Arizona Department of Financial Institutions
Authority
Created in 2004, the Arizona Department of Financial Institutions (AZDFI) assumed the responsibilities of the State Banking Department (Laws 2004, Chapter 188). Statutory authority is found at A.R.S. §6-101 et seq.; §32-1001 et seq. and §32-3601 et seq.; §44- 281 et seq.; and Arizona Administrative Code R20-4-101 et seq.
Effective July 1, 2020 the newly established Department of Insurance and Financial Institutions (DIFI) will assume the responsibilities of the Department of Financial Institutions and the Automobile Theft Authority. The Department of Financial Institutions will become a division within DIFI. Conforming legislation to implement the provisions of Laws 2019, Chapter 252 will be prepared by the Arizona Legislative Council staff for consideration in the Fifty-fifth Legislature, First Regular Session (2021).
Note: The Department of Finance is different from the Arizona Department of Financial Institutions. The Department of Finance traces back to the State Auditor, the State Department of Finance and finally to the Finance Division of the Department of Administration.
Function
The Arizona Department of Financial Institutions (AZDFI) was established to safeguard the public welfare by protecting the financial assets of the citizens of Arizona.
AZDFI is statutorily charged with licensing, supervision and regulation of state-chartered financial institutions and enterprises. The Department’s responsibility is twofold: 1) ensuring the safety and soundness of the financial services industry in Arizona, as well as compliance with state and applicable federal laws; and 2) investigating complaints filed by consumers against licensed entities and taking appropriate remedial action if the violations are substantiated. The Department is a self-supporting branch of state government and is routinely a net contributor to the State’s General Fund. Revenues are derived solely from supervision, examinations and licensing fees assessed against those financial institutions and enterprises regulated by the Department.
History
The Arizona Department of Financial Institutions (formerly known as the State Banking Department – 1922 to 2004; and before that the State Auditor – 1912 to 1968) traces back to territorial days and was established in the Howell Code, Chapter 20, Section 1, in 1864 as the Board of Territorial Auditors. The Office of the Territorial Auditor was established in 1866 and for a time included banking responsibilities.
In 1912, the name of the Office of the Territorial Auditor changed to Office of the State Auditor (Article 5 of the State Constitution). The auditor operated as “the general accountant of the State, a keeper of all public account books, vouchers, documents and all papers relating to the accounts and contracts of the State and its revenue, debt and fiscal affairs.” (Annual Report, 1912, AUD 1.1.)
Under Title IV of the 1913 Civil Code, the Bank Comptroller also worked out of the Office of the State Auditor and until 1922, the same individual often occupied both positions. The Bank Comptroller licensed building and loan societies and associations, savings banks, and bank and banking companies. In 1922, the duties of the Bank Comptroller were transferred to the newly established State Banking Department. See Laws 1922, Chapter 31.
Laws 1968, Chapter 89 transferred powers and duties of the State Auditor relating to audit and general accounting to the Commissioner of Finance; repealed A.R.S. Title 41, Chapter 1 Article 3, relating to the State Auditor; and amended Title 35, Chapter 1, by adding Article 2.3 related to accounting for state funds. The measure included an effective date of January 2, 1969 with a conditional enactment that required voter approval in order to abolish the office of the State Auditor. The voters abolished the office of State Auditor by Referendum in 1968, and the elimination of the office became effective on December 4, 1968.
The statutes governing the State Banking Department were amended multiple times in the 1970s, 1980s, and 1990s.
Laws 2004, Chapter 188 established the AZDFI, transferred to it the responsibilities of the former State Banking Department, and required the Superintendent to have experience in the business of financial institutions.
Laws 2015, Chapter 19 transferred the authority, powers, and duties of the Board of Appraisal to the AZDFI. The AZDFI assumed responsibility for certifying and licensing appraisers, administering the complaint and disciplinary process, maintaining records and documents, and collecting fees. The administrative rules adopted by the former State Board of Appraisal were continued under the AZDFI. The measure also required Legislative Council staff to prepare legislation conforming Arizona Revised Statutes to the language regarding transfer of responsibilities.
Laws 2017, Chapter 334 included the conforming language prepared by Legislative Council staff as required by the 2015 measure.
Laws 2019, Chapter 22 modified responsibilities of the Superintendent of Financial Institutions relating to uniform standards of professional appraisal practice, investigations, disciplinary actions and enforcement.
Laws 2019, Chapter 252 combined the Department of Insurance, the Arizona Department of Financial Institutions (AZDFI) and the Automobile Theft Authority (ATA) into a single agency. The new agency, the Department of Insurance and Financial Institutions (DIFI), succeeds to the authority, powers, duties and responsibilities of the AZDFI and the ATA. The measure establishes the Financial Institutions Division and the Automobile Theft Authority within DIFI, effective July 1, 2020. All administrative matters, contracts, judicial actions, equipment, records, furnishings, other property, data and investigative findings transfer to the DIFI. In addition, all certificates, licenses, registrations, and permits retain their validity for the duration of their terms when issued. All appropriated monies that remain unexpended and unencumbered on July 1, 2020 transfer as well. Conforming legislation will be prepared by the Arizona Legislative Council staff for consideration by the Fifty-fifth Legislature, First Regular Session (2021).
Sources:
- A.R.S. §§ 6-101 et seq.
- A.R.S. §§ 32-1001 et seq. and 32-3601 et seq.
- A.R.S. §§ 44-281 et seq.
- Session Laws
- Laws 1922, Chapter 31
- Laws 1973, Chapter 32
- Laws 2004, Chapter 188
- Laws 2015, Chapter 19
- Laws 2017, Chapter 334
- Laws 2019, Chapter 22 and Chapter 252
Arizona Department of Financial Institutions, Annual Report, 1912, AUD 1.1
