consecutive times, but each consecutive taking of a test must occur at least 30 days after taking the preceding test.

 (f) After failing three consecutive takings of the same test, an individual shall wait at least six months before retaking the test.

 (g) A licensed mortgage loan originator who fails to maintain a valid license for a period of five years or longer shall retake the test. The period without a valid license under this subsection does not include the time the individual is a registered mortgage loan originator.

 (h) The department may assess a fee for each administration of a qualified written test.




Sec. 06.60.045. Bonding.
 (a) An applicant for a mortgage license shall file with the application submitted to the department under AS 06.60.020, and an applicant for registration under AS 06.60.014 shall file with the application filed under AS 06.60.014, a bond with one or more sureties. The department shall establish by regulation the amount of the required bond and the standards and procedures for recovery on the bond. The bond must be satisfactory to the department.

 (b) The bond required by (a) of this section shall be for the use of the department, the Department of Law, or another person to recover for a claim for relief against the obligor under this chapter. The bond must state that the obligor will faithfully conform to and abide by the provisions of this chapter and all regulations adopted under this chapter and will pay the department, the Department of Law, or another person all money that may become due or owing to the department, the Department of Law, or the other person from the obligor under this chapter.

 (c) An applicant for a mortgage license that covers more than one location or an applicant for registration that covers more than one location is not required to file more than one bond.

 (d) The bond required under (a) of this section must be continuous until three years after the department revokes or otherwise terminates the license or registration.

 (e) If the department determines that the bond required under (a) of this section is unsatisfactory for any reason, the department may require the mortgage licensee or the registered depository institution to file with the department, within 10 days after the receipt of a written demand from the department, an additional bond that complies with the provisions of this section.




Sec. 06.60.050. Decision on application.
 (a) Within 30 days after the date the department determines that it has received a complete application under AS 06.60.020, the required bond if the application is for a mortgage license, and any required fees and investigative costs, the department shall either grant or deny the license.

 (b) If the department denies the license, the department shall promptly notify the applicant. The notification must state the reason for the denial and that the applicant is entitled to a hearing on the denial.




Sec. 06.60.060. Determinations before licensing.
Before granting a license under this chapter, the department shall determine, at a minimum, that
     (1) the applicant has complied with the requirements of this chapter for obtaining the license;

     (2) the applicant, including a control person of the applicant, has
          (A) never had a mortgage lender, mortgage broker, or mortgage loan originator license revoked by a governmental jurisdiction, except that, if a revocation has been formally vacated, the revocation is not considered a revocation under this paragraph; in this paragraph,
               (i) a control person of an applicant for a mortgage license includes an entity over which the control person exercised control at the time of the revocation; and

               (ii) an applicant for a mortgage loan originator license includes an entity over which the applicant exercised control at the time of the revocation;

          (B) not been convicted of, or pled guilty or no contest to, a felony in a domestic, foreign, or military court during the seven-year period preceding the date of the application, or at any time preceding the date of application if the felony involved an act of fraud, dishonesty, a breach of trust, or money laundering; however, if the applicant has been pardoned for the conviction, the conviction is not considered a conviction under this subparagraph;

          (C) demonstrated financial responsibility, character, and general fitness sufficient to command the confidence of the community and to warrant a determination that the applicant will operate honestly, fairly, and efficiently within the purposes of this chapter; under this subparagraph,
               (i) an applicant does not show financial responsibility if the applicant has shown inattention to or neglect of the management of the person’s own financial condition;

               (ii) a determination that an applicant has not shown financial responsibility may include current outstanding judgments against the applicant, except judgments related solely to a claim related to medical expenses; current outstanding tax liens or other government liens and filings against the applicant; foreclosures of the applicant’s property within the three years preceding the date of the application; and a pattern by the applicant of seriously delinquent accounts within the three years preceding the date of the application;

     (3) the applicant for a mortgage loan originator license
          (A) has completed the prelicensing education requirement described in AS 06.60.038;

          (B) has passed a test that meets the requirements described in AS 06.60.040; and

          (C) has paid the fund fee as required by AS 06.60.550; and

     (4) the applicant for a mortgage license has provided a bond as required by AS 06.60.045.




Secs. 06.60.065 — 06.60.075. Determinations for originator licensing; form and contents of license; license availability. [Repealed, § 87 ch 61 SLA 2010.]
Sec. 06.60.077. Authority to issue provisional license.
 (a) Subject to (b) of this section, the department may issue a provisional license to an applicant for a mortgage license if the department has made all determinations under AS 06.60.060 necessary for licensure except those determinations based on the criminal history background check required by AS 06.60.027.

 (b) A provisional license may be granted under this section if the
     (1) receipt by the department of the results of the criminal history background check is delayed more than 60 days after the date the fingerprints are submitted to the governmental agency that conducts the criminal history background check; and

     (2) delay described in (1) of this subsection is not caused by the applicant.

 (c) The duration of a provisional license issued under this section may not exceed 90 days.




Article 2. License Duration, Renewal, Inactivity, and Surrender.


Sec. 06.60.080. Duration of license.
Except for a provisional license issued under AS 06.60.077, a license issued under this chapter remains in effect until December 31 of the year in which the license is issued, unless the license is revoked, is suspended, is surrendered, or becomes inactive under this chapter.


Sec. 06.60.085. Renewal of license.
 (a) If a licensee intends to renew a license, the licensee shall submit to the department
     (1) a renewal application at a time and in the form and manner established by the department and the registry;

     (2) the annual license fee;

     (3) if the renewal is for a mortgage license,
          (A) a report, as required by regulation, identifying any changes in the information provided to the department; and

          (B) current information indicating that the mortgage licensee continues to meet the minimum standards for license issuance;

     (4) if the renewal is for a mortgage loan originator license,
          (A) a report, as required by regulation, identifying any changes in the information provided to the department;

          (B) current information indicating that the mortgage loan originator continues to meet the minimum standards for license issuance;

          (C) certificates or other documents showing the mortgage loan originator has satisfied the annual continuing education requirements of AS 06.60.160; and

          (D) the fund fee required by AS 06.60.550; and

     (5) payment of any other required fees for renewal of the license.

 (b) The department may adopt by regulation procedures and deadlines regarding the filing of an application for renewal of a license and the assessment of a penalty or other consequence for late filing, consistent with the requirements of the registry.

 (c) The department shall approve or deny the application for renewal of a license not later than 60 days after the renewal application is filed.




Sec. 06.60.087. Standards for license renewal.
 (a) After a licensee complies with AS 06.60.085, the department may renew the licensee’s license if
     (1) the licensee continues to meet the standards for license issuance under AS 06.60.060;

     (2) in the case of a mortgage loan originator license, the mortgage loan originator licensee has satisfied the annual continuing education requirements of AS 06.60.160;

     (3) the licensee has paid all required fees for renewal of the license; and

     (4) the licensee is in compliance with the requirements of this chapter and regulations adopted and orders issued under this chapter.

 (b) If a licensee fails to satisfy (a) of this section, the license expires at the end of the period for which the license was issued. The department may adopt by regulation procedures for the reinstatement of expired licenses. The procedures must be consistent with the standards established by the registry.




Sec. 06.60.090. Inactive license.
 (a) A license may become inactive under this section.

 (b) To be eligible to have a mortgage license become inactive, all mortgage loans of a licensee must have been paid in full or sold.

 (c) For a license to become inactive, a licensee shall provide the department with a written request that the license become inactive. The request must include the licensee’s name, the licensee’s address, and other information the department requires to process the request. If the request is made by mortgage licensee, the request must include a statement by the mortgage licensee that all mortgage loans of the mortgage licensee have been paid in full or sold.

 (d) The department shall issue an inactive license certificate to a person whose license becomes inactive under this section.

 (e) If a person holds a license that becomes inactive under this section, the person may not operate as a mortgage lender, mortgage broker, or mortgage loan originator under the license in this state until the license is reactivated.

 (f) If a license becomes inactive under this section, the license remains inactive until the license expires, the person surrenders the license, or the department approves the reactivation of the license, whichever event occurs first. The licensee’s request for reactivation must include the information that the department requires to process the request.

 (g) While a license is inactive under this section, the person holding the inactive license shall
     (1) pay the annual license fee as required by AS 06.60.035;

     (2) inform the department of any change that occurs in the name and address of the person, the location of the person’s business, or the business operations or control of the person;

     (3) maintain the bond required by AS 06.60.045; and

     (4) file the annual report required by AS 06.60.100(a).

 (h) Notwithstanding AS 06.60.120, while a license is inactive under this section, the person who holds the license may not transfer the license to another person.

 (i) [Repealed, § 87 ch 61 SLA 2010.]
 (j) While a license is inactive under this section, the person holding the inactive license shall continue to maintain records as required by AS 06.60.135 for the business transactions of the person that occurred before the license became inactive.

 (k) While a license is inactive under this section, the department may take action against the license, the person holding the inactive license, or both for noncompliance with this chapter before the license became inactive or for noncompliance with this section while the license is inactive.

 (l) A licensee whose license lapses under this chapter is not eligible for an inactive license under this section unless the license is reactivated under AS 06.60.095.

 (m) A person holding a license that is inactive under this section may not engage in activities for which the license is required, but may receive commissions or other payments from a person who contracted with or employed the licensee for services, if the services were performed while the licensee was actively licensed.

 (n) Except as otherwise provided in this section and by regulations adopted by the department, the provisions of this chapter do not apply to a person holding an inactive license under this section.




Sec. 06.60.095. Reactivation of inactive license.
 (a) A person who has an inactive license certificate under AS 06.60.090 may apply to the department for an active license and pay the required fees. To be eligible for license reactivation, the applicant shall comply with all requirements for licensure in effect at the time of reactivation.

 (b) If the department reactivates a license under this section, the license expires on December 31 of the year in which it is issued.




Sec. 06.60.097. Surrender of license.
 (a) A licensee may surrender a license issued to the licensee by delivering written notice to the department that the licensee intends to surrender the license, except that a mortgage licensee may not surrender a license until all loans of that mortgage licensee have either been paid in full or sold.

 (b) [Repealed, § 87 ch 61 SLA 2010.]
 (c) Surrender of a license under this section does not affect the licensee’s civil or criminal liability for acts committed before surrender of the license.




Article 3. Licensee Obligations.


Sec. 06.60.100. Annual report.
 (a) Annually, on or before a date established by the department by regulation, a mortgage licensee and a registered depository institution shall file a report with the department providing relevant information that the department requires concerning the business and operations of the mortgage licensee or registered depository institution. The mortgage licensee and the registered depository institution shall make the report under oath or on affirmation. The content and form of the report shall be established by the department by regulation.

 (b) A mortgage licensee who or registered depository institution that fails to file a report as required by this section is subject to a civil penalty of $25 for each day’s failure to file the report.

 (c) A mortgage licensee and a registered depository institution shall submit to the registry, as required by the registry, reports of the condition of the licensee or registered depository institution, which must be in the form and contain the information that the registry may require.




Sec. 06.60.105. Biennial license fee. [Repealed, § 87 ch 61 SLA 2010.]
Sec. 06.60.110. Location of business.
A mortgage licensee may not maintain the mortgage licensee’s principal place of business or a branch office within an office, suite, room, or place of business in which any other business is solicited or engaged in, or in association or conjunction with another business, unless the name, ownership, and business purpose of the other business is disclosed in the mortgage licensee’s application for a mortgage license.


Sec. 06.60.112. Branch office application.
A mortgage licensee shall submit an application to register a branch office to the department through the registry. The department may adopt by regulation procedures and fees for the submission of an application to register a branch office, consistent with the requirements of the registry. The department may adopt by regulation fees and other requirements for renewal of a branch office registration that are consistent with the requirements of the registry.


Sec. 06.60.115. Change of place of business.
If a mortgage licensee wishes to change the mortgage licensee’s place of business to another location, the mortgage licensee shall submit a written notice to the department at least 10 days before relocating the business. If the mortgage licensee is otherwise in compliance with this chapter, the department shall issue a revised mortgage license to the mortgage licensee that reflects the new location.


Sec. 06.60.120. Transfer of business.
A mortgage licensee may only transfer or assign the licensee’s business if
     (1) an application is made to the department to transfer or assign the business to another mortgage licensee with the same type of mortgage license as the transferring or assigning mortgage licensee;

     (2) at least 30 days before the effective date of the proposed transfer or assignment, the department determines it has received a complete application from the proposed assignee or transferee; and

     (3) the department determines that the proposed transferee or assignee complies with AS 06.60.060.




Sec. 06.60.130. Change in business control or business operations.
 (a) The prior approval of the department that is made in a record is required for the continued operation of a mortgage licensee’s business when a change in control of the mortgage licensee is proposed. The department may require the information it considers necessary to determine whether a new application is required. The mortgage licensee requesting approval of the change in control shall pay all reasonable expenses incurred by the department to investigate and approve or deny the change in control. The department may establish by regulation the fees and other requirements for requesting approval of a change in control that are consistent with the requirements of the registry.

 (b) If there is a material change in the business operations of a mortgage licensee not covered by AS 06.60.120, the mortgage licensee shall provide written notice to the department at least 30 days before the effective date of the change in business operations.




Sec. 06.60.135. Records of mortgage licensee.
 (a) The requirements of this section apply to the business transactions of a mortgage licensee or registered depository institution that occur entirely or partially in this state.

 (b) A mortgage licensee or registered depository institution shall keep and use in the business of the mortgage licensee or registered depository institution the accounting records that are in accord with generally accepted accounting principles.

 (c) A mortgage licensee and a registered depository institution shall maintain a record of the account of each borrower and for each mortgage loan or mortgage loan application that is related to the purchase or refinancing of an existing mortgage loan. This record must contain all documents, work papers, electronic correspondence, and forms that are produced or prepared for the mortgage loan by the mortgage licensee or registered depository institution, and the mortgage licensee and registered depository institution shall retain each document, work paper, electronic correspondence, and form for 36 months from the date they were created.

 (d) A mortgage licensee and a registered depository institution shall retain, for at least three years after final payment is made on a mortgage loan, or three years after a mortgage loan is sold, whichever occurs first, the original contract for the compensation of the mortgage licensee or registered depository institution, copies of the note, settlement statement, and truth-in-lending disclosure, an account of fees received in connection with the loan, and other papers or records relating to the loan that may be required by department order or regulation.

 (e) If a mortgage licensee or registered depository institution conducts business as a mortgage loan servicing agent for mortgage loans that the mortgage licensee or registered depository institution owns, or as an agent for other mortgage lenders or investors, the mortgage licensee or registered depository institution shall, in addition to complying with (b) and (c) of this section, maintain a record for each mortgage loan. The record of each mortgage loan must include the amount of the mortgage loan, the total amount of interest and finance charges on the mortgage loan, the interest rate on the mortgage loan, the amount of each payment to be made on the mortgage loan, a description of the collateral taken for the mortgage loan, a history of all payments received by the mortgage licensee or registered depository institution on the mortgage loan, a detailed history of the amount of each payment that is applied to the reduction of the mortgage loan principal, the interest that accrues on the mortgage loan, and any other fees and charges that are related to the mortgage loan, as well as other papers required by law, department order, or regulation. The mortgage licensee or registered depository institution shall retain the record required by this subsection for three years after the loan is sold to another mortgage loan servicing agent or after the mortgage loan is satisfied, whichever occurs first.

 (f) In this section, “mortgage loan servicing agent” means a person who acts on behalf of the owner of a mortgage loan to collect payments on the mortgage loan and enforce the terms of the mortgage loan.




Sec. 06.60.140. Availability of out-of-state records.
A mortgage licensee who or registered depository institution that operates an office or other place of business outside this state shall, at the request of the department,
     (1) make the records of the office or place of business available to the department at a location within this state; or

     (2) reimburse the department its reasonable costs, as provided in AS 06.60.250(k), that are incurred by the department in conjunction with an investigation or examination conducted at the office or place of business.




Secs. 06.60.145 , 06.60.150. Disqualified persons; posting of license. [Repealed, § 87 ch 61 SLA 2010.]
Sec. 06.60.155. Restriction on mortgage loan originator licensee’s work.
A mortgage loan originator licensee may only work as a mortgage loan originator licensee under contract for, or as an employee of, one mortgage licensee.


Sec. 06.60.157. Restrictions on mortgage licensee’s performance of mortgage loan originator activities.
A mortgage licensee may not perform mortgage loan originator activities except through a licensed mortgage loan originator who is an employee of or under exclusive contract with a mortgage licensee.


Sec. 06.60.159. Mortgage licensee’s employment of, contract with, and liability for mortgage loan originator.
 (a) A mortgage licensee may not employ or enter into a contract with a person who acts as a mortgage loan originator for the mortgage licensee unless the person has a mortgage loan originator license.

 (b) A mortgage licensee is liable for the conduct of a person acting as a mortgage loan originator if the mortgage licensee knows or should have known that the person’s conduct violates this chapter and the person is employed by or is under contract with the mortgage licensee to act as a mortgage loan originator.




Sec. 06.60.160. Continuing education requirements for mortgage loan originators.
 (a) Each calendar year, a licensed mortgage loan originator shall complete at least eight hours of education approved under (b) of this section. At a minimum, these hours must include
     (1) three hours of instruction in federal statutes and regulations;

     (2) two hours of instruction in ethics, including instruction on issues related to fraud prevention, consumer protection, and fair lending; and

     (3) two hours of training related to lending standards for the nontraditional mortgage product marketplace.

 (b) For the purposes of (a) of this section, a continuing education course must be approved under 12 U.S.C. 5105(b)(2) (Secure and Fair Enforcement for Mortgage Licensing Act of 2008). Review and approval of a continuing education course includes review and approval of the course provider.

 (c) Nothing in this section precludes a continuing education course that is approved under (b) of this section and that is provided by the employer of the applicant, an entity affiliated with the applicant, or a subsidiary or affiliate of an employer or entity affiliated with the applicant.

 (d) Continuing education may be offered in a classroom, on-line, or by other means approved under 12 U.S.C. 5105(b)(2) (Secure and Fair Enforcement for Mortgage Licensing Act of 2008).

 (e) A licensed mortgage loan originator
     (1) except as provided by (i) of this section, may only receive credit for a continuing education course in the calendar year in which the course is taken; and

     (2) may not retake an approved course in the same or successive calendar years if the mortgage loan originator has previously taken the course to meet the annual requirements for continuing education.

 (f) A licensed mortgage loan originator who is an approved instructor of an approved continuing education course may receive credit for the licensed mortgage loan originator’s own annual continuing education requirement at the rate of two hours of credit for each one hour taught.

 (g) Successful completion of a continuing education course approved for another state by the registry shall be accepted as credit toward completion of continuing education requirements in this state.

 (h) Before a new or renewed license may be issued to a licensed mortgage loan originator who has become unlicensed, the mortgage loan originator shall complete the continuing education requirements for the last calendar year in which the mortgage loan originator’s license was valid.

 (i) A person meeting the requirements of AS 06.60.087, other than the continuing education requirement of AS 06.60.087(a)(2), may make up a deficiency in continuing education in a manner established by regulation.




Article 4. Discipline and Investigation.


Sec. 06.60.200. Disciplinary action.
 (a) In addition to other disciplinary action allowed under this chapter or under AS 06.01, the department may deny, suspend, revoke, condition, or decline to renew a license or take other disciplinary action against a person subject to this chapter, including action under a regulation adopted under this chapter, if the department finds that the person
     (1) fails to comply with an applicable provision of this title, an applicable regulation adopted under this title, a lawful demand, ruling, order, or requirement of the department, or other state or federal statute or regulation applicable to the conduct of the licensee’s business;

     (2) fails to meet the minimum standards for issuance or renewal of a license; or

     (3) knowingly withholds material information or negligently makes a material misstatement in an application for or renewal of a license.

 (b) The department may
     (1) order a person subject to this chapter to cease and desist from conducting business, including an immediate temporary order to cease and desist;

     (2) order a person subject to this chapter to cease and desist from violating this chapter, including an immediate temporary order to cease and desist;

     (3) impose a fine on a person subject to this chapter under AS 06.60.420;

     (4) issue an order of rescission, restitution, or disgorgement directed to a person subject to this chapter for a violation of this chapter;

     (5) order other affirmative action that the department considers necessary, including an accounting, an asset freeze, or the appointment of a receiver.

 (c) A disciplinary action under this section may be taken by itself or in conjunction with one or more other disciplinary actions under this chapter or under AS 06.01.




Sec. 06.60.210. Suspension, revocation, or renewal related to fund.
 (a) When an award is made from the fund, the department may suspend, revoke, or decline to renew the license of the mortgage loan originator licensee whose actions formed the basis of the award.

 (b) The department shall lift a suspension made under (a) of this section if the mortgage loan originator licensee reaches an agreement with the department on terms and conditions for the repayment to the fund of the money awarded to the claimant and the costs of hearing the fund claim. The department may reimpose the suspension if the mortgage loan originator licensee violates the terms of a repayment agreement entered into under this subsection.




Sec. 06.60.230. Divestment.
If the department revokes a mortgage license, the mortgage licensee shall divest itself of all outstanding loans that were issued under this chapter by selling or assigning them to another mortgage licensee. Divestment under this section must be approved by the department.


Sec. 06.60.240. Reinstatement.
The department may reinstate a suspended license if the licensee complies with this chapter or with a demand, ruling, or requirement made by the department under this chapter. Before reinstatement of a license, the licensee shall pay any fees, restitution, and civil penalties owing under this chapter.


Sec. 06.60.250. Investigation and examination authority.
 (a) For the purpose of initial licensing, license renewal, license suspension, license conditioning, license revocation, license termination, or general or specific inquiry or investigation to determine compliance with this chapter, including compliance by a registered depository institution, the department may access, receive, use, and copy any books, accounts, records, files, documents, information, or evidence, including
     (1) criminal, civil, and administrative history information, including nonconviction information; in this paragraph, “nonconviction information” has the meaning given in AS 12.62.900;

     (2) personal history and experience information, including independent credit reports obtained from a consumer reporting agency; and

     (3) other documents, information, and evidence the department considers relevant to the inquiry or investigation, regardless of the location, possession, or custody of the documents, information, or evidence.

 (b) Notwithstanding AS 06.01.015, for the purpose of investigating violations or complaints arising under this chapter, or for the purpose of examination, the department may review, investigate, or examine an applicant, licensee, or another person subject to this chapter as often as necessary to carry out the purposes of this chapter. The department may conduct an examination without prior notice to the licensee.

 (c) A licensee or other person subject to this chapter shall make available to the department, on request, the place of business, books, records, accounts, safes, and vaults relating to the operations of the licensee or other person subject to this chapter. The department may interview the officers, principals, mortgage loan originators, employees, independent contractors, agents, and customers of the licensee or other person subject to this chapter concerning the licensee’s or other person’s business.

 (d) For the purpose of hearings, investigations, or other proceedings under this chapter, the department or an officer designated by the department may administer oaths and affirmations, subpoena witnesses, compel the attendance of witnesses, take evidence, and require the production of books, papers, correspondence, memoranda, agreements, or other documents or records that the department considers relevant or material to the matter.

 (e) If a person refuses to comply with a subpoena, the superior court, on application by the department, may issue to the person an order requiring the person to appear before the department to produce documentary evidence or to give evidence regarding the matter under investigation or in question.

 (f) A licensee or other person subject to this chapter shall make or compile reports or prepare other information as directed by the department to carry out the purposes of this section, including
     (1) accounting compilations;

     (2) information lists and data concerning loan transactions in a format prescribed by the department; and

     (3) other information considered necessary to carry out the purposes of this chapter.

 (g) In making an examination or investigation authorized by this chapter, the department may control access to documents and records of the licensee or other person under examination or investigation. The department may take possession of the documents and records or place a person in exclusive charge of the documents and records in the place where they are usually kept. During the period of control, a person may not remove or attempt to remove any of the documents and records except under a court order or with the consent of the department. In this subsection, “control” does not have the meaning given in AS 06.60.990.

 (h) To carry out the purposes of this section, the department may
     (1) retain attorneys, accountants, or other professionals and specialists, including examiners, auditors, or investigators, to conduct or assist in the conduct of examinations or investigations;

     (2) enter into agreements or relationships with other government officials or regulatory associations to improve efficiency and reduce the regulatory burden by sharing resources, standardized or uniform methods or procedures, and documents, records, information, and evidence obtained under this section;

     (3) use, hire, contract, or employ public or privately available analytical systems, methods, or electronic software to examine or investigate the licensee, individual, or other person subject to this chapter;

     (4) accept and rely on examination or investigation reports made by other government officials in this or another state;

     (5) share information received or collected during an examination, investigation, or other proceeding with other law enforcement agencies; or

     (6) accept an audit report prepared by an independent certified public accountant for the licensee or other person subject to this chapter and may incorporate an audit report in the report of the examination or other writing of the department.

 (i) The authority under this section remains in effect, whether or not a licensee or other person subject to this chapter acts or claims to act under a licensing or registration law of the state or claims to act without the authority of a licensing or registration law of the state.

 (j) A licensee or other person subject to investigation or examination under this section may not knowingly withhold, abstract, remove, mutilate, destroy, or secrete any books, records, computer records, or other information.

 (k) A person shall reimburse the department for reasonable costs incurred by the department to conduct an examination or investigation under this section. The reimbursement under this subsection may not exceed the rate of $75 an hour for the examination or investigation, plus travel costs, including a per diem allowance that does not exceed the per diem allowance for employees of the state under AS 39.20.110.

 (l) In this section, “person” and “person subject to this chapter” include a registered depository institution.




Sec. 06.60.260. Revocation, removal, or suspension of mortgage loan originator licensee.
If the department finds that a mortgage loan originator licensee is dishonest, reckless, or incompetent when operating as a mortgage loan originator or fails to comply with applicable law, with regulations or orders of the department, or with written requirements or instructions of the department relating to the mortgage loan originator license, the department may revoke or suspend the mortgage loan originator license, remove the mortgage loan originator licensee from operating as a mortgage loan originator in the state, or order a person licensed under this title to remove the mortgage loan originator licensee from operating as a mortgage loan originator for the person.


Sec. 06.60.270. Removal by entity.
A mortgage licensee shall remove a mortgage loan originator licensee from acting as a mortgage loan originator for the mortgage licensee if the department directs the mortgage licensee to remove the mortgage loan originator licensee under AS 06.60.260.


Sec. 06.60.280. Department list.
The department shall make available to the public a list of all licensees who have been censured or barred or had their licenses suspended or revoked under this chapter. The department shall update the list on a monthly basis.


Sec. 06.60.290. Report to the registry.
Notwithstanding AS 06.01.025, the department shall regularly report violations of this chapter, as well as enforcement actions and other relevant information, to the registry, subject to provisions established by the department by regulation.


Article 5. Business Duties and Restrictions.


Sec. 06.60.320. False, misleading, or deceptive advertising prohibited.
A person may not advertise, print, display, publish, distribute, broadcast, or cause or permit to be advertised, printed, displayed, published, distributed, or broadcast, in any manner a statement or representation with regard to the rates, terms, or conditions for a mortgage loan that is false, misleading, or deceptive.


Sec. 06.60.325. Display of unique identifier.
A person operating as a mortgage lender, mortgage broker, or mortgage loan originator shall clearly display the unique identifier assigned to the person by the registry on all residential mortgage loan application forms, solicitations, and advertisements, including business cards or websites, and any other documents as established by regulation or order of the department.


Sec. 06.60.330. Compliance with federal requirements.
A person subject to this chapter shall conduct the person’s mortgage loan activities in compliance with
     (1) 12 U.S.C. 2601 — 2617 (Real Estate Settlement Procedures Act of 1974);

     (2) 12 U.S.C. 2801 — 2810 (Home Mortgage Disclosure Act of 1975);

     (3) 12 U.S.C. 2901 — 2908 (Community Reinvestment Act of 1977);

     (4) 12 U.S.C. 5101 — 5116 (Secure and Fair Enforcement for Mortgage Licensing Act of 2008);

     (5) 15 U.S.C. 1601 — 1666j and 1671 — 1693r (Consumer Credit Protection Act);

     (6) 42 U.S.C. 3601 — 3631 (Fair Housing Act of 1968);

     (7) any other federal statute the purpose of which is to regulate residential mortgage lending; and

     (8) regulations adopted under the statutes identified in (1) — (7) of this section.




Sec. 06.60.340. Prohibited activities.
A person who is required to be licensed under this chapter and a person who is licensed under AS 06.20 may not, in connection with a mortgage loan transaction,
     (1) misrepresent or conceal a material fact or make a false promise likely to influence, persuade, or induce an applicant for a mortgage loan or a borrower to enter into a mortgage loan transaction;

     (2) pursue a course of misrepresentation through an agent;

     (3) directly or indirectly employ any scheme, device, or artifice to defraud or mislead a borrower or lender or to defraud a person;

     (4) engage in any unfair or deceptive act or practice toward any person;

     (5) obtain property by fraud or misrepresentation;

     (6) solicit or enter into a contract with a borrower that provides, in substance, that the person subject to this chapter may earn a fee or commission through using the person’s best efforts to obtain a loan, even though a loan is not actually obtained for the borrower;

     (7) solicit, advertise, or enter into a contract for specific interest rates, points, or other financing terms unless the terms are actually available at the time of soliciting, advertising, or contracting;

     (8) conduct a business covered by this chapter without holding a valid license as required under this chapter, or assist a person in the conduct of business under this chapter without a valid license as required under this chapter;

     (9) fail to make disclosures as required by this chapter or by another applicable state or federal statute, including regulations adopted under the statute;

     (10) fail to comply with this chapter or regulations adopted under this chapter or fail to comply with another state or federal statute, including regulations adopted under the statute, applicable to a business authorized or conducted under this chapter;

     (11) make, in any manner, false or deceptive statements or representations, including statements or representations about rates, points, or other financing terms or conditions, or engage in bait and switch advertising;

     (12) negligently make a false statement or knowingly omit a material fact in connection with information or reports filed with the department or the registry or in connection with an investigation conducted by the department;

     (13) make a payment, threat, or promise, directly or indirectly, to a person for the purposes of influencing the independent judgment of the person in connection with a mortgage loan, or make a payment, threat, or promise, directly or indirectly, to an appraiser of a property, for the purpose of influencing the independent judgment of the appraiser with respect to the value of the property;

     (14) collect, charge, attempt to collect, attempt to charge, or use or propose an agreement purporting to collect or charge a fee prohibited by this chapter;

     (15) cause or require a borrower to obtain property insurance coverage in an amount that exceeds the replacement cost, as established by the property insurer, of the improvements;

     (16) improperly refuse to issue a satisfaction of a mortgage loan;

     (17) fail to account for or deliver to a person money, a document, or another thing of value obtained in connection with a mortgage loan, including money provided for a real estate appraisal or a credit report, if the person is not entitled to retain the money under the circumstances;

     (18) pay, receive, or collect, in whole or in part, a commission, fee, or other compensation for brokering a mortgage loan in violation of this chapter, including a mortgage loan brokered by an unlicensed person;

     (19) fail to disburse money in accordance with a written commitment or agreement to make a mortgage loan;

     (20) engage in a transaction, practice, or course of business that is not engaged in by the person in good faith or fair dealing or that constitutes a fraud on a person in connection with the brokering, making, purchase, or sale of a mortgage loan;

     (21) influence or attempt to influence, through coercion, extortion, or bribery, the development, reporting, result, or review of a real estate appraisal sought in connection with a mortgage loan; this paragraph does not prohibit a person from asking an appraiser to
          (A) consider additional appropriate property information;

          (B) provide further detail, substantiation, or explanation for the appraiser’s value determination; or

          (C) correct errors in the appraisal report;

     (22) make a false or misleading statement in a mortgage loan commitment or prequalification letter, or omit material information necessary to make the statements made not misleading, if the person knew or reasonably should have known the statement was false or misleading or the omission consisted of material information necessary to make the statements made not misleading;

     (23) engage in a practice or course of business in which the ultimate rates, terms, or costs of mortgage loans are materially worse for the borrower than they are represented to be in the first good faith estimates the person provides to the borrower, unless
          (A) the person’s generally published or advertised rates, terms, or costs, if any, change for a borrower’s loan program; or

          (B) new or changed information from the borrower makes it necessary to change the loan program offered to the borrower;

     (24) represent that the person has a license, registration, title, certification, sponsorship, approval, status, affiliation, or connection that the person does not have;

     (25) engage in unfair, deceptive, or fraudulent advertising; or

     (26) authorize, direct, plan, or aid in the publishing, distribution, or circulation of a materially false statement or a material misrepresentation concerning the licensee’s business or concerning mortgage loans originated in the course of the licensee’s business in this or another state.




Sec. 06.60.350. Certain refinancing prohibited.
 (a) A covered person may not refinance a mortgage loan within 12 months after the date the mortgage loan is closed unless the refinancing is beneficial to the borrower.

 (b) The factors to be considered when determining if refinancing is beneficial to the borrower under this section may include whether
     (1) the borrower’s new monthly payment is lower than the total of all monthly obligations being refinanced, after taking into account the costs and fees of the refinancing;

     (2) the amortization period of the new mortgage loan is different from the amortization period of the mortgage loan being refinanced;

     (3) the borrower receives cash in excess of the costs and fees of the refinancing;

     (4) the rate of interest of the borrower’s promissory note is reduced;

     (5) the mortgage loan changes from an adjustable rate loan to a fixed rate loan; in a determination under this paragraph, the department may take into account costs and fees;

     (6) the refinancing is necessary to respond to a bona fide personal need or an order of a court of competent jurisdiction;

     (7) the original term of the mortgage loan being refinanced is two years or less; and

     (8) the refinancing is being made to prevent a foreclosure on an existing mortgage loan.




Sec. 06.60.360. Escrow accounts.
 (a) A covered person and a borrower may agree that the covered person will keep in an escrow account all money that the borrower is required to pay to defray future taxes or insurance premiums or for other lawful purposes. The escrow account must be segregated from the other accounts of the covered person and be subject to a written escrow agreement. The covered person may not commingle the borrower’s money with the general funds of the covered person. Money deposited in an escrow account under this subsection shall be maintained in the account until it is disbursed in accordance with the written escrow agreement.

 (b) A covered person may not require a borrower to pay money into escrow to defray future taxes, to defray insurance premiums, or for another purpose, in connection with a subordinate mortgage loan, unless an escrow account for that purpose is not being maintained for the mortgage loan that is superior to the subordinate mortgage loan.

 (c) If the billing address of a covered person who is holding money in escrow for insurance premiums changes, the covered person shall notify the insurer in writing about the change of billing address within 30 days after the change or 60 days before the renewal date of the insurance policy, whichever is later.

 (d) A covered person who accepts money belonging to a borrower in connection with a mortgage loan shall deposit all of the money into an escrow account maintained by the covered person in a bank or another recognized depository institution. In this subsection, “recognized depository institution” means a person who is organized as a financial institution under the laws of a state or the federal government and whose deposits are insured by a federal agency.

 (e) Money held in an escrow account under this section is exempt from execution, attachment, or garnishment under AS 09.38 and is not subject to a claim under AS 09.38.065.

 (f) In this section, “escrow account” means an account
     (1) to which a borrower makes payments for obligations related to the real property that is the subject of a residential mortgage loan of the borrower;

     (2) held by a third person; and

     (3) from which the third person identified in (2) of this subsection disburses money in accordance with a written agreement to pay obligations related to the real property that is the subject of a residential mortgage loan of the borrower.




Sec. 06.60.370. Criminal penalties.
 (a) The department may report a violation of (b) — (e) of this section to the attorney general, who may institute the proper proceedings to enforce the criminal penalties provided in (b) — (e) of this section.

 (b) A person who knowingly provides false or misleading information to the department that is material under this chapter is guilty of a class A misdemeanor.

 (c) A person who knowingly fails to account for or deliver to a person money, deposits, or checks or other forms of negotiable instruments in violation of the provisions of this chapter is guilty of a class A misdemeanor.

 (d) A licensee who knowingly fails to disburse money belonging to the borrower without just cause is guilty of a class A misdemeanor.

 (e) Unless the person is exempt from licensing under this chapter, a person who knowingly operates in this state as a mortgage lender, mortgage broker, or mortgage loan originator without a license issued under this chapter is guilty of a class A misdemeanor.




Sec. 06.60.380. Definition of “covered person.”
In AS 06.60.320 — 06.60.380, “covered person” means a mortgage licensee or a person who is licensed under AS 06.20.


Article 6. Enforcement.


Sec. 06.60.400. Cease and desist proceedings.
 (a) Notwithstanding AS 06.01.030(d) and (e), if the department finds, after notice and opportunity for a hearing, that a person has violated, is violating, or is about to violate any provision of this chapter, a regulation adopted under this chapter, or an order issued under this chapter, the department may publish findings and enter an order requiring the person to cease and desist from committing or causing the violation and any future violation of the same provision or regulation. An order may, in addition to requiring a person to cease and desist from committing or causing a violation, require the person to comply, or to take steps to effect compliance, with a provision or regulation, on terms and conditions and within a time, as the department may specify in the order. An order may require future compliance or steps to result in future compliance, either permanently or for a period of time, as the department may specify.

 (b) Notwithstanding AS 06.01.030(d) and (e), if the department determines that the alleged violation or threatened violation is likely to result in significant dissipation or conversion of assets, significant harm to consumers, or substantial harm to the public interest before the completion of cease and desist proceedings, the department may enter a temporary order requiring the respondent to cease and desist from the violation or threatened violation and to take action to prevent the violation or threatened violation and to prevent dissipation or conversion of assets, significant harm to consumers, or substantial harm to the public interest as the department determines appropriate pending completion of the proceedings. A temporary order may be entered only after notice and opportunity for a hearing, unless the department determines that notice and hearing before entry would be impracticable or contrary to the public interest. A temporary order becomes effective on service on the respondent and, unless set aside, limited, or suspended by the department or a court of competent jurisdiction, remains effective and enforceable pending the completion of the cease and desist proceedings.




Sec. 06.60.405. Review of temporary cease and desist orders.
 (a) At any time after the respondent has been served with a temporary cease and desist order under AS 06.60.400(b), the respondent may apply to the department to have the order set aside, limited, or suspended. If the respondent has been served with a temporary cease and desist order entered without a prior hearing, the respondent may, within 10 days after the date on which the order was served, request a hearing on the application, and the office of administrative hearings shall hold a hearing and render a decision on the application under AS 44.64.060. A respondent served with a temporary cease and desist order entered without a prior hearing may not apply to the court except after hearing and decision by the department on the respondent’s application under this subsection.

 (b) The commencement of proceedings under this section does not, unless specifically ordered by the court, operate as a stay of the department’s order.

 (c) In a cease and desist proceeding under this section, the department may issue an order to prohibit, conditionally or unconditionally, permanently or for a period of time the department determines, a person who has violated this chapter from operating as a mortgage lender, mortgage broker, or mortgage loan originator if the conduct of that person demonstrates unfitness to operate as a mortgage lender, mortgage broker, or mortgage loan originator.




Sec. 06.60.410. Censure, suspension, or bar.
 (a) In addition to any other remedy provided under this chapter, the department may, by order after appropriate notice and opportunity for a hearing, censure a person, suspend the license of a person for a period not to exceed 12 months, or bar a person from a position of employment, management, or control of a licensee or registered depository institution if the department finds that
     (1) the censure, suspension, or bar is in the public interest;

     (2) the person has knowingly committed or caused a violation of this chapter or a regulation adopted under this chapter; and

     (3) the violation has caused material damage to the licensee, to the registered depository institution, or to the public.

 (b) When a person who is the subject of a proposed order under this section receives a notice of the department’s intention to issue an order under this section, the person is immediately prohibited from engaging in any activities for which a license is required under this chapter or for which registration is required under AS 06.60.014.

 (c) A person who is suspended or barred under this section is prohibited from participating in a business activity of a licensee or registered depository institution and from engaging in a business activity on the premises where a licensee or registered depository institution is conducting the business of a licensee or registered depository institution. This subsection may not be construed to prohibit a suspended or barred person from having the person’s personal transactions processed by a licensee or registered depository institution.




Sec. 06.60.420. Civil penalty for violations.
 (a) Notwithstanding AS 06.01.035, a person who violates a provision of this chapter, or a regulation adopted or an order issued under this chapter, is liable for a civil penalty not to exceed $10,000 for each violation.

 (b) The remedies provided by this section and by other sections of this chapter are not exclusive and may be sought in combination with other remedies to enforce the provisions of this chapter.




Sec. 06.60.430. Additional enforcement provisions, actions, and rights.
 (a) The department may treat a licensee as a financial institution under AS 06.01 when applying the enforcement provisions of AS 06.01.

 (b) This chapter may not be interpreted to prevent the attorney general or any other person from exercising the rights provided under AS 45.50.471 — 45.50.561.

 (c) If the department determines that a licensee or a person acting on behalf of the licensee is in violation of, or has violated, a provision of this chapter, the department may refer the information to the attorney general and request that the attorney general investigate the violation under AS 45.50.495. The attorney general may enjoin a violation of this chapter and may seek restitution, rescission, and other relief as allowed by law.

 (d) In addition to another investigation allowed under this chapter, the department may conduct other examinations, periodic audits, special audits, investigations, and hearings as may be necessary and proper for the efficient administration of this chapter.




Sec. 06.60.440. Definition. [Repealed, § 87 ch 61 SLA 2010.]

Article 7. Originator Surety Fund.


Sec. 06.60.500. Mortgage loan originator surety fund.
The mortgage loan originator surety fund is established as a separate account in the general fund. The purpose of the fund is to pay fund claims against mortgage loan originator licensees.


Sec. 06.60.510. Composition of fund.
The fund consists of appropriations of payments made by mortgage loan originator licensees under AS 06.60.550, filing fees for fund claims retained under AS 06.60.620, income earned on the investment of the money in the fund, and money deposited in the fund by the department under AS 06.60.740.


Sec. 06.60.520. Use of fund.
The legislature may appropriate the money collected in the fund under AS 06.60.510 to the department to implement AS 06.60.500 — 06.60.750, including paying claims, holding hearings, and incurring legal expenses and other expenses directly related to fund claims and the operation of the fund. Nothing in AS 06.60.500 — 06.60.750 creates a dedicated fund.


Sec. 06.60.530. Fund report.
Every six months, the department shall provide a written report to the director of the office of management and budget on the activities of the fund, the balances in the fund, interest earned on the fund, and interest returned to the fund.


Sec. 06.60.540. Approval required. [Repealed, § 87 ch 61 SLA 2010.]
Sec. 06.60.550. Required fund fees.
 (a) A person who applies for or renews a mortgage loan originator license shall pay to the department, in addition to the fees required by AS 06.60.035, a fund fee established by the department.

 (b) Every two years, if the department determines that the average balance in the fund during the previous two years was less than $250,000 or more than $500,000, the department shall, unless the department waives the adjustment, adjust the fund fee so that the average balance of the fund during the next two years is anticipated to be an amount that is not less than $250,000 or more than $500,000. In this subsection, “average balance” means the average balance in the fund after the department deducts anticipated expenditures for claims against the fund and for hearing and legal expenses directly related to fund operations and claims.

 (c) At least once a month, the department shall pay the fees collected under this section into the general fund. These payments shall be credited to the fund.

 (d) Notwithstanding (a) of this section, a mortgage loan originator licensee who obtains an initial mortgage loan originator license when the department has reduced the fund fee to nothing shall nonetheless pay the fund fee established by regulation to the department for the first year of the mortgage loan originator license.




Sec. 06.60.560. Claim for reimbursement.
In addition to any other remedies available to the person, a person may seek reimbursement for a loss suffered in a mortgage loan transaction as a result of fraud, misrepresentation, deceit, or the wrongful conversion of money by a mortgage loan originator licensee and is eligible to be reimbursed under AS 06.60.500 — 06.60.750 for the loss from money appropriated for that purpose.


Sec. 06.60.570. Submission of fund claim.
To seek reimbursement under AS 06.60.560, a person shall submit a fund claim to the department for the reimbursement on a form furnished by the department. The person must file the fund claim within two years after the occurrence of the fraud, misrepresentation, deceit, or conversion that is claimed as the basis for the reimbursement.


Sec. 06.60.580. Form and contents of fund claim.
The form for a fund claim shall be executed under penalty of unsworn falsification in the second degree and must include
     (1) the name and address of each mortgage loan originator licensee involved;

     (2) the amount of the alleged loss;

     (3) the date or period of time during which the alleged loss occurred;

     (4) the date when the alleged loss was discovered;

     (5) the name and address of the claimant; and

     (6) a general statement of the facts related to the fund claim.




Sec. 06.60.590. Claim hearing.
Except as otherwise provided by AS 06.60.610, a hearing on a fund claim shall be handled by the office of administrative hearings (AS 44.64.010).


Sec. 06.60.600. Filing and distribution of claim.
At least 20 days before a hearing is held on the fund claim by the office of administrative hearings (AS 44.64.010), the department shall send a copy of the claim filed with the department to
     (1) each mortgage loan originator licensee alleged to have committed the misconduct resulting in the alleged loss;

     (2) the employer of the mortgage loan originator licensee described in (1) of this section; and

     (3) any other parties involved in the mortgage loan transaction that is the subject of the fund claim.




Sec. 06.60.610. Election to use small claims court.
 (a) Within 30 days after receiving a copy of a fund claim under AS 06.60.600, a mortgage loan originator licensee against whom a claim is made may elect to defend the fund claim as a small claims action in district court under District Court Rules of Civil Procedure if the claim does not exceed the small claims jurisdictional limit.

 (b) A mortgage loan originator licensee who elects under (a) of this section to defend a fund claim in district court under the small claims rules may not revoke the election without the consent of the person who filed the fund claim.

 (c) On receipt of a valid written election under (a) of this section, the department shall dismiss the fund claim filed with the department and notify the person who filed the fund claim that the person who filed the fund claim must bring a small claims action in the appropriate district court.




Sec. 06.60.620. Filing fee.
 (a) A person who files a fund claim under AS 06.60.570 shall pay the department a filing fee of $250 when the person files the fund claim.

 (b) The department shall refund the filing fee required under this section if the
     (1) department makes an award to the claimant;

     (2) fund claim is dismissed under AS 06.60.610; or

     (3) fund claim is withdrawn by the claimant before the office of administrative hearings (AS 44.64.010) holds a hearing on the fund claim.




Sec. 06.60.630. Department contracts.
When the department receives a fund claim, the department may contract under AS 36.30 (State Procurement Code) with an investigator, an accountant, an attorney, or another person necessary for the department to process the fund claim. A contract may cover more than one fund claim.


Sec. 06.60.640. Defense of claim.
When the department receives a fund claim, the department shall allow each mortgage loan originator licensee against whom the claim is made an opportunity to file with the department, within seven days after receipt of notification of the fund claim under AS 06.60.600, a written statement in opposition to the fund claim and a request for a hearing.


Sec. 06.60.650. Standard of proof.
A person who submits a fund claim under AS 06.60.570 bears the burden of establishing by a preponderance of the evidence that the person suffered a loss in a mortgage loan transaction as a result of fraud, misrepresentation, deceit, or the conversion of trust funds by a mortgage loan originator licensee and the extent of those losses.


Sec. 06.60.660. Postponement.
The department may postpone its consideration of a fund claim until after a hearing under AS 06.60.200 or 06.60.590 or until the completion of a pending court proceeding.


Sec. 06.60.670. Nonapplication.
AS 06.60.630 — 06.60.660 do not apply to a fund claim that is dismissed under AS 06.60.610.


