§ 36 — Examinations; right of inspection; penalties for refusing to permit examination

New York § 36

• Jurisdiction: New York
• Law BNK: Banking
• Art. 2: Department of Financial Services; Superintendent of Financial Services; Supervisory and Regulatory Powers

Text

§ 36. Examinations; right of inspection; penalties for refusing to\npermit examination. * 1. The superintendent shall have the power to\nexamine every banking organization, every bank holding company and any\nnon-banking subsidiary thereof (as such terms "bank holding company" and\n"non-banking subsidiary" are defined in article three-A of this chapter)\nand every licensed lender at any time prior to its dissolution whenever\nin his judgment such examination is necessary or advisable.\n * NB Effective until certain provisions are met (see Ch. 58 of 2025,\nPart Y, § 13)\n * 1. The superintendent shall have the power to examine every banking\norganization, every bank holding company and any non-banking subsidiary\nthereof (as such terms "bank holding company" and "non-banking\nsubsidiary" are defined in article three-A of this chapter) and every\nlicensed lender and licensed buy-now-pay-later lender at any time prior\nto its dissolution whenever in the superintendent's judgment such\nexamination is necessary or advisable.\n * NB Effective upon the one hundred eightieth day after the\npromulgation of rules and/or regulations by the department of financial\nservices to effectuate certain provisions (see Ch. 58 of 2025, Part Y, §\n13)\n 2. At least once in each calendar year upon such date or dates within\neach such period as in his or her discretion he or she deems proper, the\nsuperintendent shall cause every banking organization to be examined;\nprovided, however, that:\n (a) the provisions of this subdivision shall not be applicable to an\ninvestment company unless (i) such investment company has been\nauthorized by the superintendent of financial services to receive\ndeposits, in accordance with the terms of subdivision three of section\nfive hundred eight of this chapter, (ii) a bank or trust company, or any\ntwo or more of such organizations, shall own an aggregate of twenty-five\nper centum or more of the capital stock of such investment company, or\n(iii) such investment company is a corporation which, under the terms of\nsubdivision six of this section, is deemed for the purposes of this\nsection to be a corporation affiliated with a corporate banking\norganization, and\n (b) the superintendent may extend the examination interval from at\nleast once in each calendar year to at least once in each eighteen month\nperiod if the banking organization to be examined:\n (1) has total assets of less than one billion dollars;\n (2) is well-capitalized, which for purposes of this paragraph is\ndefined as having capital which significantly exceeds the required\nminimum level for each relevant capital measure or as having such\ncapital as the superintendent shall otherwise define by regulation;\n (3) at its most recent examination, was found to be well-managed and\nits composite condition was found to be outstanding or good;\n (4) is not currently subject to a formal enforcement proceeding or\norder by the superintendent, the federal deposit insurance corporation\nor any other federal banking agency; and\n (5) has not been acquired by any person during the twelve month period\nin which an examination would be required but for this paragraph, and\n (c) the superintendent may modify the examination intervals as\nprescribed by this subdivision to the extent the superintendent deems\nappropriate, in his or her sole discretion, in order to obtain the\nefficient use of the personal and nonpersonal resources of the\ndepartment by maximizing coordination with identical or parallel\nexaminations having differing or varying intervals performed by federal\nbanking regulators, whether such examinations are performed in\nconjunction with the department or on an alternating schedule with such\nfederal banking regulators; provided, that nothing in this paragraph\nshall be deemed in any manner to lessen or modify the requirement\nimposed pursuant to section ten of this article.\n 3. On every such examination of any banking organization inquiry shall\nbe made as to (a) its financial condition, (b) the security afforded to\nthose by whom its engagements are held, (c) the policies of its\nmanagement, (d) whether the requirements of law have been complied with\nin the administration of its affairs, and (e) such other matters as the\nsuperintendent may prescribe. Examination of a licensed lender shall be\nmade only for the purposes set forth in section three hundred\nforty-eight of this chapter.\n 4. The superintendent shall also have power at any time to examine\nevery agency, branch or office located in this state of any foreign\nbanking corporation, including, but not limited to, all of the books,\naccounts or records of every agency, branch or office located in this\nstate of such foreign banking corporation as well as all of the books,\naccounts or records maintained in this state of any agency, branch or\noffice not located in this state of such foreign banking corporation for\nthe purpose of ascertaining whether it has violated any law and for any\nother purpose.\n 5. The superintendent shall have the power to make such special\ninvestigations as he shall deem necessary to determine whether any\nindividual, partnership, unincorporated association or corporation has\nviolated any of the provisions of this chapter; and to the extent\nnecessary for this purpose the superintendent shall have the power to\nexamine all relevant books, records, accounts and documents.\n 6. For the purpose of determining the financial condition of a banking\norganization, the superintendent shall have the power, when in his or\nher judgment it is necessary or advisable, to examine corporations or\nany other entity affiliated with any such banking organization. The\nfollowing are deemed for the purposes of this section to be corporations\nor other entities affiliated with a banking organization:\n (a) (i) Any corporation or other entity, the capital stock of which\nsuch banking organization directly or indirectly, or through a\nsubsidiary or subsidiaries, owns or controls ten per centum or more of\nthe voting shares of such corporation or other entity; or (ii) any\ncorporation or other entity the election of a majority of the board of\ndirectors of which is in any manner directly or indirectly controlled by\nsuch banking organization; or (iii) any corporation or other entity the\nmanagement or policies over which the banking organization has the\npower, directly or indirectly, to exercise a controlling influence, as\ndetermined by the superintendent; provided, however, the foregoing\ndefinition of affiliate corporations and other entities shall not apply\nto small business investment companies as defined in and operating\npursuant to the provisions of an act of congress entitled "Small\nBusiness Investment Act of 1958," and such companies shall be deemed to\nbe corporations affiliated with the banking organization for the\npurposes of this subdivision, if such banking organization directly or\nindirectly owns or controls twenty-five per centum or more of the voting\nshares or more than twenty-five per centum of the shares voted for the\nelection of directors at the preceding annual meeting of such small\nbusiness investment company; or any such small business investment\ncompany the election of at least twenty-five per centum of the board of\ndirectors of which is in any other manner directly or indirectly\ncontrolled by such banking organization; or\n (b) Any corporation or other entity which directly or indirectly, or\nthrough a subsidiary or subsidiaries, owns or controls ten per centum or\nmore of the voting shares of capital stock of such banking organization;\nor any corporation or other entity which in any manner directly or\nindirectly controls the election of a majority of the board of directors\nof such banking organization; or with respect to the management or\npolicies of such banking organization has the power, directly or\nindirectly, to exercise a controlling influence, as determined by the\nsuperintendent.\n 6-a. (a) For the purposes of determining the financial condition of a\nbanking organization, the superintendent shall have the power, when in\nhis or her judgment it is necessary or advisable, to examine a\nnon-banking subsidiary of a corporation or other entity which\ncorporation or other entity, pursuant to paragraph (b) of subdivision\nsix of this section, is deemed to be an affiliate of a banking\norganization.\n (b) For the purposes of this subdivision, a "subsidiary" of such\naffiliated corporation or other entity shall mean:\n (1) Any corporation or other entity ten per centum or more of whose\nvoting stock is directly or indirectly, or through a subsidiary or\nsubsidiaries, owned, controlled, or held with power to vote, by an\naffiliated corporation or other entity; or (2) any corporation or other\nentity, the election of a majority of whose directors is controlled in\nany manner by an affiliated corporation or other entity; or (3) any\ncorporation or other entity, ten per centum or more of whose voting\nstock is directly or indirectly owned, controlled, or held with power to\nvote, by a trustee or trustees for the benefit of the stockholders or\nmembers of an affiliated corporation or other entity; or (4) any\ncorporation or other entity, at least ten per centum of the voting stock\nof which is directly or indirectly, or through a subsidiary or\nsubsidiaries, owned, controlled or held with power to vote by a\ncombination of an affiliated corporation or other entity and by a\ntrustee or trustees for the benefit of the stockholders or members of\nsuch affiliated corporation or other entity; or (5) any entity,\ncorporate or unincorporated, with respect to the management or policies\nof which such affiliated corporation or other entity has the power,\ndirectly or indirectly, to exercise a controlling influence, as\ndetermined by the superintendent, after notice and opportunity for a\nhearing. For the purposes of this subdivision, voting stock shall not be\ndeemed to include voting stock owned by the United States or by any\ncorporation wholly owned by the United States.\n (c) A "non-banking subsidiary" for the purposes of this subdivision\nmeans one which is not a banking organization or which is not engaged in\nthe banking business as defined in subdivision one of section one\nhundred thirty-one of this chapter.\n (d) The superintendent may use the reports of regulatory agencies of\nthis state, of other states, of any foreign government, and of federal\nregulatory agencies in making such examinations or in conjunction with\nsuch examination. All regulatory agencies of this state, shall upon\nrequest of the superintendent, furnish or make available to him or her\nreports of examination made by them of any such non-banking subsidiary.\n 6-b. For purposes of subdivisions six and six-a of this section, any\nreferences contained therein to "voting stock" or "voting shares" shall\nbe deemed to include any ownership interest with respect to any entity\nother than a corporation, any references to "stockholders" or\n"shareholders" shall include persons or entities who have an equity\ninterest in any entity other than a corporation, and any references to\n"board of directors" shall be deemed to mean the governing body with\nrespect to any entity other than a corporation.\n 7. The superintendent may cause any corporation, association or\npartnership having business transactions or relations with any corporate\nbanking organization to be examined if such examination is found by a\njustice of the supreme court, on application of the superintendent and\non notice to such company, to be necessary or expedient in order to\nascertain whether the capital stock of such corporate banking\norganization is impaired or whether safety of depositors with it has\nbeen imperilled.\n 8. Examinations may be made and inquiries instituted or continued in\nthe discretion of the superintendent after he has taken possession of\nthe property and business of any banking organization or after it has\nentered upon voluntary dissolution until it shall resume business or its\naffairs shall be finally liquidated.\n 9. Any individual, partnership, unincorporated association or\ncorporation, or any other entity, which refuses to permit examination or\ninvestigation in accordance with the terms of this section shall forfeit\nto the people of the state an amount as determined pursuant to section\nforty-four of this chapter for every day such refusal continues.\n * 10. All reports of examinations and investigations, correspondence\nand memoranda concerning or arising out of such examination and\ninvestigations, including any duly authenticated copy or copies thereof\nin the possession of any banking organization, bank holding company or\nany subsidiary thereof (as such terms "bank holding company" and\n"subsidiary" are defined in article three-A of this chapter), any\ncorporation or any other entity affiliated with a banking organization\nwithin the meaning of subdivision six of this section and any\nnon-banking subsidiary of a corporation or any other entity which is an\naffiliate of a banking organization within the meaning of subdivision\nsix-a of this section, foreign banking corporation, licensed lender,\nlicensed casher of checks, licensed mortgage banker, registered mortgage\nbroker, licensed mortgage loan originator, licensed sales finance\ncompany, registered mortgage loan servicer, licensed student loan\nservicer, licensed insurance premium finance agency, licensed\ntransmitter of money, licensed budget planner, any other person or\nentity subject to supervision under this chapter, or the department,\nshall be confidential communications, shall not be subject to subpoena\nand shall not be made public unless, in the judgment of the\nsuperintendent, the ends of justice and the public advantage will be\nsubserved by the publication thereof, in which event the superintendent\nmay publish or authorize the publication of a copy of any such report or\nany part thereof in such manner as may be deemed proper or unless such\nlaws specifically authorize such disclosure. For the purposes of this\nsubdivision, "reports of examinations and investigations, and any\ncorrespondence and memoranda concerning or arising out of such\nexaminations and investigations", includes any such materials of a bank,\ninsurance or securities regulatory agency or any unit of the federal\ngovernment or that of this state any other state or that of any foreign\ngovernment which are considered confidential by such agency or unit and\nwhich are in the possession of the department or which are otherwise\nconfidential materials that have been shared by the department with any\nsuch agency or unit and are in the possession of such agency or unit.\n * NB Effective until certain provisions are met (see Ch. 58 of 2025,\nPart Y, § 13)\n * 10. All reports of examinations and investigations, correspondence\nand memoranda concerning or arising out of such examination and\ninvestigations, including any duly authenticated copy or copies thereof\nin the possession of any banking organization, bank holding company or\nany subsidiary thereof (as such terms "bank holding company" and\n"subsidiary" are defined in article three-A of this chapter), any\ncorporation or any other entity affiliated with a banking organization\nwithin the meaning of subdivision six of this section and any\nnon-banking subsidiary of a corporation or any other entity which is an\naffiliate of a banking organization within the meaning of subdivision\nsix-a of this section, foreign banking corporation, licensed lender,\nlicensed buy-now-pay-later lender, licensed casher of checks, licensed\nmortgage banker, registered mortgage broker, licensed mortgage loan\noriginator, licensed sales finance company, registered mortgage loan\nservicer, licensed student loan servicer, licensed insurance premium\nfinance agency, licensed transmitter of money, licensed budget planner,\nany other person or entity subject to supervision under this chapter, or\nthe department, shall be confidential communications, shall not be\nsubject to subpoena and shall not be made public unless, in the judgment\nof the superintendent, the ends of justice and the public advantage will\nbe subserved by the publication thereof, in which event the\nsuperintendent may publish or authorize the publication of a copy of any\nsuch report or any part thereof in such manner as may be deemed proper\nor unless such laws specifically authorize such disclosure. For the\npurposes of this subdivision, "reports of examinations and\ninvestigations, and any correspondence and memoranda concerning or\narising out of such examinations and investigations", includes any such\nmaterials of a bank, insurance or securities regulatory agency or any\nunit of the federal government or that of this state any other state or\nthat of any foreign government which are considered confidential by such\nagency or unit and which are in the possession of the department or\nwhich are otherwise confidential materials that have been shared by the\ndepartment with any such agency or unit and are in the possession of\nsuch agency or unit.\n * NB Effective upon the one hundred eightieth day after the\npromulgation of rules and/or regulations by the department of financial\nservices to effectuate certain provisions (see Ch. 58 of 2025, Part Y, §\n13)\n