Clearinghouse Rule _________
PROPOSED ORDER OF THE
DEPARTMENT OF FINANCIAL INSTITUTIONS,
DIVISION OF CORPORATE AND CONSUMER SERVICES
CREATING RULES
The Wisconsin Department of Financial Institutions – Division of Corporate and Consumer Services proposes an order to create DFI- CCS 25 of the Wisconsin Administrative Code, relating to notaries public and notarial acts.
The scope statement for this rule was approved by the Governor on June 11, 2020 and published in Administrative Register No. 774A3 on June 15, 2020. ______________________________________________________________________________
ANALYSIS
1. Statutes interpreted:
Chapter 140 of the Wisconsin Statutes. 2. Statutory authority:
3. Explanation of agency authority:
The Department of Financial Institutions commissions and regulates notaries public of this state under Chapter 140 of the Wisconsin Statutes. Section 140.27 of the Wisconsin Statutes authorizes the Department to promulgate administrative rules to implement Chapter 140, including rules ensuring the integrity of notarial acts for remotely located individuals, preventing fraud or mistake, and prescribing the process for granting and restricting notary commissions. Section 140.145(8) further authorizes the Department to promulgate administrative rules relating to the performance of notarial acts for remotely located individuals. 4. Related statutes or rules:
Notaries public and notarial acts in this state are governed by Chapter 140 of the Wisconsin Statutes. 5. Plain language analysis:
These administrative rules help the state to implement 2019 Wisconsin Act 125, which revised state law governing notaries and notarial acts and authorized notaries public to perform notarial acts for remotely located individuals using approved technologies. They are intended to provide additional clarity to notaries public regarding remote online notarization, while ensuring the integrity of the notarial process and flexibility to adjust to technological developments. They also take advantage of the expertise of the state Remote Notary Council, a new body created by Act 125, to evaluate remote online notarization platforms and providers and to help ensure that Wisconsin notaries are using providers that implement proper safeguards to minimize the risk of fraud or mistake. The rules do the following:
(1) Codify the Remote Notary’s Council’s role in reviewing and approving technology providers. By statute, Wisconsin notaries may only perform remote online notarial acts using technologies that have been approved by the Department. Since Act 125 became effective, the Department has developed applications by which providers of technology used for remote online notarial acts can seek state approval, and it has worked with the Remote Notary Council to review application materials, meet with providers, establish conditions, and ultimately approve 19 providers (and counting) that seek to offer their technologies to notaries in this state.
The proposed rules would codify the procedures jointly developed and implemented to date by the Department and the Council. Under both current practice and the proposed rules, remote online notarization technology providers seeking to make their technologies available for use by Wisconsin notaries would apply for approval with the Department. The application requires the provider to explain how it will help ensure compliance with the law and safeguard the integrity of the notarial process. The application is then reviewed at a meeting of the Remote Notary Council, where a representative of the applicant must appear and answer questions from the Council. The Council may deny an application or approve it, subject to such conditions as may be appropriate to protect the public and Wisconsin notaries public, and may rescind an approval for violating those conditions, violating Wisconsin law, or taking other specified actions described in the proposed rules.
(2) Codify certain processes for granting and restricting notary commissions. The proposed rules codify the process for addressing complaints against notaries public, including the department’s authority to investigate those complaints and the grounds for restricting or revoking a notary commission. The rules also clarify the types of prior offenses that are disqualifying when applying for a notary commission and authorize the department to use email as the primary means of providing notices to notaries and notary applicants.
(3) Relieve an apparent discrepancy in Chapter 140 concerning expiration dates. Chapter 140 contains an internal inconsistency regarding the inclusion of an expiration date on a notary public’s official stamp or seal. Section 140.17(1) states that a notary public’s official stamp must include the “commission expiration date if applicable,” whereas Section 140.02(3)(a) states that the official stamp “shall state only the following: ‘Notary Public,’ ‘State of Wisconsin’ and the name of the notary,” with no mention of the expiration date. Proposed section DFI-CCS 25.06 addresses this apparent statutory conflict by clarifying that an official stamp may comply with either Section 140.17(1) or Section 140.02(3)(a) of the Wisconsin Statutes; it need not (and physically cannot) comply with both. 6. Summary of, and comparison with, existing or proposed federal regulation:
Not applicable. The commissioning and regulation of notaries public is a matter of state law.
7. Comparison with rules in adjacent states:
Michigan has had a remote online notarization statute in effect since early 2019. Its Secretary of State is required to review whether communication technology providers meet the state’s standards for identity proofing, credential verification, records retention, training for notaries public, and other safeguards that overlap those set forth in 2019 Wisconsin Act 125. State notaries public are permitted to perform remote online notarizations using communication technology providers. Michigan has not adopted separate administrative rules for remote online notarization, though its Secretary of State has issued official guidance to notaries.
Minnesota also has not adopted separate administrative rules, though its remote online notarization statute largely mirrors the standards and requirements of 2019 Wisconsin Act 125. Iowa’s remote online notarization statute (SF 475) took effect on July 1, 2020, and the state has promulgated administrative rules which also took effect on that date. The statute contains substantially similar requirements for notarial acts as 2019 Wisconsin Act 125. Illinois last year enacted a remote online notarization statute that took effect on January 1, 2022. It has not yet developed administrative rules relating to remote online notarization under the new law. Prior to the passage of that legislation, the state permitted remote online notarization through adopted emergency guidelines that did not require identity-proofing or credential verification—safeguards that are required by both Wisconsin Act 125 and the new legislation in Illinois.
8. Summary of factual data and analytical methodologies:
The proposed rules are based on (1) the Department’s experience in commissioning and regulating notaries public in this state; (2) a review of 2019 Wisconsin Act 125 and substantially similar statutes and administrative rules governing remote online notarization in other states; and (3) the experience of the Department and the Remote Notary Council in administering Act 125 in this state since spring 2020. The Department conferred with Council members regarding the proposed rules at public meetings of the Council on November 5, 2021, and January 18, 2022. At the conclusion of January 18 meeting, the Council members expressed their support for these proposed rules by unanimous vote. 9. Analysis and supporting documents used to determine effect on small business:
Small businesses are not financially affected by these rules.
10. Anticipated costs incurred by private sector:
No additional costs are anticipated to be incurred by the private sector as a result of these rules.
11. Effect on small business:
