The Florida Senate
BILL ANALYSIS AND FISCAL IMPACT STATEMENT
(This document is based on the provisions contained in the legislation as of the latest date listed below.)
Prepared By: The Professional Staff of the Committee on Banking and Insurance
BILL: SB 532
INTRODUCER: Senator Burton
SUBJECT: Money Services Businesses
DATE: March 14, 2023
ANALYST STAFF DIRECTOR REFERENCE ACTION
1. Moody Knudson BI Pre-meeting
2. CM
3. RC
I. Summary:
SB 532 revises the definition of a “control person” and defines the term “governing documents”
in ch. 560, F.S., the money services business (MSB) chapter. The purpose of the amendments are
to clarify terms within the definition of “control person” to ensure compliance with federal law.
This bill has no fiscal impact on the state, local governments, or the private sector.
The effective date of the bill is July 1, 2023.
II. Present Situation:
Licensing of Money Services Businesses
The Office of Financial Regulation (OFR) is responsible for the regulatory oversight of Florida’s
financial services industry. As part the OFR’s responsibilities, the OFR oversees MSBs, which
are regulated under three license categories created pursuant to ch. 560, F.S. The first category,
money transmitters and persons selling or issuing payment instruments, is regulated under part II
of ch. 560, F.S. The second category, check cashers and foreign currency exchangers, is
regulated under part III of ch. 560, F.S.
To be licensed under ch. 560, F.S., an MSB applicant must:
Demonstrate to the OFR the character and general fitness necessary to command the
confidence of the public and warrant the belief that the MSB or deferred presentment
provider shall be operated lawfully and fairly;
Be legally authorized to do business in Florida;
Be registered as a MSB with the Financial Crimes Enforcement Network as required by 31
C.F.R. s. 1022.380, if applicable;
REVISED: BILL: SB 532 Page 2
Have an anti-money laundering program in place which meets the requirements of 31 C.F.R.
s. 1022.210; and
Provide the OFR with all the information required under ch. 560, F.S., and related rules.
1
To apply as a money services business a person must submit:
An application to the OFR for an MSB license that must include, on a form prescribed by
rule, all of the following:
o The legal name and address of the applicant, including any fictitious or trade names used
by the applicant in the conduct of its business;
o The date of the applicant’s formation and the state where the applicant was formed, if
applicable;
o The name, social security number, alien identification or taxpayer identification number,
business and residence addresses, and employment history for the past 5 years for each
control person;
o A description of the organizational structure of the applicant, including the identity of any
parent or subsidiary of the applicant, and the disclosure of whether any parent or
subsidiary is publicly traded;
o The applicant’s history of operations in other states, if applicable, and a description of the
money services business or deferred presentment provider activities the applicant
proposes to conduct in Florida;
o If the applicant or its parent is a publicly traded company, for the preceding year, copies
of all filings made by the applicant with the United States Securities and Exchange
Commission (SEC); or, if publicly traded in a country other than the United States, such
filings with that country’s regulator similar to the SEC;
o The location at which the applicant proposes to establish its principal place of business
and any other location, including branch offices and authorized vendors operating within
Florida. For each branch office and each location of an authorized vendor, the applicant
must include the nonrefundable fee required by s. 560.143, F.S.;
o The name and address of the clearing financial institution or financial institutions through
which the applicant’s payment instruments are drawn or through which the payment
instruments are payable;
o The history of the applicant’s material litigation, criminal convictions, pleas of nolo
contendere, and cases of adjudication withheld;
o The history of material litigation, arrests, criminal convictions, pleas of nolo contendere,
and cases of adjudication withheld for each control person;
o The name of the registered agent in this state for service of process unless the applicant is
a sole proprietor; and
o Any other information specified in ch. 560, F.S. or by rule.
2
A nonrefundable application fee, as specified in s. 560.143, F.S.
3
Fingerprints, for live-scan processing in accordance with rules adopted by the Financial
Services Commission (Commission), for each control person. Regarding such fingerprints:
o They may be submitted through a third-party vendor authorized by the Florida
Department of Law Enforcement (FDLE) to provide live-scan fingerprinting. The FDLE
1
Section 560.1401, F.S.
2
Section 560.141(1)(a), F.S.
3
Section 560.141(1)(b), F.S. BILL: SB 532 Page 3
must also conduct the state criminal history background check, and a federal criminal
history background check must be conducted through the FBI. The OFR must review the
results of this background check.
o The cost of processing and retaining the fingerprints are borne by the person subject to
the background checks to determine license eligibility.
o Fingerprints are not required from publicly traded corporations.
4
A copy of the applicant’s written anti-money laundering program required under 31 C.F.R. s.
1022.210.
5
Within the time allotted by rule, any information needed to resolve any deficiencies found in
the application.
6
Licenses issued to MSBs cannot be for more than 2 years,
7
after which, the MSB must reapply
for licensure pursuant to s. 560.142, F.S.
Once licensed, an MSB is required to report any change in control persons.
8
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.
9
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.
10
A change
of control application must be accompanied by the payment of an initial licensing fee
11
and a fee
per branch or authorized vendor
12
, up to a maximum of $20,000.
13
Federal Bureau of Investigation Determination Regarding Access to Criminal History
Record Information
As stated above, MSB applicant fingerprints must be submitted to FDLE for a state and federal
criminal history background check. The federal check is conducted through the FBI, which
manages a criminal history record information (CHRI) system, through which this information
can be obtained. The purpose of the CHRI system is to assure that criminal history record
information wherever it appears is collected, stored, and disseminated in a manner to ensure the
accuracy, completeness, currency, integrity, and security of such information and to protect
individual privacy.
14
Federal Public Law 92-544 authorizes the exchange of CHRI with officials
of state and local governmental agencies for licensing and employment purposes. However, this
4
Section 560.141(1)(c), F.S.
5
Section 560.141(1)(d), F.S.
6
Section 560.141(1)(e), F.S.
7
Section 560.141(2), F.S.
8
Section 560.126(3), F.S.
9
Section 560.126(3)(a), F.S.; r. 69v-560.201(4), F.A.C.
10
Section 560.126(3)(c), F.S.; r. 69v-560.201(6), F.A.C.
11
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 s. 560.143(1)(a), F.S. Part III licenses require a $188 license
application fee per s. 560.143(b), F.S.
12
Section 560.143(1)(c) and (d), F.S., provides that both the per branch fee and the authorized vendor fee are $38.
13
Section 560.143(1)(g), F.S.
14
28 C.F.R. s. 20.1. BILL: SB 532 Page 4
access can only be authorized by a state statute which has been subsequently approved by the
Attorney General of the United States. 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.
15
The FBI, with the assistance of the United
States Department of Justice, has determined the parameters of Pub. L. 92-544.
16
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.
Section 560.141, F.S. (the statute authorizing background checks for MSB applicants), had been
previously approved for access to CHRI; however, the situation has recently changed.
In an effort to obtain CHRI for applicants to a recently created (in 2020) Financial Technology
Sandbox under s. 559.952, F.S., the 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 access 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. On March 22, 2021, CJILU responded to this
request stating that s. 560.141, F.S. did not qualify for CHRI because certain terms were overly
broad and, thus, did not sufficiently define the categories of people subject to the background
check.
17
The CJILU did express that since it had previously approved s. 560.141, F.S., it would
continue to honor fingerprints submitted under ch. 560, F.S., during a grace period in order to
allow Florida to amend 560.103, F.S.
18
CJILU will not allow fingerprinting of additional
categories of applicants (i.e., those applying under the Financial Technology Sandbox) during
this grace period.
19
15
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).
16
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) (on file with the Senate Committee
on Banking and Insurance).
17
Office of Financial Regulation, Senate Bill 1536 Analysis (January 12, 2022) (on file with the Senate Committee on
Banking and Insurance), and Letter from Heather R. Postletwait, Paralegal Specialist for the FBI CJILU, to Nathan Pate,
Florida Dept. of Law Enforcement, (Mar. 22, 2022) (on file with the Senate Committee on Banking and Insurance).
18
Id.
19
Id. BILL: SB 532 Page 5
These concerns raised by the FBI resulted in the adoption of a new definition of the term
“control person” that was codified in 2022 which described all persons subject to fingerprinting
under ch. 560, F.S.,
20
to mean 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 a money services business.
A person who holds any of the officer positions named in the money services business’s
governing documents.
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.
A director of the money services business’s board of directors.
A person who directs the affairs of a money services business or who participates in, or has
authority to participate in, the major policymaking functions of a money services business,
regardless of whether the person has an official title or receives a salary or other
compensation.
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.
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 limited liability company’s capital.
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.
21
The FBI determined that this definition of “control person” does not meet the requirements of
Public Law 92-544 because it does not “‘identify the specific category(ies) of
licensees/employees falling within its purview, thereby avoiding over breadth,’”
22
and has
continued the grace period while revisions are made to meet the requirements of federal law.
III. Effect of Proposed Changes:
Section 1 amends the definition of a “control person” to include:
A person who holds a manager or managing member position named in the MSB governing
documents.
Each person of a corporation
23
or a foreign corporation,
24
who is a 25 percent or more
interest holder, defined as a shareholder in a for profit corporation.
25
The clarification to the
provision under paragraph (d) of the definition: (a) adds reference to a foreign corporation,
20
Chapter 2022-135, L.O.F.
21
Section 560.103(10), F.S.
22
Email from Amanda Brooke Taylor, FDLE Operations & Management Consultant Manager, to Russell Weigel,
Commissioner of Office of Financial Regulation, RE: OFR Request – FBI approval of HB 389 language (August 9, 2022)
(on file with the Senate Committee on Banking and Insurance).
23
Section 607.01401(13), F.S., defines “corporation” as a corporation for profit, which is not a foreign corporation,
incorporated under this chapter.
24
Section 607.01401(36), F.S., defines “foreign corporation” as an entity incorporated or organized under laws other than the
laws of this state which would be a corporation for profit if incorporated under the laws of this state.
25
Section 607.01401(44)(a), F.S. BILL: SB 532 Page 6
(b) removes reference to a direct or indirect shareholder, (c) refers to a each person who is a
25 percent or greater interest holder rather than a shareholder who owns or has the power to
vote 25 percent or more of a class of voting securities.
Each person of a limited partnership,
26
limited liability limited partnership,
27
foreign limited
partnership,
28
or foreign limited liability limited partnership
29
who has a 25 percent or greater
transferrable interest
30
as that term is defined in s. 620.1102, F.S., which is substantially the
same as current law except: (a) the bill does not refer to specific types of partners, and (b) the
bill includes partners who has a 25 percent or greater right to receive distribution rather than
partners who have contributed or have a right to receive upon dissolution 25 percent or more
of the partnership’s capital which is provided under current law.
Each person of a limited liability company
31
or a foreign limited liability company,
32
as that
term is defined in s. 605.0102, F.S., who is a 25 percent or greater interest holder.
33
This
differs from current law that includes all members who have contributed or have the right to
receive upon dissolution 25 percent or more of the limited liability company’s capital.
The bill removes the following persons from within the definition of “control person”:
A person who holds any position named in the MSB’s liability insurance coverage for
directors and officers, if the business has such coverage; and
A person who directs the affairs of a MSB or who participates in, or has authority to
participate in, the major policymaking functions of a money service business, regardless of
whether the person has an official title or receives a salary or other compensation.
“Governing documents” is defined, as used in s. 560.103(10)(b), F.S., to mean bylaws, articles of
incorporation or organization, partnership agreements, shareholder agreements, and management
or operating agreements.
On February 17, 2023, the FBI asked questions and provided comments on the bill language. The
FBI noted “the inclusion of terms that are overly broad and undefined do not meet the
26
Section 620.1102(12), F.S., defines “limited partnership,” except in the phrase “foreign limited partnership” and “foreign
limited liability limited partnership,” means an entity, having one or more general partners and one or more limited partners,
which is formed under this act by two or more persons or becomes subject to this act as the result of a conversion or merger
under this act, or which was a limited partnership governed by the laws of this state when this act became a law and became
subject to this act under s. 620.2204(1) and (2). The term includes a limited liability limited partnership.
27
Section 620.1102(10), F.S., defines “limited liability limited partnership,” except in the phrase “foreign limited liability
limited partnership,” means a limited partnership whose certificate of limited partnership states that the limited partnership is
a limited liability limited partnership, or which was a limited liability limited partnership when the limited partnership
became subject to this act under s. 620.2204(1) or (2).
28
Section 620.1102(8), F.S., defines “foreign limited partnership” as a partnership formed under the laws of a jurisdiction
other than this state and required by those laws to have one or more general partners and one or more limited partners. The
term includes a foreign limited liability limited partnership.
29
Section 620.1102(7), F.S., defines “foreign limited liability limited partnership” as a foreign limited partnership whose
general partners have limited liability for the obligations of the foreign limited partnership under a provision similar to s.
620.1404(3).
30
Section 620.1102(25), F.S., defines “transferrable interest” as a partner’s right to receive distributions.
31
Section 605.0102(36), F.S., defines “limited liability company” as an entity formed or existing under ch. 605, F.S., or an
entity that becomes subject to ch. 605, F.S., pursuant to ss. 605.1001-605.1072, F.S.
32
Section 605.0102(26), F.S., defines “foreign limited liability company” as an unincorporated entity that was formed in a
jurisdiction other than this state and is denominated by that law as a limited liability company.
33
Section 605.0102(31)(f), F.S., defines “interest holder” as a member of a limited liability company. BILL: SB 532 Page 7
requirements of Public Law 92-544.” The FBI also noted that they would need to review the
entire statute to make a final determination on whether the proposed bill language would be
approved.
34
Section 2 provides an effective date of July 1, 2023.
IV. Constitutional Issues:
A. Municipality/County Mandates Restrictions:
None.
B. Public Records/Open Meetings Issues:
None.
C. Trust Funds Restrictions:
None.
D. State Tax or Fee Increases:
None.
E. Other Constitutional Issues:
None.
V. Fiscal Impact Statement:
A. Tax/Fee Issues:
None.
B. Private Sector Impact:
None.
C. Government Sector Impact:
None.
VI. Technical Deficiencies:
None.
34
Email from CJILU to Charles Murphy, Deputy Director, Florida Department of Law Enforcement Criminal Justice
Information Services, (Feb. 17, 2023) (on file with the Senate Committee on Banking and Insurance). BILL: SB 532 Page 8
VII. Related Issues:
None.
VIII. Statutes Affected:
This bill substantially amends section 560.103 of the Florida Statutes.
IX. Additional Information:
A. Committee Substitute – Statement of Changes:
(Summarizing differences between the Committee Substitute and the prior version of the bill.)
None.
B. Amendments:
None.
This Senate Bill Analysis does not reflect the intent or official position of the bill’s introducer or the Florida Senate.