KRS 286.2-040: Examination of service provider by commissioner or other state or

federal regulatory agency -- Confidentiality and evidentiary value of

report -- Examination fees -- Cooperative agreements.

(1) As used in this section:

(a) "Covered service" means:

1. Data processing;

2. Any activity that supports financial services, including but not limited

to lending, funds transfer, fiduciary activity, trading activity, and

deposit taking; and

3. Internet-related services, including but not limited to Web services

and electronic bill payments, mobile applications, system and

software development and maintenance, and security monitoring;

(b) "Depository institution" means any:

1. State bank as defined in KRS 286.3-010;

2. Branch of an out-of-state bank as defined in KRS 286.3-010 that is

doing business under the laws of this state;

3. Trust company as defined in KRS 286.3-010; or

4. Credit union as defined in KRS 286.6-005; and

(c) "Service provider" means any person that provides a covered service

listed in paragraph (a) of this subsection to a depository institution, except

any:

1. Bank service company that is examined and regulated by the

appropriate federal banking agency. For the purposes of this

subparagraph, "bank service company" and "appropriate federal

banking agency" have the meanings set forth in the Bank Service

Company Act, 12 U.S.C. sec. 1861, as amended, or any successor

statute;

2. Depository institution, holding company of a depository institution, or

subsidiary of that holding company; and

3. Federally chartered depository institution, holding company of a

federally chartered depository institution, or subsidiary of that

holding company. For the purposes of this subparagraph, "federally

chartered depository institution" means a bank, savings association,

or credit union organized pursuant to the laws of the United States.

(2) The commissioner may examine a service provider for any covered service it

provides to a depository institution if the examination is conducted in

conjunction with an examination conducted by a properly authorized federal

regulatory agency.

(3) The commissioner may accept an examination made by other properly

authorized state or federal regulatory agencies that have concurrent jurisdiction

over a service provider in lieu of any examination authorized or required under

the laws of this state.

(4) A report of examination and related correspondence shall be considered

confidential information. No person shall release any information contained in

the examination unless required by court order. Notwithstanding this

subsection, the department may furnish:

(a) A copy of a report of examination performed by the commissioner of the

condition and affairs of any service provider to the depository institutions

serviced by the service provider; and

(b) To and exchange information and reports of examinations with officials

and examiners of other properly authorized state or federal regulatory

agencies.

(5) Every official report concerning a service provider, and every report of

examination, shall be prima facie evidence of the facts contained in the report

for any purpose in any action in which the department or service provider is a

party.

(6) The commissioner shall fix a scale of examination fees to be paid by service

providers. The fees shall be:

(a) Sufficient to cover the cost of the examination based upon a fair

compensation for time and actual expense;

(b) Assessed and paid by service providers promptly after completion of the

examination; and

(c) Set by administrative regulation.

(7) The commissioner may enter into cooperative agreements with other properly

authorized state or federal regulatory agencies that have concurrent jurisdiction

over a service provider to facilitate the examination process, including joint

examination, scheduling, resources, fee collection and sharing, report of

examination processing, and enforcement actions.