Sec. 06.60.680. Findings and payment.
 (a) At the conclusion of the department’s consideration of a claim made under AS 06.60.570, the department shall issue a written report that provides the department’s findings of fact and conclusions of law.

 (b) If the department determines that the claimant has suffered a loss in a mortgage loan transaction as a result of fraud, misrepresentation, deceit, or the wrongful conversion of money by a mortgage loan originator licensee, the department may award the person who filed the fund claim reimbursement from money appropriated to the fund.




Sec. 06.60.690. Fund operations.
The department shall deposit into the fund money that the department recovers from a mortgage loan originator licensee under AS 06.60.745. The department may not consider amounts paid from the fund for hearing or legal expenses when determining the maximum reimbursement to be awarded under AS 06.60.710 or the maximum liability for fund claims under AS 06.60.710.


Sec. 06.60.700. Payment of small claims judgment.
 (a) If a fund claim dismissed under AS 06.60.610 results in a monetary award against a mortgage loan originator licensee, the department may pay, subject to AS 06.60.710 and 06.60.720, any outstanding portion of the small claims judgment from money appropriated to the department for the purpose.

 (b) Before making payment under (a) of this section, the person who received the award shall file with the department a copy of the final judgment and an affidavit stating that more than 30 days have elapsed since the judgment became final and that the judgment has not yet been satisfied by the mortgage loan originator licensee against whom the award was made.

 (c) After the department pays a small claims judgment under this section, the department is subrogated to the rights of the person to whom the money was awarded under the judgment.




Sec. 06.60.710. Maximum liability.
 (a) Payment of a fund claim may not exceed $15,000 for each claimant and $15,000 for each mortgage loan transaction regardless of the number of persons injured or the number of pieces of residential property involved in the mortgage loan transaction.

 (b) The maximum liability for fund claims against one mortgage loan originator licensee may not exceed $50,000.

 (c) If the $50,000 liability limit under (b) of this section is insufficient to pay in full the valid fund claims of all persons who have filed fund claims against one mortgage loan originator licensee, the $50,000 shall be distributed among the claimants in the ratio that their individual fund claims bear to the aggregate of valid fund claims against that mortgage loan originator licensee. The department shall distribute the money among the persons entitled to share in the recovery without regard to the order in which their fund claims were filed.




Sec. 06.60.715. Other rights of claimant.
The rights granted to a claimant under AS 06.60.500 — 06.60.750 do not limit any other cause of action the claimant may have against a mortgage loan originator.


Sec. 06.60.720. Order of fund claim payment.
If the money appropriated to the department for payment under AS 06.60.520 — 06.60.750 is insufficient to satisfy an award under AS 06.60.680 for a fund claim, the department shall, when sufficient money has been appropriated to the department for the purpose, satisfy unpaid fund claims in the order the fund claims were originally filed, plus accumulated interest at the rate allowed under AS 45.45.010(a).


Sec. 06.60.730. False claims or documents.
A person who files a notice, statement, or other document under AS 06.60.500 — 06.60.750 that contains a material misstatement of fact is guilty of a class A misdemeanor.


Sec. 06.60.740. Right to subrogation.
When the department has paid to a claimant the sum awarded under AS 06.60.680 or 06.60.700 and any amount due under AS 06.60.720, the department shall be subrogated to all of the rights of the claimant to the amount paid, and the claimant shall assign all right, title, and interest in that portion of the claim to the department. Money collected by the department on the claim shall be deposited in the fund.


Sec. 06.60.745. Reimbursement for expenses.
If the department pays all or a portion of a fund claim against a mortgage loan originator licensee under AS 06.60.680 or 06.60.700, the department may recover from the mortgage loan originator licensee, in addition to the payment of the fund claim, the expenses incurred by the department to process and otherwise handle the fund claim.


Sec. 06.60.750. Disciplinary action against a mortgage loan originator licensee.
Repayment in full of all obligations to the fund does not nullify or modify the effect of disciplinary proceedings brought against a mortgage loan originator licensee under this chapter.


Article 8. Program Administration Fee.


Sec. 06.60.800. Authorization of program administration fee.
 (a) The department may collect a program administration fee of $10 for each mortgage loan transaction to reimburse the state for the cost of administering this chapter.

 (b) The program administration fee shall be paid by a borrower who is providing real property as security for the mortgage loan, except that, if the regulations of a federal or state loan program that insures the loan and that applies to the mortgage loan transaction prohibits the borrower from paying the program administration fee, another party to the mortgage loan transaction shall pay the program administration fee.

 (c) If there are multiple mortgage loan instruments recorded for a single mortgage loan transaction, the department shall collect only one program administration fee.

 (d) The program administration fees collected under this section shall be separately accounted for and may be appropriated by the legislature to the department for the operation of this chapter.

 (e) In this section, “mortgage loan instrument” means a deed of trust, mortgage, or another loan instrument recorded to encumber residential real property in the state.




Sec. 06.60.810. Payment and use of fees. [Repealed, § 87 ch 61 SLA 2010.]

Article 9. Duties and Powers of the Department.


Sec. 06.60.850. Publication of disciplinary action.
The department may release, through the Internet, the registry, or other publication, notice of disciplinary action taken by the department against a person required to be licensed under this chapter.


Sec. 06.60.860. Authority of department.
The department may make a ruling, demand, or finding that the department determines is necessary for the proper conduct of a licensee’s business regulated by this chapter or for the enforcement of this chapter, including an order for the payment of restitution. The ruling, demand, or finding must be consistent with this chapter.


Sec. 06.60.870. Authority to participate in national system and registry. [Repealed, § 87 ch 61 SLA 2010.]

Article 10. Miscellaneous Provisions.


Sec. 06.60.890. Application to Internet activities.
This chapter applies to a person even if the person is engaging in the activities regulated by this chapter by using an Internet website from within or outside the state.


Sec. 06.60.895. Effect of revocation, suspension, or surrender of license.
The revocation, suspension, or surrender of a license does not impair or otherwise affect the rights or obligations of a preexisting lawful contract between the licensee and a borrower.


Sec. 06.60.900. Applicability of administrative procedures.
Notwithstanding AS 06.01.030(f), the provisions of AS 44.62 (Administrative Procedure Act) apply to an action of the department to deny, revoke, or suspend a license or registration under this chapter, to censure, suspend, or bar a person under AS 06.60.410, to take other disciplinary action under this chapter, to hold disciplinary hearings, and to issue disciplinary orders. In this section, “registration” means the registration of a depository institution under AS 06.60.014.


Sec. 06.60.905. Untrue, misleading, or false statements.
A person may not, in a document filed with the department or in an examination, an investigation, a hearing, or another proceeding under this chapter, make or cause to be made an untrue statement of a material fact, or omit to state a material fact necessary in order to make the statement made, in the light of the circumstances under which it is made, not misleading or false.


Sec. 06.60.910. Regulations.
The department may adopt regulations under AS 44.62 (Administrative Procedure Act) to implement this chapter.


Sec. 06.60.920. Relationship to federal and other state law.
 (a) If a provision of this chapter is preempted by or conflicts with federal law in a particular situation, the provision does not apply to the extent of the preemption or conflict.

 (b) If a provision of this chapter conflicts with another state law in a particular situation, the provision in this chapter governs to the extent of the conflict.




Article 11. General Provisions.


Sec. 06.60.990. Definitions.
In this chapter, unless the context otherwise requires,
     (1) “borrower” means an individual who receives a mortgage loan;

     (2) “consumer reporting agency” means a consumer reporting agency that compiles and maintains files on consumers on a nationwide basis; in this paragraph, “consumer reporting agency that compiles and maintains files on consumers on a nationwide basis” has the meaning given in 15 U.S.C. 1681a(p) (Fair Credit Reporting Act);

     (3) “control” means the power, directly or indirectly, to direct the management or policies of a company, whether through ownership of securities, by contract, or otherwise; an individual is presumed to control a company if the individual
          (A) is a director, general partner, or executive officer, including chief executive officer, chief financial officer, chief operations officer, chief legal officer, chief credit officer, or chief compliance officer, or occupies a similar position or performs a similar function;

          (B) directly or indirectly, has the right to vote 10 percent or more of a class of voting security or has the power to sell or direct the sale of 10 percent or more of a class of voting securities;

          (C) in the case of a limited liability company,
               (i) is a managing member;

               (ii) is a member who has the right to receive on dissolution, or has contributed, 10 percent or more of the capital of the limited liability company; or

               (iii) if the limited liability company is managed by elected or appointed managers, is an elected or appointed manager; or

          (D) in the case of a partnership, has the right to receive on dissolution, or has contributed, 10 percent or more of the capital;

     (4) “control person” means an individual described in the uniform mortgage lender and mortgage broker application form of the registry who directly or indirectly exercises control over the applicant;

     (5) “department” means the Department of Commerce, Community, and Economic Development;

     (6) “depository institution” has the meaning given in 12 U.S.C. 1813 (Federal Deposit Insurance Act) and includes a credit union;

     (7) “dwelling” means a residential structure or mobile home that contains one to four family housing units, or the individual units of condominiums or cooperatives;

     (8) “federal banking agency” means the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, the director of the Office of Thrift Supervision, the National Credit Union Administration, and the Federal Deposit Insurance Corporation;

     (9) “fund” means the mortgage loan originator surety fund established under AS 06.60.500;

     (10) “fund claim” means a claim against the fund;

     (11) “fund fee” means the fee required to be paid by AS 06.60.550;

     (12) “individual” means a natural person;

     (13) “knowingly” has the meaning given in AS 11.81.900(a);

     (14) “license” means a license issued under this chapter;

     (15) “licensed mortgage loan originator” means a person who holds a mortgage loan originator license issued under this chapter;

     (16) “licensee” means a person who holds a license issued under this chapter;

