IBA Compliance Connection

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We received a letter from the Illinois Department of Healthcare and Family Services (DHFS) requesting that we sign a new Financial Institution Data Match Agreement. The letter indicates that “because you have not entered into the Agreement, your service processor is unable to transmit data encompassed by the new Agreement for any institution that utilizes the same service processor.” Are we required to sign this agreement? We don’t want to share personal information if we don’t have to.

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No, your bank is not required to sign the amended agreement with DHFS that authorizes the sharing of unpaid child support information on a multistate basis, although we believe that most Illinois banks will do or already have done so.

Both federal and Illinois law require financial institutions to share certain data on Illinois customers with the state pursuant to written agreements with the DHFS, which uses this data to “match” responsible relatives who owe past-due child support. Previously, the DHFS did not share this data with other states. More recently, the DHFS expanded its data match program for unpaid child to share the Illinois data it collects with nineteen other states (all of which utilize the same third-party vendor as Illinois for administering their data match programs).

Your bank is not required by law to participate in the DHFS’ sharing of this data with other states, so technically your bank is not required to enter into the amended agreement that DHFS sent you, and you could continue to submit data as you have before under your existing agreement. However, as noted above, we believe most financial institutions in Illinois will agree to the DHFS’ amended agreement for multistate sharing, since they also will simply continue to submit their data as they have before – through their core processor or via a separate API (application programming interface) plugged into their own computer system. Either way, the DHFS will continue to reimburse financial institutions for their actual costs incurred in performing their data matches.

We should note that for the relatively few smaller financial institutions in Illinois that continue to perform their data matches manually (i.e., through neither a core processor nor an internal, automated system), the DHFS will not expect the institution to provide out-of-state data matching, per an agreement secured by the Illinois Bankers Association, although they too may choose to do so.

We also should note that the federal Social Security Act (SSA) offers broad liability protection for financial institutions that disclose personal information to “a State child support enforcement agency attempting to establish, modify, or enforce a child support obligation of such individual.” Notably, that law does not limit liability protection to sharing data with the State of Illinois – it encompasses data sharing with any state child support enforcement agency. Likewise, the federal Personal Responsibility and Work Opportunity Reconciliation Act of 1996, the Illinois Public Aid Code, and the Illinois Banking Act all contain similar provisions protecting financial institutions from liability for sharing this data.

For more detailed information, see our IBA Special Alert on this issue.

For resources related to our guidance, please see:

  • Illinois Public Aid Code, Financial Institution Data Match Program, 305 ILCS 5/10-24.5(a) (“The Illinois Department may design and implement a data match system pursuant to which the Illinois Department shall enter into agreements with financial institutions doing business in this State for the purpose of identifying accounts as defined in Section 10-24 of responsible relatives who owe past-due child support.”)
  • Social Security Act, 42 USC 669a (“Notwithstanding any other provision of Federal or State law, a financial institution shall not be liable under any Federal or State law to any person for disclosing any financial record of an individual to a State child support enforcement agency attempting to establish, modify, or enforce a child support obligation of such individual. . . .”)
  • Personal Responsibility and Work Opportunity Reconciliation Act of 1996, 42 USC 666(a)(17)(C) (“A financial institution shall not be liable under any Federal or State law to any person (i) for any disclosure of information to the State agency under subparagraph (A)(i) [entering into an agreement with a State agency to develop and operate a data match system].”)
  • Illinois Public Aid Code, 305 ILCS 5/10-24.50 (“A financial institution that provides information under Sections 10-24 through 10-24.50 shall not be liable to any account holder, owner, or other person in any civil, criminal, or administrative action for any of the following:

(1) Disclosing the required information to the Illinois Department, any other provisions of the law notwithstanding.

(2) Holding, encumbering, or surrendering any of an individual's accounts as defined in Section 10-24 in response to a lien or order to withhold and deliver issued by: (A) the Illinois Department under Sections 10-25 and 10-25.5; or (B) a person or entity acting on behalf of the Illinois Department.

(3) Any other action taken or omission made in good faith to comply with Sections 10-24 through 10-24.50, including individual or mechanical errors, provided that the action or omission does not constitute gross negligence or willful misconduct.”)

  • Illinois Banking Act, 205 ILCS 5/48.1(b)(14) (“This Section does not prohibit: . . . (14) The furnishing of information in accordance with the federal Personal Responsibility and Work Opportunity Reconciliation Act of 1996. Any bank governed by this Act shall enter into an agreement for data exchanges with a State agency provided the State agency pays to the bank a reasonable fee not to exceed its actual cost incurred. A bank providing information in accordance with this item shall not be liable to any account holder or other person for any disclosure of information to a State agency, for encumbering or surrendering any assets held by the bank in response to a lien or order to withhold and deliver issued by a State agency, or for any other action taken pursuant to this item, including individual or mechanical errors, provided the action does not constitute gross negligence or willful misconduct. A bank shall have no obligation to hold, encumber, or surrender assets until it has been served with a subpoena, summons, warrant, court or administrative order, lien, or levy.”)