This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives.
STORAGE NAME: h0587b.EEG
DATE: 1/22/2024
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: HB 587 Pub. Rec./Access to Financial Institution Customer Accounts
SPONSOR(S): Rommel
TIED BILLS: CS/HB 585 IDEN./SIM. BILLS:
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Insurance & Banking Subcommittee 18 Y, 0 N Fletcher Lloyd
2) Ethics, Elections & Open Government
Subcommittee
Rando Toliver
3) Commerce Committee
SUMMARY ANALYSIS
The federal Bank Secrecy Act (BSA) establishes reporting, recordkeeping, and related requirements for federal
and state-chartered financial institutions to help detect and prevent money laundering. Under the BSA,
financial institutions are required to report suspicious activity that might signify money laundering, tax evasion,
or other criminal activities. These types of reports are known as “suspicious activity reports” (SARs) and are
filed with the Financial Crimes Enforcement Network, a bureau of the U.S. Department of the Treasury.
Florida’s codification of the BSA is the Florida Control of Money-Laundering and Terrorist Financing in
Financial Institutions Act (Act). The Act requires financial institutions to submit to the Office of Financial
Regulation (OFR) certain reports and maintain certain records of customers, accounts, and transactions
involving currency or monetary instruments or suspicious activities in accordance with the policies of the BSA.
CS/HB 585, to which this bill is linked, requires financial institutions to file a report with OFR whenever the
financial institution suspends, terminates, or takes similar action restricting access to a customer’s or member’s
account. CS/HB 585 also requires, among other things, OFR to investigate the termination-of-access report to
determine whether the financial institution’s action was made in bad faith, and report a bad faith determination
to the Department of Financial Services, the Attorney General, and the customer or member.
The bill, which is linked to the passage of CS/HB 585, creates a public record exemption for certain information
received by OFR in a termination-of-access report, including information received by OFR as part of its
investigations or examinations of such reports.
The bill provides that the public record exemption is subject to the Open Government Sunset Review Act and
will repeal on October 2, 2029, unless reviewed and saved from repeal by the Legislature. It also provides a
statement of public necessity as required by the Florida Constitution.
The bill is effective upon the same date that CS/HB 585 or similar legislation takes effect, if such legislation is
adopted in the same legislative session or an extension thereof and becomes a law.
Article I, s. 24(c) of the Florida Constitution requires a two-thirds vote of the members present and
voting for final passage of a newly created public record exemption. The bill creates a public record
exemption; thus, it requires a two-thirds vote for final passage. STORAGE NAME: h0587b.EEG PAGE: 2
DATE: 1/22/2024
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Public Records
The Florida Constitution sets forth the state’s public policy regarding access to government records,
guaranteeing every person a right to inspect or copy any public record of the legislative, executive, and
judicial branches of government.
1
The Legislature, however, may provide by general law an exemption
2
from public record requirements provided that the exemption passes by a two-thirds vote of each
chamber, states with specificity the public necessity justifying the exemption, and is no broader than
necessary to meet its public purpose.
3
Current law also addresses the public policy regarding access to government records by guaranteeing
every person a right to inspect and copy any state, county, or municipal record, unless the record is
exempt.
4
Furthermore, the Open Government Sunset Review (OGSR) Act
5
provides that a public
record exemption may be created, revised, or maintained only if it serves an identifiable public purpose
and the “Legislature finds that the purpose is sufficiently compelling to override the strong public policy
of open government and cannot be accomplished without the exemption.”
6
An identifiable public
purpose is served if the exemption meets 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; or
Protect trade or business secrets.
7
Pursuant to the OGSR Act, a new public record exemption, or the substantial amendment of an existing
public record exemption, is repealed on October 2
nd
of the fifth year following enactment, unless the
Legislature reenacts the exemption.
8
Financial Institutions Codes
Florida’s Financial Institutions Codes are codified under Title XXXVIII of the Florida Statutes.
9
The
Financial Institutions Codes apply to all state-authorized and state-chartered financial institutions and to
the enforcement of all laws relating to state-authorized and state-chartered financial institutions.
10
A
primary purpose of the Financial Institutions Codes is to provide for and promote the safe and sound
conduct of the financial services industry in Florida.
11
The specific chapters under the Financial Institutions Codes are:
Ch. 655, F.S. – Financial Institutions Generally
1
Art. I, s. 24(a), FLA. CONST.
2
A “public record exemption” means a provision of general law which provides that a specified record, or portion thereof,
is not subject to the access requirements of s. 119.07(1), F.S., or s. 24, Art. I of the Florida Constitution. See s.
119.011(8), F.S.
3
Art. I, s. 24(c), FLA. CONST.
4
See s. 119.01, F.S.
5
S. 119.15, F.S.
6
S. 119.15(6)(b), F.S.
7
Id.
8
S. 119.15(3), F.S.
9
S. 655.005(1)(k), F.S.
10
S. 655.001(1), F.S.
11
S. 655.001(2), F.S. STORAGE NAME: h0587b.EEG PAGE: 3
DATE: 1/22/2024
Ch. 657, F.S. – Credit Unions
Ch. 658, F.S. – Banks and Trust Companies
Ch. 660, F.S. – Trust Business
Ch. 662, F.S. – Family Trust Companies
Ch. 663, F.S. – International Banking
Ch. 665, F.S. – Capital Stock Associations
Ch. 667, F.S. – Savings Banks
OFFICE OF FINANCIAL REGULATION
The Office of Financial Regulation (OFR) is the regulatory authority for Florida’s financial services
industry.
12
OFR reports to the Financial Services Commission (Commission), which is made up of the
Governor and the members of the Florida Cabinet: the Chief Financial Officer (CFO), Attorney General
(AG), and Agriculture Commissioner.
13
OFR enforces and administers the Financial Institutions Codes;
is responsible for supervising banks, credit unions, savings associations, and international bank
agencies; and licenses and regulates non-depository finance companies and the securities industry.
14
BANK SECRECY ACT
The federal Bank Secrecy Act (BSA)
15
establishes reporting, recordkeeping, and related requirements
for federal and state-chartered
16
financial institutions to help detect and prevent money laundering.
17
Specifically, the BSA and other anti-money laundering regulations (BSA/AML) require financial
institutions to, among other things, keep records of cash purchases of negotiable instruments and file
reports of cash transactions exceeding $10,000 (daily aggregate amount).
18
Under the BSA/AML laws, financial institutions must also:
Establish effective BSA compliance programs;
Establish effective customer due diligence systems and monitoring programs;
Screen against Office of Foreign Assets Control lists and other government lists;
Establish an effective suspicious activity monitoring and reporting process; and
Develop risk-based anti-money laundering programs.
19
The U.S. Office of the Comptroller of Currency regularly conducts examinations of national banks,
federal branches, federal savings associations, and agencies of foreign banks in the U.S. to determine
compliance with BSA/AML laws.
20
Suspicious Activity Reports
In addition to the other requirements under the BSA/AML laws, financial institutions are also required to
report suspicious activity that might signify money laundering, tax evasion, or other criminal activities.
21
These types of reports are known as “suspicious activity reports” (SAR) and are filed with the Financial
12
Florida Office of Financial Regulation, About Our Agency, https://flofr.gov/sitePages/AboutOFR.htm (last visited Jan. 20,
2024).
13
Id.
14
Florida Department of Financial Services, Financial Services Commission, https://www.myfloridacfo.com/about/about-
dfs/commission (last visited Jan. 20, 2024). See also, s. 655.012, F.S.
15
31 U.S.C. § 5311 et seq.
16
See, 12 C.F.R. § 326.8 (sets forth requirements for state-chartered banks to establish and maintain procedures to
ensure and monitor their compliance with the BSA). See also, 12 C.F.R. § 353 (establishes requirements for state-
chartered banks to file a suspicious activity report under certain circumstances).
17
U.S. Treasury Financial Crimes Enforcement Network, FinCEN’s Legal Authorities,
https://www.fincen.gov/resources/fincens-legal-authorities (last visited Jan 20, 2024).
18
Id.
19
U.S. Office of the Comptroller of the Currency, Bank Secrecy Act, https://www.occ.treas.gov/topics/supervision-and-
examination/bsa/index-bsa.html (last visited Jan 20, 2024).
20
Id.
21
U.S. Treasury Financial Crimes Enforcement Network, supra note 17. STORAGE NAME: h0587b.EEG PAGE: 4
DATE: 1/22/2024
Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury, using
FinCEN’s BSA E-filing system.
22
Under this requirement, a financial institution is required to file an SAR no later than 30 calendar days
after the date of initial detection of facts that may constitute a basis for filing an SAR.
23
For instances
where no suspect was identified on the date of the incident requiring the filing, a financial institution
may delay filing an SAR for an additional 30 calendar days to identify a suspect.
24
However, in no case
shall reporting be delayed more than 60 calendar days after the date of initial detection of a reportable
transaction.
25
FLORIDA CONTROL OF MONEY-LAUNDERING AND TERRORIST FINANCING IN FINANCIAL INSTITUTIONS ACT
The purpose of the Florida Control of Money-Laundering and Terrorist Financing in Financial
Institutions Act
26
(Act), s. 655.50, F.S., is to require submission to OFR of certain reports and the
maintenance of certain records of customers, accounts, and transactions involving currency or
monetary instruments or suspicious activities if:
27
such reports and records deter using financial institutions to conceal, move, or provide proceeds
obtained from or intended for criminal or terrorist activities; or
such reports and records have a high degree of usefulness in criminal, tax, or regulatory
investigations or proceedings.
The Act requires financial institutions to designate and retain a BSA/AML compliance officer, which is
defined as an officer that is responsible for the development and implementation of the financial
institution’s policies and procedures for complying with the requirements of the Act and BSA/AML
laws.
28
Any change in a financial institution’s BSA/AML compliance officer must be reported to OFR.
29
Additionally, the Act requires financial institutions to maintain:
30
full and complete records of all financial transactions, including all records required by the
BSA/AML laws, for a minimum of 5 years;
a copy of all reports filed with OFR as required under the Act for a minimum of 5 years after
submission of the report;
a copy of all records of exemption for each qualified business customer
31
for a minimum of 5
calendar years after termination of exempt status of such customer.
The Act also requires financial institutions to keep a record of each financial transaction which involves
currency or other monetary instrument that has a value greater than $10,000, involves the proceeds of
specified unlawful activity, or is designed to evade the reporting requirements of the Act or other state
or federal laws, or which the financial institution reasonably believes is suspicious activity.
32
22
U.S. Office of the Comptroller of the Currency, Suspicious Activity Report Program,
https://www.occ.treas.gov/publications-and-resources/forms/sar-program/index-sar-program.html (last visited Jan. 20,
2024).
23
Id.
24
Id.
25
Id.
26
S. 655.50, F.S.
27
S. 655.50(2), F.S.
28
S. 655.50(4), F.S.
29
Id.
30
S. 655.50(8), F.S.
31
See, 31 U.S.C. § 5313(e), providing that the U.S. Secretary of Treasury (Secretary) may exempt a depository institution
from BSA/AML reporting requirements for transactions between the institution and a “qualified business customer” (QBC)
of the institution on the basis of information submitted to the Secretary. QBC is defined as a business that:
maintains a transaction account at the depository institution;
frequently engages in transactions with the institution which are subject to BSA/AML reporting requirements; and
meets criteria which the Secretary determines is sufficient to ensure the purposes of the BSA/AML laws are
carried out without requiring a report for such transactions.
32
S. 655.50(5), F.S. STORAGE NAME: h0587b.EEG PAGE: 5
DATE: 1/22/2024
A financial institution, or officer, employee, or agent thereof, which files a report in good faith pursuant
to the Act is not liable to any person for loss or damage caused in whole or in part by the making, filing,
or governmental use of the report, or any information contained therein.
33
OFR Enforcement
In addition to any other powers conferred by the Financial Institutions Codes, OFR may bring an action
in court to enforce or administer the Act, as well as issue and serve upon any person an order of
removal if OFR determines such person is violating, has violated, or is about to violate any provisions of
the Act or any similar state or federal law.
34
OFR may also impose and collect an administrative fine against any person found to have violated any
provision of the Act or similar state or federal law in an amount up to $10,000 per day for each willful
violation or $500 per day for each negligent violation.
35
Violations of the Act
A person who willfully violates the Act commits a misdemeanor of the first degree,
36
unless the violation
involves financial transactions of certain amounts, in which case the criminal penalties vary by first,
second, and third-degree felonies depending on the amount and timing of such transactions.
37
In addition to the criminal penalties, a person who violates the Act may be subject to a fine of up to
$250,000 or twice the value of the financial transaction, whichever is greater, and a subsequent
violation could result in a fine up to $500,000 or quintuple the value of the financial transaction,
whichever is greater.
38
A person or financial institution who violates the Act may also be liable for a civil penalty of not more
than the greater of the value of the financial transaction involved or $25,000.
39
EFFECTS OF BANKS’ TERMINATION OF ACCOUNT ACCESS
In 2022, banks filed over 1.8 million SARs, which is a 50% increase in two years.
40
Multiple SARs often
result in a financial institution terminating, suspending, or otherwise restricting a customer’s account
access.
41
A New York Times study of over 500 cases of financial institutions “dropping” their
customers, including interviews with current and former bank industry staffers, revealed the negative
effects of a bank’s decision to remove a customer’s account access:
Individuals can’t pay their bills on time. Banks often take weeks to send them
their balances. While the institutions close their credit cards, their credit scores
suffer. Upon cancellation, small businesses often struggle to make payroll – and
must explain to vendors and partners that they don’t have a bank account for the
33
S. 655.50(5)(c), F.S.
34
Ss. 655.50(9)(a)-(c), F.S.
35
S. 655.50(9)(d), F.S.
36
S. 655.50(10)(a), F.S.
37
S. 655.50(10)(b), F.S. A person who willfully violates or knowingly causes another to violate the Act and the violation
involves financial transactions of certain amounts:
financial transactions totaling or exceeding $300 but less than $20,000 in any 12-month period, commits a felony
of the third degree;
financial transactions totaling or exceeding $20,000 but less than $100,000 in any 12-month period, commits a
felony of the second degree; or
financial transactions totaling or exceeding $100,000 in any 12-month period, commits a felony of the first degree.
38
S. 655.50(10)(c), F.S.
39
Ss. 655.50(10)(d)-(e), F.S.
40
Ron Lieber and Tara Seigel Bernard, Why Banks Are Suddenly Closing Down Customer Accounts, Thomson Reuters
(Nov. 5, 2023), https://www.nytimes.com/2023/11/05/business/banks-accounts-close-
suddenly.html?unlocked_article_code=1.8Uw.udoQ.0cmUgCSuo6eS&smid=nytcore-android-share (last visited Jan 20. ,
2024).
41
Id. STORAGE NAME: h0587b.EEG PAGE: 6
DATE: 1/22/2024
time being… [And] once customers have moved on, they don’t know whether
there is a black mark somewhere on their permanent records that will cause a
repeat episode at another bank. If the bank has filed an SAR, it isn’t legally
allowed to tell you, and the federal government prosecutes only a small fraction
of the people whom the banks document in their SARs.
42
As a result, customers do not know why they were ever under suspicion.
43
Interviews with individuals
who had lost access to their accounts revealed behaviors that may have caused their banks to “drop”
them.
44
Specifically, a few of the interviews revealed the following:
45
Unusual Cash Deposits: When a bar owner’s weekly cash deposits fell just below the federal
currency reporting thresholds, the bank closed the bar’s account and the personal checking and
credit card accounts of the owner and his spouse.
A Marijuana Connection: A married couple’s accounts at a bank were shut down after the
husband started receiving direct deposits from a cannabis company that had recently acquired
his employer.
Criminal History: A man who had served 5 years in prison for stealing a car from a dealership
and using a counterfeit bill (among other crimes) had his accounts shut down at three different
banks. His personal banker from the third bank hinted it was because of his criminal record.
CS/HB 585
CS/HB 585, to which this bill is linked, amends Florida’s Financial Institutions Codes to require a
financial institution that terminates, suspends, or takes similar action restricting a customer’s or
member’s account to file a termination-of-access report with OFR, unless such termination,
suspension, or similar action was due to:
The customer or member initiating the access change themselves;
A lack of activity in the account; or
The property is presumed unclaimed pursuant to ch. 717, F.S.
46
CS/HB 585 also provides that the termination-of-access report shall be filed at such time and must
contain such information as the Commission requires by rule.
OFR INVESTIGATION AND DETERMINATION
Within 90 days after receipt of a termination-of-access report, OFR must investigate the financial
institution’s action and determine whether the action was taken in bad faith as substantiated by
competent and substantial evidence that was known or should have been known to the financial
institution at the time of the termination, suspension, or similar action.
Within 30 days after making a bad faith determination, OFR must report to the AG and the CFO such
bad faith termination, suspension, or similar action. The report to the AG must describe the findings of
the investigation, provide a summary of the evidence, and state whether the financial institution violated
the Financial Institutions Codes. Upon sending the report to the AG, OFR must also send a copy of the
report to the aggrieved customer or member by certified mail, return receipt requested.
CS/HB 585, among other things, also:
42
Id.
43
Id.
44
Id.
45
Id.
46
Ch. 717, F.S., is the Florida Disposition of Unclaimed Property Act (FDUP Act). Unclaimed property is a financial asset
that is unknown or lost, or has been left inactive, unclaimed, or abandoned by its owner. Under the FDUP Act, unclaimed
property is held by business or government entities (known as “holders”) for a set period of time, usually 5 years. If the
holder is unable to locate the owner, re-establish contact, and return the asset, it is reported and remitted to the Florida
Department of Financial Services’ Division of Unclaimed Property. See, Florida Department of Financial Services, Division
of Unclaimed Property, About, https://fltreasurehunt.gov/UP-Web/sitePages/About.jsp (last visited Jan 20, 2024). STORAGE NAME: h0587b.EEG PAGE: 7
DATE: 1/22/2024
provides that a financial institution’s termination, suspension, or similar action restricting a
customer’s or member’s account access in bad faith (as determined by OFR), or a financial
institution’s failure to timely file a termination-of-access report altogether, constitutes a violation
of Florida’s Financial Institutions Codes and subjects the financial institution to the applicable
sanctions and penalties provided therein; and
requires OFR to provide any filed termination-of-access report, and any information contained
therein, to any federal, state, or local law enforcement or prosecutorial agency, and any federal
or state agency responsible for the regulation or supervision of financial institutions, if the
provision of such report is otherwise required by law.
Effect of the Bill
The bill, which is linked to the passage of CS/HB 585, creates a public record exemption for certain
information received by OFR in a termination-of-access report, including information received by OFR
as part of its investigations or examinations of such reports, and provides that such information is
confidential and exempt from public record requirements.
47
The bill contains a statement of public necessity, as required by Article I, Section 24(c) of the Florida
Constitution. Specifically, the release of information contained in a termination-of-access report,
including information received by OFR in connection with its investigations and examinations of such
reports, could injure a financial institution in the marketplace by providing its competitors with detailed
insight into its business operations, thereby diminishing the advantage the institution maintains over its
competitors that do not possess such information.
Additionally, OFR may receive sensitive financial and personal information of customers or members in
filed termination-of-access reports, the release of which could defame or jeopardize the personal and
financial of such individuals and their family members. An exemption from public record requirements is
necessary to ensure OFR’s ability to administer its regulatory duties while preventing unwarranted
damage to a financial institution or a customer or member thereof.
The bill provides that the public record exemption is subject to the Open Government Sunset Review
Act and will repeal on October 2, 2029, unless reviewed and saved from repeal by the Legislature.
The bill is effective upon the same date that CS/HB 585 or similar legislation takes effect, if such
legislation is adopted in the same legislative session or an extension thereof and becomes a law.
B. SECTION DIRECTORY:
Section 1. Amends s. 655.49, F.S., as created by CS/HB 585 (2024), relating to termination-of-
access reports filed by financial institutions; investigations by the Office of Financial
Regulation.
Section 2. Provides a statement of public necessity.
Section 3. Provides a contingent effective date.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
47
There is a difference between records the Legislature designates exempt from public record requirements and those
the Legislature designates 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); State v. Wooten, 260 So. 3d 1060, 1070 (Fla. 4th DCA 2018); City of Riviera
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). STORAGE NAME: h0587b.EEG PAGE: 8
DATE: 1/22/2024
1. Revenues:
None.
2. Expenditures:
The bill may have a minimal fiscal impact on agencies because agency staff responsible for
complying with public record requests may require training related to the creation of the public
record exemption. Agencies could incur costs associated with redacting the confidential and exempt
information prior to releasing a record. The costs, however, would likely be absorbed by existing
resources, as they are part of the day-to-day responsibilities of agencies.
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:
Vote Requirement
Article I, s. 24(c) of the Florida Constitution requires a two-thirds vote of the members present and
voting for final passage of a newly created or expanded public record exemption. The bill creates a
public record exemption; thus, it requires a two-thirds vote for final passage.
Public Necessity Statement
Article I, s. 24(c) of the Florida Constitution requires a public necessity statement for a newly created
or expanded public record exemption. The bill creates a public record exemption; therefore, it
includes a public necessity statement. The public necessity statement provides that the Legislature
finds, in part, that the release of information contained in a termination-of-access report, including
information received by OFR in connection with its investigations and examinations of such reports,
could injure a financial institution in the marketplace by providing its competitors with detailed insight
into its business operations, thereby diminishing the advantage the institution maintains over its
competitors that do not possess such information.
STORAGE NAME: h0587b.EEG PAGE: 9
DATE: 1/22/2024
Breadth of Exemption
Article I, s. 24(c) of the Florida Constitution requires a newly created public record exemption to be
no broader than necessary to accomplish the stated purpose of the law. The bill creates a public
record exemption for certain information received by OFR pursuant to a termination-of-access report
filed by a financial institution. The purpose of the exemption is to protect sensitive personal, financial,
and business information that OFR receives in conjunction with its duties related to receiving a
termination-of-access report and investigating and examination such reports. As such, the bill
appears to be no broader than necessary to accomplish its purpose.
B. RULE-MAKING AUTHORITY:
None. The bill does not confer rulemaking authority nor require the promulgation of rules.
C. DRAFTING ISSUES OR OTHER COMMENTS:
None.
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES