2023 New York Laws › BNK - Banking › Article 2 - Department of Financial Services; Superintendent of Financial Services; Supervisory and Regulatory Powers › 36 - Examinations; Right of Inspection; Penalties for Refusing to Permit Examination.

§ 36.  Examinations;  right  of  inspection; penalties for refusing to
permit examination. 1.  The  superintendent  shall  have  the  power  to
examine  every  banking organization, every bank holding company and any
non-banking subsidiary thereof (as such terms "bank holding company" and
"non-banking subsidiary" are defined in article three-A of this chapter)
and every licensed lender at any time prior to its dissolution  whenever
in his judgment such examination is necessary or advisable.
2.  At least once in each calendar year upon such date or dates within
each such period as in his or her discretion he or she deems proper, the
superintendent shall cause every banking organization  to  be  examined;
provided, however, that:
(a)  the  provisions of this subdivision shall not be applicable to an
investment  company  unless  (i)  such  investment  company   has   been
authorized  by  the  superintendent  of  financial  services  to receive
deposits, in accordance with the terms of subdivision three  of  section
five hundred eight of this chapter, (ii) a bank or trust company, or any
two or more of such organizations, shall own an aggregate of twenty-five
per  centum  or more of the capital stock of such investment company, or
(iii) such investment company is a corporation which, under the terms of
subdivision six of this section, is deemed  for  the  purposes  of  this
section  to  be  a  corporation  affiliated  with  a  corporate  banking
organization, and
(b) the superintendent may extend the  examination  interval  from  at
least once in each calendar year to at least once in each eighteen month
period if the banking organization to be examined:
(1) has total assets of less than one billion dollars;
(2)  is  well-capitalized,  which  for  purposes  of this paragraph is
defined as having  capital  which  significantly  exceeds  the  required
minimum  level  for  each  relevant  capital  measure  or as having such
capital as the superintendent shall otherwise define by regulation;
(3) at its most recent examination, was found to be  well-managed  and
its composite condition was found to be outstanding or good;
(4)  is  not  currently  subject to a formal enforcement proceeding or
order by the superintendent, the federal deposit  insurance  corporation
or any other federal banking agency; and
(5) has not been acquired by any person during the twelve month period
in which an examination would be required but for this paragraph, and
(c)  the  superintendent  may  modify  the  examination  intervals  as
prescribed by this subdivision to the extent  the  superintendent  deems
appropriate,  in  his  or  her  sole  discretion, in order to obtain the
efficient  use  of  the  personal  and  nonpersonal  resources  of   the
department   by  maximizing  coordination  with  identical  or  parallel
examinations having differing or varying intervals performed by  federal
banking   regulators,   whether   such  examinations  are  performed  in
conjunction with the department or on an alternating schedule with  such
federal  banking  regulators;  provided,  that nothing in this paragraph
shall be deemed in any  manner  to  lessen  or  modify  the  requirement
imposed pursuant to section ten of this article.
3. On every such examination of any banking organization inquiry shall
be  made as to (a) its financial condition, (b) the security afforded to
those by whom  its  engagements  are  held,  (c)  the  policies  of  its
management,  (d) whether the requirements of law have been complied with
in the administration of its affairs, and (e) such other matters as  the
superintendent  may prescribe. Examination of a licensed lender shall be
made  only  for  the  purposes  set  forth  in  section  three   hundred
forty-eight of this chapter.
4.  The  superintendent  shall  also have power at any time to examine
every agency, branch or office located in  this  state  of  any  foreign

banking  corporation,  including,  but not limited to, all of the books,
accounts or records of every agency, branch or office  located  in  this
state  of  such foreign banking corporation as well as all of the books,
accounts  or  records  maintained in this state of any agency, branch or
office not located in this state of such foreign banking corporation for
the purpose of ascertaining whether it has violated any law and for  any
other purpose.
5.  The  superintendent  shall  have  the  power  to make such special
investigations as he shall  deem  necessary  to  determine  whether  any
individual,  partnership,  unincorporated association or corporation has
violated any of the provisions  of  this  chapter;  and  to  the  extent
necessary  for  this  purpose the superintendent shall have the power to
examine all relevant books, records, accounts and documents.
6. For the purpose of determining the financial condition of a banking
organization, the superintendent shall have the power, when  in  his  or
her  judgment  it  is necessary or advisable, to examine corporations or
any other entity affiliated with  any  such  banking  organization.  The
following are deemed for the purposes of this section to be corporations
or other entities affiliated with a banking organization:
(a)  (i)  Any  corporation or other entity, the capital stock of which
such  banking  organization  directly  or  indirectly,  or   through   a
subsidiary  or  subsidiaries, owns or controls ten per centum or more of
the voting shares of such corporation  or  other  entity;  or  (ii)  any
corporation  or  other entity the election of a majority of the board of
directors of which is in any manner directly or indirectly controlled by
such banking organization; or (iii) any corporation or other entity  the
management  or  policies  over  which  the  banking organization has the
power, directly or indirectly, to exercise a controlling  influence,  as
determined  by  the  superintendent;  provided,  however,  the foregoing
definition of affiliate corporations and other entities shall not  apply
to  small  business  investment  companies  as  defined in and operating
pursuant to the  provisions  of  an  act  of  congress  entitled  "Small
Business  Investment Act of 1958," and such companies shall be deemed to
be  corporations  affiliated  with  the  banking  organization  for  the
purposes  of  this subdivision, if such banking organization directly or
indirectly owns or controls twenty-five per centum or more of the voting
shares or more than twenty-five per centum of the shares voted  for  the
election  of  directors  at  the  preceding annual meeting of such small
business investment company;  or  any  such  small  business  investment
company  the election of at least twenty-five per centum of the board of
directors of which  is  in  any  other  manner  directly  or  indirectly
controlled by such banking organization; or
(b)  Any  corporation or other entity which directly or indirectly, or
through a subsidiary or subsidiaries, owns or controls ten per centum or
more of the voting shares of capital stock of such banking organization;
or any corporation or other entity  which  in  any  manner  directly  or
indirectly controls the election of a majority of the board of directors
of  such  banking  organization;  or  with  respect to the management or
policies of  such  banking  organization  has  the  power,  directly  or
indirectly,  to  exercise  a controlling influence, as determined by the
superintendent.
6-a. (a) For the purposes of determining the financial condition of  a
banking  organization,  the superintendent shall have the power, when in
his or  her  judgment  it  is  necessary  or  advisable,  to  examine  a
non-banking   subsidiary   of   a  corporation  or  other  entity  which
corporation or other entity, pursuant to paragraph  (b)  of  subdivision
six  of  this  section,  is  deemed  to  be  an  affiliate  of a banking
organization.
(b) For the purposes of  this  subdivision,  a  "subsidiary"  of  such
affiliated corporation or other entity shall mean:
(1)  Any  corporation  or other entity ten per centum or more of whose
voting stock is directly or  indirectly,  or  through  a  subsidiary  or
subsidiaries,  owned,  controlled,  or  held  with  power to vote, by an
affiliated corporation or other entity; or (2) any corporation or  other
entity,  the  election of a majority of whose directors is controlled in
any manner by an affiliated corporation or  other  entity;  or  (3)  any
corporation  or  other  entity,  ten  per centum or more of whose voting
stock is directly or indirectly owned, controlled, or held with power to
vote, by a trustee or trustees for the benefit of  the  stockholders  or
members  of  an  affiliated  corporation  or  other  entity;  or (4) any
corporation or other entity, at least ten per centum of the voting stock
of  which  is  directly  or  indirectly,  or  through  a  subsidiary  or
subsidiaries,  owned,  controlled  or  held  with  power  to  vote  by a
combination of an affiliated  corporation  or  other  entity  and  by  a
trustee  or  trustees  for the benefit of the stockholders or members of
such  affiliated  corporation  or  other  entity;  or  (5)  any  entity,
corporate  or unincorporated, with respect to the management or policies
of which such affiliated corporation or  other  entity  has  the  power,
directly   or  indirectly,  to  exercise  a  controlling  influence,  as
determined by the superintendent, after notice  and  opportunity  for  a
hearing. For the purposes of this subdivision, voting stock shall not be
deemed  to  include  voting  stock  owned by the United States or by any
corporation wholly owned by the United States.
(c) A "non-banking subsidiary" for the purposes  of  this  subdivision
means one which is not a banking organization or which is not engaged in
the  banking  business  as  defined  in  subdivision  one of section one
hundred thirty-one of this chapter.
(d) The superintendent may use the reports of regulatory  agencies  of
this  state,  of other states, of any foreign government, and of federal
regulatory agencies in making such examinations or in  conjunction  with
such  examination.  All  regulatory  agencies  of this state, shall upon
request of the superintendent, furnish or make available to him  or  her
reports of examination made by them of any such non-banking subsidiary.
6-b.  For  purposes of subdivisions six and six-a of this section, any
references contained therein to "voting stock" or "voting shares"  shall
be  deemed  to include any ownership interest with respect to any entity
other  than  a  corporation,  any  references   to   "stockholders"   or
"shareholders"  shall  include  persons  or  entities who have an equity
interest in any entity other than a corporation, and any  references  to
"board  of  directors"  shall  be deemed to mean the governing body with
respect to any entity other than a corporation.
7. The  superintendent  may  cause  any  corporation,  association  or
partnership having business transactions or relations with any corporate
banking  organization  to  be examined if such examination is found by a
justice of the supreme court, on application of the  superintendent  and
on  notice  to  such  company,  to be necessary or expedient in order to
ascertain  whether  the  capital  stock  of   such   corporate   banking
organization  is  impaired  or  whether safety of depositors with it has
been imperilled.
8. Examinations may be made and inquiries instituted or  continued  in
the  discretion  of  the superintendent after he has taken possession of
the property and business of any banking organization or  after  it  has
entered upon voluntary dissolution until it shall resume business or its
affairs shall be finally liquidated.
9.   Any   individual,   partnership,  unincorporated  association  or
corporation, or any other entity, which refuses to permit examination or

investigation in accordance with the terms of this section shall forfeit
to the people of the state an amount as determined pursuant  to  section
forty-four of this chapter for every day such refusal continues.
10. All reports of examinations and investigations, correspondence and
memoranda   concerning   or   arising   out   of  such  examination  and
investigations, including any duly authenticated copy or copies  thereof
in  the  possession of any banking organization, bank holding company or
any subsidiary  thereof  (as  such  terms  "bank  holding  company"  and
"subsidiary"  are  defined  in  article  three-A  of  this chapter), any
corporation or any other entity affiliated with a  banking  organization
within   the  meaning  of  subdivision  six  of  this  section  and  any
non-banking subsidiary of a corporation or any other entity which is  an
affiliate  of  a  banking organization within the meaning of subdivision
six-a of this section, foreign  banking  corporation,  licensed  lender,
licensed casher of checks, licensed mortgage banker, registered mortgage
broker,  licensed  mortgage  loan  originator,  licensed  sales  finance
company,  registered  mortgage  loan  servicer,  licensed  student  loan
servicer,   licensed   insurance   premium   finance   agency,  licensed
transmitter of money, licensed  budget  planner,  any  other  person  or
entity  subject  to  supervision  under this chapter, or the department,
shall be confidential communications, shall not be subject  to  subpoena
and   shall   not  be  made  public  unless,  in  the  judgment  of  the
superintendent, the ends of justice and the  public  advantage  will  be
subserved  by the publication thereof, in which event the superintendent
may publish or authorize the publication of a copy of any such report or
any part thereof in such manner as may be deemed proper or  unless  such
laws  specifically  authorize  such disclosure. For the purposes of this
subdivision,  "reports  of  examinations  and  investigations,  and  any
correspondence   and   memoranda  concerning  or  arising  out  of  such
examinations and investigations", includes any such materials of a bank,
insurance or securities regulatory agency or any  unit  of  the  federal
government  or that of this state any other state or that of any foreign
government which are considered confidential by such agency or unit  and
which  are  in  the  possession of the department or which are otherwise
confidential materials that have been shared by the department with  any
such agency or unit and are in the possession of such agency or unit.