This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives.
STORAGE NAME: h7045a.IBS
DATE: 2/10/2022
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: HB 7045 PCB GOS 22-10 OGSR/Information on Financial Institutions, Affiliated
International Trust Entities, and Qualified Limited Service Affiliates/OFR
SPONSOR(S): Government Operations Subcommittee, Fabricio
TIED BILLS: IDEN./SIM. BILLS: SB 7020
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
Orig. Comm.: Government Operations
Subcommittee
11 Y, 5 N Villa Toliver
1) Insurance & Banking Subcommittee 14 Y, 0 N Hinshelwood Luczynski
2) State Affairs Committee
SUMMARY ANALYSIS
The Open Government Sunset Review Act requires the Legislature to review each public record exemption
and each public meeting exemption five years after enactment. If the Legislature does not reenact the
exemption, it automatically repeals on October 2nd of the fifth year after enactment.
The Office of Financial Regulation (OFR) regulates “financial institutions,” the definition of which was expanded
in 2017 to include two new entities called an “international trust entity” and a “qualified limited service affiliate.”
Public record exemptions were created for each of the new entities that make the following information
confidential and exempt from public disclosure:
Any personal identifying information of the customers or prospective customers of an affiliated
international trust entity which appears in the books and records of an international trust company
representative office (ITCRO) or a qualified limited service affiliate (QLSA) or which appears in records
relating to reports of examinations, operations, or condition of an ITCRO or a QLSA, including working
papers.
Any portion of a list of names of the shareholders or members of an affiliated international trust entity or
a QLSA.
Information received by OFR from a person from another state or country or the Federal Government
which is otherwise confidential and exempt pursuant to the laws of that state or country or pursuant to
federal law.
As a result of international trust entities and QLSAs being included within the definition of “financial institution,”
the following public record exemptions in s. 655.057, F.S., relating to financial institutions generally were
amended in 2017 to incorporate the new definition:
Records and information relating to an investigation by OFR until the investigation is completed or
ceases to be active.
Reports of examinations, operations, and condition, including working papers, or portions thereof,
prepared by, or for the use of, OFR or any state or federal agency responsible for the regulation or
supervision of financial institutions in Florida.
Information that may be provided to particular parties under certain circumstances.
Confidential documents supplied to OFR or to employees of any financial institution by other state or
federal governmental agencies.
The bill saves from repeal the above-described public record exemptions, which will repeal on October 2,
2022, if this bill does not become law.
The bill does not appear to have a fiscal impact on state government or local governments. STORAGE NAME: h7045a.IBS PAGE: 2
DATE: 2/10/2022
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Background
Open Government Sunset Review Act
The Open Government Sunset Review Act (Act)
1
sets forth a legislative review process for newly
created or substantially amended public record or public meeting exemptions. It requires an automatic
repeal of the exemption on October 2nd of the fifth year after creation or substantial amendment,
unless the Legislature reenacts the exemption.
2
The Act provides that a public record or public meeting exemption may be created or maintained only if
it serves an identifiable public purpose. In addition, it may be no broader than is necessary to meet one
of the following purposes:
Allow the state or its political subdivisions to effectively and efficiently administer a
governmental program, which administration would be significantly impaired without the
exemption.
Protect sensitive personal information that, if released, would be defamatory or would
jeopardize an individual’s safety; however, only the identity of an individual may be exempted
under this provision.
Protect trade or business secrets.
3
If, and only if, in reenacting an exemption that will repeal, the exemption is expanded (essentially
creating a new exemption), then a public necessity statement and a two-thirds vote for passage are
required.
4
If the exemption is reenacted with grammatical or stylistic changes that do not expand the
exemption, if the exemption is narrowed, or if an exception to the exemption is created,
then a public
necessity statement and a two-thirds vote for passage are not required.
Office of Financial Regulation
The Office of Financial Regulation (OFR) regulates banks, credit unions, other financial institutions,
finance companies, and the securities industry.
5
OFR’s Division of Financial Institutions charters,
licenses, and regulates various entities that engage in financial institution business in Florida, in
accordance with the financial institutions codes and the rules promulgated thereunder.
6
OFR also
ensures that state financial institutions (i.e. financial institutions
7
chartered or organized by the state of
Florida) comply with state and applicable federal requirements for safety and soundness.
As part of its general supervisory powers, OFR has access to all state financial institutions’ books and
records necessary for the performance of its duties and functions prescribed under the financial
institutions codes.
8
Among its duties, OFR is required to conduct examinations of the condition of each
state financial institution at least every 18 months.
9
In relation to state financial institutions that also
have a federal regulator, OFR may accept an examination of a state financial institution made by an
1
Section 119.15, F.S.
2
Section 119.15(3), F.S.
3
Section 119.15(6)(b), F.S.
4
Article I, s. 24(c), FLA. CONST.
5
Section 20.121(3)(a)2., F.S.
6
Chapters 655, 657, 658, 660, 662, 663, 665, and 667, F.S.; chs. 69U-100 through 69U-162, F.A.C.
7
“Financial institution” is defined as “a state or federal savings or thrift association, bank, savings bank, trust company, international
bank agency, international banking corporation, international branch, international representative office, international administrative
office, international trust entity, international trust company representative office, qualified limited service affiliate, credit union, or an
agreement corporation operating pursuant to s. 25 of the Federal Reserve Act, 12 U.S.C. ss. 601 et seq. or Edge Act corporation
organized pursuant to s. 25(a) of the Federal Reserve Act, 12 U.S.C. ss. 611 et seq.” Section 655.005(1)(i), F.S.
8
Section 655.012(1)(b), F.S.
9
Sections 655.045(1) and 663.537, F.S. STORAGE NAME: h7045a.IBS PAGE: 3
DATE: 2/10/2022
appropriate federal regulatory agency, and may conduct joint or concurrent examinations with federal
agencies.
10
However, at least once during every 36-month period, OFR must conduct an examination
of each state financial institution in a manner that allows the preparation of a complete examination
report.
11
In addition to performing regular examinations, OFR may also make investigations which it deems
necessary to determine whether a person has violated or is about to violate any provision of the
financial institutions codes or the rules promulgated thereunder.
12
International Trust Entities, International Trust Company Representative Offices, and Qualified Limited
Service Affiliates
In 2017, the Legislature expanded the definition of “financial institution” to include two new entities
called an “international trust entity” and a “qualified limited service affiliate.”
13
An international trust
entity is an international trust company or organization, or any similar business entity, or an affiliated or
subsidiary entity that is licensed, chartered, or similarly permitted to conduct trust business in a foreign
country or countries under the laws where such entity is organized and supervised.
14
Currently, an
international trust entity can operate in Florida either directly through an international trust company
representative office (ITCRO) or indirectly through a qualified limited service affiliate (QLSA).
15
An ITCRO is defined as an office of an international trust entity which is established or maintained in
Florida for the purpose of engaging in specified nonfiduciary activities, or any affiliate, subsidiary, or
other person that engages in such activities on behalf of such international trust entity from an office
located in Florida. Permissible activities of an ITCRO include:
Advertising, marketing, and soliciting for fiduciary business on behalf of an international trust
entity;
Contacting existing or potential customers;
Answering questions and providing information about matters related to customer accounts;
Serving as a liaison in Florida between the international trust entity and its existing or potential
customers; and
Engaging in any other activities approved by OFR or under rules of the Financial Services
Commission.
16
An ITCRO’s representatives and employees may not act as a fiduciary, which means they may not do
such things as accept fiduciary appointment, execute the fiduciary documents that create the fiduciary
relationship, or make discretionary decisions regarding the investment or distribution of fiduciary
accounts.
17
A QLSA, on the other hand, is a separate legal entity from the international trust entity and is defined as
a person or entity that is qualified to perform specified permissible activities related to or for the benefit
of one or more affiliated international trust entities.
18
Such permissible activities include:
Marketing and liaison services related to or for the benefit of the affiliated international trust
entities, directed exclusively at professionals and current or prospective nonresident clients of
an affiliated international trust entity;
Advertising and marketing at trade, industry, or professional events;
10
Section 655.045(1)(a), F.S.
11
Id.
12
Section 655.032(1), F.S.
13
Chapter 2017-83, L.O.F.
14
Section 663.401(3), F.S.
15
Prior to 2017, the equivalent of an international trust entity, an offshore non-depository trust company, was included within the
definition of an International Banking Corporation (IBC) and governed under that regulatory framework. However, given the distinct
nature of the two entities, the Legislature separated them and relocated the regulations related to licensed offices of an international
trust entity, i.e., ITCROs, from the regulations related to licensed offices of an IBC. The Legislature also created a new kind of entity
called a QLSA (of an international trust entity).
16
Section 663.409(1), F.S.
17
Section 663.409(2), F.S.
18
Section 663.530(1)(f), F.S. STORAGE NAME: h7045a.IBS PAGE: 4
DATE: 2/10/2022
Transmitting documents between the international trust entity and its current or prospective
clients or a designee of such clients; and
Transmitting information about the trust or trust holdings of current clients between current
clients or their designees and the international trust entity.
19
A QLSA is prohibited from engaging in the following activities:
Advertising and marketing related to or for the benefit of the international trust entity which are
directed to the general public.
Acting as a fiduciary, including, but not limited to, accepting the fiduciary appointment, executing
the fiduciary documents that create the fiduciary relationship, or making discretionary decisions
regarding the investment or distribution of fiduciary accounts.
Accepting custody of any trust property or any other good, asset, or thing of value on behalf of
the affiliated international trust entity, its subsidiaries or affiliates, or subsidiaries and affiliates of
the qualified limited service affiliate.
Soliciting business within this state from the general public related to or for the benefit of an
affiliated international trust entity.
Adding a director, an executive officer, a principal shareholder, a manager, a managing
member, or an equivalent position to the qualified limited service affiliate without prior written
notification to OFR.
Commencing services for an international trust entity without complying with applicable
requirements.
Providing services for any international trust entity that is in bankruptcy, conservatorship,
receivership, liquidation, or a similar status under the laws of any country.
Otherwise conducting banking or trust business.
20
Public Record Exemptions under Review
International Trust Company Representative Offices and Qualified Limited Service Affiliates
As a result of the Legislature creating two new entity types, the below-described public record
exemptions were created relating to each of those entities that make the following information
confidential and exempt from public disclosure:
Any personal identifying information of the customers or prospective customers of an affiliated
international trust entity which appears in the books and records of an ITCRO or a QLSA or
which appears in records relating to reports of examinations, operations, or condition
21
of an
ITCRO or a QLSA, including working papers.
22
Any portion of a list of names of the shareholders or members of an affiliated international trust
entity or a QLSA.
Information received by OFR from a person from another state or country or the Federal
Government which is otherwise confidential and exempt pursuant to the laws of that state or
country or pursuant to federal law.
23
The information made confidential and exempt by the public record exemptions may be disclosed by
OFR:
To the authorized representative or representatives of the ITCRO or QLSA under examination.
The authorized representative or representatives must be identified in a resolution or by written
consent of the board of directors, or the equivalent, of the international trust entity or QLSA;
19
Section 663.531(1), F.S.
20
Section 663.531(2), F.S.
21
“Reports of examination, operations, and condition” is defined to mean records submitted to or prepared by OFR as part of OFR’s
duties performed pursuant to ss. 655.012, 655.045, or 663.537, F.S. Sections 663.416(1)(a) and 663.540(1)(a), F.S.
22
“Working papers” is defined to mean the records of the procedures followed, the tests performed, the information obtained, and the
conclusions reached in an investigation or examination performed under ss. 655.032, 655.045, or 663.537, F.S. The term includes
planning documentation, work programs, analyses, memoranda, letters of confirmation and representation, abstracts of the books and
records of a financial institution, as defined in s. 655.005, and schedules or commentaries prepared or obtained in the course of such
investigation or examination. Sections 663.416(1)(b) and 663.540(1)(b), F.S.
