DAR File No. 38179

Money Management Council, Administration

Rule R628-20

Foreign Deposits for Higher Education Institutions

Notice of Proposed Rule

(New Rule)

DAR File No.: 38179
Filed: 12/13/2013 03:13:19 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

This rule is required by Subsection 51-7-17(4)(a). This language was added in the 2013 General Legislative Session under H.B. 376 to allow for foreign deposits by higher education institutions for purposes of conducting academic, research, or clinical activities in a foreign country. This section requires that rules be written by the Council to allow them to do so.

Summary of the rule or change:

This rule adds requirements for higher education institutions when depositing funds into depositories in foreign countries for the purposes of academic, research, or clinical activities. It provides rating requirements for the depository and the country and prohibits deposits in countries that have sanctions against them or are high risk or non-cooperative jurisdictions. The rule states that the Council must approve the depository and the higher education institution must inform the Council of the purpose of the use of a foreign depository. It does give the Council the ability to approve deposits into foreign depositories that do not meet the criteria, if there are facts that make it prudent to do so. The rule contains reporting requirements by the higher education institutions semi-annually regarding the amount in the foreign depository and the current debt ratings of that depository.

State statutory or constitutional authorization for this rule:

• Section 53B-7-601
• Subsection 51-7-17(4)(a)
• Subsection 51-7-4(1)(b)(iii)

Anticipated cost or savings to:

the state budget:

This rule does not affect the state as it is allowing only higher education institutions the ability to deposit funds in foreign depositories.

local governments:

There will be minimal cost to any higher education institution to open up a depository account with a foreign depository.

small businesses:

This rule does not affect small businesses as it pertains to higher education institutions and foreign depositories only.

persons other than small businesses, businesses, or local governmental entities:

This rule does not affect any other persons as it pertains only to higher education institutions and foreign depositories.

Compliance costs for affected persons:

There are no compliance costs as this rule does not apply to any other person, it affects only higher education institutions and a foreign depository that they may utilize.

Comments by the department head on the fiscal impact the rule may have on businesses:

This rule will have no incremental costs or savings to government agencies or to private businesses, and no incremental compliance costs. The rule authorizes an additional and optional investment vehicle for public entities. It does not ably to private businesses or individuals.

Mark McRae, Chair

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Money Management Council
Administration
Room 180 UTAH STATE CAPITOL COMPLEX
350 N STATE ST
SALT LAKE CITY, UT 84114

Direct questions regarding this rule to:

• Ann Pedroza at the above address, by phone at 801-538-1883, by FAX at 801-538-1465, or by Internet E-mail at [email protected]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

01/31/2014

This rule may become effective on:

02/07/2014

Authorized by:

Mark McRae, Chair, Money Management Council

R628. Money Management Council.

R628-20. Foreign Deposits for Higher Education Institutions.

R628-20-1. Purpose.

To provide guidelines to higher education institutions when depositing funds in foreign countries.

 

R628-20-2. Authority.

This rule is issued pursuant to Section 51-7-17(4)(a) and Section 53B-7-601.

 

R628-20-3. Scope.

This rule relates to funds of higher education institutions that are either required by law of a foreign country to be deposited in the foreign country or are required by the terms of a grant, gift, or contract to be deposited in the foreign country.

 

R628-20-4. Definitions.

(1) The following terms are defined in Section 51-7-3 of the Act and when used in this rule have the same meaning as in the Act:

(a) "Council";

(b) "Nationally Recognized Statistical Rating Organization" or "NRSRO".

(2) For purposes of this rule "FDI" means foreign depository institution as defined in Section 7-1-103 of the Utah Code.

 

R628-20-5. Requirements for Deposits.

(1) To be qualified for deposit under Section 53B-7-60 the FDI shall:

(a) be insured or otherwise have a similar protection if that country does not technically provide insurance;

(b) be rated "A" or better by one NRSRO; and

(c) be domiciled in a country in which the sovereign debt rating is "A" or better by the NRSRO.

 

R628-20-6. Prohibited Deposits.

(1) Use of FDIs in any country or territory described below is prohibited.

(a) Countries subject to sanctions by the Office of Foreign Assets Control (OFAC); and

(b) Countries and territories on the Financial Action Task Force's (FATF) list of high risk and non-cooperative jurisdictions.

(2) Financial Crimes Enforcement Network (FinCEN) advisories must be reviewed by the higher education institution to ensure that potential anti-money laundering and counter-terrorist financing risks associated with any country are assessed, identified and avoided before establishing deposits in the FDI.

(3) The FDI may not be listed on the U.S. Treasury's Specially Designated Nationals (SDN) list.

 

R628-20-7. Approval by the Council.

(1) The Council must approve the FDI.

(2) Prior to approval by the Council, the higher education institution must present to the Council the reasoning and purpose for the use of a FDI.

(3) Upon review of such reasoning and purpose, the Council will decide whether to give final approval to allow funds to be deposited in the FDI.

(4) The Council may approve an FDI that does not otherwise fall within the requirement of R628-20-5. when other facts make it reasonably prudent to do so.

(5) In approving an FDI, the Council may place restrictions on the use of the FDI when the Council determines it would be reasonably prudent to do so.

(a) It is the responsibility of the higher education institution to monitor any restriction placed on the FDI and if violated, to notify the Council of the issue within 30 days of the violation and provide a plan of action in regards to the violation.

 

R628-20-8. Reporting by Higher Education Institutions of Foreign Deposits.

(1) The higher education institution shall file a written report with the Council on or before July 31 and January 31 of each year containing the following information for deposits held on June 30 and December 31 respectively:

(a) Total market value of the deposit account which will include previous historical ending balances (up to 3 years);

(b) Total market value of uninsured deposits in the deposit account, which will include previous historical ending balances (up to 3 years);

(c) Debt rating of the FDI; and

(d) Debt rating of the country in which the FDI is located.

 

KEY: foreign deposits, higher education, public funds

Date of Enactment or Last Substantive Amendment: 2014

Authorizing, and Implemented or Interpreted Law: 51-7-4(1)(b)(iii); 51-7-17(4)(a); 53B-7-601