CHAPTER 51A-1
DEFINITIONS, GENERAL PROVISIONS AND PENALTIES
51A-1-1 Applicability of provisions--Retention of capital structure by banks.
51A-1-2 Definition of terms.
51A-1-3 Adverse claims against bank deposits, contents of safe deposit box or property in safekeeping.
51A-1-4 Disqualification of officer, employee or director for violation--Civil liability.
51A-1-5 Failure to obey director's orders--Civil liability.
51A-1-6 Procedure to recover fine.
51A-1-7 Injunction against violation.
51A-1-8 Liability of bank as insurer or as guarantor or endorser of security instrument prohibited.
51A-1-9 Concealment of bank transactions as misdemeanor.
51A-1-10 False entries--Obstruction of examination--Felonies.
51A-1-11 False filing as misdemeanor.
51A-1-12 Payment or indemnification of person for fine, penalty or judgment unlawful--Civil liability--Exceptions--Action to recover payments.
51A-1-13 Misappropriation of funds or information by officer, director, or employee as felony.
51A-1-14 Receipt, possession, or sale of misappropriated funds or information as felony.
51A-1-15 Acknowledgments by officers or employees of banks validated.
51A-1-16 Severability of provisions.
51A-1-17 No duty to disclose information about customers--Exceptions.
51A-1-18 Agreements or compacts with other jurisdictions--Administration--Filing--Availability.
51A-1-19 Central bank digital currency--Public transaction prohibited.
51A-1-20 Central bank digital currency--Private transaction--Alternative required.
51A-1-1. Applicability of provisions--Retention of capital structure by banks.
Any bank, branch bank, drive-in facility, bank service corporation or other entity by its term subject to this title, is subject to this title, except that the legality of their organization under prior law is not affected by this title. Banks may retain their capital structure. However the director may order any bank to comply with the capitalization requirements of this title or such additional amounts as he deems necessary upon a finding by him that the sound conduct of banking will be jeopardized by the retention of such prior capital structure.
Source: SL 1969, ch 11, § 1.13; SDCL, § 51-15-13; SL 1988, ch 377, § 11; SDCL, § 51-15-1.1.
51A-1-2. Definition of terms.
Terms used in this title mean:
(1) "Articles of incorporation," articles of incorporation for a bank organized by incorporators as a corporation pursuant to chapter 47-1A and articles of organization for a bank organized by organizers or members as a limited liability company pursuant to chapter 47-34A;
(2) "Bank," any corporation or limited liability company, organized pursuant to chapter 47-34A, authorized under this title to engage in the business of banking or in the combined business of a bank and trust company or in the combined business of a bank with trust powers;
(3) "Bank holding company," a bank holding company as defined in 12 U.S.C. 1841, as amended as of January 1, 1988;
(4) "Banking," the business of receiving deposits, discounting commercial paper, or buying and selling exchange, and any other activity authorized by this title;
(5) "Banking day," that part of any day on which a bank is open to the public for carrying on substantially all of its banking functions;
(6) "Board of directors," board of directors for a bank organized by incorporators as a corporation pursuant to chapter 47-1A and a manager for a manager-managed bank or a member for a member-managed bank organized as a limited liability company pursuant to chapter 47-34A;
(7) "Branch bank," a branch place of business maintained by a bank to conduct its banking business;
(8) "By-laws," by-laws for a bank organized by incorporators as a corporation pursuant to chapter 47-1A and operating agreement for a bank organized by organizers or members as a limited liability company pursuant to chapter 47-34A;
(9) "Commission," the State Banking Commission;
(10) "Debt cancellation contract," a loan term or contractual arrangement modifying loan terms under which a bank agrees to cancel all or part of a customer's obligation to repay an extension of credit from the bank upon the occurrence of a specified event. The contract may be separate from or a part of other loan documents. The term, debt cancellation contract, does not include loan payment deferral arrangements in which the triggering event is the borrower's unilateral election to defer repayment, or the bank's unilateral decision to allow a deferral of repayment;
(11) "Debt suspension contract," a loan term or contractual arrangement modifying loan terms under which a bank agrees to suspend all or part of a customer's obligation to repay an extension of credit from the bank upon the occurrence of a specified event. The contract may be separate from or a part of other loan documents. The term, debt suspension contract, does not include loan payment deferral arrangements in which the triggering event is the borrower's unilateral election to defer repayment, or the bank's unilateral decision to allow a deferral of repayment.
(12) "Deputy director," the deputy director of the Division of Banking;
(13) "Director," the director of the Division of Banking;
(14) "Dividends," distributions for a corporation organized pursuant to chapter 47-1A and distributions for a limited liability company organized pursuant to chapter 47-34A.
(15) "Division," the Division of Banking of the Department of Labor and Regulation;
(16) "Executive officer," every officer who participates or has authority to participate, otherwise than in the capacity of a director, in major policy-making functions of the bank, regardless of whether the officer has an official title or whether the officer's title contains a designation of assistant and regardless of whether the officer is serving without salary or other compensation. The chairman of the board, the president, every vice-president, the cashier, secretary, and treasurer of a bank are assumed to be executive officers, unless, by resolution of the board of directors or by the bank's bylaws, any such officer is excluded from participation in major policy-making functions, otherwise than in the capacity of a director of the bank, and the officer does not actually participate therein;
(17) "Fully defeased bonds or notes," obligations issued by any state, or municipal or school district subdivision the repayment of which has been irrevocably guaranteed by other securities which securities are issued by or are fully guaranteed by the United States Government;
(18) "Loan production office," an office which is apart from its main bank or branch which is staffed or controlled by a bank and is where loans are solicited but are not approved or disbursed;
(19) "Mobile branch bank," a branch bank that does not have a single, permanent site and uses a vehicle that travels to various locations to enable the public to conduct banking business. A mobile branch bank may serve defined locations on a regular schedule or may serve a defined area at varying times and locations;
(20) "National bank," any corporation organized pursuant to 12 U.S.C. § 21, as amended as of January 1, 1990;
(21) "Stock," shares for a bank organized by incorporators as a corporation pursuant to chapter 47-1A and member equity for a bank organized as a limited liability company pursuant to chapter 47-34A;
(22) "Stockholder," a shareholder of a bank organized by incorporators as a corporation pursuant to chapter 47-1A and a member for a bank organized by organizers or members as a member as a limited liability company pursuant to chapter 47-34A.
Source: SDC 1939, § 6.0101; SDCL § 51-1-1; SL 1969, ch 11, § 1.1; SL 1978, ch 352, § 3; SL 1979, ch 321, § 1; SL 1981, ch 346, § 1; SL 1984, ch 314, § 1; SL 1986, ch 399, § 2; SL 1988, ch 377, § 1; SL 1990, ch 379; SDCL § 51-15-1; SL 1995, ch 268, § 63; SL 1998, ch 278, § 1; SL 2004, ch 17, § 298; SL 2004, ch 289, §§ 1, 6; SL 2004, ch 290, § 1; SL 2008, ch 252, § 1; SL 2011, ch 1 (Ex. Ord. 11-1), § 162, eff. Apr. 12, 2011; SL 2018, ch 270, § 1.
51A-1-3. Adverse claims against bank deposits, contents of safe deposit box or property in safekeeping.
Notice to any bank of an adverse claim to a deposit or other item standing on its books to the credit of any person, or to the contents of a safe deposit box or property held in safekeeping, shall not be sufficient to cause said bank to recognize such adverse claim unless:
(1) In the case of a deposit, the adverse claimant shall execute and deliver to such bank, in form and with sureties acceptable to it, a bond indemnifying such bank from any and all liability on account of the recognition by the bank of such adverse claim, or unless such adverse claim is made through acts or proceedings pursuant to law;
(2) In the case of a safe deposit box, such box is leased or the property is held in the name of the lessee under a written instrument designating that the contents constitute property held in a fiduciary capacity, and the adverse claim is supported by a verified statement of facts disclosing that it is made by or on behalf of a beneficiary or other person having an interest therein and that there is good cause to believe that the contents thereof are in danger of misappropriation, unless the bank is directed to do so by a court order.
Source: SL 1927, ch 55; SDC 1939, § 6.0416; SDCL, § 51-10-12; SL 1969, ch 11, § 1.2; SDCL, § 51-15-2.
51A-1-4. Disqualification of officer, employee or director for violation--Civil liability.
Any officer, employee or director of a bank who is convicted of violating any of the provisions of this title is disqualified from thereafter acting as an officer, employee or director of any bank and is liable in a civil action to such bank or any of its stockholders for all losses sustained by reason of such violations.
Source: SL 1925, ch 92; SL 1927, ch 53; SL 1933, ch 50; SDC 1939, § 6.0441; SDCL, § 51-1-6; SL 1969, ch 11, § 1.3; SL 1988, ch 377, § 2; SDCL, § 51-15-3.
51A-1-5. Failure to obey director's orders--Civil liability.
Any officer, employee, or director of a bank who fails to obey any lawful order made by the director or commission under provisions of this title is subject to the imposition of a civil fine by the director or commission not exceeding one thousand dollars per violation for each day the officer, employee, director, or bank has willfully failed to comply with the order. Any funds received from such fines shall be deposited in the banking special revenue fund.
Source: SDC 1939, § 6.9911; SDCL § 51-1-4; SL 1969, ch 11, § 1.4; SL 1980, ch 24, § 76; SL 1988, ch 377, § 3; SDCL § 51-15-4; SL 2008, ch 252, § 2.
51A-1-6. Procedure to recover fine.
Any proceeding commenced to recover any civil fine under § 51A-1-5 shall be conducted in accordance with the provisions of chapter 1-26.
Source: SL 1988, ch 377, § 4; SDCL, § 51-15-4.1.
51A-1-7. Injunction against violation.
Whenever a violation of this title by a bank or an officer, director, or employee thereof is threatened or pending, the director may make application pursuant to law for an injunction or other appropriate remedy.
Source: SL 1969, ch 11, § 1.5; SL 1988, ch 377, § 5; SDCL, § 51-15-5.
51A-1-8. Liability of bank as insurer or as guarantor or endorser of security instrument prohibited.
Except as expressly permitted in this title, a bank shall not assume liability as an insurer or as a guarantor or endorser of any security instrument or obligation in which or with respect to which it has no property interest.
Source: SL 1969, ch 11, § 1.6; SDCL, § 51-15-6.
51A-1-9. Concealment of bank transactions as misdemeanor.
It is a Class 1 misdemeanor for an officer, director, employee or agent of a bank to conceal or endeavor to conceal any transaction of the bank from any officer, director or employee of the bank or any official or employee of the division to whom it should properly be disclosed.
Source: SL 1969, ch 11, § 1.8; SL 1970, ch 265, § 2; SL 1980, ch 24, § 81; SL 1988, ch 377, § 7; SDCL, § 51-15-8.
51A-1-10. False entries--Obstruction of examination--Felonies.
It is a Class 4 felony for an officer, director, employee, or agent of a bank:
(1) With intent to deceive, to make any false or misleading statement or entry or omit any statement or entry that should be in any book, account, report, or statement of the bank; or
(2) To obstruct or endeavor to obstruct a lawful examination of the bank by an officer or employee of the division.
Source: SL 1969, ch 11, § 1.9; SL 1970, ch 265, § 3; SL 1980, ch 24, § 82; SDCL, § 51-15-9; SL 2006, ch 130, § 18.
51A-1-11. False filing as misdemeanor.
No person may knowingly file or cause to be filed any statement, information, application, report, document or other form of proof with the director or the commission which is in whole or in part materially false nor may any person knowingly make or cause to be made any false entry in any book, document, record, application, information or other proof filed with the director or the commission pursuant to this title or pursuant to an order or request of the director or commission. A violation of this section is a Class 1 misdemeanor.
Source: SL 1981, ch 346, § 3; SDCL, § 51-15-16; SL 1988, ch 377, § 12; SDCL, § 51-15-9.1.
51A-1-12. Payment or indemnification of person for fine, penalty or judgment unlawful--Civil liability--Exceptions--Action to recover payments.
It is unlawful for a bank to pay a fine or penalty imposed by law upon any other person or to reimburse directly or indirectly any person by whom such fine or penalty has been paid. Any bank that makes an unlawful payment is subject to the imposition of a civil fine by the director or commission not to exceed one hundred dollars for each unlawful payment. A bank may reimburse any person in settlement of its own liability or in connection with the acquisition of property against which the judgment is a lien, or as provided in § 51A-3-31. Any payments made by a bank in violation of this section are recoverable for the bank in an action instituted pursuant to the provisions of chapter 1-26 by the division from the person who benefited from such payment.
Source: SL 1969, ch 11, § 1.10; SL 1980, ch 24, § 78; SL 1988, ch 377, § 8; SDCL, § 51-15-10.
51A-1-13. Misappropriation of funds or information by officer, director, or employee as felony.
Any officer, director or employee of a bank, who wrongfully diverts or takes any of the money, funds, credits, data, information or property of the bank, whether owned by it or held in trust, who wrongfully withholds payment or remittance of the proceeds of any collection which may come into his hands, who without authority of the directors, issues or puts forth any certificate of deposit, draws any order or bill of exchange, makes any acceptance, assigns any note, bond, draft, bill of exchange, judgment or mortgage, or who makes any false entry in any book, report or statement of the bank or report or statement required by the provisions of this title, with intent to injure the bank or any person, or to deceive any officer of the bank, anyone appointed to examine the affairs of the bank, or any other person, is guilty of a Class 5 felony.
Source: SL 1909, ch 222, art 2, §§ 19, 39; SL 1911, ch 255, § 32; SL 1915, ch 102, art 2, §§ 22, 43; RC 1919, §§ 8969, 8991, 9062; SL 1923, ch 116, § 1; SDC 1939, §§ 6.9903, 6.9910; SDCL, §§ 51-1-2, 51-12-11; SL 1969, ch 11, § 1.11; SL 1980, ch 24, § 79; SL 1988, ch 377, § 9; SDCL, § 51-15-11.
51A-1-14. Receipt, possession, or sale of misappropriated funds or information as felony.
Any person who receives, possesses, conceals, stores, barters, sells or disposes of any money, funds, credits, data, information or property, knowing the same to have been wrongfully diverted or taken from the bank, is guilty of a Class 5 felony.
Source: SL 1988, ch 377, § 10; SDCL, § 51-15-11.1.
51A-1-15. Acknowledgments by officers or employees of banks validated.
No public officer qualified to take acknowledgments or proofs of written instruments may be disqualified for taking the acknowledgment or proof of any instrument in writing in which a bank is interested by reason of his employment, whether as officer or employee, or by reason of his stock ownership or director status in a bank so interested, and any such acknowledgments or proofs taken before July 1, 1981, are hereby validated.
Source: SL 1981, ch 346, § 2; SDCL, § 51-15-15.
51A-1-16. Severability of provisions.
If any provision of this title or the application thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications to this title which can be given effect without the invalid provision or application, and to this end the provisions of this title are declared to be severable.
Source: SL 1969, ch 11, § 14.2, SDCL, §§ 51-15-14, 51-15-17.
51A-1-17. No duty to disclose information about customers--Exceptions.
Any regulated lender as defined in § 54-3-14 has no duty to disclose information about its customers and has no duty to provide an opinion about the creditworthiness of its customers unless such information or opinion is required pursuant to a valid subpoena, court order, statute, or other legal process, or unless the customer authorizes the release of such information or opinion. A regulated lender may restrict the dissemination of information and creditworthiness of its customers by written policy or agreement.
Source: SL 2000, ch 224, § 1.
51A-1-18. Agreements or compacts with other jurisdictions--Administration--Filing--Availability.
The director, with the approval of the commission, may enter into any agreement or compact with authorized representatives of other jurisdictions to provide for the administration of banking laws under the provisions of a signed agreement or compact. In administering any agreement on behalf of this state, the director may adopt the policies, principles, and guidelines contained within the agreement. Copies of the agreement or compact, procedures manual, and guidelines shall be filed within fifteen days after execution of the agreement or compact or the effective date of the agreement or compact, whichever is the later, at the Department of Labor and Regulation. The director shall make any agreement or compact available to interested parties, upon request.
Source: SL 2005, ch 251, § 1; SL 2008, ch 252, § 3; SL 2011, ch 1 (Ex. Ord. 11-1), § 162, eff. Apr. 12, 2011.
51A-1-19. Central bank digital currency--Public transaction prohibited.
Neither the state nor any of its agencies or subdivisions may accept a central bank digital currency, whether foreign or domestic, as payment for taxes, fees, tuition, admission, the settlement of any account or debt, or any other purpose.
For the purposes of this chapter, the term "central bank digital currency" means a national digital currency issued by a central bank that is widely available to the general public.
Source: SL 2024, ch 195, § 1.
51A-1-20. Central bank digital currency--Private transaction--Alternative required.
A person engaging in the purchase or sale of any goods or services or trading in financial products or services and who accepts central bank digital currency must also accept another form of legal tender.
Source: SL 2024, ch 195, § 2.