23
Chapter 2017-84, L.O.F.; codified as ss. 663.416(2) and 663.540(2), F.S. STORAGE NAME: h7045a.IBS PAGE: 5
DATE: 2/10/2022
To a fidelity insurance company, upon written consent of the board of directors, or the
equivalent, of the international trust entity or QLSA;
To an independent auditor, upon written consent of the board of directors, or the equivalent, of
the international trust entity or QLSA;
To the liquidator, receiver, or conservator for the international trust entity or QLSA, if a
liquidator, receiver, or conservator is appointed. However, any portion of the information which
discloses the identity of a customer or prospective customer of the international trust entity, or a
shareholder or member of the international trust entity or QLSA, must be redacted by OFR
before releasing such portion to the liquidator, receiver, or conservator;
To a law enforcement agency in furtherance of the agency’s official duties and responsibilities;
To the appropriate law enforcement or prosecutorial agency for the purpose of reporting any
suspected criminal activity; and
Pursuant to a legislative subpoena. A legislative body or committee that receives records or
information pursuant to such a subpoena must maintain the confidential status of the records or
information, except in a case involving the investigation of charges against a public official
subject to impeachment or removal, in which case the records or information may be disclosed
only to the extent necessary as determined by such legislative body or committee.
24
Nothing in the public record exemptions prevent or restrict the publication of a report required by federal
law.
25
A person who willfully discloses information made confidential and exempt by the public record
exemptions commits a felony of the third degree.
26
The 2017 public necessity statement
27
for the exemptions provides that:
The individuals served by the affiliated international trust entity are often individuals
of high net worth. Individuals of high net worth and shareholders or members of
financial institutions are frequently the targets of criminal predators seeking access
to their assets. It is important that the exposure of such individuals and their family
members to threats of extortion, kidnapping, and other crimes not be increased.
Placing the personal identifying information of these individuals within the public
domain would increase the security risk that those individuals or their families could
become the target of criminal activity. . . . [Furthermore,] [t]he office frequently
engages in joint examinations with federal regulators. If such information were
subject to disclosure to the public, not only would such disclosure deter other
regulatory bodies from communicating vital information to the office, but the office
would violate existing information-sharing agreements governing the sharing of
confidential supervisory information.
28
Pursuant to the Open Government Sunset Review Act, the exemptions will repeal on October 2, 2022,
unless reenacted by the Legislature.
Financial Institutions Generally
As a result of the Legislature creating two new entity types – international trust entities and QLSAs –
the below-described public record exemptions in s. 655.057, F.S., relating to financial institutions
generally were amended following the incorporation of those two entities into the definition of “financial
institution.”
29
24
Sections 663.416(3) and 663.540(3), F.S.
25
Sections 663.416(4) and 663.540(4), F.S.
26
Sections 663.416(5) and 663.540(5), F.S.
27
Article I, s. 24(c), FLA. CONST., requires each public record exemption state with specificity the public necessity justifying the
exemption.
28
Chapter 2017-84, L.O.F.
29
Chapter 2017-84, L.O.F. STORAGE NAME: h7045a.IBS PAGE: 6
DATE: 2/10/2022
Section 655.057(1), F.S., which provides a public record exemption for all records and information
relating to an investigation by OFR until the investigation is completed or ceases to be active.
30
After an
investigation is completed or ceases to be active, portions of the covered documents remain
confidential and exempt
31
from public disclosure to the extent that disclosure would:
Jeopardize the integrity of another active investigation;
Impair the safety and soundness of the financial institution;
Reveal personal financial information;
32
Reveal the identity of a confidential source;
Defame or cause unwarranted damage to the good name or reputation of an individual or
jeopardize the safety of an individual; or
Reveal investigative techniques or procedures.
Section 655.057(2), F.S., which provides a public record exemption for reports of examinations,
33
operations, or condition, including working papers,
34
or portions thereof, prepared by, or for the use of,
the office or any state or federal agency responsible for the regulation or supervision of financial
institutions in Florida. However, examination, operation, or condition reports must be released by OFR
within one year after the appointment of a liquidator, receiver, or conservator to the financial institution
except any portion of such reports which discloses the identities of depositors, bondholders, members,
borrowers, or stockholders, other than directors, officers, or controlling stockholders of the institution.
Additionally, such reports or papers or portions thereof may be released to:
The financial institution under examination;
Any holding company of which the financial institution is a subsidiary;
Proposed purchasers if necessary to protect the continued financial viability of the financial
institution, upon prior approval by the board of directors of such institution;
Persons proposing in good faith to acquire a controlling interest in or to merge with the financial
institution, upon prior approval by the board of directors of such financial institution;
Any officer, director, committee member, employee, attorney, auditor, or independent auditor
officially connected with the financial institution, holding company, proposed purchaser, or
person seeking to acquire a controlling interest in or merge with the financial institution; or
A fidelity insurance company, upon approval of the financial institution’s board of directors.
However, a fidelity insurance company may receive only that portion of an examination report
relating to a claim or investigation being conducted by such fidelity insurance company.
Section 655.057(9), F.S., which provides that any confidential documents provided to OFR or to
employees of any financial institution by other state or federal governmental agencies are confidential
30
An investigation is considered “active” while such investigation is being conducted by OFR with a reasonable, good faith belief that
it may lead to the filing of administrative, civil, or criminal proceedings. An investigation does not cease to be active if OFR is
proceeding with reasonable dispatch, and there is a good faith belief that action may be initiated by OFR or other administrative or law
enforcement agency. Section 655.057(1), F.S.
31
There is a difference between records the Legislature designates exempt from public record requirements and those the Legislature
deems confidential and exempt. A record classified as exempt from public disclosure may be disclosed under certain circumstances.
See WFTV, Inc. v. Sch. Bd. of Seminole, 874 So.2d 48, 53 (Fla. 5th DCA 2004), review denied 892 So.2d 1015 (Fla. 2004); City of
Rivera Beach v. Barfield, 642 So.2d 1135 (Fla. 4th DCA 1994); Williams v. City of Minneola, 575 So.2d 683, 687 (Fla. 5th DCA
1991). If the Legislature designates a record as confidential and exempt from public disclosure, such record may not be released by the
custodian of public records to anyone other than the persons or entities specifically designated in statute. See Op. Att’y Gen. Fla. 04-
09 (2004).
32
“Personal financial information” is defined to mean: information relating to the existence, nature, source, or amount of a person’s
personal income, expenses, or debt; information relating to a person’s financial transactions of any kind; or information relating to the
existence, identification, nature, or value of a person’s assets, liabilities, or net worth. Section 655.057(12)(c), F.S.
33
“Examination report” is define to mean “records submitted to or prepared by the office as part of the office’s duties performed
pursuant to s. 655.012 or s. 655.045(1).” Section 655.057(12)(a), F.S.
34
“Working papers” is defined to mean “the records of the procedures followed, the tests performed, the information obtained, and the
conclusions reached in an examination or investigation performed under s. 655.032 or s. 655.045. Working papers include planning
documentation, work programs, analyses, memoranda, letters of confirmation and representation, abstracts of the books and records of
a financial institution as defined in s. 655.005(1), and schedules or commentaries prepared or obtained in the course of such
examination or investigation.” Section 655.057(12)(d), F.S. STORAGE NAME: h7045a.IBS PAGE: 7
DATE: 2/10/2022
and exempt from public record requirements. Such information may only be made public with the
consent of the agency that owns the documents.
Section 655.057(5), F.S., which specifies that the above-described public record exemptions do not
prevent or restrict OFR from:
Publishing reports that are required to be submitted to OFR pursuant to s. 655.045(2), F.S., or
required by applicable federal statutes or regulations to be published.
35
Furnishing records or information to any other state, federal, or foreign agency responsible for
the regulation or supervision of financial institutions.
Disclosing or publishing summaries of the condition of financial institutions and general
economic and similar statistics and data, provided that the identity of a particular financial
institution is not disclosed.
Reporting any suspected criminal activity, with supporting documents and information, to
appropriate law enforcement and prosecutorial agencies.
Furnishing information upon request to the Chief Financial Officer or the Division of Treasury of
the Department of Financial Services regarding the financial condition of any financial
institution that is, or has applied to be, designated as a qualified public depository pursuant to
ch. 280, F.S.
Furnishing information to Federal Home Loan Banks regarding its member institutions pursuant
to an information sharing agreement between the Federal Home Loan Banks and OFR.
However, any such information or records obtained from OFR that is confidential must be maintained
as confidential and exempt from public record requirements.
A person who willfully discloses information made confidential by the foregoing public record
exemptions commits a felony of the third degree.
36
The 2017 public necessity statement
37
for the exemption provides that:
An exemption from public records requirements prevents gaps in the law by
providing the same protections to international trust entities and qualified limited
service affiliates which are afforded to other financial institutions, thereby
preventing any disadvantage to these similarly regulated entities in comparison to
other entities currently defined as “financial institutions.”. . . Public disclosure of
records and information relating to an examination or investigation by the office
could expose the subject financial institution to unwarranted damage to its good
name or reputation and impair its safety and soundness, as well as the safety and
soundness of the financial system in the state.
38
Pursuant to the Open Government Sunset Review Act, the exemptions will repeal on October 2, 2022,
unless reenacted by the Legislature.
Open Government Sunset Review
During the 2021 interim, the House Government Operations Subcommittee staff conducted an interview
with staff from OFR as part of its review under the Open Government Sunset Review Act. According to
OFR staff, there are currently 12 international trust entities operating in Florida. OFR staff indicated that
the exemptions are functioning well and that OFR has not received any complaints regarding the
exemptions. OFR staff recommended the exemptions be reenacted to protect the sensitive information
shared with the agency in the course of administering its examination and investigative duties, to
maintaining information sharing practices between OFR and other regulatory bodies, and to protect the
35
See r. 69U-120.0451, F.A.C., providing for the quarterly filing of Call Reports.
36
Section 655.057(13), F.S.
37
Article I, s. 24(c), Fla. Const., requires each public record exemption state with specificity the public necessity justifying the
exemption.
38
Chapter 2017-84, L.O.F. STORAGE NAME: h7045a.IBS PAGE: 8
DATE: 2/10/2022
personal identifying information of individuals served by an international trust entity and shareholders or
members of certain financial institutions.
Effect of the Bill
The bill removes the scheduled repeal dates of the public record exemptions relating to ITCROs and
QLSAs specifically, thereby maintaining the public record exemptions for the personal identifying
information of individuals served by an international trust entity and shareholders or members of certain
financial institutions; as well as information received by OFR from other regulatory entities that is
confidential and exempt under the laws of that entity’s jurisdiction.
The bill also removes the scheduled repeal date of certain public record exemptions in s. 655.057, F.S.,
that were amended in 2017 to incorporate the addition of international trust entities and QLSAs within
the definition of “financial institution.” The following exemptions that relate to financial institutions
generally are maintained by the bill:
Records and information relating to an investigation by OFR until the investigation is completed
or ceases to be active.
Reports of examinations, operations, and condition, including working papers, or portions
thereof, prepared by, or for the use of, OFR or any state or federal agency responsible for the
regulation or supervision of financial institutions in Florida.
Information that may be provided to particular parties under certain circumstances.
Confidential documents supplied to OFR or to employees of any financial institution by other
state or federal governmental agencies.
B. SECTION DIRECTORY:
Section 1 amends s. 655.057, F.S., to save from repeal certain public record exemptions relating to
financial institutions.
Section 2 amends s. 663.416, F.S., to save from repeal the public record exemption for certain
sensitive information of an international trust entity held by OFR.
Section 3 amends s. 663.540, F.S., to save from repeal the public record exemption for certain
sensitive information of an international trust entity and QLSA held by OFR.
Section 4 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.
STORAGE NAME: h7045a.IBS PAGE: 9
DATE: 2/10/2022
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 bill does not authorize or require rulemaking.
C. DRAFTING ISSUES OR OTHER COMMENTS:
None.
IV. AMENDMENTS/ COMMITTEE SUBSTITUTE CHANGES
None.