Florida Senate - 2017 COMMITTEE AMENDMENT Bill No. SB 736 Ì875382:Î875382 LEGISLATIVE ACTION Senate . House Comm: RCS . 03/06/2017 . . . . ————————————————————————————————————————————————————————————————— ————————————————————————————————————————————————————————————————— The Committee on Banking and Insurance (Mayfield) recommended the following: 1 Senate Amendment (with title amendment) 2 3 Delete lines 1674 - 2015 4 and insert: 5 otherwise related to the operation of a financial institution 6 and caused or is likely to cause more than a minimal financial 7 loss to, or a significant adverse effect on, the financial 8 institution; 9 (i) A declaration under penalty of perjury, signed by the 10 executive officer or managing member of the proposed registrant, 11 that, to the best of his or her knowledge: 12 1. No financial institution-affiliated party of the 13 proposed registrant or financial institution-affiliated party of 14 any affiliated international trust entity: 15 a. Has been fined or sanctioned as a result of a complaint 16 to the office or any other state or federal regulatory agency; 17 b. Has been convicted of a felony; or 18 c. Has been ordered to pay a fine or penalty within the 19 prior 10 years in a proceeding initiated by a federal, state, 20 foreign, or local law enforcement agency or an international 21 agency which is related to money laundering, currency 22 transaction reporting, tax evasion, facilitating or furthering 23 terrorism, fraud, theft, larceny, embezzlement, fraudulent 24 conversion, misappropriation of property, dishonesty, breach of 25 trust, breach of fiduciary duty, moral turpitude, or which is 26 otherwise related to the operation of a financial institution 27 and is related to any offense that caused or is likely to cause 28 more than a minimal financial loss to, or a significant adverse 29 effect on, the financial institution. 30 2. No financial institution-affiliated party of the 31 proposed registrant: 32 a. Provides, or will provide, banking services; promotes or 33 sells, or will promote or sell, investments; or accepts, or will 34 accept, custody of assets; and 35 b. Acts, or will act, as a fiduciary in this state, which 36 includes, but is not limited to, accepting the fiduciary 37 appointment, executing the fiduciary documents that create the 38 fiduciary relationship, or making discretionary decisions 39 regarding the investment or distribution of fiduciary accounts. 40 3. The jurisdiction of the international trust entity or 41 its offices, subsidiaries, or any affiliates that are directly 42 involved in or facilitate the financial services functions, 43 banking, or fiduciary activities of the international trust 44 entity is not listed on the Financial Action Task Force Public 45 Statement or on its list of jurisdictions with deficiencies in 46 anti-money laundering or counterterrorism; 47 (j) For each international trust entity that the proposed 48 registrant will provide services for in this state, the 49 following: 50 1. The name of the international trust entity; 51 2. A list of the current officers and directors of the 52 international trust entity; 53 3. Any country where the international trust entity is 54 organized or authorized to do business; 55 4. The name of the home-country regulator; 56 5. Proof that the international trust entity has been 57 authorized by charter, license, or similar authorization by its 58 home-country regulator to engage in trust business; 59 6. Proof that the international trust entity lawfully 60 exists and is in good standing under the laws of the 61 jurisdiction where it is chartered, licensed, or organized; 62 7. A statement that the international trust entity is not 63 in bankruptcy, conservatorship, receivership, liquidation, or a 64 similar status under the laws of any country; 65 8. Proof that the international trust entity is not 66 operating under the direct control of the government or the 67 regulatory or supervisory authority of the jurisdiction of its 68 incorporation, through government intervention or any other 69 extraordinary actions, and confirmation that it has not been in 70 such a status or under such control at any time within the prior 71 3 years; 72 9. Proof and confirmation that the proposed registrant is 73 affiliated with the international trust entities provided in the 74 notice; and 75 10. Proof that the jurisdictions where the international 76 trust entity or its offices, subsidiaries, or any affiliates 77 that are directly involved in or that facilitate the financial 78 services functions, banking, or fiduciary activities of the 79 international trust entity are not listed on the Financial 80 Action Task Force Public Statement or on its list of 81 jurisdictions with deficiencies in anti-money laundering or 82 counterterrorism; and 83 (k) A declaration under penalty of perjury, signed by an 84 executive officer or managing member of each affiliated 85 international trust entity, declaring that the information 86 provided to the office is true and correct to the best of his or 87 her knowledge. 88 89 The proposed registrant may provide additional information in 90 the form of exhibits when attempting to satisfy any of the 91 registration requirements. All information that the proposed 92 registrant desires to present to support the written notice must 93 be submitted with the notice. 94 (2) The office may request additional information as the 95 office reasonably requires. Any request for additional 96 information must be made by the office within 30 days after 97 initial receipt of the written notice and the full amount of the 98 fee specified in subsection (1). Additional information must be 99 submitted within 60 days after a request has been made by the 100 office. Failure to respond to such request within 60 days after 101 the date of the request is a ground for denial of the 102 registration. A notice is not deemed complete until all 103 requested information has been submitted to the office. Upon 104 deeming the notice complete, the office has 120 days to register 105 the limited service affiliate or issue a denial. An order 106 denying a registration must contain notice of opportunity for a 107 hearing pursuant to ss. 120.569 and 120.57. 108 (3) A registration under this part must be summarily 109 suspended by the office if the limited service affiliate made a 110 material false statement in the written notice. The summary 111 suspension must remain in effect until a final order is entered 112 by the office. For purposes of s. 120.60(6), a material false 113 statement made in the limited service affiliate’s written notice 114 constitutes an immediate and serious danger to the public 115 health, safety, and welfare. If a limited service affiliate made 116 a material false statement in the written notice, the office 117 must enter a final order revoking the registration and may 118 impose a fine as prescribed by s. 655.041 or issue an order of 119 suspension, removal, or prohibition under s. 655.037 to a 120 financial institution-affiliated party of the limited service 121 affiliate. 122 (4) Any instance in which a director, executive officer, 123 principal shareholder, manager, or the equivalent has ever been 124 arrested for, charged with, convicted of, or pled guilty or nolo 125 contendere to, regardless of adjudication, any offense that 126 involves money laundering, currency transaction reporting, tax 127 evasion, facilitating or furthering terrorism, fraud, theft, 128 larceny, embezzlement, fraudulent conversion, misappropriation 129 of property, dishonesty, breach of trust, breach of fiduciary 130 duty, or moral turpitude, or that is otherwise related to the 131 operation of a financial institution and caused or is likely to 132 cause more than a minimal financial loss to, or a significant 133 adverse effect on, the financial institution, is a ground for 134 denial of the registration. 135 (5) The existence of any previous violation, fine, or 136 penalty of a financial institution-affiliated party of a limited 137 service affiliate or the affiliated international trust entity 138 does not necessarily disqualify a registrant under this part. 139 When evaluating a registration, the office may consider factors 140 reasonably related to the violation, fine, or penalty, such as 141 mitigating factors, a history of multiple violations, the 142 severity of the offense, and a showing of rehabilitation. 143 (6) A registration is not transferable or assignable. 144 (7) Fees collected under this section must be submitted in 145 the manner prescribed by the commission and must be deposited 146 into the Financial Institutions’ Regulatory Trust Fund pursuant 147 to s. 655.049 for the purpose of administering this part. 148 (8) A person or entity in operation as of January 1, 2018, 149 which meets the definition of a limited service affiliate under 150 s. 663.530 must, on or before March 31, 2018, apply for 151 registration as a limited service affiliate or cease doing 152 business in this state. 153 (9) No later than March 31, 2018, a person or entity that 154 previously qualified under the moratorium in s. 663.041 must 155 register under this part or cease doing business in this state. 156 A person or entity that previously qualified under the 157 moratorium in s. 663.041 may remain open and in operation until 158 March 31, 2018, without registering under this part, but shall 159 refrain from engaging in new lines of business in this state 160 until the disposition of registration under this part. 161 Section 42. Section 663.533, Florida Statutes, is created 162 to read: 163 663.533 Applicability of the financial institutions codes. 164 A limited service affiliate is subject to the financial 165 institutions codes. Without limiting the foregoing, the 166 following provisions are applicable to a limited service 167 affiliate: 168 (1) Section 655.012, relating to general supervisory powers 169 of the office. 170 (2) Section 655.031, relating to administrative enforcement 171 guidelines. 172 (3) Section 655.032, relating to investigations, subpoenas, 173 hearings, and witnesses. 174 (4) Section 655.0321, relating to restricted access to 175 certain hearings, proceedings, and related documents. 176 (5) Section 655.033, relating to cease and desist orders. 177 (6) Section 655.034, relating to injunctions. 178 (7) Section 655.037, relating to removal of a financial 179 institution-affiliated party by the office. 180 (8) Section 655.041, relating to administrative fines and 181 enforcement. 182 (9) Section 655.057, relating to restrictions on access to 183 public records. 184 (10) Section 655.059, relating to access to books and 185 records. 186 (11) Section 655.0591, relating to trade secret documents. 187 (12) Section 655.91, relating to records of institutions 188 and copies thereof; retention and destruction. 189 (13) Section 655.968, relating to financial institutions; 190 transactions relating to Iran or terrorism. 191 192 This section does not prohibit the office from investigating or 193 examining an entity to ensure that it is not in violation of 194 this chapter or applicable provisions of the financial 195 institutions codes. 196 Section 43. Section 663.534, Florida Statutes, is created 197 to read: 198 663.534 Events that require notice to be provided to the 199 office.—A registrant must report to the office, within 15 days 200 of its knowledge of the occurrence, any changes to the 201 information previously relied upon by the office when 202 registering or renewing a registration under this part. 203 Section 44. Section 663.535, Florida Statutes, is created 204 to read: 205 663.535 Notice to customers.—All marketing documents and 206 advertisements and any display at the location of the limited 207 service affiliate or at any trade or marketing event must 208 contain the following statement in a contrasting color in at 209 least 10-point type: “The Florida Office of Financial Regulation 210 DOES NOT provide safety and soundness oversight of this company, 211 does not provide any opinion as to any affiliated companies or 212 products, and does not provide the oversight of this company’s 213 affiliated international trust entities or the jurisdictions 214 within which they operate. This company may not act as a 215 fiduciary and may not accept the fiduciary appointment, execute 216 or transmit fiduciary documents, take possession of any assets, 217 create a fiduciary relationship, make discretionary decisions 218 regarding the investment or distribution of fiduciary accounts, 219 provide banking services, or promote or sell investments.” 220 Section 45. Section 663.536, Florida Statutes, is created 221 to read: 222 663.536 Recordkeeping requirements for trade, industry, or 223 professional events.—A registrant registered only under this 224 part who participates in a trade, industry, or professional 225 event pursuant to s. 663.531 must keep a record of its 226 participation in the event. The record must be maintained for at 227 least 2 years following the event and must contain the following 228 information: 229 (1) The date, time, and location of the event; 230 (2) To the extent known or available, a list of 231 participants in the event, including other vendors, presenters, 232 attendees, and targeted attendees; 233 (3) The nature and purpose of the event; 234 (4) The registrant’s purpose for participating in the 235 event; and 236 (5) Samples of materials or, when samples are unavailable, 237 descriptions of materials provided by the registrant to 238 attendees and other participants. 239 Section 46. Section 663.537, Florida Statutes, is created 240 to read: 241 663.537 Examination or investigation of a limited service 242 affiliate.— 243 (1) The office may conduct an examination or investigation 244 of a limited service affiliate at any time that it deems 245 necessary to determine whether the limited service affiliate or 246 financial institution-affiliated party thereof has violated, or 247 is about to violate, any provision of this chapter, any 248 applicable provision of the financial institutions codes, or any 249 rule adopted by the commission pursuant to this chapter or the 250 financial institutions codes. The office shall conduct an 251 examination of each limited service affiliate at least once 252 every 18 months to assess compliance with this part and the 253 financial institutions codes. The office may conduct an 254 examination, before or after registration, of any person or 255 entity that submits a notice for registration to confirm 256 information provided in the registration filing and to confirm 257 the activities of the person or entity seeking registration. 258 (2) For each examination of a limited service affiliate 259 authorized under this part, the limited service affiliate shall 260 pay a fee for the costs of the examination by the office. As 261 used in this section, the term “costs” means the salary and 262 travel expenses of field staff which are directly attributable 263 to the examination of the registrant and the travel expenses of 264 any supervisory and support staff required as a result of 265 examination findings. The costs of examination must be 266 determined as follows: 267 (a) The office shall charge each limited service affiliate 268 in this state an examination fee equal to the actual cost of 269 each examiner’s participation during each examination of such 270 limited service affiliate. The examination fee must equal the 271 actual cost of the examination, but such fees, inclusive of 272 travel expenses and other incidental expenses, may not be less 273 than $200 per day for each examiner participating in the 274 examination. 275 (b) As used in this section, the term “actual cost” means 276 the direct salary, excluding employee benefits; travel expenses; 277 and other incidental expenses required as a result of the 278 examination staff’s onsite and offsite examination of the 279 limited service affiliate. In addition, the term includes the 280 travel expenses of any supervisory staff required as a result of 281 examination findings. 282 (3) All examination fee payments must be received within 30 283 days after receipt of an invoice from the office and must be 284 submitted in a manner prescribed by the commission. The office 285 may levy a late fee of up to $100 per day that a payment is 286 overdue, unless waived by the office for good cause. However, if 287 the late payment of costs is intentional, the office may levy an 288 administrative fine of up to $1,000 per day for each day the 289 payment is overdue. 290 (4) All fees collected under this section must be submitted 291 in the manner prescribed by the commission and must be deposited 292 into the Financial Institutions’ Regulatory Trust Fund pursuant 293 to s. 655.049 for the purpose of administering this part. 294 Section 47. Section 663.538, Florida Statutes, is created 295 to read: 296 663.538 Suspension, revocation, or voluntary surrender of 297 registration.— 298 (1) A registrant that proposes to terminate operations in 299 this state shall surrender its registration to the office and 300 comply with such procedures as required by rule of the 301 commission. 302 (2) A registrant that fails to renew its registration may 303 be subject to a fine and penalty; however, such registrant may 304 renew its registration within 30 days after expiration or may 305 surrender the registration in accordance with procedures 306 prescribed by commission rule. 307 (3) The registration of a limited service affiliate in this 308 state may be suspended or revoked by the office, with or without 309 examination, upon the office’s determination that the registrant 310 does not meet all requirements for original or renewal 311 registration. 312 (4) If a registrant surrenders its registration or its 313 registration is suspended or revoked by the office, all rights 314 and privileges afforded by this part to the registered limited 315 service affiliate cease. 316 (5) At least 60 days before a proposed date of voluntary 317 termination of a registration, a registrant must provide to the 318 office written notice by letter of its intention to surrender 319 its registration and terminate operations. The notice must 320 include the proposed date of termination and the name of the 321 officer in charge of the termination procedures. 322 (6) The office may conduct an examination of the books and 323 records of a limited service affiliate at any time after receipt 324 of the notice of surrender of registration to confirm the 325 winding down of operations. 326 (7) Operations of a registrant are deemed terminated 327 effective upon the later of the expiration of 60 days from the 328 date of the filing of the notice of voluntary surrender or upon 329 the date provided in the notice of voluntary surrender, unless 330 the office provides written notice specifying the grounds for 331 denial of such proposed termination. The office may not deny a 332 request to terminate unless it learns of the existence of any 333 outstanding claim or claims against the registrant, it finds 334 that the requirements to terminate operations have not been 335 satisfied, or there is an immediate and serious danger to the 336 public health, safety, and welfare if the termination occurred. 337 Section 48. Section 663.539, Florida Statutes, is created 338 to read: 339 663.539 Biennial registration renewal.—A registration must 340 be renewed every 2 years. A registration must be renewed by 341 furnishing such information as the commission requires, together 342 with payment of a $500 nonrefundable renewal fee. All fees 343 received by the office pursuant to this section must be 344 submitted in the manner prescribed by the commission and must be 345 deposited into the Financial Institutions’ Regulatory Trust Fund 346 pursuant to s. 655.049 for the purpose of administering this 347 part. A complete biennial renewal of registration must include a 348 declaration under penalty of perjury, signed by the executive 349 officer or managing member of the registrant, declaring that the 350 information submitted for the purposes of renewal is true and 351 correct to the best of his or her knowledge, and confirming or 352 providing all of the following: 353 (1) That the registrant is in compliance with this part. 354 (2) The physical location of the principal place of 355 business of the registrant. 356 (3) The telephone number of the registrant. 357 (4) A list of current financial institution-affiliated 358 parties operating under the registration to be renewed. 359 (5) Any updates or changes in information which were not 360 previously provided either in the initial registration or in 361 subsequent registration renewals or which were not previously 362 disclosed to the office. 363 Section 49. Section 663.5395, Florida Statutes, is created 364 to read: 365 663.5395 Civil action subpoena enforcement.— 366 (1) Notwithstanding s. 655.059, a limited service affiliate 367 established under this chapter is not required to produce a book 368 or record pertaining to a customer of an affiliated 369 international trust entity that is located outside the United 370 States or its territories in response to a subpoena if the book 371 or record is maintained outside the United States or its 372 territories and is not in the possession, custody, or control of 373 the affiliated limited service affiliate established in this 374 state. 375 (2) This section applies only to a subpoena issued pursuant 376 to the Florida Rules of Civil Procedure, the Federal Rules of 377 Civil Procedure, or other similar law or rule of civil procedure 378 in another state or territory of the United States. This section 379 does not apply to a subpoena issued by or on behalf of a 380 federal, state, or local government law enforcement agency, 381 administrative or regulatory agency, legislative body, or grand 382 jury and does not limit the power of the office to access all 383 books and records in the exercise of the office’s regulatory and 384 supervisory powers under the financial institutions codes. 385 386 ================= T I T L E A M E N D M E N T ================ 387 And the title is amended as follows: 388 Delete lines 167 - 208 389 and insert: 390 registration; providing that violations, fines, or 391 penalties of certain entities do not necessarily 392 disqualify registrants from registration; authorizing 393 the office to consider certain factors in evaluating 394 registrations; providing that registrations are not 395 transferable or assignable; providing for deposit of 396 fees into a specified trust fund; requiring the 397 commission to adopt rules; requiring certain persons 398 or entities to be registered as limited service 399 affiliates by a specified date; creating s. 663.533, 400 F.S.; providing applicability of the financial 401 institutions codes as to limited service affiliates; 402 providing construction; creating s. 663.534, F.S.; 403 requiring a registrant to report changes of certain 404 information to the office within a specified 405 timeframe; creating s. 663.535, F.S.; requiring a 406 specified notice to customers in marketing documents, 407 advertisements, and displays at the limited service 408 affiliate’s location or at certain events; creating s. 409 663.536, F.S.; specifying recordkeeping requirements 410 relating to certain events that a registered limited 411 service affiliate participates in; creating s. 412 663.537, F.S.; authorizing the office to conduct 413 examinations or investigations of limited service 414 affiliates for certain purposes; specifying a minimum 415 interval of examinations to assess compliance; 416 authorizing the office to examine a person or entity 417 submitting a notice of registration for certain 418 purposes; requiring limited service affiliates to pay 419 specified costs of examination within a specified 420 time; defining the terms “costs” and “actual cost”; 421 providing penalties; specifying the trust fund where 422 examination fees must be deposited; requiring the 423 commission to adopt rules; creating s. 663.538, F.S.; 424 providing requirements and procedures relating to the 425 suspension, revocation, or voluntary surrender of a 426 limited service affiliate’s registration; providing a 427 penalty; authorizing the office to conduct 428 examinations under certain circumstances; prohibiting 429 the office from denying a request to terminate 430 operations except under certain circumstances; 431 providing construction; creating s. 663.539, F.S.; 432 requiring a limited service affiliate to renew its 433 registration biennially; specifying the renewal fee 434 and the trust fund where such fee must be deposited; 435 specifying requirements for the renewal registration; 436 creating s. 663.5395, F.S.; providing that limited 437 service affiliates are not required to produce certain 438 books and records under certain circumstances; 439 providing applicability;