This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives.
STORAGE NAME: h0389d.COM
DATE: 2/24/2022
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: CS/CS/HB 389 Money Services Businesses
SPONSOR(S): State Administration & Technology Appropriations Subcommittee, Insurance & Banking
Subcommittee, Zika
TIED BILLS: IDEN./SIM. BILLS: CS/CS/SB 1536
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Insurance & Banking Subcommittee 15 Y, 0 N, As CS Hinshelwood Luczynski
2) State Administration & Technology
Appropriations Subcommittee
13 Y, 0 N, As CS Lee Topp
3) Commerce Committee 20 Y, 0 N Hinshelwood Hamon
SUMMARY ANALYSIS
The Office of Financial Regulation’s (OFR) Division of Consumer Finance licenses and regulates various aspects of
the non-depository financial services industries, including money services businesses (MSBs) regulated under ch.
560, F.S. MSB applicants must submit fingerprints to the Florida Department of Law Enforcement (FDLE) for a state
criminal history background check, and the fingerprints must be submitted to the Federal Bureau of Investigation
(FBI) for a federal criminal history background check. The OFR must review the results of the state and federal
criminal history background checks and determine whether the applicant meets licensure requirements.
Access to the FBI’s criminal history record information (CHRI) system is authorized for fingerprints pursuant to ch.
560, F.S. However, in order to obtain CHRI for applicants to the recently created Financial Technology Sandbox,
FDLE sent correspondence to the FBI’s Criminal Justice Information Law Unit (CJILU) to obtain an Originating
Agency Identifier (ORI). The ORI validates legal authorization to obtain criminal justice information and identifies the
specific agency requesting the information. CJILU responded to this request stating that the MSB licensing statute
does not qualify for access to CHRI because the terms “responsible person” and “control of a money services
business”, as used in that statute to specify persons who are required to submit fingerprints, are overly broad and,
thus, do not sufficiently define the categories of people subject to the background check. The CJILU acknowledged
that MSB fingerprinting was previously approved by the CJILU, and that the FBI will continue to honor fingerprints
submitted for MSB licensure. However, the CJILU has placed MSB fingerprinting on a grace period of unspecified
length in order to allow Florida to amend MSB fingerprinting statutes such that the statutes specifically identify the
categories of licensees or employees falling within the purview of the statutes; CJILU will not allow fingerprinting of
additional categories of applicants (i.e., those applying under the Financial Technology Sandbox) during this grace
period.
The bill creates the term “control person” and repeals the definitions of “officer” and “responsible person”. Some of
the elements from these repealed definitions are made part of the “control person” definition. The bill inserts “control
person” throughout ch. 560, F.S., in place of these repealed definitions as well as other positions within an MSB that
are consolidated under the newly defined term “control person”. A person who meets the definition of “control
person”, as defined in the bill, must submit fingerprints and be vetted by the OFR. The bill clarifies the OFR’s duties
associated with fingerprinting control persons who are added to existing MSBs. The bill relocates the definition of
“publicly traded” such that the definition applies to all current uses of the term “publicly traded” throughout the
chapter regulating MSBs.
The bill has no fiscal impact on the state, local governments, or the private sector.
The bill provides an effective date of October 1, 2022. STORAGE NAME: h0389d.COM PAGE: 2
DATE: 2/24/2022
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Background
The Office of Financial Regulation (OFR) regulates banks, credit unions, other financial institutions,
finance companies, and the securities industry.
1
The Division of Consumer Finance within the OFR
licenses and regulates various aspects of the non-depository financial services industries, including
money services businesses (MSBs) regulated under ch. 560, F.S. An MSB is any person located in or
doing business in this state, from this state, or into this state from locations outside this state or country
who acts as the following:
2
Payment instrument seller: A payment instrument seller sells, issues, provides, or delivers
payment instruments.
3
Foreign currency exchanger: A foreign currency exchanger exchanges, for compensation,
currency
4
of the United States or a foreign government to currency of another government.
5
Check casher: A check casher sells, issues, provides, or delivers currency
6
in exchange for
payment instruments
7
received, except travelers checks.
8
Money transmitter: A money transmitter receives currency,
9
monetary value,
10
or payment
instruments
11
for the purpose of transmitting the same by any means, including transmission by
wire, facsimile, electronic transfer, courier, the Internet, or through bill payment services or other
businesses that facilitate such transfer within this country, or to or from this country.
12
An MSB may engage in deferred presentment transactions, commonly known as “payday loans”, by
filing a declaration of intent to engage in deferred presentment transactions with the OFR.
13
A money
transmitter or payment instrument seller may engage in the activities authorized for check cashers and
foreign currency exchangers without paying additional licensing fees.
14
State and federally chartered
depository institutions, such as banks and credit unions, are exempt from licensure as an MSB.
15
An applicant for an MSB license must submit the following to the OFR:
An application;
16
A nonrefundable application fee;
17
1
S. 20.121(3)(a)2., F.S.
2
S. 560.103(22), F.S.
3
S. 560.103(30) and (34), F.S. The term “payment instrument” means a check, draft, warrant, money order, travelers
check, electronic instrument, or other instrument, payment of money, or monetary value whether or not negotiable. The
term does not include an instrument that is redeemable by the issuer in merchandise or service, a credit card voucher, or
a letter of credit. S. 560.103(29), F.S.
4
The term “currency” means the coin and paper money of the United States or of any other country which is designated
as legal tender and which circulates and is customarily used and accepted as a medium of exchange in the country of
issuance. Currency includes United States silver certificates, United States notes, and Federal Reserve notes. Currency
also includes official foreign bank notes that are customarily used and accepted as a medium of exchange in a foreign
country. S. 560.103(11), F.S.
5
S. 560.103(17), F.S.
6
Definition of “currency”, supra note 4.
7
Definition of “payment instrument”, supra note 3.
8
S. 560.103(6) and (34), F.S.
9
Definition of “currency”, supra note 4.
10
The term “monetary value” means a medium of exchange, whether or not redeemable in currency. S. 560.103(21), F.S.
11
Definition of “payment instrument”, supra note 3.
12
S. 560.103(23), F.S.
13
S. 560.403, F.S.
14
S. 560.204(2), F.S.
15
S. 560.104, F.S.
16
S. 560.141(1)(a), F.S.
17
Ss. 560.141(1)(b) and 560.143, F.S. STORAGE NAME: h0389d.COM PAGE: 3
DATE: 2/24/2022
A copy of the applicant’s written anti-money laundering program required by federal law;
18
and
Fingerprints for the following individuals:
19
o An officer, which is defined as an individual, other than a director, who participates in, or
has authority to participate in, the major policymaking functions of an MSB, regardless
of whether the individual has an official title or receives a salary or other
compensation.
20
o A director.
o A responsible person, which is defined as an individual who is employed by or affiliated
with an MSB and who has principal active management authority over the business
decisions, actions, and activities of the MSB in this state.
21
In turn, “affiliated party”
means a director, officer, responsible person, employee, or foreign affiliate of an MSB,
or a person who has a controlling interest in an MSB.
22
o The compliance officer, which is defined as the individual in charge of overseeing,
managing, and ensuring that an MSB is in compliance with all state and federal laws
and rules relating to MSBs, as applicable, including all money laundering laws and
rules.
23
o A controlling shareholder.
o Any other person who has a controlling interest, meaning a person who:
24
Possesses the power, directly or indirectly, to direct the management or policies
of the MSB, whether through ownership, by contract, or otherwise;
Directly or indirectly may vote 25 percent or more of a class of a voting security
or sell or direct the sale of 25 percent or more of a class of voting securities; or
In the case of a partnership, may receive upon dissolution or has contributed 25
percent or more of the capital.
Fingerprints are not required if the applicant is a publicly traded corporation.
25
If fingerprints are
required, the fingerprints must be submitted for live-scan processing.
26
Live-scan is a device that
electronically takes fingerprints and other information and uploads that information to the Florida
Department of Law Enforcement (FDLE) who, in turn, sends the fingerprints to the Federal Bureau of
Investigation (FBI) for a fingerprint background check.
27
The fingerprints may be submitted through a
third-party vendor authorized by FDLE to provide live-scan fingerprinting.
28
FDLE must conduct the
state criminal history background check, and a federal criminal history background check must be
conducted through the FBI.
29
The costs of fingerprint processing, including the cost of retaining the
fingerprints, must be borne by the person subject to the background check.
30
The OFR must review the
results of the state and federal criminal history background checks and determine whether the applicant
meets licensure requirements.
31
An MSB license must be renewed every two years.
32
18
S. 560.141(d), F.S.
19
Ss. 560.141(c) and 560.127, F.S.
20
S. 560.103(26), F.S.
21
S. 560.103(33), F.S.
22
S. 560.103(1), F.S.
23
S. 560.103(8), F.S.
24
S. 560.127, F.S.
25
S. 560.141(1)(c)6., F.S.
26
S. 560.141(1)(c), F.S.
27
Florida Live Scan,
https://livescanflorida.com/#:~:text=LiveScan%20is%20a%20device%20that,for%20a%20fingerprint%20background%20c
heck. (last visited Jan. 25, 2022).
28
S. 560.141(1)(c)1., F.S.
29
S. 560.141(1)(c)2., F.S.
30
S. 560.141(1)(c)4., F.S.
31
S. 560.141(1)(c)5., F.S.
32
Ss. 560.141(2) and 560.142, F.S. STORAGE NAME: h0389d.COM PAGE: 4
DATE: 2/24/2022
Once licensed, an MSB is required to report any change in the partners, officers, members, joint
venturers, directors, controlling shareholders, or responsible persons.
33
If such person does not have a
controlling interest in the MSB, then the person must simply comply with fingerprint requirements and
be vetted by the OFR.
34
If any person, directly or indirectly or acting by or through one or more persons,
proposes to purchase or acquire a controlling interest in an MSB, such person or group must submit a
new application for licensure at least 30 days before such purchase or acquisition.
35
Such a change of
control application is not required where the person or group of persons has previously complied with
applicable licensing provisions, provided that they are currently affiliated with the MSB, or where the
person or group of persons is currently licensed with the OFR as an MSB.
36
A change of control
application must be accompanied by the payment of an initial licensing fee and a fee per branch or
authorized vendor, up to a maximum of $20,000.
37
As previously mentioned, when fingerprinting is required, the fingerprints must be submitted to FDLE
for a state and federal criminal history background check. The federal background check is conducted
through the FBI’s criminal history record information (CHRI) system. Federal law Pub. L. 92-544
authorizes the exchange of CHRI with officials of state and local governmental agencies for licensing
and employment purposes.
38
One of the primary purposes for enacting Pub. L. 92-544 was to establish
a national policy with adequate sanctions and administrative safeguards regarding the dissemination of
FBI’s CHRI to state and local governments for non-criminal justice licensing and employment
purposes.
39
The FBI, with the assistance of the United States Department of Justice, has determined
the parameters of Pub. L. 92-544.
40
The criteria for granting access to the FBI’s CHRI are as follows:
a. The state’s statute requiring fingerprinting must exist as a result of a legislative enactment;
b. It must require the fingerprinting of applicants who are to be subjected to a national criminal
history background check;
c. It must, expressly (“submit to the FBI”) or by implication (“submit for a national check”),
authorize the use of FBI records for the screening of applicants;
d. It must identify the specific category(ies) of licensees/employees falling within its purview,
thereby avoiding over breadth;
e. It must not be against public policy; and
f. It may not authorize receipt of the CHRI by a private entity.
Access to the FBI’s CHRI is authorized for fingerprints pursuant to ch. 560, F.S. However, in order to
obtain CHRI for applicants to the recently created Financial Technology Sandbox under s. 559.952,
F.S., created in the 2020 legislative session,
41
FDLE sent correspondence to the FBI’s Criminal Justice
Information Law Unit (CJILU) to obtain an Originating Agency Identifier (ORI). The ORI validates legal
authorization to obtain criminal justice information and identifies the specific agency requesting the
information. CJILU reviewed s. 559.952, F.S., which derives its fingerprinting authority from s. 560.141,
F.S. CJILU responded to this request stating that s. 560.141, F.S., does not qualify for access to CHRI
because the terms “responsible person” and “control of a money services business” as used in s.
560.141, F.S., are overly broad and, thus, do not sufficiently define the categories of people subject to
the background check.
42
The CJILU acknowledged that MSB fingerprinting was previously approved by
the CJILU and that the FBI will continue to honor fingerprints submitted for MSB licensure.
43
However,
the CJILU has placed MSB fingerprinting on a grace period of unspecified length in order to allow
33
S. 560.126(3), F.S.
34
S. 560.126(3)(b), F.S.
35
S. 560.126(3)(a), F.S.; r. 69v-560.201(3), F.A.C.
36
S. 560.126(3)(c), F.S.; r. 69v-560.201(6), F.A.C.
37
Ss. 560.126(3) and 560.143(1), F.S.
38
20 C.F.R. § 20.33.
39
Federal Bureau of Investigation, Testimony of Dennis Lormel Before the House Financial Services Committee (Mar. 06,
2001), https://archives.fbi.gov/archives/news/testimony/fbis-perspective-on-criminal-history-record-information-checks-on-
individuals-conducting-insurance-business (last visited Jan. 25, 2022).
40
Email from Heather R. Postlethwait, FBI Office of the General Counsel, to Nathan Pate, Florida Department of Law
Enforcement, RE: ORI Request - Florida Office of Financial Regulation (Mar. 22, 2021).
41
Ch. 2020-161, Laws of Fla.
42
Email from Heather R. Postlethwait, supra note 40.
43
Id. STORAGE NAME: h0389d.COM PAGE: 5
DATE: 2/24/2022
Florida to amend MSB fingerprinting statutes such that the statutes specifically identify the categories
of licensees or employees falling within the purview of the statutes; CJILU will not allow fingerprinting of
additional categories of applicants (i.e., those applying under the Financial Technology Sandbox)
during this grace period.
44
Effect of the Bill
The bill creates the term “control person” and defines the term as any of the following:
A person who holds the title of president, chief executive officer, chief financial officer, chief
operations officer, chief legal officer, or compliance officer for an MSB.
A person who holds any of the officer positions named in the MSB’s governing documents.
A person who holds any position named by the MSB's liability insurance coverage for directors
and officers, if the business has such coverage.
A director of the MSB's board of directors.
A person who directs the affairs of an MSB or who participates in, or has authority to participate
in, the major policymaking functions of an MSB, regardless of whether the person has an
official title or receives a salary or other compensation.
For an MSB that is a corporation, all shareholders that, directly or indirectly, own 25 percent or
more or that have the power to vote 25 percent or more of a class of voting securities.
For an MSB that is a partnership, all general partners, and those limited or special partners that
have contributed 25 percent or more or that have the right to receive upon dissolution 25
percent or more of the partnership's capital.
For an MSB that is a limited liability company, all managers, and those members that have
contributed 25 percent or more or that have the right to receive upon dissolution 25 percent or
more of the limited liability company's capital.
The bill repeals the definitions of “officer” and “responsible person”, and some of the elements from
these repealed definitions are made part of the “control person” definition. The bill inserts “control
person” throughout ch. 560, F.S., in place of these repealed definitions as well as other positions within
an MSB that are consolidated under the newly defined term “control person”.
A person who meets the definition of “control person”, as defined in the bill, must submit fingerprints
and be vetted by the OFR. The bill clarifies the OFR’s duties associated with fingerprinting control
persons who are added to existing MSBs. Upon the addition of a control person, the OFR must
evaluate the added control person and ensure that such person has submitted fingerprints for
processing. If the OFR determines that addition of the control person would cause the MSB to no
longer meet the licensure requirements under ch. 560, F.S., the OFR may bring an administrative
action to enforce the provisions of the chapter.
The bill relocates the definition of “publicly traded” from within s. 560.141(1)(c)6., F.S., to the main
definitions statute of ch. 560, F.S., such that the definition applies to all current uses of the term
“publicly traded” throughout the chapter.
The bill provides an effective date of October 1, 2022.
B. SECTION DIRECTORY:
Section 1. Amends s. 560.103, F.S., relating to definitions.
Section 2. Amends s. 560.118, F.S., relating to reports.
Section 3. Amends s. 560.123, F.S., relating to Florida Control of Money Laundering in Money
Services Business Act.
Section 4. Amends s. 560.126, F.S., required notice by licensee.
44
Id. STORAGE NAME: h0389d.COM PAGE: 6
DATE: 2/24/2022
Section 5. Amends s. 560.141, F.S., relating to license application.
Section 6 Reenacts s. 559.952, F.S., relating to Financial Technology Sandbox.
Section 7. Reenacts s. 560.114, F.S., disciplinary actions; penalties.
Section 8. Provides an effective date of October 1, 2022.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
None.
2. Expenditures:
None.
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
None.
2. Expenditures:
None.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
None.
D. FISCAL COMMENTS:
None.
III. COMMENTS
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
Not applicable. The bill does not appear to affect county or municipal governments.
2. Other:
None.
B. RULE-MAKING AUTHORITY:
The Financial Services Commission (commission)
45
will need to amend rules to conform to changes
made by the bill.
C. DRAFTING ISSUES OR OTHER COMMENTS:
45
S. 657.028(6), F.S. The commission is composed of the Governor, Attorney General, Chief Financial Officer, and
Commissioner of Agriculture. S. 20.121(3), F.S. The commission members are the OFR’s agency head for the purpose of
rulemaking. S. 20.121(3)(c), F.S. STORAGE NAME: h0389d.COM PAGE: 7
DATE: 2/24/2022
The changes proposed by the bill have not yet been reviewed by the FBI. Continued access to national
criminal history record information for persons required to submit fingerprints pursuant to ch. 560, F.S.,
is reliant upon the FBI’s approval of the changes made by the bill.
46
IV. AMENDMENTS/ COMMITTEE SUBSTITUTE CHANGES
On January 27, 2022, the Insurance & Banking Subcommittee considered a proposed committee substitute
and reported the bill favorably as a committee substitute. The committee substitute differs from HB 389 in
the following ways:
Amends definitions.
Removes provisions relating to permanent or temporary bars to licensure or suspension of a
license.
Makes other technical and conforming changes.
On February 15, 2022, the State Administration & Technology Appropriations Subcommittee considered
one amendment, which was adopted, and reported the bill favorably as a committee substitute. The
committee substitute:
Removes the fiscal impact of the bill by restoring current law relating to an application for change of
control of a money services business.
Further clarifies the fingerprint provisions for money services businesses.
The staff analysis has been updated to reflect the committee substitute as passed by the State
Administration & Technology Appropriations Subcommittee.
46
Florida Department of Law Enforcement, Agency Analysis of 2022 Senate Bill 1536 (Jan. 10, 2022).