Institution Definitions and Descriptions
Below you will find a brief definition of each of the main types of institutions/individuals that we supervise and a brief description of the laws under which we regulate them.
Banks and Trust Companies
Banks, also known as commercial banks, are community, regional or national for-profit business corporations owned by private investors and governed by a board of directors chosen by stockholders. Banks are generally institutions focused on commercial lending to help finance business and other ventures but are also involved in unsecured lending or lending secured by items other than real estate (i.e. credit cards or inventory loans).
A Trust Company is an entity that is authorized by the Superintendent to exercise fiduciary (trust) powers. A trust may be a stand-alone entity or be part of a bank. These companies provide a number of fiduciary responsibilities. The "trust" name refers to the ability of the institution to act as a trustee – someone who administers financial assets on behalf of another.
In the case of a Limited Purpose Trust Company, the application process generally receives the same level of scrutiny as other bank and trust companies with two exceptions: the minimum level of capitalization and the requirement for Federal Deposit Insurance Corporation (FDIC) insurance. The basic restriction on limited purpose trusts is the prohibition on receiving deposits and making loans except as incidental to the exercise of fiduciary powers. DFS charters and regulates banks and trust companies under Article III of the Banking Law. Such Limited Purpose Trust Companies are, in some cases, authorized by DFS to engage in virtual currency-related activity.
A budget planner is a non-profit corporation that enters into a contract with a debtor under which the debtor agrees to pay a sum of money periodically to the budget planner, which the budget planner distributes among the debtor’s creditors. A budget planner also provides credit counseling and financial education. Section 456 of the General Business Law prohibits budget planning by anyone other than a non-profit corporation. Budget planners are licensed by and have their fees approved by the DFS under Article XII-C of the Banking Law.
Some banks in the U.S. are organized as mutual companies. A mutual company is one that is owned, and sometimes governed, by its members instead of being owned by public or private shareholders. In the case of a mutual savings bank or a mutual savings association, the members are the financial institution’s depositors.
When a mutual company converts to a stock form of ownership, it may establish a private charitable foundation expected to provide funds to support charitable causes and community development activities. The foundation may be funded by the sponsoring institution with cash, common stock or other property and is established as a separate legal entity, though it may be closely tied to the sponsoring corporation through an interlocking board of directors and staff. Such foundations must apply for tax-exempt status at both the state and federal levels. Contributions by the corporation to the charitable foundation are tax deductible for federal tax purposes over a certain period with deductions generally limited to a certain percent of taxable income in any one year. These charitable foundations are subject to examination by the DFS. The Community and Regional Banks Division is responsible for the examination and supervision of these foundations.
A check casher is a person or entity whose primary business is the cashing of checks, drafts or money orders for a fee.
A check casher license is not required when a person or entity cashes checks, drafts or money orders for free, or when the person or entity cashes checks, drafts or money orders as an incident to the conduct of another lawful business (e.g. a store) and not more than $1.00 is charged. New York State strictly regulates the check cashing industry, from setting limits on the amount that can be charged for cashing a check to regulating how close together facilities can be located.
Check cashers are licensed by the Superintendent of Financial Services under Article IX-A of the Banking Law.
Consumer Credit Reporting Agencies
A consumer credit reporting agency (CCRA) is a company that assembles or evaluates and maintains consumer credit information for the purpose of providing reports to third parties that bear on consumers’ credit worthiness, credit standing, or credit capacity. Part 201 of Title 23 of the Official Compilation of Codes, Rules, and Regulations of the State of New York provides the official definition of a CCRA, and requires CCRAs that, within the preceding 12-month period, have assembled, evaluated, or maintained a consumer credit report on one thousand or more New York consumers to register with DFS.
A credit union is a non-stock corporation (i.e. a membership corporation) whose members must either have a common employer or be members of the same trade, industry, profession, club, union, society or other association. Credit unions may accept deposits from, make loans to, and issue credit cards to their members, among other things. The Banking Law also provides for an entity called a corporate credit union, whose members are primarily other credit unions.
Credit unions are regulated under Article XI of the Banking Law. New York state-chartered credit unions are also regulated by the National Credit Union Administration, which also insures credit union share accounts up to certain limits.