     (17) “loan processor or underwriter” means an individual who performs clerical or support duties as an employee at the direction of and subject to the supervision and instruction of a person required to be licensed or exempt from licensing under this chapter; in this paragraph, “clerical or support duties” includes, subsequent to the receipt of an application,
          (A) the receipt, collection, distribution, and analysis of information common for the processing or underwriting of a mortgage loan; and

          (B) communicating with a consumer to obtain the information necessary for the processing or underwriting of a loan, to the extent that the communication does not include offering or negotiating loan rates or terms or counseling consumers about mortgage loan rates or terms;

     (18) “mortgage broker” means a person who, for compensation or gain, or in the expectation of compensation or gain, directly or indirectly, by telephone, by electronic means, by mail, through the Internet, in person, or by the person itself or a mortgage loan originator,
          (A) arranges with a variety of lending sources, including private lenders, institutional investors, or wholesale lenders, to provide financing for mortgage loans; or

          (B) assists or offers to assist a borrower or potential borrower to obtain financing for a mortgage loan;

     (19) “mortgage lender”
          (A) means a person who consummates and funds a mortgage loan and who is named as the payee in the promissory note and as the beneficiary of the deed of trust;

          (B) does not include a subsequent purchaser of a mortgage loan or an interest in a mortgage loan that is originated by a licensee under this chapter;

     (20) “mortgage license” means a license issued under this chapter to operate as a mortgage lender or a mortgage broker;

     (21) “mortgage licensee” means a person who holds a mortgage license;

     (22) “mortgage loan” means a residential mortgage loan;

     (23) “mortgage loan originator”
          (A) means an individual who, for compensation or gain, or in the expectation of compensation or gain,
               (i) takes a mortgage loan application; or

               (ii) offers or negotiates terms of a mortgage loan;

          (B) does not include an individual who is not otherwise described in (A) of this paragraph and who is engaged solely as a loan processor or underwriter on behalf of a person described in (A) of this paragraph, except as provided in AS 06.60.013;

          (C) does not include an individual who only performs real estate brokerage activities and is licensed or registered under applicable state law, unless the individual is compensated by a lender, a mortgage broker, or another mortgage loan originator, or by an agent of the lender, mortgage broker, or other mortgage loan originator; in this subparagraph, ”real estate brokerage activity” means an activity that involves offering or providing real estate brokerage services to the public, including
               (i) acting as a real estate agent or real estate broker for a buyer, seller, lessor, or lessee of real property;

               (ii) bringing together parties interested in the sale, purchase, lease, rental, or exchange of real property;

               (iii) negotiating, on behalf of a party, a portion of a contract relating to the sale, purchase, lease, rental, or exchange of real property other than in connection with providing financing with respect to the transaction;

               (iv) engaging in an activity for which a person engaged in the activity is required to be registered or licensed as a real estate agent or real estate broker under an applicable law; and

               (v) offering to engage in an activity, or act in a capacity, described in (i), (ii), (iii), or (iv) of this subparagraph; and

          (D) does not include a person solely involved in extensions of credit relating to timeshare plans; in this subparagraph, “timeshare plan” has the meaning given in 11 U.S.C. 101 (Bankruptcy Code);

     (24) “mortgage loan originator license” means a license issued to a person to operate as a mortgage loan originator;

     (25) “Nationwide Mortgage Licensing System and Registry” has the meaning given in 12 U.S.C. 5102 (Secure and Fair Enforcement for Mortgage Licensing Act of 2008);

     (26) “nontraditional mortgage product” means a mortgage product other than a 30-year fixed-rate mortgage;

     (27) “operate” means hold out, do business, offer to provide services, or provide services; in this paragraph, “hold out” means to represent to the public, through advertising or other means of communicating or providing information, including the use of business cards, stationery, brochures, signs, rate lists, or other promotional items, that the person can or will perform an activity for which a license is required under this chapter;

     (28) “operate in the state” includes operating in the state from a location outside the state or from an Internet website that originates inside or outside the state;

     (29) “program administration fee” means the fee described under AS 06.60.800(a);

     (30) “record” means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form;

     (31) “registered mortgage loan originator” means an individual who
          (A) is a mortgage loan originator and is an employee of
               (i) a depository institution;

               (ii) a subsidiary that is owned and controlled by a depository institution and regulated by a federal banking agency; or

               (iii) an institution regulated by the Farm Credit Administration; and

          (B) is registered with the registry and maintains a unique identifier with the registry;

     (32) “registry” means the Nationwide Mortgage Licensing System and Registry;

     (33) “registered depository institution” means a depository institution that is registered under AS 06.60.014.

     (34) “residential mortgage loan” means a loan that is primarily for personal, family, or household use and that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling or residential real estate located in the state; in this paragraph,
          (A) “manufactured home” has the meaning given in AS 45.29.102;

          (B) “residential real estate” means real property on which a dwelling is constructed or intended to be constructed, including a manufactured home that has become real property under AS 34.85.010;

     (35) “unique identifier” means a number or other identifier assigned to a licensee by protocols established by the registry.




Sec. 06.60.995. Short title.
This chapter may be known as the Alaska Secure and Fair Enforcement for Mortgage Licensing Act of 2010.


Chapter 65. Alaska Savings Program for Eligible Individuals.

Sec. 06.65.010. Program authorized.
The Alaska savings program for eligible individuals is created in the department. The department shall implement and administer the program under this chapter and as required by the federal authorizing law.


Sec. 06.65.020. General department duties.
To implement and administer the program, the department shall, in addition to the other powers and duties provided to the department under this chapter,
     (1) develop, set, and approve the terms and conditions of the program, consistent with this chapter and the federal authorizing law, including limiting the nature and amount of contributions that may be made to a program account;

     (2) supervise the decisions about the investment of contributions to a program account;

     (3) seek required federal, state, and other regulatory agency rulings and exemptions;

     (4) arrange for the timely filing of required regulatory notices, disclosure documents, and reports;

     (5) arrange for the program to be audited annually; and

     (6) take other action that is not specifically identified in this section but that is necessary to
          (A) obtain and maintain the tax benefits allowed under the federal authorizing law; and

          (B) maintain favorable treatment for designated beneficiaries under state and federal programs that use a means test for eligibility.




Sec. 06.65.030. Modification of program.
Consistent with this chapter and the federal authorizing law, the department may modify the terms and conditions of the program as the department considers necessary or desirable for the effective and efficient operation of the program.


Sec. 06.65.040. Additional department powers.
The department may
     (1) set fees the department considers necessary or desirable for program transactions and services; and

     (2) develop marketing plans and materials to promote the benefits of the program that are available to contributors under the program and to beneficiaries under the program.




Sec. 06.65.050. Contracting authority; procurement exemption.
 (a) The department may contract with a person to advise and assist in the implementation and operation of the program.

 (b) The department may contract with a person to provide services for the program.

 (c) The department may enter into a contract with other states to obtain or provide the services for implementing the program. The contract may include cooperative procurement by the states of a person to provide services for the program, including investment and record-keeping services.

 (d) Notwithstanding the other provisions of this chapter, the department may enter into a contract with another state to allow the residents of
     (1) this state to participate in a program established by another state under the federal authorizing law, instead of establishing the program in this state;

     (2) that contracting state to participate in the program in this state.

 (e) The procurement of contracts for the program, including procurement of services under a contract with other states, is exempt from AS 36.30 (State Procurement Code).




Sec. 06.65.060. Investment oversight.
The department shall
     (1) oversee and approve the selection of investment managers and advisors for the program;

     (2) oversee all aspects of the program’s investments and investment performance and decisions regarding the investment of program assets; and

     (3) oversee all investment disclosure documents and regulatory filings related to program investments.




Sec. 06.65.070. Financial contractor obligations.
In addition to any other obligations imposed by the contract with the department, if the department enters into a contract with a person to provide program accounts, the financial contractor shall
     (1) provide program accounts that comply with the federal authorizing law;

     (2) take the action necessary to keep the program in compliance with the requirements of this chapter and to manage the program accounts in compliance with the federal authorizing law;

     (3) keep adequate records of each program account and keep each program account segregated from other program accounts;

     (4) as requested by the department, compile the information contained in statements required to be prepared under AS 06.65.210 and provide the statements and the compiled material to the department;

     (5) provide the department with access to the books and records of the financial contractor to the extent needed to determine compliance with the contract, this chapter, and the federal authorizing law;

     (6) hold program accounts for the benefit of the program account owner;

     (7) be audited, at least annually, by a firm of certified public accountants acceptable to the department and provide the results of the audits to the department;

     (8) upon request of the department, provide the department with copies of all filings and reports related to the program made by the financial contractor during the contract or while the financial contractor holds program accounts;

     (9) upon request of the department, make available to the department for review the results of periodic examinations of the financial contractor by a state or federal banking, insurance, or securities agency, except to the extent that the report is confidential under state or federal law; and

     (10) ensure that the descriptions of the program in the media that the financial contractor uses to promote the program are consistent with a marketing plan developed for the program.




Sec. 06.65.080. Additional audits.
In addition to the annual audit required by AS 06.65.020(5), the department may require a financial contractor to have an audit conducted of the financial contractor’s operations and financial position when the department is concerned about the financial position, the record-keeping practices, or the status of the program accounts of the financial contractor.


Sec. 06.65.090. Contract termination; nonrenewal.
The department may terminate or fail to renew a financial contract. If the department terminates or does not renew a contract with a financial contractor, the department shall take custody of the program accounts held by the financial contractor and transfer the program accounts to another financial contractor as soon as possible and into program accounts that are as similar as possible to the types of program accounts being transferred.


Sec. 06.65.100. Eligible individuals.
To be eligible for a program account, when an individual or the individual’s representative establishes the program account or makes a distribution to another program account under AS 06.65.200, the individual shall be an individual
     (1) who is entitled to benefits based on blindness or disability under 42 U.S.C. 401 — 434 or 42 U.S.C. 1381 — 1383f, and the blindness or disability occurred before the date on which the individual reached 26 years of age; or

     (2) for whom a disability certification that satisfies the secretary and the federal authorizing law is filed with the secretary for the calendar year in which the eligible individual or the eligible individual’s representative opens the program account.




Sec. 06.65.110. Representative of eligible individual.
 (a) A person may act as the representative of an eligible individual under this chapter if the eligible individual is a minor or lacks decision-making capacity and if the person is
     (1) a parent, guardian, or conservator of the eligible individual; in this paragraph,
          (A) “conservator” has the meaning given in AS 13.06.050;

          (B) “guardian” has the meaning given in AS 13.06.050;

          (C) “parent” includes a stepparent; or

     (2) a trustee of the property of the eligible individual.

 (b) The representative of an eligible individual may establish a program account for the eligible individual, and the eligible individual is the designated beneficiary of the program account. The representative shall manage the program account for the benefit of the designated beneficiary.

 (c) In this section, “decision-making capacity” means the ability to understand and appreciate the nature and consequences of a decision and the ability to reach and communicate an informed decision.




Sec. 06.65.120. Program account ownership.
 (a) The owner of a program account is the designated beneficiary of the program account.

 (b) If a representative of an eligible individual establishes a program account for an eligible individual, the representative is not an owner of the program account and does not have or acquire an interest in the assets of the program account.




Sec. 06.65.130. Number of program accounts.
An eligible individual may not be the designated beneficiary on more than one program account.


Sec. 06.65.140. Program account application.
The application for a program account must be in the form established by the department and contain
     (1) the name, address, and social security number of the program account owner and, if applicable, the representative who opens the program account for the eligible individual; and

     (2) additional information that the department and the secretary determine is necessary.




Sec. 06.65.150. Program account establishment fee.
The financial contractor may charge an eligible individual a nonrefundable fee for establishing a program account. The department shall establish the amount of the fee by contract with the financial contractor or by regulation.


Sec. 06.65.160. Program account contributions.
 (a) As provided by the federal authorizing law, a person may make a contribution to a program account for the designated beneficiary.

 (b) A person may not make a contribution to open or add to a program account unless the person makes the contribution by using a method of payment acceptable to the department.

 (c) Any person may make a contribution to a program account, but the amount that the person may contribute is subject to the limits set by the federal authorizing law or the department.

 (d) The department or the financial contractor shall reject or withdraw from a program account
     (1) that part of a contribution that exceeds the limit established under (c) of this section; or

     (2) the total amount of a contribution, if the department or the financial contractor determines that the
          (A) value of the program account without the contribution is equal to or greater than the maximum limit established by the federal authorizing statute for the program account; or

          (B) designated beneficiary is not an eligible individual during the calendar year in which the contribution is made.

 (e) If a person makes a distribution from a program account during a calendar year, the financial contractor shall report the distribution to the federal Internal Revenue Service and to the account owner or the representative of the account owner.

 (f) The report under (e) of this section must include the distribution information required by state and federal law.




Sec. 06.65.170. Limited investment direction.
A designated beneficiary or the designated beneficiary’s representative may not, directly or indirectly, direct the investment of a program account, including the earnings on the program account, more than twice in one calendar year.


Sec. 06.65.180. Change of designated beneficiary.
A designated beneficiary or the designated beneficiary’s representative may change the designated beneficiary of a program account to an eligible individual who is a member of the family of the previous designated beneficiary.


Sec. 06.65.190. Distributions for qualified expenses.
Except as allowed under AS 06.65.200, a designated beneficiary or the representative of the designated beneficiary may not make a withdrawal or other distribution from a program account unless the withdrawal or other distribution is used to pay for the qualified expenses of the designated beneficiary.


Sec. 06.65.200. Rollover distribution.
 (a) Subject to the restrictions in the federal authorizing law for rollover distributions, a designated beneficiary or the designated beneficiary’s representative may make a distribution of the money in a program account to another program account if the designated beneficiary of the program account to which the distribution is being made is
     (1) the same eligible individual; or

     (2) an eligible individual who is a member of the family of the designated beneficiary from whom the distribution is made.

 (b) To qualify as a distribution allowed under (a) of this section, the designated beneficiary or the designated beneficiary’s representative shall make the distribution to the other program account before the 60th day after the designated beneficiary or the designated beneficiary’s representative makes the distribution from the program account.




Sec. 06.65.210. Statements.
 (a) A financial contractor shall provide program account statements to the designated beneficiary or the designated beneficiary’s representative of each program account established with the financial contractor at least four times each year and at the times the department establishes.

 (b) A financial contractor shall provide the department with the reports and information that the department requests that are related to the program account statements.




Sec. 06.65.220. Preparation and filing.
In addition to the other reporting requirements of this chapter, a financial contractor shall prepare and file the statements, program account information, and other information as required by state and federal law and state and federal agencies.


Sec. 06.65.230. Separate accounting.
A financial contractor shall provide separate accounting for each program account established with the financial contractor.


Sec. 06.65.240. Annual fee.
A financial contractor may impose an annual fee as may be established by the department on the program account owner for the maintenance of a program account.


Sec. 06.65.250. Use as security.
A person may not use a program account or an interest in a program account as security for a loan. If a person pledges a program account or an interest in a program account as security for a loan, the pledge is void.


Sec. 06.65.260. No state obligation.
 (a) This chapter may not be construed to create an obligation of the state, the department, or an agency or instrumentality of the state to guarantee for the benefit of a designated beneficiary
     (1) the return of the principal deposited in the program account;

     (2) a rate of interest or other return on the principal in a program account; or

     (3) the payment of interest or other return on the principal in a program account.

 (b) Every contract, application, and other document that may be used in connection with opening a program account must clearly state that the state does not insure a program account or guarantee the items described in (a) of this section.




Sec. 06.65.270. Confidentiality.
The department, the Department of Health and Social Services, and another state agency that receives information under AS 06.65.280 shall maintain the confidentiality of the information they receive or exchange under this chapter about eligible individuals, designated beneficiaries, and program accounts as required by state and federal law.


Sec. 06.65.280. Exchange of information.
The department may exchange information with the Department of Health and Social Services and other state agencies to determine whether an individual is an eligible individual.


Sec. 06.65.290. Treatment under means test programs.
 (a) Notwithstanding a contrary provision of law, a state agency may not consider a program account amount in this or another state when determining the eligibility of the designated beneficiary of the program account to receive state assistance or state benefits or when determining the amount of state assistance or state benefits to be received by the designated beneficiary of the program account.

 (b) In this section, “program account amount” means a contribution to a program account, earnings on the contribution, or a distribution for a qualified expense.




Sec. 06.65.300. Deposit from permanent fund dividend.
A person who is eligible under AS 43.23 to receive a permanent fund dividend may make a deposit into the program account of a designated beneficiary from and up to the amount of the person’s permanent fund dividend.


Sec. 06.65.310. Program expense fund.
 (a) The program expense fund is established as a separate fund of the state in the general fund.

 (b) The program expense fund consists of money appropriated to the fund to pay the expenses of the program.

 (c) The department shall pay the expenses incurred by the department to implement and administer the program from the program expense fund.

 (d) The department shall manage the fund.

 (e) Except as provided otherwise by the appropriation for the money, the money remaining in the program expense fund at the end of a fiscal year does not lapse and remains available for expenditure under this section in successive fiscal years.




Sec. 06.65.320. Medicaid claims.
This state or another state may file a claim against the amount remaining in the program account of a deceased designated beneficiary to recover medical assistance payments if the payments were made for the designated beneficiary, were made under that state’s Medicaid program authorized by 42 U.S.C. 1396 — 1396p (Title XIX, Social Security Act), and were made after the program account of the designated beneficiary was established. The application of this section is subject to the requirements of 26 U.S.C. 529A(f) (Internal Revenue Code).


Sec. 06.65.330. Governing law.
If a provision of this chapter conflicts with the requirements of the federal authorizing law for the program, the federal authorizing law governs to the extent of the conflict.


Sec. 06.65.340. Regulations.
The department may adopt regulations under AS 44.62 (Administrative Procedure Act) to implement this chapter.


Sec. 06.65.350. Annual report.
The department shall evaluate the program each year. The department shall submit an annual report containing the evaluation to the senate secretary and chief clerk of the house of representatives on or before the first day of each regular session of the legislature and shall notify the legislature that the report is available.


Sec. 06.65.390. Definitions.
In this chapter,
     (1) “department” means the Department of Revenue;

     (2) “designated beneficiary” means the eligible individual for whom a program account for qualified expenses is established under this chapter;

     (3) “eligible individual” means an individual who is eligible under AS 06.65.100;

     (4) “federal authorizing law” means 26 U.S.C. 529A (Internal Revenue Code) and the regulations issued under that statute;

     (5) “financial contractor” means a person that enters into a contract with the department under this chapter to provide program accounts;

     (6) “member of the family” has the meaning given in the federal authorizing statute;

     (7) “program” means the Alaska savings program for eligible individuals established under AS 06.65.010;

     (8) “program account” means a savings account used by the program to meet the qualified disability expenses of the designated beneficiary of the account;

     (9) “program account owner” means the designated beneficiary of a program account;

     (10) “qualified expense” means a qualified disability expense as defined by the federal authorizing law;

     (11) “representative” means a person who is a representative of an eligible individual under AS 06.65.110(a);

     (12) “savings account” means a financial account;

     (13) “secretary” means the United States Secretary of the Treasury.