This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives.
STORAGE NAME: h0607.IBS
DATE: 3/7/2023
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: HB 607 Money Services Businesses
SPONSOR(S): Steele
TIED BILLS: IDEN./SIM. BILLS: SB 532
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Insurance & Banking Subcommittee Sellas Lloyd
2) State Administration & Technology
Appropriations Subcommittee
3) Commerce Committee
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 gain access to CHRI data 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 data 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. To
address this issue the Florida Legislature passed Chapter 2022-135, Laws of Florida, which created the term
“control person” to replace the use of “officer” and “responsible person,” as well as various other terms, throughout
ch. 560 F.S. However, this new “control person” term was still too broad for CJILU’s approval, and thus OFR still
lacks the ORI approval from CJILU.
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 revises the term “control person” to create a more definite list of individuals who are subject to required
fingerprinting to better meet the requirements of federal law while also ensuring appropriate consumer protection.
The bill has no fiscal impact on the state, local governments, or the private sector.
The bill has an effective date of July 1, 2023. STORAGE NAME: h0607.IBS PAGE: 2
DATE: 3/7/2023
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
1
S. 20.121(3)(a)2., F.S.
2
S. 560.103(23), 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(12), F.S.
5
S. 560.103(18), 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(22), F.S.
11
Definition of “payment instrument”, supra note 3.
12
S. 560.103(24), F.S.
13
S. 560.403, F.S.
14
S. 560.204(2), F.S.
15
S. 560.104, F.S. STORAGE NAME: h0607.IBS PAGE: 3
DATE: 3/7/2023
An applicant for an MSB license must submit the following to the OFR:
An application;
16
A nonrefundable application fee;
17
A copy of the applicant’s written anti-money laundering program required by federal law;
18
and
Fingerprints for the following individuals:
19
o A person who holds the title of president, chief executive officer, chief financial officer,
chief operations officer, chief legal officer, or compliance officer for a money services
business.
20
o A person who holds any of the officer positions named in the money services business’s
governing documents.
21
o A person who holds any position named by the money services business’s liability
insurance coverage for directors and officers, if the business has such coverage.
22
o A director of the money services business’s board of directors.
23
o A person who directs the affairs of a money services business or who participates in, or
has authority to participate in, the major policy making functions of a money services
business, regardless of whether the person has an official title or receives a salary or
other compensation.
24
o For a money services business 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.
25
o For a money services business 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.
26
o For a money services business 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.
27
Fingerprints are not required if the applicant is a publicly traded corporation.
28
If fingerprints are required, the fingerprints must be submitted for live-scan processing.
29
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.
30
The fingerprints may be submitted
through a third-party vendor authorized by FDLE to provide live-scan fingerprinting.
31
FDLE must
conduct the state criminal history background check, and a federal criminal history background check
must be conducted through the FBI.
32
16
S. 560.141(1)(a), F.S.
17
Ss. 560.141(1)(b) and 560.143, F.S.
18
S. 560.141(d), F.S.
19
Ss. 560.141(c) and 560.127, F.S.
20
S. 560.103(10)(a), F.S.
21
S. 560.103(10)(b), F.S.
22
S. 560.103(10)(c), F.S.
23
S. 560.103(10)(d), F.S.
24
S. 560.103(10)(e), F.S.
25
S. 560.103(10)(f), F.S.
26
S. 560.103(10)(g), F.S
27
S. 560.103(10)(h), F.S
28
S. 560.141(1)(c)6., F.S.
29
S. 560.141(1)(c), F.S.
30
Florida Live Scan,
https://livescanflorida.com/#:~:text=LiveScan%20is%20a%20device%20that,for%20a%20fingerprint%20background%20c
heck. (last visited Feb. 27, 2023).
31
S. 560.141(1)(c)1., F.S.
32
S. 560.141(1)(c)2., F.S. STORAGE NAME: h0607.IBS PAGE: 4
DATE: 3/7/2023
The costs of fingerprint processing, including the cost of retaining the fingerprints, must be borne by the
person subject to the background check.
33
The OFR must review the results of the state and federal
criminal history background checks and determine whether the applicant meets licensure
requirements.
34
An MSB license must be renewed every two years.
35
Once licensed, an MSB is required to report any change in control persons.
36
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.
37
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.
38
A change of control application must be accompanied by the payment of an
initial licensing fee
39
and a fee per branch or authorized vendor
40
, up to a maximum of $20,000.
41
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 data with officials of state and local governmental agencies for
licensing and employment purposes.
42
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 the FBI’s CHRI data to state and local governments for non-criminal justice licensing
and employment purposes.
43
The FBI, with the assistance of the United States Department of Justice,
has determined the parameters of Pub. L. 92-544.
44
The criteria for granting access to the FBI’s CHRI
data are as follows:
The state’s statute requiring fingerprinting must exist as a result of a legislative enactment;
It must require the fingerprinting of applicants who are to be subjected to a national criminal
history background check;
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;
It must identify the specific category(ies) of licensees/employees falling within its purview,
thereby avoiding over breadth;
It must not be against public policy; and
It may not authorize receipt of the CHRI data by a private entity.
Access to the FBI’s CHRI data is authorized for fingerprints pursuant to ch. 560, F.S. However, in order
to gain access to CHRI data for applicants to the recently created Financial Technology Sandbox under
s. 559.952, F.S., created in the 2020 legislative session,
45
FDLE sent correspondence to the FBI’s
33
S. 560.141(1)(c)4., F.S.
34
S. 560.141(1)(c)5., F.S.
35
Ss. 560.141(2) and 560.142, F.S.
36
S. 560.126(3), F.S.
37
S. 560.126(3)(a), F.S.; r. 69v-560.201(4), F.A.C.
38
S. 560.126(3)(c), F.S.; r. 69v-560.201(6), F.A.C.
39
Fees are determined by whether the MSB is licensed under Part II or Part III of Chapter 560. Initial licensing fees under
Part II licenses require a $375 license application fee per § 560.143(1)(a). Part III licenses require a $188 license
application fee per § 560.143(b).
40
Both the per branch fee and the authorized vendor fee are $38. § 560.143(1)(c); § 560.143(1)(d).
41
Ss. 560.126(3) and 560.143(1), F.S.
42
20 C.F.R. § 20.33.
43
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 Feb. 27, 2023).
44
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).
45
Ch. 2020-161, Laws of Fla. STORAGE NAME: h0607.IBS PAGE: 5
DATE: 3/7/2023
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 data
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.
46
In 2022, the Legislature passed a bill to address this issue by creating the
term “control person” to replace the use of “officer” and “responsible person” throughout ch. 560 F.S.
47
This solution sought to address the concerns of CJILU by narrowing the scope of applicable parties.
However, CJILU found that the revised statute was still too broad.
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.
48
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.
49
Effect of the Bill
The bill amends the term “control person” to identify the specific categories of licensees or employees
falling within the purview of the statute.
The bill requires the following MSB-related “control persons” to be fingerprinted for the background
check:
A person who holds any of the officer, manager, or managing member positions named in the
money services business’s governing documents.
50
A director of the money service’s business’s board of directors.
A person with a 25% or greater transferable interest in a money services business that is either
a corporation or foreign corporation.
51
A person with a 25% or greater transferable interest in a money services business that is either
a limited partnership, limited liability limited partnership, foreign limited partnership, or foreign
limited liability limited partnership.
52
A person with a 25% or greater transferable interest in a money services business that is either
a limited liability company or a foreign limited liability company.
53
The bill provides an effective date of July 1, 2023.
46
Email from Heather R. Postlethwait, supra note 44.
47
Chapter 2022-135, Laws of Fla.
48
Id.
49
Id.
50
Governing documents is defined as including bylaws, articles of incorporation or organization, partnership agreements,
shareholder agreements, and management or operating agreements
51
As defined in s. 607.01401
52
As defined in s. 620.1102
53
As defined in s. 605.0102 STORAGE NAME: h0607.IBS PAGE: 6
DATE: 3/7/2023
B. SECTION DIRECTORY:
Section 1. Amends s. 560.103, F.S., relating to definitions.
Section 2. Provides an effective date of July 1, 2023.
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. This bill does not appear to affect county or municipal governments.
2. Other:
None.
B. RULE-MAKING AUTHORITY:
None provided by the bill.
C. DRAFTING ISSUES OR OTHER COMMENTS:
None.
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES