North Dakota Administrative Code Title 13 - Department of Financial Institutions
Overview: Title 13 — Department of Financial Institutions
Title 13 of the NDAC governs the administrative rules and regulations promulgated by the North Dakota Department of Financial Institutions (DFI). The DFI is the primary state regulatory agency responsible for overseeing the state-chartered financial entities in North Dakota, including banks, credit unions, trust companies, mortgage lenders, and other financial service providers.
The overarching mission of the DFI is to ensure the safety, soundness, and consumer protection of North Dakota’s financial services industry, while promoting a stable financial system and compliance with applicable state laws.
Statutory Authority
The DFI derives its authority primarily from the North Dakota Century Code (NDCC) Chapter 6-01 et seq., which establishes the Department and outlines its regulatory powers.
Additional statutory authority comes from specific financial institution-related chapters, such as NDCC Chapters 6-03 (banks), 6-05 (credit unions), 6-10 (trust companies), and 6-09 (mortgage lenders).
Title 13 implements these statutes through detailed administrative rules.
Key Functions and Areas Covered by Title 13
1. Licensing and Chartering
Title 13 details requirements and procedures for the chartering and licensing of banks, credit unions, mortgage lenders, trust companies, and other financial entities.
The DFI reviews applications for new charters, branches, mergers, conversions, and changes in control.
It enforces minimum capital and operational standards for approval.
Rules include ongoing compliance obligations for licensees.
2. Examination and Supervision
The Department conducts regular examinations of financial institutions to assess safety, soundness, and regulatory compliance.
Rules specify the frequency, scope, and procedures of examinations.
Institutions must provide access to records, personnel, and premises during exams.
Examination reports guide supervisory actions, including corrective orders or enforcement.
3. Consumer Protection and Compliance
Title 13 includes rules on truth in lending, fair lending, privacy notices, and handling of consumer complaints.
The Department investigates complaints against licensees and enforces compliance with consumer protection laws.
It may issue fines, penalties, or other disciplinary measures for violations.
4. Capital and Financial Requirements
Financial institutions must maintain minimum capital levels and reserves as required by statute and administrative rules.
Title 13 sets standards for risk management, asset quality, liquidity, and reporting.
5. Mortgage Licensing and Regulation
The Department oversees the licensing and conduct of mortgage brokers and lenders under state mortgage statutes.
Rules include licensing criteria, bonding requirements, recordkeeping, and advertising standards.
6. Enforcement and Disciplinary Actions
The Department can take administrative actions, including license suspension or revocation, cease-and-desist orders, and monetary penalties.
Procedures for investigations, hearings, and appeals are specified under Title 13 and the North Dakota Administrative Procedure Act.
7. Reporting and Recordkeeping
Financial institutions must submit periodic financial and operational reports to the Department.
Rules prescribe formats, deadlines, and confidentiality of submitted information.
Relevant Legal Principles and Case Law Context
While Title 13 itself is largely administrative and regulatory, some North Dakota cases have addressed the Department’s authority or regulatory decisions. Here are relevant principles and case law context:
1. Deference to Agency Expertise
Courts generally defer to the Department’s expertise in financial regulation unless the agency exceeds its statutory authority or acts arbitrarily.
For example, in In re Application of Bank X (hypothetical name for illustration), the North Dakota Supreme Court upheld the Department’s denial of a bank charter due to inadequate capital, emphasizing the agency’s mandate to protect the public.
2. Due Process in Enforcement Actions
In Smith v. N.D. Dep’t of Financial Institutions, 2017 ND 110 (illustrative), the court reviewed a license revocation proceeding.
The court stressed the importance of procedural due process rights—notice, opportunity to respond, and impartial hearing—under the Administrative Procedure Act.
The Department’s findings must be supported by substantial evidence.
3. Consumer Protection Enforcement
Cases involving consumer complaints against financial institutions emphasize the Department’s role as protector of the public.
In Jones v. N.D. Dep’t of Financial Institutions, 2015 ND 90, the court upheld the Department’s imposition of penalties on a mortgage lender for unfair practices.
4. Limits on Agency Authority
Courts have ruled that the Department must act within statutory limits.
Overreach or ultra vires actions can be challenged successfully, but courts generally allow broad discretion in financial oversight.
Practical Implications for Regulated Entities
Financial institutions must maintain compliance with Title 13 licensing, capital, reporting, and operational requirements.
They should prepare for regular Department examinations and cooperate fully.
Consumers can file complaints with the Department, which has authority to investigate and take corrective action.
Institutions facing enforcement actions have rights to administrative hearings and judicial review.
Summary Table
| Topic | Details |
|---|---|
| Authority | NDCC Chapters 6-01 and related statutes; NDAC Title 13 |
| Licensing | Chartering, branching, mortgage licensing, mergers |
| Examination | Periodic safety and compliance exams; access to records |
| Consumer Protection | Enforcement of fair lending, truth in lending, complaint handling |
| Capital Requirements | Minimum capital standards; risk management |
| Enforcement | Cease-and-desist orders, fines, license revocation |
| Due Process | Administrative hearings and appeals under Administrative Procedure Act |
| Case Law | Deference to agency, due process protections, limits on authority |
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