Florida Senate - 2022 CS for SB 1536 By the Committee on Banking and Insurance; and Senator Boyd 597-02091-22 20221536c1 1 A bill to be entitled 2 An act relating to money services businesses; amending 3 s. 560.103, F.S.; defining the terms control person 4 and publicly traded; revising and deleting 5 definitions; amending s. 560.118, F.S.; providing that 6 a rule may require reports to contain declarations by 7 control persons, rather than officers or other 8 responsible persons; amending s. 560.123, F.S.; 9 providing that control persons, rather than officers, 10 are not liable for loss or damages under certain 11 circumstances; amending s. 560.126, F.S.; requiring 12 licensees to report changes in control persons, rather 13 than certain other entities or persons; deleting a 14 requirement for certain persons to submit a licensure 15 application under certain circumstances; deleting the 16 definition of the term controlling interest; 17 providing that the addition of a control person, 18 rather than certain other entities or persons, is 19 subject to certain requirements; deleting a 20 requirement for the commission to adopt rules; 21 repealing s. 560.127, F.S., relating to control of a 22 money services business; amending s. 560.141, F.S.; 23 revising requirements for applications for licensure 24 as a money services business; amending s. 560.143, 25 F.S.; revising a limitation for certain fees to apply 26 to a change in control, rather than in a controlling 27 interest; reenacting s. 559.952(4)(a), F.S., relating 28 to the Financial Technology Sandbox, to incorporate 29 the amendments made to ss. 560.118 and 560.141, F.S., 30 in references thereto; reenacting s. 560.114(2)(c), 31 F.S., relating to license applications for money 32 services businesses, to incorporate the amendments 33 made to s. 560.141, F.S., in a reference thereto; 34 providing an effective date. 35 36 Be It Enacted by the Legislature of the State of Florida: 37 38 Section 1.Section 560.103, Florida Statutes, is amended to 39 read: 40 560.103Definitions.As used in this chapter, the term: 41 (1)Affiliated party means a control director, officer, 42 responsible person, employee, or foreign affiliate of a money 43 services business, or a person who has a controlling interest in 44 a money services business as provided in s. 560.127. 45 (2)Appropriate regulator means a state, federal, or 46 foreign agency that has been granted authority to enforce state, 47 federal, or foreign laws related to a money services business or 48 deferred presentment provider. 49 (3)Authorized vendor means a person designated by a 50 money services business licensed under part II of this chapter 51 to act on behalf of the licensee at locations in this state 52 pursuant to a written contract with the licensee. 53 (4)Branch office means the physical location, other than 54 the principal place of business, of a money services business 55 operated by a licensee under this chapter. 56 (5)Cashing means providing currency for payment 57 instruments except for travelers checks. 58 (6)Check casher means a person who sells currency in 59 exchange for payment instruments received, except travelers 60 checks. 61 (7)Commission means the Financial Services Commission. 62 (8)Compliance officer means the individual in charge of 63 overseeing, managing, and ensuring that a money services 64 business is in compliance with all state and federal laws and 65 rules relating to money services businesses, as applicable, 66 including all money laundering laws and rules. 67 (9)Conductor means a natural person who presents himself 68 or herself to a licensee for purposes of cashing a payment 69 instrument. 70 (10)Control person means: 71 (a)A person who possesses the power, directly or 72 indirectly, to direct the management or policies of a money 73 services business, whether through ownership of securities, by 74 contract, or through other means, and regardless of whether such 75 person has an official title or receives a salary or other 76 compensation. The following persons are each presumed to be a 77 control person: 78 1.The president, chief executive officer, chief financial 79 officer, chief operations officer, chief legal officer, and 80 chief compliance officer. 81 2.A person holding any of the officer positions named by 82 the money services businesss governing documents. 83 3.A person holding any position named by the money 84 services businesss directors and officers liability insurance 85 coverage, if the business has such coverage; and 86 4.A director of the money services businesss board of 87 directors. 88 (b)For a corporation not publicly traded, each shareholder 89 that, directly or indirectly, owns 25 percent or more or that 90 has the power to vote 25 percent or more of a class of voting 91 securities. For purposes of this paragraph, the term publicly 92 traded means a stock currently traded on a national securities 93 exchange registered with the Securities and Exchange Commission 94 or traded on an exchange in a country other than the United 95 States regulated by a regulator equivalent to the Securities and 96 Exchange Commission and the disclosure and reporting 97 requirements of such regulator are substantially similar to 98 those of the commission. 99 (c)For a partnership, all general partners and limited or 100 special partners that have contributed 25 percent or more or 101 that have the right to receive, upon dissolution, 25 percent or 102 more of the partnerships capital. 103 (d)For a trust, each trustee. 104 (e)For a limited liability company, all managers and those 105 members that have contributed 25 percent or more or that have 106 the right to receive, upon dissolution, 25 percent or more of 107 the limited liability companys capital account. 108 (11)(10)Corporate payment instrument means a payment 109 instrument on which the payee named on the instruments face is 110 other than a natural person. 111 (12)(11)Currency means the coin and paper money of the 112 United States or of any other country which is designated as 113 legal tender and which circulates and is customarily used and 114 accepted as a medium of exchange in the country of issuance. 115 Currency includes United States silver certificates, United 116 States notes, and Federal Reserve notes. Currency also includes 117 official foreign bank notes that are customarily used and 118 accepted as a medium of exchange in a foreign country. 119 (13)(12)Deferred presentment provider means a person who 120 is licensed under part II or part III of this chapter and has 121 filed a declaration of intent with the office to engage in 122 deferred presentment transactions as provided under part IV of 123 this chapter. 124 (14)(13)Department means the Department of Financial 125 Services. 126 (15)(14)Electronic instrument means a card, tangible 127 object, or other form of electronic payment for the transmission 128 or payment of money or the exchange of monetary value, including 129 a stored value card or device that contains a microprocessor 130 chip, magnetic stripe, or other means for storing information; 131 that is prefunded; and for which the value is decremented upon 132 each use. 133 (16)(15)Financial audit report means a report prepared 134 in connection with a financial audit that is conducted in 135 accordance with generally accepted auditing standards prescribed 136 by the American Institute of Certified Public Accountants by a 137 certified public accountant licensed to do business in the 138 United States, and which must include: 139 (a)Financial statements, including notes related to the 140 financial statements and required supplementary information, 141 prepared in conformity with accounting principles generally 142 accepted in the United States. The notes must, at a minimum, 143 include detailed disclosures regarding receivables that are 144 greater than 90 days, if the total amount of such receivables 145 represents more than 2 percent of the licensees total assets. 146 (b)An expression of opinion regarding whether the 147 financial statements are presented in conformity with accounting 148 principles generally accepted in the United States, or an 149 assertion to the effect that such an opinion cannot be expressed 150 and the reasons. 151 (17)(16)Foreign affiliate means a person located outside 152 this state who has been designated by a licensee to make 153 payments on behalf of the licensee to persons who reside outside 154 this state. The term also includes a person located outside of 155 this state for whom the licensee has been designated to make 156 payments in this state. 157 (18)(17)Foreign currency exchanger means a person who 158 exchanges, for compensation, currency of the United States or a 159 foreign government to currency of another government. 160 (19)(18)Fraudulent identification paraphernalia means 161 all equipment, products, or materials of any kind that are used, 162 intended for use, or designed for use in the misrepresentation 163 of a customers identity. The term includes, but is not limited 164 to: 165 (a)A signature stamp, thumbprint stamp, or other tool or 166 device used to forge a customers personal identification 167 information. 168 (b)An original of any type of personal identification 169 listed in s. 560.310(2)(b) which is blank, stolen, or unlawfully 170 issued. 171 (c)A blank, forged, fictitious, or counterfeit instrument 172 in the similitude of any type of personal identification listed 173 in s. 560.310(2)(b) which would in context lead a reasonably 174 prudent person to believe that such instrument is an authentic 175 original of such personal identification. 176 (d)Counterfeit, fictitious, or fabricated information in 177 the similitude of a customers personal identification 178 information that, although not authentic, would in context lead 179 a reasonably prudent person to credit its authenticity. 180 (20)(19)Licensee means a person licensed under this 181 chapter. 182 (21)(20)Location means a branch office, mobile location, 183 or location of an authorized vendor whose business activity is 184 regulated under this chapter. 185 (22)(21)Monetary value means a medium of exchange, 186 whether or not redeemable in currency. 187 (23)(22)Money services business means any person located 188 in or doing business in this state, from this state, or into 189 this state from locations outside this state or country who acts 190 as a payment instrument seller, foreign currency exchanger, 191 check casher, or money transmitter. 192 (24)(23)Money transmitter means a corporation, limited 193 liability company, limited liability partnership, or foreign 194 entity qualified to do business in this state which receives 195 currency, monetary value, or payment instruments for the purpose 196 of transmitting the same by any means, including transmission by 197 wire, facsimile, electronic transfer, courier, the Internet, or 198 through bill payment services or other businesses that 199 facilitate such transfer within this country, or to or from this 200 country. 201 (25)(24)Net worth means assets minus liabilities, 202 determined in accordance with United States generally accepted 203 accounting principles. 204 (26)(25)Office means the Office of Financial Regulation 205 of the commission. 206 (26)Officer means an individual, other than a director, 207 who participates in, or has authority to participate in, the 208 major policymaking functions of a money services business, 209 regardless of whether the individual has an official title or 210 receives a salary or other compensation. 211 (27)Outstanding money transmission means a money 212 transmission to a designated recipient or a refund to a sender 213 that has not been completed. 214 (28)Outstanding payment instrument means an unpaid 215 payment instrument whose sale has been reported to a licensee. 216 (29)Payment instrument means a check, draft, warrant, 217 money order, travelers check, electronic instrument, or other 218 instrument, payment of money, or monetary value whether or not 219 negotiable. The term does not include an instrument that is 220 redeemable by the issuer in merchandise or service, a credit 221 card voucher, or a letter of credit. 222 (30)Payment instrument seller means a corporation, 223 limited liability company, limited liability partnership, or 224 foreign entity qualified to do business in this state which 225 sells a payment instrument. 226 (31)Person means an individual, partnership, 227 association, trust, corporation, limited liability company, or 228 other group, however organized, but does not include a public 229 agency or instrumentality thereof. 230 (32)Personal identification information means a 231 customers name that, alone or together with any of the 232 following information, may be used to identify that specific 233 customer: 234 (a)Customers signature. 235 (b)Photograph, digital image, or other likeness of the 236 customer. 237 (c)Unique biometric data, such as the customers 238 thumbprint or fingerprint, voice print, retina or iris image, or 239 other unique physical representation of the customer. 240 (33)Responsible person means an individual who is 241 employed by or affiliated with a money services business and who 242 has principal active management authority over the business 243 decisions, actions, and activities of the money services 244 business in this state. 245 (33)(34)Sells means to sell, issue, provide, or deliver. 246 (34)(35)Stored value means funds or monetary value 247 represented in digital electronic format, whether or not 248 specially encrypted, and stored or capable of storage on 249 electronic media in such a way as to be retrievable and 250 transferred electronically. 251 Section 2.Subsection (2) of section 560.118, Florida 252 Statutes, is amended to read: 253 560.118Reports. 254 (2)Each licensee must submit quarterly reports to the 255 office in a format and include information as specified by rule. 256 The rule may require the report to contain a declaration by a 257 control an officer, or any other responsible person authorized 258 to make such declaration, that the report is true and correct to 259 the best of her or his knowledge and belief. 260 Section 3.Paragraph (d) of subsection (3) of section 261 560.123, Florida Statutes, is amended to read: 262 560.123Florida Control of Money Laundering in Money 263 Services Business Act. 264 (3)A money services business shall keep a record of each 265 financial transaction occurring in this state which it knows to 266 involve currency or other payment instrument, as prescribed by 267 the commission, having a value greater than $10,000; to involve 268 the proceeds of specified unlawful activity; or to be designed 269 to evade the reporting requirements of this section or chapter 270 896. The money services business must maintain appropriate 271 procedures to ensure compliance with this section and chapter 272 896. 273 (d)A money services business, or control person officer, 274 employee, or agent thereof, that files a report in good faith 275 pursuant to this section is not liable to any person for loss or 276 damage caused in whole or in part by the making, filing, or 277 governmental use of the report, or any information contained 278 therein. 279 Section 4.Subsection (3) of section 560.126, Florida 280 Statutes, is amended to read: 281 560.126Required notice by licensee. 282 (3)Each licensee must report any change in the control 283 partners, officers, members, joint venturers, directors, 284 controlling shareholders, or responsible persons of the licensee 285 or changes in the form of business organization by written 286 amendment in such form and at such time as specified by rule. 287 (a)If any person, directly or indirectly or acting by or 288 through one or more persons, proposes to purchase or acquire a 289 controlling interest in a licensee, such person or group must 290 submit an application for licensure as a money services business 291 or deferred presentment provider before such purchase or 292 acquisition at such time and in such form as prescribed by rule. 293 As used in this subsection, the term controlling interest 294 means the same as described in s. 560.127. 295 (b)The addition of a control person partner, officer, 296 member, joint venturer, director, controlling shareholder, or 297 responsible person of the applicant who does not have a 298 controlling interest and who has not previously complied with 299 the applicable provisions of ss. 560.1401 and 560.141 is subject 300 to such provisions. If the office determines that the licensee 301 does not continue to meet the licensure requirements, the office 302 may bring an administrative action in accordance with s. 560.114 303 to enforce the provisions of this chapter. 304 (c)The commission shall adopt rules providing for the 305 waiver of the license application required by this subsection if 306 the person or group of persons proposing to purchase or acquire 307 a controlling interest in a licensee has previously complied 308 with the applicable provisions of ss. 560.1401 and 560.141 under 309 the same legal entity or is currently licensed under this 310 chapter. 311 Section 5.Section 560.127, Florida Statutes, is repealed. 312 Section 6.Paragraph (a) of subsection (1) of section 313 560.141, Florida Statutes, is amended to read: 314 560.141License application. 315 (1)To apply for a license as a money services business 316 under this chapter, the applicant must submit: 317 (a)An application to the office on forms prescribed by 318 rule which includes the following information: 319 1.The legal name and address of the applicant, including 320 any fictitious or trade names used by the applicant in the 321 conduct of its business. 322 2.The date of the applicants formation and the state in 323 which the applicant was formed, if applicable. 324 3.The name, social security number, alien identification 325 or taxpayer identification number, business and residence 326 addresses, and employment history for the past 5 years for each 327 control person officer, director, responsible person, the 328 compliance officer, each controlling shareholder, and any other 329 person who has a controlling interest in the money services 330 business as provided in s. 560.127. 331 4.A description of the organizational structure of the 332 applicant, including the identity of any parent or subsidiary of 333 the applicant, and the disclosure of whether any parent or 334 subsidiary is publicly traded. 335 5.The applicants history of operations in other states if 336 applicable and a description of the money services business or 337 deferred presentment provider activities proposed to be 338 conducted by the applicant in this state. 339 6.If the applicant or its parent is a publicly traded 340 company, copies of all filings made by the applicant with the 341 United States Securities and Exchange Commission, or with a 342 similar regulator in a country other than the United States, 343 within the preceding year. 344 7.The location at which the applicant proposes to 345 establish its principal place of business and any other 346 location, including branch offices and authorized vendors 347 operating in this state. For each branch office and each 348 location of an authorized vendor, the applicant shall include 349 the nonrefundable fee required by s. 560.143. 350 8.The name and address of the clearing financial 351 institution or financial institutions through which the 352 applicants payment instruments are drawn or through which the 353 payment instruments are payable. 354 9.The history of the applicants material litigation, 355 criminal convictions, pleas of nolo contendere, and cases of 356 adjudication withheld. 357 10.The history of material litigation, arrests, criminal 358 convictions, pleas of nolo contendere, and cases of adjudication 359 withheld for each control executive officer, director, 360 controlling shareholder, and responsible person. 361 11.The name of the registered agent in this state for 362 service of process unless the applicant is a sole proprietor. 363 12.Any other information specified in this chapter or by 364 rule. 365 Section 7.Subsection (1) of section 560.143, Florida 366 Statutes, is amended to read: 367 560.143Fees. 368 (1)LICENSE APPLICATION FEES.The applicable non-refundable 369 fees must accompany an application for licensure: 370 (a)Part II.........................................$375. 371 (b)Part III........................................$188. 372 (c)Per branch office................................$38. 373 (d)For each location of an authorized 374 vendor......................................................$38. 375 (e)Declaration as a deferred presentment 376 provider.................................................$1,000. 377 (f)Fingerprint retention fees as prescribed by rule. 378 (g)License application fees for branch offices and 379 authorized vendors are limited to $20,000 when such fees are 380 assessed as a result of a change in control controlling interest 381 as defined in s. 560.127. 382 Section 8.For the purpose of incorporating the amendment 383 made by this act to sections 560.118 and 560.141, Florida 384 Statutes, in references thereto, paragraph (a) of subsection (4) 385 of section 559.952, Florida Statutes, is reenacted to read: 386 559.952Financial Technology Sandbox. 387 (4)EXCEPTIONS TO GENERAL LAW AND WAIVERS OF RULE 388 REQUIREMENTS. 389 (a)Notwithstanding any other law, upon approval of a 390 Financial Technology Sandbox application, the following 391 provisions and corresponding rule requirements are not 392 applicable to the licensee during the sandbox period: 393 1.Section 516.03(1), except for the application fee, the 394 investigation fee, the requirement to provide the social 395 security numbers of control persons, evidence of liquid assets 396 of at least $25,000, and the offices authority to investigate 397 the applicants background. The office may prorate the license 398 renewal fee for an extension granted under subsection (7). 399 2.Section 516.05(1) and (2), except that the office shall 400 investigate the applicants background. 401 3.Section 560.109, only to the extent that the section 402 requires the office to examine a licensee at least once every 5 403 years. 404 4.Section 560.118(2). 405 5.Section 560.125(1), only to the extent that the 406 subsection would prohibit a licensee from engaging in the 407 business of a money transmitter or payment instrument seller 408 during the sandbox period. 409 6.Section 560.125(2), only to the extent that the 410 subsection would prohibit a licensee from appointing an 411 authorized vendor during the sandbox period. Any authorized 412 vendor of such a licensee during the sandbox period remains 413 liable to the holder or remitter. 414 7.Section 560.128. 415 8.Section 560.141, except for s. 560.141(1)(a)1., 3., 7. 416 10. and (b), (c), and (d). 417 9.Section 560.142(1) and (2), except that the office may 418 prorate, but may not entirely eliminate, the license renewal 419 fees in s. 560.143 for an extension granted under subsection 420 (7). 421 10.Section 560.143(2), only to the extent necessary for 422 proration of the renewal fee under subparagraph 9. 423 11.Section 560.204(1), only to the extent that the 424 subsection would prohibit a licensee from engaging in, or 425 advertising that it engages in, the selling or issuing of 426 payment instruments or in the activity of a money transmitter 427 during the sandbox period. 428 12.Section 560.205(2). 429 13.Section 560.208(2). 430 14.Section 560.209, only to the extent that the office may 431 modify, but may not entirely eliminate, the net worth, corporate 432 surety bond, and collateral deposit amounts required under that 433 section. The modified amounts must be in such lower amounts that 434 the office determines to be commensurate with the factors under 435 paragraph (5)(c) and the maximum number of consumers authorized 436 to receive the financial product or service under this section. 437 Section 9.For the purpose of incorporating the amendment 438 made by this act to section 560.141, Florida Statutes, in a 439 reference thereto, paragraph (c) of subsection (2) of section 440 560.114, Florida Statutes, is reenacted, to read: 441 560.114Disciplinary actions; penalties. 442 (2)Pursuant to s. 120.60(6), the office may summarily 443 suspend the license of a money services business if the office 444 finds that a licensee poses an immediate, serious danger to the 445 public health, safety, and welfare. A proceeding in which the 446 office seeks the issuance of a final order for the summary 447 suspension of a licensee shall be conducted by the commissioner 448 of the office, or his or her designee, who shall issue such 449 order. The following acts are deemed to constitute an immediate 450 and serious danger to the public health, safety, and welfare, 451 and the office may immediately suspend the license of a money 452 services business if: 453 (c)A natural person required to be listed on the license 454 application for a money services business pursuant to s. 455 560.141(1)(a)3. is criminally charged with, or arrested for, a 456 crime described in paragraph (1)(o), paragraph (1)(p), or 457 paragraph(1)(q). 458 Section 10.This act shall take effect October 1, 2022.