Domestic Representative Offices
A national bank or a bank chartered in another state, wishing to establish a presence in New York State in order to conduct certain business activities may choose to register a Domestic Representative Office with the Superintendent. A representative office can also be an office of a New York state-chartered institution located outside the New York that engages in representational functions. Domestic Representative Offices may only engage in certain functions on behalf of the institution such as approving loans, executing loan documents, soliciting loans (including assembling credit information, property inspections and appraisals, securing title information, preparing loan applications, solicitation loan servicing) soliciting banking business on behalf of the institution, conducting research and acting as liaison with customers of the institution.
Domestic representative offices are not branches and cannot engage in general banking transactions at their representative offices. They may not disburse funds, transmit funds, accept loan repayments, or accept deposits on behalf of the banking institution.
A Foreign Agency of a Foreign Banking Organization (“FBO”) is licensed by the Superintendent to conduct banking business in New York and has many of the same powers as a Foreign Branch, except in the case of deposits. A Foreign Agency, in accordance with Section 202-a of the Banking Law, may issue large-denomination obligations over a specified amount, may accept deposits other than from citizens or residents of the United States, and may maintain credit balances for customers incidental to its banking business.
Foreign Agencies are covered under Article V of the Banking Law. Since 1991, they have also been subject to supervision by the Federal Reserve Board.
A Foreign Branch of an FBO is licensed by the Superintendent to conduct banking business in New York. A Foreign Branch may exercise the same powers as a state-chartered commercial bank, including accepting deposits, making loans, issuing letters of credit, dealing in foreign exchange, making acceptances and, if authorized, exercising fiduciary powers. A Foreign Branch can be insured or uninsured; an uninsured Foreign Branch may accept deposits only as authorized by the FDIC.
Foreign Branches are covered under Article V of the Banking Law. Since 1991, they have also been subject to supervision by the Federal Reserve Board. Since passage of the FDIC Foreign Bank Supervision Enhancement Act in 1991, no new insured Foreign Branches have been licensed.
Foreign Representative Offices
A Foreign Representative Office (“Rep Office”) of an FBO is licensed by the Superintendent to conduct research on the U.S. market and engage in marketing for the FBO. A Rep Office is not permitted to perform any core banking functions for the FBO or make any business decisions that would obligate the FBO, but it is permitted to engage in a number of activities not deemed to constitute the business of banking, including acting as liaison with customers and correspondents of the FBO, soliciting new business for the FBO, soliciting investors to buy loans from the FBO, and soliciting loans of $250,000 or more for the FBO.
Foreign Representative Offices are covered in Article V-B of the Banking Law. Since 1991, they have also been subject to supervision by the Federal Reserve Board.
The Department is responsible for regulating the following types of health insurers: accident and health; non-profit health services, medical expense indemnity, dental expense indemnity corporations and health maintenance organizations (HMOs). In addition, the Department regulates health insurance products issued by fraternal benefit societies, municipal cooperative health benefit plans and continuing care retirement communities (CCRCs).
The Department oversees the solvency of these companies, corporate and marketplace conduct, and compliance with the Insurance Law and regulations. The Department conducts periodic financial and market conduct examinations of these companies; reviews and approves health insurance premium adjustments; reviews and approves new rates and filings; and issues legal interpretations of contract language for health insurance, including Disability Benefits Law (DBL) coverage and continuing care retirement communities (CCRCs).
A bank holding company is an entity (or natural person) that owns 10% or more of the voting stock, or otherwise controls, two or more New York banks or trust companies or national banks whose principal offices are located in New York State. Regulation of bank holding companies under Article III-A of the Banking Law is designed to prevent undue concentration of bank ownership. Consequently, unlike the Federal Reserve Board, which regulates all holding companies, even if they control only one bank, the Department does not regulate one-bank holding companies.
An insurance holding company is an individual or entity who directly or indirectly controls any authorized insurer. Control is presumed to exist if an individual or entity directly or indirectly owns, controls, or holds, with the power to vote, 10% or more of the voting securities of an authorized insurer. The Department regulates holding companies under Insurance Law Article 15 and 11 NYCRR 80-1 (Insurance Regulation 52). Regulation of insurance holding companies is designed to prevent indiscriminate over-concentration of economic power and to forestall potential abuses that could harm controlled insurers.
An Article XII Investment Company is a specialized non-depository lending institution that has broad borrowing and lending powers and may invest in stocks and bonds. An Article XII Investment Company is not an “investment company” subject to registration under the Investment Company Act of 1940.
An Article XII Investment Company may accept credit balances in New York that are incidental to the exercise of its other powers and may accept deposits outside New York with the approval of the Superintendent. Article XII Investment Companies may specialize in commercial or retail sales finance; others are involved in domestic and international commercial and merchant banking.
A licensed lender is an entity engaged in the business of making loans in the principal amount of $25,000 or less to any individual for personal, family, household, or investment purposes, or $50,000 or less for business and commercial loans, at a rate of interest greater than 16% a year.
Licensed lenders are covered in Article IX of the Banking Law.
The Department is responsible for regulating the financial condition, market conduct activities, corporate conduct and administration of the Insurance Law for the following types of insurers: life insurance companies, life insurance departments of savings banks, public pension funds, fraternal benefit societies, retirement systems, charitable annuity societies, life settlement companies and union welfare funds.
The Department conducts annual reviews of reserves; issues certificates of reserve valuation; reviews actuarial opinions and memoranda; audits minimum statutory formula reserves; reviews rates and actuarial aspects of life insurance and annuity policy forms; reviews reserve procedures for separate account plans of operation; reviews applications for the creation of continuing care retirement communities; conducts legal reviews and evaluations of life insurance and annuity contracts, reviews related policy forms and life settlement contracts; and drafts regulations and proposed legislation in connection with life insurance policies and annuity contracts.
A money transmitter is a business that issues and sells traveler’s checks and money orders, and transmits money on behalf of the public by any means including transmissions within this country or abroad by wire, check, draft, facsimile or courier. Generally, a money transmitter markets its services through a network of agents.
Money transmitters are regulated and licensed under Article XIII-B of the Banking Law.
A mortgage banker is a person or entity that engages in the business of making three or more mortgage loans in one calendar year or five or more mortgage loans in any two year period (other than certain exempt entities, including a banking organization and an insurance company.
Mortgage bankers are subject to licensing by the Superintendent of Financial Services under Article XII-D of the Banking Law.
Certain entities that engage in mortgage lending or mortgage brokering are exempt from the licensing and registration requirements of the Banking Law. These organizations are subject to the disclosure and other regulations regarding one to four family owner occupied residential mortgages. Additionally, the Superintendent has the authority to examine these institutions. Bona fide non-profit organizations are eligible for exemption.
A mortgage broker is a person who solicits, processes, places or negotiates a mortgage loan, but does not include a real estate broker or salesman, as defined in section 440 of the Real Property Law, if he does not directly or indirectly accept a fee for services rendered in connection with such solicitation, processing, placement or negotiation.
Mortgage brokers are subject to registration by the Superintendent of Financial Services under Article XII-D of the Banking Law.
Mortgage Brokers - Inactive
Inactive mortgage brokers are brokers that are prohibited from soliciting, processing or negotiating mortgage loans for 1-4 family residential property in New York.
Mortgage loan originator means an individual who, for compensation or gain or in the expectation of compensation or gain takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan. The term does not include any individual engaged solely in loan processor or underwriter activities (as described in the statute), except if the individual is working as an independent contractor of an originating entity, certain individuals who are real estate brokers or an individual engaged in extensions of credit for timeshare plans. They are subject to a criminal background check and must complete certain educational requirements.
Article 12-E of the New York Banking Law, which went into effect on July 11, 2009, requires all individuals (with limited exceptions) who engage in the business of a mortgage loan originator with respect to New York residential real estate, to obtain a license from the Superintendent of Financial Services . The New York State DFS uses the Nationwide Mortgage Licensing System (NMLS) as the initial step in the Mortgage Loan Originator license application process. The NMLS can also be used to renew, amend or surrender an existing license. (NMLS itself does not grant or deny license authority.)
A mortgage loan servicer is any person or entity in the business of servicing residential mortgage loans. Servicing includes receiving any scheduled periodic payments from a borrower pursuant to the terms of any mortgage loan, including amounts for escrow accounts, and making payments to the owner of the loan or other third parties of principal and interest and such other payments with respect to the amounts received from the borrower as may be required pursuant to the terms of the mortgage loan documents or servicing contract. In the case of a home equity conversion mortgage or reverse mortgage, servicing includes making payments to the borrower.
Exempt Mortgage Loan Servicers are loan servicers that are exempt from registering with the Superintendent but intend to service mortgages in the state. The statute makes such firms subject to New York State conduct of business rules.
New York State Regulated Corporations are business entities that are formed and incorporated by the State of New York through legislative acts and placed under the regulatory supervision of the Superintendent.
A premium finance agency enters into premium finance agreements with an insured person or acquires premium finance agreements from insurance agents or brokers or other premium finance agencies. A premium finance agreement is an arrangement under which a premium finance agency or an insurance broker or agent advances funds to an insurance company to pay an insurance premium on behalf of the insured and receives repayment by the insured over a period of time.
Under Article XII-B of the Banking Law, the DFS licenses premium finance agencies and regulates the terms of the finance agreement.
A Private Bank is a bank owned by an individual or a partnership. A Private Bank may engage in most commercial and investment banking activities. Accepting of deposits is subject to certain restrictions and limitations.
Private Bankers are covered under Article IV of the Banking Law.
The Department regulates the financial condition, corporate conduct and administration of the Insurance Law for the following types of property and casualty insurers: fire and marine, casualty and surety, title, financial guaranty and mortgage guaranty. The Department also regulates policy forms and rates for these types of insurance, and monitors and investigates insurers' market conduct practices.
A safe deposit company acts as a custodian for storage of personal property and papers of any kind. It may also engage in the safe deposit business by renting vaults and safe deposit boxes. It cannot lend money or make advances on any property left in its possession. Safe Deposit Companies and the safe deposit business are covered in Articles VIII and VIII-A of the Banking Law.
A sales finance company acquires retail installment contracts, obligations or credit agreements made by other parties. The term includes a retail car dealer who holds retail installment contracts acquired from retail buyers, which have aggregate unpaid time balances of $25,000 or more. The term also includes a person who enters into retail installment credit agreements with retail buyers under Section 413(11) of the Personal Property Law.
Sales finance companies are licensed and regulated under Article XI-B of the Banking Law.
Savings Banks are also known as thrifts. A savings bank is a financial institution whose primary purpose is accepting savings deposits. It may also perform some other functions. Savings Banks are community, regional or national for-profit business corporations owned by private investors and governed by a board of directors chosen by stockholders. Historically, savings banks were organized as mutual companies.
Thrift is a blanket term that was historically used to describe savings and loan associations, savings banks and savings associations to differentiate them from “commercial banks” Thrifts are traditionally focused on residential lending and promoting home ownership and thus to qualify as a thrift, must issue a certain volume of loans secured by residential real estate, whereas a commercial bank's focus was traditionally on business accounts and commercial lending. Thrifts are regulated under Article VI of the Banking Law.
A Savings & Loan or “S&L” is also a thrift. Historically, savings and loan associations were organized as stock companies and typically were local or regional in nature, focusing on the needs of a community of residential customers. S&Ls are regulated under Article X of the Banking Law and must have a certain percent of assets in residential mortgage and mortgage securities. Though historically there was a difference in the types of products and services that savings banks and commercial banks could offer to the public, many of these products and services are now offered by both, however commercial banks and savings banks (or thrifts) remain under the supervision of different regulatory bodies.
A service contract provider is any person or entity who sells or administers a service contract, and who is contractually obligated to provide service under the service contract. In New York, a service contract is a contract or agreement, for a separate or additional consideration and for a specific duration, to perform the repair, replacement or maintenance of any kind of property, or indemnification for the repair, replacement or maintenance of property, due to a defect in materials or workmanship or wear and tear. Although a service contract may cover any kind of property, some of the most common kinds of property covered by service contracts include motor vehicles, personal electronics, computers, home appliances and certain residential plumbing, heating, cooling, ventilation, and electrical system components. A Service Contract Provider must register with and obtain approval from the Superintendent prior to selling any service contracts in New York.
Virtual Currency Businesses (or BitLicensees)
Licensed virtual currency businesses conduct one or more of the following types of activities involving New York or New York residents:
- receiving virtual currency for transmission or transmitting virtual currency;
- storing, holding, or maintaining custody or control of virtual currency on behalf of others;
- buying and selling virtual currency as a customer business;
- performing exchange services as a customer business; or
- controlling, administering, or issuing a virtual currency.
Licensed virtual currency businesses are licensed by DFS under 23 NYCRR Part 200.