- Joined
- Nov 15, 2025
- Messages
- 100
- Thread Author
- #1
Sponsor: Multi Man, MP
Type: Act of Parliament
Preamble: This Act establishes rules for financial services, including licensing, supervision, and consumer protection.
1. Short Title and Enactment
(a) This Act may be cited as the "Financial Services Act."
(b) This Act is enacted when each of the following bills has received Royal Assent: the "Business Act," the "Financial Services Act," the "Azalea Banking and Solvency Act," the Parliamentary Norms and Procedures Act, and the Public Utility Empowerment Act.
2. Definitions
(a) "MEA" means the Ministry of Economic Affairs. "BoA" means the Bank of Azalea. "Court" means the District Court. "Person" means an individual or a legal entity. "Legal entity" has the meaning given in section 3(b) of the New Criminal Code Act.
(b) A "deposit" is money accepted as part of a customer account or savings arrangement that the recipient must repay on demand or at an agreed time, with or without interest. It includes a certificate of deposit and other fixed-term savings.
(c) Whether an arrangement is a deposit depends on its terms and how it is offered and used. A genuine private loan or investment security is not a deposit merely because it must be repaid. The name of an arrangement, its maturity, or whether it can be transferred does not by itself decide whether it is a deposit.
(d) A "bank" is a person that holds a banking license or carries on a business of accepting deposits from the public or a membership group. A licensed credit union is a bank. An exchange or payment service provider is not a bank solely because it maintains customer balances for the trading or payment activity described in section 10. The BoA is not a bank for the purposes of this Act.
(e) A "commercial bank" is a bank other than a credit union.
(f) A person has "control" of a bank if the person can direct its management, directly or indirectly, through ownership or an agreement.
(g) A "key position" is a position the BoA designates under section 5.
(h) A person faces "serious financial difficulty" if their liabilities exceed the fair market value of their assets, they cannot pay their debts as they fall due, or they face a serious, demonstrable risk of either.
(j) For the resolution provisions and section 9 of this Act, "bank" also includes a former bank that still owes debts arising from deposits and an unlicensed business that has accepted deposits for which a banking license was required.
(k) The "banking provisions" are sections 3 through 8 of this Act and the resolution provisions as they apply to banks, and sections 9(c) through (e), 10(a) through (k), and 13 through 15 of this Act.
(l) A "nonbank financial institution" is a person other than a bank or the BoA that carries on a business providing financial services to others. It includes an investment bank, stock exchange, or payment service provider. An occasional private loan alone does not make a person a nonbank financial institution. A seller other than a bank or the BoA is a nonbank financial institution if it regularly offers interest-bearing installments for its own goods or services. Interest-free installments for its own goods or services do not alone make the seller a nonbank financial institution.
(m) A "financial institution" is a bank or nonbank financial institution, except as provided in sections 20(b) and 21(f).
(n) The "resolution provisions" are sections 9 through 15 of the Azalea Banking and Solvency Act.
3. Banking Licenses
(a) A person must hold a banking license to carry on a banking business, and only a registered limited company may receive one.
(b) A stock exchange or payment service provider does not need a banking license solely to maintain customer balances for trading or payments, respectively, in accordance with section 10.
(c) The MEA administers banking licenses and nonbank registrations. An applicant for a banking license must give the MEA the information required by this Act, the resolution provisions, and applicable rules of the BoA. Within seven days after receiving an application for either authorization, the MEA must identify any required information that is missing.
(d) The MEA must decide within fourteen days after receiving a banking-license or nonbank-registration application with all required information. It must grant the license or registration if the applicant meets the applicable legal requirements and give written reasons for refusal.
(e) The BoA sets or approves the financial requirements and conditions that apply to a bank. The MEA may attach a nonfinancial condition needed to comply with a specific provision of this Act, the resolution provisions, or an applicable rule of the BoA. The MEA must give written reasons for that condition.
(f) The MEA must maintain a public register showing each bank's license, permitted activities, and conditions in effect. The register must protect customer identities. The MEA must give the bank the full terms of its license and conditions.
(g) The MEA must set a reasonable date by which a newly licensed bank must make its banking services available. The MEA must give reasons for the date and may extend it for good cause. This subsection does not require an existing provisional bank to start its services again.
(h) The MEA may amend, suspend, or revoke a license if the bank:
(j) A temporary interruption or lack of customers does not by itself establish that a bank has closed or abandoned its business. Before suspending or revoking a license for a minor failure to meet an eligibility or compliance requirement that can be corrected, the MEA must give the bank a reasonable opportunity to correct it.
(k) Before suspending or revoking a license or adding a restriction to it without the bank's request, the MEA must give the bank written reasons and at least seventy-two hours to respond.
(l) The MEA may impose a temporary suspension or restriction without waiting for that response if a ground under subsection (h) exists and delay would pose an immediate serious risk to depositors or the financial system. The MEA must immediately give written reasons, allow at least seventy-two hours to respond, and make a final decision within seven days after the temporary action begins. If it does not decide within that period, the action expires. The MEA must not restart the period by issuing the same temporary action on unchanged grounds.
(m) The MEA must update the register when a temporary action begins or ends and when it makes a final decision.
(n) A bank must not accept new deposits while its license is suspended or after it ends without another banking license taking effect for the same operator. An operator whose banking license ends without another taking effect for that operator remains subject to this Act and the resolution provisions as a bank while it owes debts arising from deposits. A winding up already begun under sections 9 through 15 of the Azalea Banking and Solvency Act shall continue under that Act until completed.
(o) A financial business must not use "bank" in its name or describe itself as a bank unless it holds a banking license. The BoA may use its name. An investment bank may use "investment bank" if it makes clear that it does not accept deposits.
(p) A bank whose license is suspended must publicly disclose the suspension immediately. A financial business whose banking license is permanently revoked, or whose provisional license ends without a full license taking effect for the same operator, must immediately disclose that it is no longer licensed and change its name within thirty days to comply with subsection (o).
(q) An applicant or operator may appeal a refusal, restriction, suspension, or revocation of a banking license or nonbank registration, or a disputed BoA-set or approved condition, to the BoA under section 7 of the Azalea Banking and Solvency Act. A person who participated in the challenged decision must not decide the appeal.
4. Financial Requirements and Services
(a) The BoA may set rules for banks' financial condition and activities, including loss-absorbing capital requirements. It may specify qualifying funds and required amounts, and set or approve financial requirements for an individual bank.
(b) A general banking rule is subject to section 3(h) of the Azalea Banking and Solvency Act. A new general capital rule must state when banks must comply and allow a reasonable period for compliance.
(c) A bank may offer accounts, certificates of deposit, loans, and credit cards. A bank must obtain the BoA's permission before offering another financial service or investing in another financial tool. The BoA may approve a category by published rule or approve an individual application.
(d) A bank must obtain the BoA's permission before acquiring or holding shares in a limited company, except as provided in section 12 of the Azalea Banking and Solvency Act. The BoA may grant permission for a published category or an individual investment.
(e) The BoA must apply the same criteria to proposed investments by credit unions as to those by other banks. A credit union may offer the accounts, certificates of deposit, loans, and credit cards listed in subsection (c), but must not offer other financial services to customers.
(f) A person must obtain the BoA's approval before acquiring control of a licensed bank through a voluntary private transaction. The BoA must publish the criteria for approval.
(g) A company that operates a banking business and another business must maintain separate operating accounts and accounting records for its banking business.
5. Key Positions
(a) The BoA may designate positions, such as director and manager, as key positions. It must publish objective standards for the competence, honesty, and ability needed to perform those positions.
(b) An individual must not hold a key position while the individual has a valid, unexpunged conviction for a disqualifying offense under the New Criminal Code Act. An offense is disqualifying if it is or has been listed in section 9 of that Act or classified as a capital offense at any time on or after the date of the charge that led to the conviction.
(c) Before appointing a person to a key position, a bank must notify the MEA and the BoA. The bank must ensure that a person it appoints or retains in a key position meets the standards and requirements of this section.
(d) The BoA may determine that a person is unsuitable under its published standards. The BoA must promptly notify the person, the bank, and the MEA of its determination. The MEA may enforce that determination and subsection (b).
(e) A person who is disqualified under subsection (b) or found unsuitable by the BoA must immediately stop performing the duties of the key position. The bank must complete the person's removal within seven days.
(f) When the BoA first designates a key position, this section applies from the date the designation takes effect. Within fourteen days after that date, the bank must notify the MEA and the BoA of the person holding the position.
6. Reports and Reporting Appeals
(a) Each bank must file a report with the MEA for each calendar month in which it is a bank, by the end of the fifth calendar day of the next month. The report must state:
(b) A bank with more than $100,000 in deposits must have a lawyer on staff or retainer. The MEA may grant a one-month exception on the bank's application.
(c) The BoA may require additional reports or information under its powers. The MEA must give the Chairman of the BoA access to all banking reports it receives. The Chairman may share them with the Governors of the BoA.
(d) A financial institution may appeal an additional periodic reporting request made by the MEA under section 11(g) to the BoA under section 7 of the Azalea Banking and Solvency Act. Filing the appeal pauses the disputed request until the appeal is decided.
(e) Within forty-eight hours after the appeal is filed, the MEA must give its reasons for the request to the institution and to the Chairman or Governors deciding the appeal. The institution may respond within forty-eight hours after receiving those reasons.
(f) The decision-maker must decide whether the request is lawful, necessary, and proportionate. The decision-maker may uphold, narrow, or cancel it, and must give written reasons within seven days after the appeal is filed. If the decision-maker upholds or narrows the request, the institution must comply within seven days after the decision.
(g) When Governors decide the appeal, the MEA and the institution must provide their submissions directly to them. The Minister of Economic Affairs must not vote. If the Governors hold a vote and it is tied, the request is upheld.
7. Records and Inspections
(a) The MEA may require a bank and staff responsible for a banking matter to provide records and answer factual questions reasonably needed for the MEA's duties under the banking provisions. The MEA may require an answer to be affirmed when reasonably necessary. This subsection does not require production of a record or answer protected from compulsion by law.
(b) A demand under subsection (a) must allow at least seven days for a response, or longer when reasonably needed. The MEA may set a shorter reasonable period, with written reasons, if delay risks the loss of important records or immediate serious financial harm.
(c) The MEA or the BoA may apply for a banking-records warrant under section 20(k) of the Judiciary Act for records held by an independent third party.
(d) The MEA may inspect or audit a bank where it has lawful access or consent. Compulsory entry or a search requires the authority provided by law. A banking-records warrant requires production of records; it does not authorize entry or a search.
(e) The BoA may audit a financial institution and require it to provide records relevant to that audit. When the BoA needs records for an audit, the MEA must give the BoA any relevant records the MEA already holds.
8. Supervisory Orders
(a) When exercising powers under sections 3 through 8 of this Act or the resolution provisions in relation to a bank, or under section 10(e) or sections 13 through 15, the MEA and the BoA must seek to preserve essential banking services, protect depositors and other creditors, limit harm to the financial system, and limit public costs. Each measure must be necessary and proportionate. If more than one effective measure is available, the authority must use the least intrusive one.
(b) The MEA may order a bank to correct a breach of this Act, the resolution provisions, or an applicable rule. It may enforce financial requirements that the BoA has set or approved, including restrictions on capital, exposure, dividends, and asset transfers.
(c) The MEA may restrict a bank's promotion or sale of a particular financial instrument when necessary to address a serious risk to consumers arising from how it is marketed or sold. A financial requirement for an individual bank requires the BoA's approval.
(d) The MEA may require a bank to commission an independent audit when necessary. The bank must select a qualified independent auditor, subject to the MEA's approval, and pay the reasonable cost.
(e) Before making a binding order under this section, the MEA must give the bank written reasons and at least seventy-two hours to respond.
(f) If waiting would pose an immediate serious risk to depositors or the financial system, the MEA may make a temporary order before the response period ends. The requirements in section 3(l) for notice, response, decision, expiration, and reissuance apply to the temporary order.
(g) An ordinary supervisory order or license condition under section 3 or this section must not suspend an owner's voting rights, require a corporate reorganization, or impose a general halt on payments or withdrawals from existing customer accounts. Those measures require the applicable procedure in the resolution provisions.
9. Credit Unions
(a) A credit union must be a nonprofit limited company under section 6 of the Business Act. A credit union lawfully operating at enactment is registered as a nonprofit company under that Act without a new registration fee or loss of its existing legal identity. The MEA must record that status.
(b) Credit-union shares and votes follow these rules:
(c) When a credit union begins acting on a decision to close permanently, winding up starts, or the Court orders liquidation, whichever occurs first, it must record its members, their deposits, and their voting proportions before any transfer or repayment under that decision, winding up, or order.
(d) After debts and winding-up or liquidation costs are paid, the credit union must distribute remaining assets to the recorded members in proportion to their recorded deposits. If those total zero, it must distribute them in their recorded voting proportions.
(e) Until dissolution, the recorded members retain their recorded voting proportions for winding-up decisions. Those rights do not displace powers given to a liquidator by the Court.
(f) Each founder must be an individual and include a written commitment to a stated positive deposit in the formation application. For formation and until seven days after the banking license is issued, each $1 of an unpaid commitment counts as a temporary issued voting share for that founder. Each founder must make the committed deposit within seven days after issuance. Deposited amounts replace corresponding temporary shares with shares under subsection (b). Remaining temporary shares expire at that deadline. A commitment is not a deposit.
(g) If total deposit balances reach zero after the credit union has received deposits, the members holding deposit-weighted shares immediately beforehand retain those shares solely for voting in their last voting proportions until deposits return. Those retained shares are not deposits.
10. Exchanges and Payment Service Providers
(a) A stock exchange may maintain customer cash balances for trading. A payment service provider may maintain customer cash balances for payments. Each must keep cash held for those balances in an account in its name at a licensed bank or the BoA, rather than accumulating it in its own operating balance.
(b) An exchange or payment service provider must meet the BoA's requirements for assets backing customer cash balances. The BoA must set the requirements, including eligible assets and their valuation, by a Board-approved rule published before it takes effect.
(c) Until the rule under subsection (b) takes effect, the exchange or provider must maintain eligible assets worth at least the customer cash balances it owes. Eligible assets are deposits at a licensed bank or the BoA and saleable debt securities issued by the Azalea Isles Government, a territorial district, or a public utility company within the meaning of the Public Utility Empowerment Act. Assets must be counted at current value. If an asset secures a debt of the exchange or provider, only the value exceeding the enforceable secured claim must be counted.
(d) The exchange or provider must keep enough cash available at a licensed bank or the BoA for reasonably expected payments and withdrawals. Money held under a restriction counts as available cash only if it can be used for those payments.
(e) On application, the BoA may approve different eligible assets or cash arrangements. Until the rule under subsection (b) takes effect, an approval must still require assets worth at least the customer cash balances owed.
(f) An exchange may use available cash for a loan permitted under subsection (n) if it continues to meet the applicable requirement under subsection (b) or (c) and the applicable cash requirement under subsection (d) or an approval under subsection (e). A loan counts as an eligible asset only if the BoA approves it under subsection (e).
(g) Losses on assets held under this section do not reduce the customer balances owed. An exchange or provider must make up any shortfall in the backing required by subsection (b) or (c). It must notify the BoA within twenty-four hours after learning of a shortfall.
(h) An exchange must obtain a customer's affirmative agreement before lending the customer's shares for short sales. A general agreement to lend shares for short sales is sufficient.
(j) An exchange may share the following returns under agreed terms:
(k) A payment service provider enables the processing of electronic payments, including through non-Minecraft platforms. It may arrange a payment authorized by a customer from the customer's bank account to another person's in-game balance.
(l) A stock exchange must report to the MEA each month. The report must state:
(m) A stock exchange is responsible for facilitating the buying and selling of shares and other financial tools. It may list shares in limited companies and BoA-approved investment tools created by investment banks.
(n) A stock exchange may make loans only to support investment in financial tools offered on that exchange. It must not invest customer funds that are deposits under section 2(b) and (c), or offer users interest for keeping funds deposited with the exchange, except as permitted by this section. It may invest its own funds.
(o) A payment service provider must not publish, sell, or otherwise share information that directly tracks, traces, or identifies an individual or that individual's transactions. A provider may share information needed to carry out a payment authorized by its customer. It may also provide information to the MEA or the BoA when required by law, disclose information under a court order, or provide information required by a lawful compulsory inquiry of Parliament or a parliamentary committee. A provider may also disclose information under the conditions in section 21(b)(ii), 21(b)(iii), or 21(g).
(p) A payment service provider may be owned by a registered limited company or directly by a financial institution. It must not go public or hold assets unrelated to its operations. Assets held to back customer balances under this section are related to its operations.
11. Financial Institutions and Taxation
(a) An investment bank must make a reasonable effort to keep the public aware that it is not a commercial bank. It must not offer normal deposit accounts.
(b) An investment bank may offer loans and investment accounts or funds. It may create exchange-traded funds and bonds.
(c) An investment bank must obtain the BoA's approval to create additional financial tools or services. The BoA may grant approval to all investment banks or to a particular investment bank. The BoA may grant a narrower approval to allow initial development, to limit a higher-risk or capital-intensive tool to investment banks able to handle it, or for another reason it determines.
(d) A financial institution must have an in-game or digital location, such as a Discord server or website, where it offers its financial products.
(e) If a financial institution receives a plot because a customer defaults, it may hold that plot despite a plot cap for up to two months. Afterward, it violates the cap if it still holds more plots than allowed.
(f) Each nonbank financial institution must file a monthly report with the MEA. The MEA must publish the required information and filing deadline, which may vary by type of institution. A report may satisfy both this subsection and section 10(l).
(g) The MEA may request additional information in the monthly reports required from a category of financial institution or from all financial institutions. An institution may appeal the request under section 6.
(h) Financial institutions are exempt from normal business tax rates.
(j) A withdrawal from a normal checking or savings account is subject to a tax of 0.25%. The Government must pay the tax proceeds to the Deposit Protection Fund under section 4 of the Azalea Banking and Solvency Act.
(k) Financial institutions must pay a tax of 10% on net income earned per standard yearly quarter.
12. Enforcement for Financial Institutions
(a) A financial institution other than the BoA, a bank, or an operator described in section 2(j) must notify the MEA and the BoA within 24 hours after a director or manager knows, or reasonably should know, that the institution faces serious financial difficulty. The initial notice must give the material facts then known. As soon as the information is reasonably available, the institution must report its financial position, the causes of the difficulty, and the steps taken or planned to address it.
(b) Before fining a financial institution for failing to provide required information, the MEA must give it notice of the failure and seven full days after notice to provide the information. If the institution has not provided the information by then, it must pay a $500 fine for each day the failure continues, beginning the next day. The MEA may waive an accrued fine for fair reasons. This subsection does not apply to a failure to comply with sections 20 through 22.
(c) Before fining a financial institution for failing to cooperate with an MEA or BoA audit, the MEA must give it notice of the required cooperation and a compliance deadline at least seven days after notice. If the institution has not complied by the deadline, it must pay a $1,000 fine for each day the failure continues, beginning the next day. The MEA may waive an accrued fine for fair reasons.
(d) In a liquidation under section 15 of the Azalea Banking and Solvency Act of a nonbank financial institution covered by section 9(a) of that Act, a sale of a plot subject to a lien registered under the Plot Liens Act must comply with section 4 of the Plot Liens Act.
(e) If a financial institution incorrectly accounts for its profit taxes at the end of a quarter, the MEA must give it a warning for the first occurrence, and the institution must file an accurate correction. For later occurrences, the MEA may impose a fine. Repeated failure to account properly for taxes may be prosecuted as criminal fraud.
(f) Depending on the severity of the noncompliance, the MEA may impose penalties authorized by this Act on a financial institution that is neither a bank nor an operator described in section 2(j). Suspension of its operations or revocation of its registration is subject to section 16.
13. Confidentiality and Financial Difficulty
(a) A current or former employee or agent of the MEA must keep confidential nonpublic information obtained through the MEA's work concerning banking or financial institutions. A current or former employee or agent of the BoA must keep confidential nonpublic banking information obtained under this Act, the resolution provisions, or the BoA's other banking powers.
(b) A person subject to subsection (a) may disclose the information to perform duties under law, as authorized or required by law, to a court, with the consent of the person to whom it relates, or in a summary that does not identify a bank or person.
(c) A bank must notify the MEA and the BoA within twenty-four hours after a director or manager knows, or reasonably should know, that the bank faces serious financial difficulty. The initial notice must give the material facts then known.
(d) As soon as the information is reasonably available, the bank must report its financial position, the causes of the difficulty, and the steps taken or planned to address it.
14. Administrative Fines
(a) The MEA may fine a person responsible for a breach of a duty imposed under sections 3 through 8, 9(c) through (e), 10(a) through (k), 13, or 15 of this Act or the resolution provisions, or an order made under those provisions. A person is not responsible solely because the person is a director or manager.
(b) For a breach, the MEA may impose a fine of up to $25,000. For a continuing breach, the MEA may instead impose a fine of up to $1,000 for each day. The total under this section for the same breach must not exceed $25,000.
(c) Before imposing a fine, the MEA must give the person written notice of the alleged breach and at least seventy-two hours to respond. A person may challenge the fine in Court.
(d) A person must not be fined under both this section and section 12(b) or (c) for the same noncompliance.
(e) The MEA must not impose a fine under this section on the MEA, the BoA, or their personnel for carrying out official duties.
(f) This section does not apply to a duty or order under the resolution provisions as applied to a nonbank financial institution.
15. Transition
(a) A person lawfully carrying on a deposit-taking business immediately before enactment holds a provisional banking license from enactment if the business requires a license under this Act.
(b) A provisional license holder must apply for a banking license within 30 days after enactment. Otherwise, the provisional license ends after those 30 days. If the holder applies on time, the provisional license shall continue until the MEA decides the application. The holder must supply missing required information by a reasonable deadline set by the MEA. The provisional license ends if the holder fails to meet that deadline.
(c) A provisional license holder that is not a limited company may continue operating under its provisional license despite section 3(a), but must register a limited company within 30 days after enactment, subject to paragraph (i). It may apply for a banking license for the proposed company while registration is pending.
(d) A provisional license holder that does not apply on time, or whose application the MEA refuses, must stop accepting new deposits when its provisional license ends. Its existing deposit debts remain payable.
(e) A financial business that lawfully uses a name restricted by section 3 at enactment must comply with the naming requirement within 30 days after enactment.
(f) A notice or seizure concerning a bank that is pending under the Seizure Act at enactment shall continue under that Act. Its powers, procedures, orders, and review remain available for that matter. The District Court may approve a transition to proceedings under the resolution provisions after giving affected parties an opportunity to be heard.
(g) A right, liability, fine, or reporting duty that arose before enactment shall continue to be handled under the law that applied when it arose.
(h) At enactment, a Finance Committee appeal concerning a reporting request transfers to the BoA for decision under section 6 if the appeal has not been resolved or withdrawn and the request remains in effect. This includes an appeal whose committee proceeding lapsed on dissolution. From enactment, the request is paused until the appeal is decided. The deadlines under section 6 and section 7 of the Azalea Banking and Solvency Act run from the transfer.
(j) A registration, approval, permission, waiver, order, or license other than a banking license that is valid under the Banking Foundations Act immediately before enactment shall continue under the corresponding provision of this Act or the resolution provisions to the extent that provision authorizes it. It shall remain in effect until it expires or is changed or revoked under law.
16. Registration of Nonbank Financial Operators
(a) A person must obtain the MEA's approval before operating a private nonbank financial institution. The operator must be a registered limited company or another entity with separate legal personality under applicable law. A qualifying financial institution may provide an additional service itself, subject to the approvals required for that service.
(b) An application must identify the operator's name and legal status, owners, contact information, and proposed services. It must include any other information required by this Act, the resolution provisions, or a rule of the BoA. An exchange must also identify the developer of its platform or tool, whether it will be private or public, its planned ownership structure and initial owners, its name, and its Discord server.
(c) The BoA may set financial and operational requirements for registration. A general registration rule is subject to section 3(h) of the Azalea Banking and Solvency Act. The BoA sets or approves the financial and operational conditions for an individual operator. The MEA must apply those requirements and conditions.
(d) The MEA must maintain a public register showing each operator's name, registration status, services, and conditions. The register must not disclose customer identities or private supporting information. The operator must notify the MEA of a material change to its registration information within seven days. An approval required for a change must be obtained before the change is made.
(e) The MEA may suspend or revoke registration if the operator obtained it using materially false or misleading information supplied knowingly, recklessly, or negligently; fails to meet a registration requirement; seriously or repeatedly breaches this Act, the resolution provisions, or an applicable rule; or has closed or abandoned its financial business. A temporary interruption or lack of customers does not by itself establish closure or abandonment.
(f) Before suspending or revoking registration, the MEA must give written reasons and at least seventy-two hours to respond. For a minor, correctable failure, the MEA must also give a reasonable opportunity to correct it.
(g) If a ground under subsection (e) exists and delay would pose an immediate serious risk to customers or the financial system, the MEA may temporarily suspend or restrict registration without waiting for the response period. The requirements in section 3(l) for notice, response, decision, expiration, and reissuance apply to the operator and temporary action.
(h) The MEA must promptly update the register when registration is suspended or revoked. The operator must promptly announce the suspension or loss of registration without identifying customers. It must stop the affected new activity but remains responsible for existing customer balances and may take the steps needed for an orderly wind-down.
17. Acquisition of Control of a Nonbank Financial Institution
(a) A person must obtain the BoA's approval before acquiring control of a nonbank financial institution through a voluntary private transaction. Control means the ability to direct management, directly or indirectly, through ownership or an agreement.
(b) The BoA must publish and apply its approval criteria. Within seven days after an application is submitted, it must identify missing required information. Within fourteen days after receiving the application and all required information, it must decide it, approve it if the legal requirements and published criteria are met, and give written reasons for refusal.
(c) The applicant may challenge a refusal in Court. If the BoA misses the fourteen-day decision deadline, the applicant may ask the Court to compel a decision.
18. Parliamentary Approval of Covered Rescue Agreements
(a) This section applies to a direct agreement under the Government Contracts Act 2.0 for a Court-approved sale under section 13 of the Azalea Banking and Solvency Act. The agreement does not become binding until Parliament approves it and the other required approvals have been obtained.
(b) The MEA must promptly deliver the approved agreement and its terms to the Speaker. The Speaker must open a vote without a separate motion. Parliament must approve or deny the agreement within seven days after the Court approves the sale. The ordinary parliamentary voting and quorum rules apply.
(c) If dissolution or recess prevents a vote from opening, the remaining period pauses until the new Parliament first convenes or recess ends, respectively. If Parliament has not decided within the applicable period, the agreement remains pending and may be decided by a later valid vote.
(d) An agreement that has been rejected or not adopted for lack of quorum may be resubmitted. Parliament has seven days after resubmission to the Speaker to decide it, subject to subsection (c). If the parties materially revise the agreement, the Court must approve the revised terms before resubmission.
(e) If Parliament has not decided the agreement within the applicable period and the officer responsible for the vote has failed to perform that officer's duty, the Court may impose a continuing fine of up to $1,000 per day. Before imposing the fine, the Court must give the officer notice and at least twenty-four hours to respond or comply. The Court decides when the fine ends. A failure of other members to provide a quorum is not by itself a failure by that officer.
(f) After Parliament approves an agreement under this section, section 6(b) of the Government Contracts Act 2.0 does not apply to the agreement if it concerns a nonbank sale or the sale of a privately owned bank to a private purchaser.
19. Transition for Existing Nonbank Financial Operators
(a) A person lawfully operating a private nonbank financial institution immediately before enactment may continue for thirty days while applying for registration under section 16 and any entity registration required by that section.
(b) If the operator submits a complete financial registration application and, if required, a complete entity-formation application within thirty days, supplying all required information other than proof that formation is complete, the operator may continue while the MEA decides the applications. The MEA must not refuse the financial registration solely because formation under a timely application is not yet complete.
20. Financial Consumer Rights and Disclosure
(a) For sections 20 through 22, a "consumer" is an individual or private enterprise engaging in a financial transaction or seeking a financial product or service for personal or business use within the Azalea Isles.
(b) For those sections, a "financial institution" includes commercial banks, investment banks, credit unions, payment service providers, and any other entity offering financial products or services to consumers. A "financial product or service" includes deposit accounts, loans, mortgages, credit, investment products, payment processing, and financial advice.
(c) A consumer has the right to fair treatment and to be free from misleading, deceptive, or coercive practices by financial institutions. A financial institution must not use false, misleading, or deceptive advertising or promotional activities.
(d) Before a consumer enters an agreement for a financial product or service, the financial institution must provide clear, concise, and accurate information about all terms, conditions, fees, and risks. The institution must disclose the risks of an investment product as required by subsection (g). Before a transaction or service begins, the institution must itemize and explain all fees, charges, and interest rates applicable to it.
(e) A financial institution must provide standardized disclosure documents for its financial products and services that allow consumers to compare and understand them easily. The BoA must publish standards for the formats and required information for different products, and the MEA must administer those standards.
(f) A contract for a financial product or service must use plain language, highlight key terms, and be readily accessible to the consumer.
(g) An institution offering an investment product must clearly disclose the risks a reasonable consumer would need to consider, including possible loss of principal.
(h) A Court may enforce a proven loan despite noncompliance with subsections (e), (f), or (g), or the requirement in subsection (d) to itemize and explain fees, charges, and interest rates.
(j) A financial institution and its employees must manage and disclose conflicts of interest that could adversely affect a consumer. Before a consumer commits to an affected transaction, the institution must explain the conflict in time for the consumer to consider it. If a conflict arises later, it must explain it as soon as reasonably practicable after learning of it.
(k) A financial institution must maintain and publicize a clear, accessible process for consumer complaints. Within seven days after receiving a complaint, it must give the consumer a decision or substantive update, and within 30 days, a final response.
(l) A person must not exploit a borrower's vulnerability in lending or use loan terms designed to trap a borrower in debt.
(m) A financial institution must take heightened care that a product or service offered to a new player is appropriate and not exploitative. It must do the same for another person if it knows or reasonably should know that the person's circumstances materially limit their ability to understand the product or service or protect their interests.
(n) For each person in either group, the institution must explain material terms and risks in a way tailored to that person and check their understanding. It must not proceed if it knows the person still does not understand those terms and risks. A "new player" is any player who qualifies as a recent immigrant under section 3(p) of the New Criminal Code Act.
21. Financial Customer Privacy
(a) A financial institution must protect a customer's financial data. It must not disclose the data to a third party without the customer's explicit consent, except as required by law or Court order or as permitted by this section.
(b) Without separate explicit consent, an institution may disclose:
(c) A financial institution must obtain the customer's explicit consent before disclosing identifiable customer data to another business for that business's marketing.
(d) If a financial institution learns that a customer's financial data was improperly exposed, it must promptly take reasonable steps to identify affected customers and notify each as soon as reasonably practicable after identifying whom to contact. The notice must describe the exposed information, the institution's response, and a contact for questions. It must update the customer if material facts change.
(e) Within 24 hours after learning of an improper exposure of a customer's financial data, the institution must notify the BoA and the MEA of what is known. It must provide material updates as more is learned.
(f) For subsections (a) through (e), a customer includes a person or private enterprise using, seeking, or having used a financial product or service. Customer financial data is information relating to the customer's financial activities, assets, liabilities, or transactions.
22. Financial Consumer Enforcement
(a) A consumer may pursue timely and fair resolution of financial complaints and disputes through private litigation in Court.
(c) Sections 20 through 22 are enforced through private litigation in Court, rather than by administrative oversight, except as provided in this subsection. Criminal prosecution remains available under applicable law. The MEA may administer the standards under section 20(e), make a compliance order under section 31 of the Business Act, and suspend or revoke a license or registration under section 3(h)(iii) or 16(e) for serious or repeated violations of sections 20 through 22.
(d) An individual, including an employee of a financial institution or a consumer, who reports a violation, or in good faith reports a suspected violation, of sections 20 through 22 to authorities or attorneys is protected from retaliation, including termination, harassment, or discrimination.
(e) A whistleblower whose report leads to successful litigation may receive a financial reward determined by the Court. The whistleblower's identity must be protected to the fullest extent permitted by law unless disclosure is required by Court order.
(f) A financial institution, including a person described as a financial institution in section 21(f), does not violate sections 20 through 22 by doing what an order under this Act or the resolution provisions lawfully requires.
23. Financial Consumer Transition
(a) Conduct occurring before enactment remains governed by the law in effect when it occurred. A claim or proceeding concerning that conduct may be brought or continued under that law.
(b) Sections 22(d) and (e) protect a report, whenever made, of a violation of the Financial Consumer Protection Act that occurred before enactment.
(c) For a complaint pending at enactment, the periods in section 20(k) run from enactment. Accrued rights remain governed by subsection (a).
24. Amendments
(a) The Judiciary Act is amended as follows:
(b) The Bankruptcy and Debt Relief Act is amended as follows:
25. Repeals
(a) The Banking Foundations Act and the Financial Consumer Protection Act are repealed.
Type: Act of Parliament
A
BILL
TO
AMEND THE JUDICIARY ACT AND THE BANKRUPTCY AND DEBT RELIEF ACT; REPEAL AND REPLACE THE BANKING FOUNDATIONS ACT AND THE FINANCIAL CONSUMER PROTECTION ACT; ESTABLISH RULES FOR THE LICENSING AND SUPERVISION OF FINANCIAL INSTITUTIONS
BILL
TO
AMEND THE JUDICIARY ACT AND THE BANKRUPTCY AND DEBT RELIEF ACT; REPEAL AND REPLACE THE BANKING FOUNDATIONS ACT AND THE FINANCIAL CONSUMER PROTECTION ACT; ESTABLISH RULES FOR THE LICENSING AND SUPERVISION OF FINANCIAL INSTITUTIONS
Preamble: This Act establishes rules for financial services, including licensing, supervision, and consumer protection.
Chapter 1: General Provisions
1. Short Title and Enactment
(a) This Act may be cited as the "Financial Services Act."
(b) This Act is enacted when each of the following bills has received Royal Assent: the "Business Act," the "Financial Services Act," the "Azalea Banking and Solvency Act," the Parliamentary Norms and Procedures Act, and the Public Utility Empowerment Act.
2. Definitions
(a) "MEA" means the Ministry of Economic Affairs. "BoA" means the Bank of Azalea. "Court" means the District Court. "Person" means an individual or a legal entity. "Legal entity" has the meaning given in section 3(b) of the New Criminal Code Act.
(b) A "deposit" is money accepted as part of a customer account or savings arrangement that the recipient must repay on demand or at an agreed time, with or without interest. It includes a certificate of deposit and other fixed-term savings.
(c) Whether an arrangement is a deposit depends on its terms and how it is offered and used. A genuine private loan or investment security is not a deposit merely because it must be repaid. The name of an arrangement, its maturity, or whether it can be transferred does not by itself decide whether it is a deposit.
(d) A "bank" is a person that holds a banking license or carries on a business of accepting deposits from the public or a membership group. A licensed credit union is a bank. An exchange or payment service provider is not a bank solely because it maintains customer balances for the trading or payment activity described in section 10. The BoA is not a bank for the purposes of this Act.
(e) A "commercial bank" is a bank other than a credit union.
(f) A person has "control" of a bank if the person can direct its management, directly or indirectly, through ownership or an agreement.
(g) A "key position" is a position the BoA designates under section 5.
(h) A person faces "serious financial difficulty" if their liabilities exceed the fair market value of their assets, they cannot pay their debts as they fall due, or they face a serious, demonstrable risk of either.
(j) For the resolution provisions and section 9 of this Act, "bank" also includes a former bank that still owes debts arising from deposits and an unlicensed business that has accepted deposits for which a banking license was required.
(k) The "banking provisions" are sections 3 through 8 of this Act and the resolution provisions as they apply to banks, and sections 9(c) through (e), 10(a) through (k), and 13 through 15 of this Act.
(l) A "nonbank financial institution" is a person other than a bank or the BoA that carries on a business providing financial services to others. It includes an investment bank, stock exchange, or payment service provider. An occasional private loan alone does not make a person a nonbank financial institution. A seller other than a bank or the BoA is a nonbank financial institution if it regularly offers interest-bearing installments for its own goods or services. Interest-free installments for its own goods or services do not alone make the seller a nonbank financial institution.
(m) A "financial institution" is a bank or nonbank financial institution, except as provided in sections 20(b) and 21(f).
(n) The "resolution provisions" are sections 9 through 15 of the Azalea Banking and Solvency Act.
Chapter 2: Banks and Credit Unions
3. Banking Licenses
(a) A person must hold a banking license to carry on a banking business, and only a registered limited company may receive one.
(b) A stock exchange or payment service provider does not need a banking license solely to maintain customer balances for trading or payments, respectively, in accordance with section 10.
(c) The MEA administers banking licenses and nonbank registrations. An applicant for a banking license must give the MEA the information required by this Act, the resolution provisions, and applicable rules of the BoA. Within seven days after receiving an application for either authorization, the MEA must identify any required information that is missing.
(d) The MEA must decide within fourteen days after receiving a banking-license or nonbank-registration application with all required information. It must grant the license or registration if the applicant meets the applicable legal requirements and give written reasons for refusal.
(e) The BoA sets or approves the financial requirements and conditions that apply to a bank. The MEA may attach a nonfinancial condition needed to comply with a specific provision of this Act, the resolution provisions, or an applicable rule of the BoA. The MEA must give written reasons for that condition.
(f) The MEA must maintain a public register showing each bank's license, permitted activities, and conditions in effect. The register must protect customer identities. The MEA must give the bank the full terms of its license and conditions.
(g) The MEA must set a reasonable date by which a newly licensed bank must make its banking services available. The MEA must give reasons for the date and may extend it for good cause. This subsection does not require an existing provisional bank to start its services again.
(h) The MEA may amend, suspend, or revoke a license if the bank:
(i) obtained it using materially false or misleading information supplied knowingly, recklessly, or negligently;
(ii) fails to meet a requirement or condition of its license;
(iii) seriously or repeatedly breaches this Act, the resolution provisions, or an applicable rule;
(iv) fails to make its banking services available by the date set under subsection (g); or
(v) has closed or abandoned its banking business.
(j) A temporary interruption or lack of customers does not by itself establish that a bank has closed or abandoned its business. Before suspending or revoking a license for a minor failure to meet an eligibility or compliance requirement that can be corrected, the MEA must give the bank a reasonable opportunity to correct it.
(k) Before suspending or revoking a license or adding a restriction to it without the bank's request, the MEA must give the bank written reasons and at least seventy-two hours to respond.
(l) The MEA may impose a temporary suspension or restriction without waiting for that response if a ground under subsection (h) exists and delay would pose an immediate serious risk to depositors or the financial system. The MEA must immediately give written reasons, allow at least seventy-two hours to respond, and make a final decision within seven days after the temporary action begins. If it does not decide within that period, the action expires. The MEA must not restart the period by issuing the same temporary action on unchanged grounds.
(m) The MEA must update the register when a temporary action begins or ends and when it makes a final decision.
(n) A bank must not accept new deposits while its license is suspended or after it ends without another banking license taking effect for the same operator. An operator whose banking license ends without another taking effect for that operator remains subject to this Act and the resolution provisions as a bank while it owes debts arising from deposits. A winding up already begun under sections 9 through 15 of the Azalea Banking and Solvency Act shall continue under that Act until completed.
(o) A financial business must not use "bank" in its name or describe itself as a bank unless it holds a banking license. The BoA may use its name. An investment bank may use "investment bank" if it makes clear that it does not accept deposits.
(p) A bank whose license is suspended must publicly disclose the suspension immediately. A financial business whose banking license is permanently revoked, or whose provisional license ends without a full license taking effect for the same operator, must immediately disclose that it is no longer licensed and change its name within thirty days to comply with subsection (o).
(q) An applicant or operator may appeal a refusal, restriction, suspension, or revocation of a banking license or nonbank registration, or a disputed BoA-set or approved condition, to the BoA under section 7 of the Azalea Banking and Solvency Act. A person who participated in the challenged decision must not decide the appeal.
(i) The BoA may uphold, modify, or reverse the decision and direct the MEA to act in accordance with its decision and applicable law. If it does not grant the requested relief or fails to decide within the period in that section, the appellant may bring a civil suit.
(ii) An appeal does not automatically pause a suspension or revocation, but the reviewing body may grant relief.
4. Financial Requirements and Services
(a) The BoA may set rules for banks' financial condition and activities, including loss-absorbing capital requirements. It may specify qualifying funds and required amounts, and set or approve financial requirements for an individual bank.
(b) A general banking rule is subject to section 3(h) of the Azalea Banking and Solvency Act. A new general capital rule must state when banks must comply and allow a reasonable period for compliance.
(c) A bank may offer accounts, certificates of deposit, loans, and credit cards. A bank must obtain the BoA's permission before offering another financial service or investing in another financial tool. The BoA may approve a category by published rule or approve an individual application.
(d) A bank must obtain the BoA's permission before acquiring or holding shares in a limited company, except as provided in section 12 of the Azalea Banking and Solvency Act. The BoA may grant permission for a published category or an individual investment.
(e) The BoA must apply the same criteria to proposed investments by credit unions as to those by other banks. A credit union may offer the accounts, certificates of deposit, loans, and credit cards listed in subsection (c), but must not offer other financial services to customers.
(f) A person must obtain the BoA's approval before acquiring control of a licensed bank through a voluntary private transaction. The BoA must publish the criteria for approval.
(g) A company that operates a banking business and another business must maintain separate operating accounts and accounting records for its banking business.
5. Key Positions
(a) The BoA may designate positions, such as director and manager, as key positions. It must publish objective standards for the competence, honesty, and ability needed to perform those positions.
(b) An individual must not hold a key position while the individual has a valid, unexpunged conviction for a disqualifying offense under the New Criminal Code Act. An offense is disqualifying if it is or has been listed in section 9 of that Act or classified as a capital offense at any time on or after the date of the charge that led to the conviction.
(i) An offense under section 17 of that Act is also disqualifying if the underlying offense is or has been listed in section 9 at any time on or after the date of the section 17 charge that led to the conviction.
(ii) Repealing, replacing, or amending the offense or the underlying offense does not end the disqualification.
(c) Before appointing a person to a key position, a bank must notify the MEA and the BoA. The bank must ensure that a person it appoints or retains in a key position meets the standards and requirements of this section.
(d) The BoA may determine that a person is unsuitable under its published standards. The BoA must promptly notify the person, the bank, and the MEA of its determination. The MEA may enforce that determination and subsection (b).
(e) A person who is disqualified under subsection (b) or found unsuitable by the BoA must immediately stop performing the duties of the key position. The bank must complete the person's removal within seven days.
(f) When the BoA first designates a key position, this section applies from the date the designation takes effect. Within fourteen days after that date, the bank must notify the MEA and the BoA of the person holding the position.
6. Reports and Reporting Appeals
(a) Each bank must file a report with the MEA for each calendar month in which it is a bank, by the end of the fifth calendar day of the next month. The report must state:
(i) the names of employees with direct access to alter or withdraw from customer account balances or the bank's in-game balance;
(ii) the lawyer or law firm retained by the bank, if any;
(iii) the amounts of deposits, cash on hand, and cash loaned out; and
(iv) the change in the bank's in-game balance from the beginning to the end of the month.
(b) A bank with more than $100,000 in deposits must have a lawyer on staff or retainer. The MEA may grant a one-month exception on the bank's application.
(c) The BoA may require additional reports or information under its powers. The MEA must give the Chairman of the BoA access to all banking reports it receives. The Chairman may share them with the Governors of the BoA.
(d) A financial institution may appeal an additional periodic reporting request made by the MEA under section 11(g) to the BoA under section 7 of the Azalea Banking and Solvency Act. Filing the appeal pauses the disputed request until the appeal is decided.
(e) Within forty-eight hours after the appeal is filed, the MEA must give its reasons for the request to the institution and to the Chairman or Governors deciding the appeal. The institution may respond within forty-eight hours after receiving those reasons.
(f) The decision-maker must decide whether the request is lawful, necessary, and proportionate. The decision-maker may uphold, narrow, or cancel it, and must give written reasons within seven days after the appeal is filed. If the decision-maker upholds or narrows the request, the institution must comply within seven days after the decision.
(g) When Governors decide the appeal, the MEA and the institution must provide their submissions directly to them. The Minister of Economic Affairs must not vote. If the Governors hold a vote and it is tied, the request is upheld.
7. Records and Inspections
(a) The MEA may require a bank and staff responsible for a banking matter to provide records and answer factual questions reasonably needed for the MEA's duties under the banking provisions. The MEA may require an answer to be affirmed when reasonably necessary. This subsection does not require production of a record or answer protected from compulsion by law.
(b) A demand under subsection (a) must allow at least seven days for a response, or longer when reasonably needed. The MEA may set a shorter reasonable period, with written reasons, if delay risks the loss of important records or immediate serious financial harm.
(c) The MEA or the BoA may apply for a banking-records warrant under section 20(k) of the Judiciary Act for records held by an independent third party.
(d) The MEA may inspect or audit a bank where it has lawful access or consent. Compulsory entry or a search requires the authority provided by law. A banking-records warrant requires production of records; it does not authorize entry or a search.
(e) The BoA may audit a financial institution and require it to provide records relevant to that audit. When the BoA needs records for an audit, the MEA must give the BoA any relevant records the MEA already holds.
8. Supervisory Orders
(a) When exercising powers under sections 3 through 8 of this Act or the resolution provisions in relation to a bank, or under section 10(e) or sections 13 through 15, the MEA and the BoA must seek to preserve essential banking services, protect depositors and other creditors, limit harm to the financial system, and limit public costs. Each measure must be necessary and proportionate. If more than one effective measure is available, the authority must use the least intrusive one.
(b) The MEA may order a bank to correct a breach of this Act, the resolution provisions, or an applicable rule. It may enforce financial requirements that the BoA has set or approved, including restrictions on capital, exposure, dividends, and asset transfers.
(c) The MEA may restrict a bank's promotion or sale of a particular financial instrument when necessary to address a serious risk to consumers arising from how it is marketed or sold. A financial requirement for an individual bank requires the BoA's approval.
(d) The MEA may require a bank to commission an independent audit when necessary. The bank must select a qualified independent auditor, subject to the MEA's approval, and pay the reasonable cost.
(e) Before making a binding order under this section, the MEA must give the bank written reasons and at least seventy-two hours to respond.
(f) If waiting would pose an immediate serious risk to depositors or the financial system, the MEA may make a temporary order before the response period ends. The requirements in section 3(l) for notice, response, decision, expiration, and reissuance apply to the temporary order.
(g) An ordinary supervisory order or license condition under section 3 or this section must not suspend an owner's voting rights, require a corporate reorganization, or impose a general halt on payments or withdrawals from existing customer accounts. Those measures require the applicable procedure in the resolution provisions.
9. Credit Unions
(a) A credit union must be a nonprofit limited company under section 6 of the Business Act. A credit union lawfully operating at enactment is registered as a nonprofit company under that Act without a new registration fee or loss of its existing legal identity. The MEA must record that status.
(b) Credit-union shares and votes follow these rules:
(i) Only individuals may be depositors. Each $1 on deposit is one voting share owned by its depositor or joint depositors. Joint owners must choose one person to cast all the deposit's votes while it remains in the credit union. For subsections (c) through (g), joint owners must be treated as holding equal shares of their deposit and its votes.
(ii) Only deposit shares may be held, except under subsections (e) through (g). Legal death alone does not extinguish a deposit or its shares; applicable law governs them.
(iii) A share change solely due to a member's deposit balance change is not an ordinary issue under section 18(c) of the Business Act and does not trigger section 18(d) or (e).
(iv) For decisions under sections 10(b) and 14(b) of the Business Act, voting follows this section instead of the headcount rules in those subsections. A majority of votes cast decides the board vote, and holders of more than half of all voting power may remove the highest executive.
(c) When a credit union begins acting on a decision to close permanently, winding up starts, or the Court orders liquidation, whichever occurs first, it must record its members, their deposits, and their voting proportions before any transfer or repayment under that decision, winding up, or order.
(d) After debts and winding-up or liquidation costs are paid, the credit union must distribute remaining assets to the recorded members in proportion to their recorded deposits. If those total zero, it must distribute them in their recorded voting proportions.
(e) Until dissolution, the recorded members retain their recorded voting proportions for winding-up decisions. Those rights do not displace powers given to a liquidator by the Court.
(f) Each founder must be an individual and include a written commitment to a stated positive deposit in the formation application. For formation and until seven days after the banking license is issued, each $1 of an unpaid commitment counts as a temporary issued voting share for that founder. Each founder must make the committed deposit within seven days after issuance. Deposited amounts replace corresponding temporary shares with shares under subsection (b). Remaining temporary shares expire at that deadline. A commitment is not a deposit.
(g) If total deposit balances reach zero after the credit union has received deposits, the members holding deposit-weighted shares immediately beforehand retain those shares solely for voting in their last voting proportions until deposits return. Those retained shares are not deposits.
Chapter 3: Financial Institutions
10. Exchanges and Payment Service Providers
(a) A stock exchange may maintain customer cash balances for trading. A payment service provider may maintain customer cash balances for payments. Each must keep cash held for those balances in an account in its name at a licensed bank or the BoA, rather than accumulating it in its own operating balance.
(b) An exchange or payment service provider must meet the BoA's requirements for assets backing customer cash balances. The BoA must set the requirements, including eligible assets and their valuation, by a Board-approved rule published before it takes effect.
(c) Until the rule under subsection (b) takes effect, the exchange or provider must maintain eligible assets worth at least the customer cash balances it owes. Eligible assets are deposits at a licensed bank or the BoA and saleable debt securities issued by the Azalea Isles Government, a territorial district, or a public utility company within the meaning of the Public Utility Empowerment Act. Assets must be counted at current value. If an asset secures a debt of the exchange or provider, only the value exceeding the enforceable secured claim must be counted.
(d) The exchange or provider must keep enough cash available at a licensed bank or the BoA for reasonably expected payments and withdrawals. Money held under a restriction counts as available cash only if it can be used for those payments.
(e) On application, the BoA may approve different eligible assets or cash arrangements. Until the rule under subsection (b) takes effect, an approval must still require assets worth at least the customer cash balances owed.
(f) An exchange may use available cash for a loan permitted under subsection (n) if it continues to meet the applicable requirement under subsection (b) or (c) and the applicable cash requirement under subsection (d) or an approval under subsection (e). A loan counts as an eligible asset only if the BoA approves it under subsection (e).
(g) Losses on assets held under this section do not reduce the customer balances owed. An exchange or provider must make up any shortfall in the backing required by subsection (b) or (c). It must notify the BoA within twenty-four hours after learning of a shortfall.
(h) An exchange must obtain a customer's affirmative agreement before lending the customer's shares for short sales. A general agreement to lend shares for short sales is sufficient.
(j) An exchange may share the following returns under agreed terms:
(i) fees earned from lending a customer's shares, with the owner of those shares;
(ii) interest actually earned on short-sale proceeds or collateral; and
(iii) interest actually earned on permitted margin loans.
(k) A payment service provider enables the processing of electronic payments, including through non-Minecraft platforms. It may arrange a payment authorized by a customer from the customer's bank account to another person's in-game balance.
(l) A stock exchange must report to the MEA each month. The report must state:
(i) the employees who can alter or withdraw account balances, change stock holdings, or make similar financial approvals or account changes; and
(ii) cash in customer accounts, cash on hand, cash loaned out, revenue, and expenses.
(m) A stock exchange is responsible for facilitating the buying and selling of shares and other financial tools. It may list shares in limited companies and BoA-approved investment tools created by investment banks.
(n) A stock exchange may make loans only to support investment in financial tools offered on that exchange. It must not invest customer funds that are deposits under section 2(b) and (c), or offer users interest for keeping funds deposited with the exchange, except as permitted by this section. It may invest its own funds.
(o) A payment service provider must not publish, sell, or otherwise share information that directly tracks, traces, or identifies an individual or that individual's transactions. A provider may share information needed to carry out a payment authorized by its customer. It may also provide information to the MEA or the BoA when required by law, disclose information under a court order, or provide information required by a lawful compulsory inquiry of Parliament or a parliamentary committee. A provider may also disclose information under the conditions in section 21(b)(ii), 21(b)(iii), or 21(g).
(p) A payment service provider may be owned by a registered limited company or directly by a financial institution. It must not go public or hold assets unrelated to its operations. Assets held to back customer balances under this section are related to its operations.
11. Financial Institutions and Taxation
(a) An investment bank must make a reasonable effort to keep the public aware that it is not a commercial bank. It must not offer normal deposit accounts.
(b) An investment bank may offer loans and investment accounts or funds. It may create exchange-traded funds and bonds.
(c) An investment bank must obtain the BoA's approval to create additional financial tools or services. The BoA may grant approval to all investment banks or to a particular investment bank. The BoA may grant a narrower approval to allow initial development, to limit a higher-risk or capital-intensive tool to investment banks able to handle it, or for another reason it determines.
(d) A financial institution must have an in-game or digital location, such as a Discord server or website, where it offers its financial products.
(e) If a financial institution receives a plot because a customer defaults, it may hold that plot despite a plot cap for up to two months. Afterward, it violates the cap if it still holds more plots than allowed.
(f) Each nonbank financial institution must file a monthly report with the MEA. The MEA must publish the required information and filing deadline, which may vary by type of institution. A report may satisfy both this subsection and section 10(l).
(g) The MEA may request additional information in the monthly reports required from a category of financial institution or from all financial institutions. An institution may appeal the request under section 6.
(h) Financial institutions are exempt from normal business tax rates.
(j) A withdrawal from a normal checking or savings account is subject to a tax of 0.25%. The Government must pay the tax proceeds to the Deposit Protection Fund under section 4 of the Azalea Banking and Solvency Act.
(k) Financial institutions must pay a tax of 10% on net income earned per standard yearly quarter.
12. Enforcement for Financial Institutions
(a) A financial institution other than the BoA, a bank, or an operator described in section 2(j) must notify the MEA and the BoA within 24 hours after a director or manager knows, or reasonably should know, that the institution faces serious financial difficulty. The initial notice must give the material facts then known. As soon as the information is reasonably available, the institution must report its financial position, the causes of the difficulty, and the steps taken or planned to address it.
(b) Before fining a financial institution for failing to provide required information, the MEA must give it notice of the failure and seven full days after notice to provide the information. If the institution has not provided the information by then, it must pay a $500 fine for each day the failure continues, beginning the next day. The MEA may waive an accrued fine for fair reasons. This subsection does not apply to a failure to comply with sections 20 through 22.
(c) Before fining a financial institution for failing to cooperate with an MEA or BoA audit, the MEA must give it notice of the required cooperation and a compliance deadline at least seven days after notice. If the institution has not complied by the deadline, it must pay a $1,000 fine for each day the failure continues, beginning the next day. The MEA may waive an accrued fine for fair reasons.
(d) In a liquidation under section 15 of the Azalea Banking and Solvency Act of a nonbank financial institution covered by section 9(a) of that Act, a sale of a plot subject to a lien registered under the Plot Liens Act must comply with section 4 of the Plot Liens Act.
(e) If a financial institution incorrectly accounts for its profit taxes at the end of a quarter, the MEA must give it a warning for the first occurrence, and the institution must file an accurate correction. For later occurrences, the MEA may impose a fine. Repeated failure to account properly for taxes may be prosecuted as criminal fraud.
(f) Depending on the severity of the noncompliance, the MEA may impose penalties authorized by this Act on a financial institution that is neither a bank nor an operator described in section 2(j). Suspension of its operations or revocation of its registration is subject to section 16.
13. Confidentiality and Financial Difficulty
(a) A current or former employee or agent of the MEA must keep confidential nonpublic information obtained through the MEA's work concerning banking or financial institutions. A current or former employee or agent of the BoA must keep confidential nonpublic banking information obtained under this Act, the resolution provisions, or the BoA's other banking powers.
(b) A person subject to subsection (a) may disclose the information to perform duties under law, as authorized or required by law, to a court, with the consent of the person to whom it relates, or in a summary that does not identify a bank or person.
(c) A bank must notify the MEA and the BoA within twenty-four hours after a director or manager knows, or reasonably should know, that the bank faces serious financial difficulty. The initial notice must give the material facts then known.
(d) As soon as the information is reasonably available, the bank must report its financial position, the causes of the difficulty, and the steps taken or planned to address it.
14. Administrative Fines
(a) The MEA may fine a person responsible for a breach of a duty imposed under sections 3 through 8, 9(c) through (e), 10(a) through (k), 13, or 15 of this Act or the resolution provisions, or an order made under those provisions. A person is not responsible solely because the person is a director or manager.
(b) For a breach, the MEA may impose a fine of up to $25,000. For a continuing breach, the MEA may instead impose a fine of up to $1,000 for each day. The total under this section for the same breach must not exceed $25,000.
(c) Before imposing a fine, the MEA must give the person written notice of the alleged breach and at least seventy-two hours to respond. A person may challenge the fine in Court.
(d) A person must not be fined under both this section and section 12(b) or (c) for the same noncompliance.
(e) The MEA must not impose a fine under this section on the MEA, the BoA, or their personnel for carrying out official duties.
(f) This section does not apply to a duty or order under the resolution provisions as applied to a nonbank financial institution.
15. Transition
(a) A person lawfully carrying on a deposit-taking business immediately before enactment holds a provisional banking license from enactment if the business requires a license under this Act.
(b) A provisional license holder must apply for a banking license within 30 days after enactment. Otherwise, the provisional license ends after those 30 days. If the holder applies on time, the provisional license shall continue until the MEA decides the application. The holder must supply missing required information by a reasonable deadline set by the MEA. The provisional license ends if the holder fails to meet that deadline.
(c) A provisional license holder that is not a limited company may continue operating under its provisional license despite section 3(a), but must register a limited company within 30 days after enactment, subject to paragraph (i). It may apply for a banking license for the proposed company while registration is pending.
(i) If the holder submits a complete company registration application and a banking license application within 30 days, supplying all required information other than proof of completed registration, the holder may continue operating provisionally while the MEA decides the applications. The MEA must not refuse the banking license solely because the company registration the holder applied for on time is not yet complete. The MEA must allow the holder the full 30 days to complete registration and set reasonable deadlines for any other required information.
(ii) The provisional authority ends if the MEA refuses either application or the holder fails to meet an applicable deadline. Incorporation does not transfer a debt or release the person who owes it.
(d) A provisional license holder that does not apply on time, or whose application the MEA refuses, must stop accepting new deposits when its provisional license ends. Its existing deposit debts remain payable.
(e) A financial business that lawfully uses a name restricted by section 3 at enactment must comply with the naming requirement within 30 days after enactment.
(f) A notice or seizure concerning a bank that is pending under the Seizure Act at enactment shall continue under that Act. Its powers, procedures, orders, and review remain available for that matter. The District Court may approve a transition to proceedings under the resolution provisions after giving affected parties an opportunity to be heard.
(g) A right, liability, fine, or reporting duty that arose before enactment shall continue to be handled under the law that applied when it arose.
(h) At enactment, a Finance Committee appeal concerning a reporting request transfers to the BoA for decision under section 6 if the appeal has not been resolved or withdrawn and the request remains in effect. This includes an appeal whose committee proceeding lapsed on dissolution. From enactment, the request is paused until the appeal is decided. The deadlines under section 6 and section 7 of the Azalea Banking and Solvency Act run from the transfer.
(j) A registration, approval, permission, waiver, order, or license other than a banking license that is valid under the Banking Foundations Act immediately before enactment shall continue under the corresponding provision of this Act or the resolution provisions to the extent that provision authorizes it. It shall remain in effect until it expires or is changed or revoked under law.
Chapter 4: Registration and Rescue Agreements
16. Registration of Nonbank Financial Operators
(a) A person must obtain the MEA's approval before operating a private nonbank financial institution. The operator must be a registered limited company or another entity with separate legal personality under applicable law. A qualifying financial institution may provide an additional service itself, subject to the approvals required for that service.
(b) An application must identify the operator's name and legal status, owners, contact information, and proposed services. It must include any other information required by this Act, the resolution provisions, or a rule of the BoA. An exchange must also identify the developer of its platform or tool, whether it will be private or public, its planned ownership structure and initial owners, its name, and its Discord server.
(c) The BoA may set financial and operational requirements for registration. A general registration rule is subject to section 3(h) of the Azalea Banking and Solvency Act. The BoA sets or approves the financial and operational conditions for an individual operator. The MEA must apply those requirements and conditions.
(d) The MEA must maintain a public register showing each operator's name, registration status, services, and conditions. The register must not disclose customer identities or private supporting information. The operator must notify the MEA of a material change to its registration information within seven days. An approval required for a change must be obtained before the change is made.
(e) The MEA may suspend or revoke registration if the operator obtained it using materially false or misleading information supplied knowingly, recklessly, or negligently; fails to meet a registration requirement; seriously or repeatedly breaches this Act, the resolution provisions, or an applicable rule; or has closed or abandoned its financial business. A temporary interruption or lack of customers does not by itself establish closure or abandonment.
(f) Before suspending or revoking registration, the MEA must give written reasons and at least seventy-two hours to respond. For a minor, correctable failure, the MEA must also give a reasonable opportunity to correct it.
(g) If a ground under subsection (e) exists and delay would pose an immediate serious risk to customers or the financial system, the MEA may temporarily suspend or restrict registration without waiting for the response period. The requirements in section 3(l) for notice, response, decision, expiration, and reissuance apply to the operator and temporary action.
(h) The MEA must promptly update the register when registration is suspended or revoked. The operator must promptly announce the suspension or loss of registration without identifying customers. It must stop the affected new activity but remains responsible for existing customer balances and may take the steps needed for an orderly wind-down.
17. Acquisition of Control of a Nonbank Financial Institution
(a) A person must obtain the BoA's approval before acquiring control of a nonbank financial institution through a voluntary private transaction. Control means the ability to direct management, directly or indirectly, through ownership or an agreement.
(b) The BoA must publish and apply its approval criteria. Within seven days after an application is submitted, it must identify missing required information. Within fourteen days after receiving the application and all required information, it must decide it, approve it if the legal requirements and published criteria are met, and give written reasons for refusal.
(c) The applicant may challenge a refusal in Court. If the BoA misses the fourteen-day decision deadline, the applicant may ask the Court to compel a decision.
18. Parliamentary Approval of Covered Rescue Agreements
(a) This section applies to a direct agreement under the Government Contracts Act 2.0 for a Court-approved sale under section 13 of the Azalea Banking and Solvency Act. The agreement does not become binding until Parliament approves it and the other required approvals have been obtained.
(b) The MEA must promptly deliver the approved agreement and its terms to the Speaker. The Speaker must open a vote without a separate motion. Parliament must approve or deny the agreement within seven days after the Court approves the sale. The ordinary parliamentary voting and quorum rules apply.
(c) If dissolution or recess prevents a vote from opening, the remaining period pauses until the new Parliament first convenes or recess ends, respectively. If Parliament has not decided within the applicable period, the agreement remains pending and may be decided by a later valid vote.
(d) An agreement that has been rejected or not adopted for lack of quorum may be resubmitted. Parliament has seven days after resubmission to the Speaker to decide it, subject to subsection (c). If the parties materially revise the agreement, the Court must approve the revised terms before resubmission.
(e) If Parliament has not decided the agreement within the applicable period and the officer responsible for the vote has failed to perform that officer's duty, the Court may impose a continuing fine of up to $1,000 per day. Before imposing the fine, the Court must give the officer notice and at least twenty-four hours to respond or comply. The Court decides when the fine ends. A failure of other members to provide a quorum is not by itself a failure by that officer.
(f) After Parliament approves an agreement under this section, section 6(b) of the Government Contracts Act 2.0 does not apply to the agreement if it concerns a nonbank sale or the sale of a privately owned bank to a private purchaser.
19. Transition for Existing Nonbank Financial Operators
(a) A person lawfully operating a private nonbank financial institution immediately before enactment may continue for thirty days while applying for registration under section 16 and any entity registration required by that section.
(b) If the operator submits a complete financial registration application and, if required, a complete entity-formation application within thirty days, supplying all required information other than proof that formation is complete, the operator may continue while the MEA decides the applications. The MEA must not refuse the financial registration solely because formation under a timely application is not yet complete.
Chapter 5: Financial Consumer Protection
20. Financial Consumer Rights and Disclosure
(a) For sections 20 through 22, a "consumer" is an individual or private enterprise engaging in a financial transaction or seeking a financial product or service for personal or business use within the Azalea Isles.
(b) For those sections, a "financial institution" includes commercial banks, investment banks, credit unions, payment service providers, and any other entity offering financial products or services to consumers. A "financial product or service" includes deposit accounts, loans, mortgages, credit, investment products, payment processing, and financial advice.
(c) A consumer has the right to fair treatment and to be free from misleading, deceptive, or coercive practices by financial institutions. A financial institution must not use false, misleading, or deceptive advertising or promotional activities.
(d) Before a consumer enters an agreement for a financial product or service, the financial institution must provide clear, concise, and accurate information about all terms, conditions, fees, and risks. The institution must disclose the risks of an investment product as required by subsection (g). Before a transaction or service begins, the institution must itemize and explain all fees, charges, and interest rates applicable to it.
(e) A financial institution must provide standardized disclosure documents for its financial products and services that allow consumers to compare and understand them easily. The BoA must publish standards for the formats and required information for different products, and the MEA must administer those standards.
(f) A contract for a financial product or service must use plain language, highlight key terms, and be readily accessible to the consumer.
(g) An institution offering an investment product must clearly disclose the risks a reasonable consumer would need to consider, including possible loss of principal.
(h) A Court may enforce a proven loan despite noncompliance with subsections (e), (f), or (g), or the requirement in subsection (d) to itemize and explain fees, charges, and interest rates.
(j) A financial institution and its employees must manage and disclose conflicts of interest that could adversely affect a consumer. Before a consumer commits to an affected transaction, the institution must explain the conflict in time for the consumer to consider it. If a conflict arises later, it must explain it as soon as reasonably practicable after learning of it.
(k) A financial institution must maintain and publicize a clear, accessible process for consumer complaints. Within seven days after receiving a complaint, it must give the consumer a decision or substantive update, and within 30 days, a final response.
(l) A person must not exploit a borrower's vulnerability in lending or use loan terms designed to trap a borrower in debt.
(m) A financial institution must take heightened care that a product or service offered to a new player is appropriate and not exploitative. It must do the same for another person if it knows or reasonably should know that the person's circumstances materially limit their ability to understand the product or service or protect their interests.
(n) For each person in either group, the institution must explain material terms and risks in a way tailored to that person and check their understanding. It must not proceed if it knows the person still does not understand those terms and risks. A "new player" is any player who qualifies as a recent immigrant under section 3(p) of the New Criminal Code Act.
21. Financial Customer Privacy
(a) A financial institution must protect a customer's financial data. It must not disclose the data to a third party without the customer's explicit consent, except as required by law or Court order or as permitted by this section.
(b) Without separate explicit consent, an institution may disclose:
(i) information needed by a service provider to provide the service; the provider must protect it and use it only for that purpose;
(ii) relevant information when reasonably necessary to investigate or prevent suspected fraud; the recipient must protect its confidentiality and use it only for that purpose; or
(iii) relevant information needed by the BoA or the MEA for its lawful financial duties, subject to applicable confidentiality rules.
(c) A financial institution must obtain the customer's explicit consent before disclosing identifiable customer data to another business for that business's marketing.
(d) If a financial institution learns that a customer's financial data was improperly exposed, it must promptly take reasonable steps to identify affected customers and notify each as soon as reasonably practicable after identifying whom to contact. The notice must describe the exposed information, the institution's response, and a contact for questions. It must update the customer if material facts change.
(e) Within 24 hours after learning of an improper exposure of a customer's financial data, the institution must notify the BoA and the MEA of what is known. It must provide material updates as more is learned.
(f) For subsections (a) through (e), a customer includes a person or private enterprise using, seeking, or having used a financial product or service. Customer financial data is information relating to the customer's financial activities, assets, liabilities, or transactions.
(i) For this section, a financial institution includes a person carrying on a business of providing financial products or services, whether or not it serves consumers. For subsections (d) and (e), a financial institution does not include the BoA.
(g) A person may disclose information reasonably needed to report a suspected violation of sections 20 through 22 to an authority or attorney. The recipient must protect its confidentiality and use it only for the report and related advice, investigation, or legal proceedings, unless disclosure is required by law or Court order.22. Financial Consumer Enforcement
(a) A consumer may pursue timely and fair resolution of financial complaints and disputes through private litigation in Court.
(i) A consumer may seek relief for a violation of sections 20 through 22. A customer described in section 21(f) may seek relief for a violation of section 21(a) through (e) or (g). A borrower harmed by a violation of section 20(l) may seek relief for that violation.
(ii) A Court may award reasonable attorney fees and other costs to a successful plaintiff. Consumers, customers bringing claims under section 21(a) through (e) or (g), and borrowers bringing claims under section 20(l) may file class-action lawsuits to address widespread violations.
(b) A financial institution found liable in Court for a violation of sections 20 through 22, or another person found liable for a violation of section 20(l), 21(a) through (e), or 21(g), may be subject to compensatory and punitive damages, restitution to affected consumers, customers, or borrowers, or other remedies.(c) Sections 20 through 22 are enforced through private litigation in Court, rather than by administrative oversight, except as provided in this subsection. Criminal prosecution remains available under applicable law. The MEA may administer the standards under section 20(e), make a compliance order under section 31 of the Business Act, and suspend or revoke a license or registration under section 3(h)(iii) or 16(e) for serious or repeated violations of sections 20 through 22.
(d) An individual, including an employee of a financial institution or a consumer, who reports a violation, or in good faith reports a suspected violation, of sections 20 through 22 to authorities or attorneys is protected from retaliation, including termination, harassment, or discrimination.
(e) A whistleblower whose report leads to successful litigation may receive a financial reward determined by the Court. The whistleblower's identity must be protected to the fullest extent permitted by law unless disclosure is required by Court order.
(f) A financial institution, including a person described as a financial institution in section 21(f), does not violate sections 20 through 22 by doing what an order under this Act or the resolution provisions lawfully requires.
23. Financial Consumer Transition
(a) Conduct occurring before enactment remains governed by the law in effect when it occurred. A claim or proceeding concerning that conduct may be brought or continued under that law.
(b) Sections 22(d) and (e) protect a report, whenever made, of a violation of the Financial Consumer Protection Act that occurred before enactment.
(c) For a complaint pending at enactment, the periods in section 20(k) run from enactment. Accrued rights remain governed by subsection (a).
Chapter 6: Amendments and Repeals
24. Amendments
(a) The Judiciary Act is amended as follows:
(i) Add a new section 20(k):
(ii) Add a new section 20(l):
(b) The Bankruptcy and Debt Relief Act is amended as follows:
(i) Add to the end of section 3(d)(iv):
(ii) Add to the end of section 3(d)(vi):
25. Repeals
(a) The Banking Foundations Act and the Financial Consumer Protection Act are repealed.
Last edited: