Bill Text: FL S1106 | 2016 | Regular Session | Comm Sub

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: International Trust Entities

Spectrum: Bipartisan Bill

Status: (Passed) 2016-04-06 - Chapter No. 2016-192 [S1106 Detail]

Download: Florida-2016-S1106-Comm_Sub.html

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       Florida Senate - 2016                             CS for SB 1106
       
       
        
       By the Committee on Appropriations; and Senator Flores
       
       576-04524-16                                          20161106c1
    1                        A bill to be entitled                      
    2         An act relating to international trust entities;
    3         amending s. 663.01, F.S.; defining the term
    4         “international trust entity”; creating s. 663.041,
    5         F.S.; providing for a moratorium for a specified
    6         timeframe on enforcement by the Office of Financial
    7         Regulation of certain licensure requirements for
    8         certain organizations and entities providing services
    9         to international trust companies; providing conditions
   10         to apply the moratorium to specified persons of the
   11         organization or entity; providing for construction;
   12         specifying requirements for a letter to the office to
   13         request qualification as a party to the moratorium;
   14         requiring the office to confirm specified findings
   15         when processing a request; specifying circumstances
   16         for establishing adequate supervision; providing
   17         procedures and timeframes for the office’s processing
   18         of requests and the office’s requests for additional
   19         information; providing timeframes for the office to
   20         confirm with the organization or entity whether it has
   21         been confirmed as a party to the moratorium; requiring
   22         the office to issue a notice of denial if it
   23         determines that an organization or entity is not a
   24         party to the moratorium; providing that a denied
   25         organization or entity may request a certain hearing
   26         to contest the denial; providing for construction if
   27         certain timeframes are not met; authorizing the office
   28         to conduct an onsite visitation of an organization or
   29         entity for a specified purpose until a specified time;
   30         requiring the office to issue an immediate final order
   31         disqualifying an organization or entity if it finds
   32         that such organization or entity made a material false
   33         statement in its request; providing for construction;
   34         providing for future repeal; providing an effective
   35         date.
   36          
   37  Be It Enacted by the Legislature of the State of Florida:
   38  
   39         Section 1. Present subsections (10) and (11) of section
   40  663.01, Florida Statutes, are renumbered as subsections (11) and
   41  (12), respectively, and a new subsection (10) is added to that
   42  section, to read:
   43         663.01 Definitions.—As used in this part, the term:
   44         (10) “International trust entity” means an international
   45  trust company, an international business, an international
   46  business organization, or an affiliated or subsidiary entity
   47  that is licensed, chartered, or similarly permitted to conduct
   48  trust business in a foreign country or countries under the laws
   49  of which it is organized and supervised.
   50         Section 2. Section 663.041, Florida Statutes, is created to
   51  read:
   52         663.041 Moratorium on the office’s enforcement of licensing
   53  requirements for an international trust entity or related
   54  entities.—
   55         (1) Until June 30, 2017, the office shall delay the
   56  enforcement of the requirement under s. 663.04(4) relating to
   57  licensure of an organization or entity in this state providing
   58  services to an international trust entity that engages in the
   59  activities described in s. 663.0625. This delay applies to any
   60  person who manages or controls or is employed by such
   61  organization or entity that:
   62         (a) Has been organized to conduct business in this state
   63  before October 1, 2013;
   64         (b) Has not been fined or sanctioned as a result of any
   65  complaint to the office or to any other state or federal
   66  regulatory agency;
   67         (c) Has not been convicted of a felony or ordered to pay a
   68  fine or penalty in any proceeding initiated by any federal,
   69  state, foreign, or local law enforcement agency or international
   70  agency within the 10 years before the effective date of this
   71  section;
   72         (d) Has not had any of its directors, executive officers,
   73  principal shareholders, managers, or employees arrested for,
   74  charged with, convicted of, or plead guilty or nolo contendere
   75  to, regardless of adjudication, any offense that is punishable
   76  by imprisonment for 1 year or more, or to any offense that
   77  involves money laundering, currency transaction reporting, tax
   78  evasion, facilitating or furthering terrorism, fraud, or that is
   79  otherwise related to the operation of a financial institution,
   80  within the 10 years before the effective date of this section;
   81         (e) Does not provide services for any international trust
   82  entity that is in bankruptcy, conservatorship, receivership,
   83  liquidation, or a similar status under the laws of any country;
   84         (f) Does not provide banking services or promote or sell
   85  investments or accept custody of assets;
   86         (g) Does not act as a fiduciary, which includes, but is not
   87  limited to, accepting the fiduciary appointment, executing the
   88  fiduciary documents that create the fiduciary relationship, or
   89  making discretionary decisions regarding the investment or
   90  distribution of fiduciary accounts; and
   91         (h) Conducts those activities permissible for an
   92  international trust company representative office as described
   93  in s. 663.0625.
   94         (2) This moratorium does not prevent the office from
   95  otherwise enforcing the financial institutions codes.
   96         (3) An organization or entity that requests to qualify for
   97  this moratorium shall notify the office in writing by letter on
   98  official letterhead via United States Postal Service or
   99  commercial mail delivery service by July 1, 2016, and shall
  100  provide the following:
  101         (a) Written proof that it has been organized to do business
  102  in this state before October 1, 2013;
  103         (b) The name or names under which it conducts business in
  104  this state;
  105         (c) The addresses of its locations from which it conducts
  106  business;
  107         (d) A detailed list and description of the activities being
  108  conducted at the locations from which it conducts business. The
  109  detailed description must include the types of consumers that
  110  utilize those activities and an explanation of how those
  111  activities serve the business purpose of an international trust
  112  entity.
  113         (e) As to each international trust entity the organization
  114  or entity provides services for in this state, the following:
  115         1. The name of the international trust entity;
  116         2. A list of the current officers and directors of the
  117  international trust entity;
  118         3. The country or countries where the international trust
  119  entity is organized;
  120         4. The supervisory or regulatory authority, or equivalent
  121  or other similarly sanctioned body, organization, governmental
  122  entity, or recognized authority that has licensing, chartering,
  123  oversight, or similar responsibilities over the international
  124  trust entity;
  125         5. Proof that the international trust entity has been
  126  authorized by a charter, license, or similar authorization by
  127  operation of law in its home country jurisdiction to engage in
  128  trust business;
  129         6. Proof that the international trust entity lawfully
  130  exists and is in good standing under the laws of the
  131  jurisdiction where it is chartered, licensed, organized, or
  132  lawfully existing. The organization or entity shall submit a
  133  certificate of good standing or equivalent document issued by
  134  the supervisory or regulatory authority, or equivalent or other
  135  similarly sanctioned body, organization, governmental entity, or
  136  recognized authority that has similar responsibilities, of the
  137  country where the international trust entity is licensed,
  138  chartered, or has similar authorization by operation of law and
  139  is duly organized and lawfully exists;
  140         7. A statement that the international trust entity is not
  141  in bankruptcy, conservatorship, receivership, liquidation, or in
  142  a similar status under the laws of any country; and
  143         8. Proof that the international trust entity is not
  144  operating under the direct control of the government,
  145  regulatory, or supervisory authority of the jurisdiction of its
  146  incorporation, through government intervention or any other
  147  extraordinary actions, and confirmation that it has not been in
  148  such a status or under such control at any time within the 7
  149  years before the date of notification to the office.
  150         (f) A declaration under penalty of perjury signed by an
  151  executive officer or managing member of the organization or
  152  entity, declaring that the information provided to the office is
  153  true and correct to the best of his or her knowledge.
  154         (4) In processing the request to qualify for the
  155  moratorium, the office shall confirm the following:
  156         (a) That the international trust entity is adequately
  157  supervised by the appropriate regulatory authority, or
  158  equivalent or other similarly sanctioned body, organization,
  159  governmental entity, or recognized authority that has similar
  160  responsibilities in the foreign country where it is organized,
  161  chartered, or licensed, or has similar authorization by
  162  operation of law; and
  163         (b) That the jurisdiction of the international trust entity
  164  or its offices, subsidiaries, or any affiliates that are
  165  directly involved in or facilitate the financial services
  166  functions, banking, or fiduciary activities of the international
  167  trust entity, is not listed on the Financial Action Task Force
  168  Public Statement or on its list of jurisdictions with
  169  deficiencies in anti-money laundering or counterterrorism.
  170         (5) For purposes of establishing adequate supervision under
  171  paragraph (4)(a):
  172         (a) An international trust entity with foreign
  173  establishments is considered adequately supervised if it is
  174  subject to consolidated supervision. As used in this paragraph,
  175  “consolidated supervision” means supervision that enables the
  176  appropriate regulatory authority, or equivalent or other
  177  similarly sanctioned body, organization, governmental entity, or
  178  recognized authority that has similar responsibilities of the
  179  home country (home country supervisor) to evaluate:
  180         1. The safety and soundness of the international trust
  181  entity’s operations located within the home country supervisor’s
  182  primary jurisdiction; and
  183         2. The safety and soundness of the operations performed by
  184  the international trust entity’s offices, subsidiaries, or any
  185  affiliates that are directly involved in or facilitate the
  186  financial services functions, banking, or fiduciary activities
  187  of the international trust entity, wherever located.
  188         (b) An international trust entity with no foreign
  189  establishments is considered adequately supervised if the home
  190  country supervisor can evaluate the safety and soundness of the
  191  international trust entity’s operations through its offices or
  192  subsidiaries located in the home country. For purposes of this
  193  paragraph, the home country supervisor is deemed to be able to
  194  evaluate the safety and soundness of the international trust
  195  entity if the home country supervisor has the authority to
  196  collect and maintain information on the following regulatory
  197  components:
  198         1. The technical competence and administrative ability of
  199  the management of the international trust entity;
  200         2. The adequacy of the operational, accounting, and
  201  internal control systems of the international trust entity,
  202  particularly the international trust entity’s ability to monitor
  203  and supervise the activities of its offices or subsidiaries
  204  wherever located;
  205         3. The adequacy of asset management and asset
  206  administration policies and procedures;
  207         4. The capital adequacy of the international trust entity,
  208  its offices or subsidiaries as specified by any capital adequacy
  209  guidelines in the home country;
  210         5. The earnings of the international trust entity; and
  211         6. The external and internal auditors’ reports as well as
  212  any management comment letters or any documented corrective
  213  action by management.
  214         (c) As used in paragraphs (4)(a), (5)(a), and (5)(b),
  215  adequate supervision does not require supervision of companies
  216  that control the international trust entity or supervision of
  217  companies under common control with the international trust
  218  entity but that are not in the international trust entity’s
  219  chain of control. However, in cases where a holding company is
  220  the only controlling element in a trust business group, holding
  221  company supervision by a home country supervisor shall be
  222  required when it is needed to ensure consolidated supervision of
  223  all trust business entities in the group.
  224         (d) If a holding company is not supervised, adequate
  225  supervision is deemed to exist if the home country supervisor
  226  regulates transactions between the international trust entity
  227  and controlling persons or entities under common control.
  228         (e) An international trust entity and its offices or
  229  subsidiaries is deemed to be adequately supervised if it is
  230  subject to comprehensive supervision. For purposes of this
  231  paragraph, comprehensive supervision:
  232         1. Means supervision that ensures that the supervisory
  233  processes and procedures are designed to inform the home country
  234  supervisor about the international trust entity’s financial
  235  condition, including capital position; asset management and
  236  asset administration; internal controls and audit; compliance
  237  with existing laws and regulations; and capability of
  238  management.
  239         2. Does not require the home country supervisor to conduct
  240  onsite examinations of the international trust entity or its
  241  offices or subsidiaries. However, at a minimum, it requires that
  242  the home country supervisor:
  243         a. Is able to determine that the international trust entity
  244  and its offices and subsidiaries have adequate procedures for
  245  monitoring and controlling its domestic and foreign operations;
  246         b. Is authorized to obtain information, by examination,
  247  audits or by other means, on the domestic and foreign operations
  248  of the international trust entity, including its offices and
  249  subsidiaries, and the authority to demand financial reports
  250  which permit analysis of the consolidated condition of the
  251  international trust entity;
  252         c. Is able to obtain information on the dealings and
  253  relationships between the international trust entity and its
  254  offices and subsidiaries, wherever located; and
  255         d. Is authorized by the home country’s laws to ensure the
  256  safety and soundness of the international trust entity and its
  257  offices and subsidiaries.
  258         3. Includes the ability and willingness of the home country
  259  supervisor to provide the office early notice of any weaknesses
  260  being experienced by the international trust entities, including
  261  its offices or subsidiaries wherever located.
  262         4. Includes the ability of the home country supervisor to
  263  provide the office assurance of cooperation by both the
  264  international trust entity and the home country supervisor.
  265         (6) The office shall process requests made for inclusion
  266  under the moratorium as follows:
  267         (a) Upon receipt of any request, the office shall review
  268  the information contained therein, and request any additional
  269  information to complete the request to qualify for the
  270  moratorium within 30 days after receipt. The organization or
  271  entity shall provide the requested additional information within
  272  45 days after the receipt of the notice from the office. If the
  273  office does not make such request within 30 days after receipt,
  274  the request to qualify for the moratorium is deemed complete as
  275  of the date it was received.
  276         (b) Within 20 days after receipt of any additional
  277  information requested, the office shall deem the request to
  278  qualify for the moratorium complete or provide notification to
  279  the organization or entity that the information provided does
  280  not satisfy the office’s request or requests.
  281         (c) Within 90 days after receipt of a completed request to
  282  qualify for the moratorium, the office shall confirm with the
  283  organization or entity that they are or are not a party to the
  284  moratorium.
  285         1. If the office determines that an organization or entity
  286  is not a party to the moratorium, the office shall issue a
  287  notice of denial informing the organization or entity of its
  288  determination. An organization or entity receiving a notice of
  289  denial may request a hearing under chapter 120 to contest the
  290  denial.
  291         2. If the office fails to notify the organization or entity
  292  within such time whether or not the organization or entity is a
  293  party to the moratorium, then the organization or entity is
  294  considered a party to the moratorium by operation of law.
  295         (d) During the period of the moratorium, the office may
  296  conduct an onsite visitation of an organization or entity to
  297  confirm information provided to the office in deeming the
  298  organization or entity qualified for the moratorium. If the
  299  office finds that the organization or entity made a material
  300  false statement in its request to qualify for the moratorium,
  301  the office shall issue an immediate final order suspending the
  302  organization’s or entity’s qualification and disqualifying the
  303  organization or entity from participating in the moratorium. A
  304  material false statement made in the request to qualify for the
  305  moratorium constitutes an immediate and serious danger to the
  306  public health, safety, and welfare.
  307         Section 3. Section 663.041, Florida Statutes, and the
  308  amendments to section 663.01, Florida Statutes, made by this
  309  act, are repealed on July 1, 2017.
  310         Section 4. This act shall take effect upon becoming a law.