The Office of Financial Regulation (OFR) proposes to create new rules, and amend existing rules, under Chapter 69U-140, F.A.C., to implement Ch. 2017-83, Laws of Florida (International Financial Institutions), signed into law on June 9, 2017. The ...

Notice of Proposed Rule

 

DEPARTMENT OF FINANCIAL SERVICES

FSC - Financial Institution Regulation

RULE NOS.:              RULE TITLES:

69U-140.002              Applications

69U-140.003              Principles of Adequate Supervision of an International Banking Corporation's Foreign Establishments

69U-140.004              Application for the Establishment of Separate International Banking Agencies by a Qualified International Banking Corporation

69U-140.0045              Interim Operational Plans

69U-140.005              Surrender of Agency License

69U-140.006              Investment Services

69U-140.008              Permissible Activities for an Agency

69U-140.015              Capital Equivalency or Asset Maintenance

69U-140.016              Capital Accounts and Capital Ratio Standards

69U-140.017              Acceptances

69U-140.018              Minimum Audit Procedures - International Bank Agencies

69U-140.019              Financial Reports

69U-140.022              Service of Process

69U-140.023              Reciprocity

69U-140.120              Examination Fees

PURPOSE AND EFFECT: The Office of Financial Regulation (OFR) proposes to create new rules, and amend existing rules, under Chapter 69U-140, F.A.C., to implement Ch. 2017-83, Laws of Florida (International Financial Institutions), signed into law on June 9, 2017. The legislation requires the Financial Services Commission to implement some of its provisions by rule. Additionally, the OFR proposes to amend Rule 69U-140.005, F.A.C., to make the surrender of license requirements applicable to all licensed offices of international banking corporations; and amend Rule 69U-140.023, F.A.C., to update the reciprocity requirement. Finally, the OFR proposes to amend Rules 69U-140.002, 140.003, 140.004, 140.005, 140.006, 140.008, 140.015, 140.017, 140.018, 140.019, 140.020, 140.022, 140.023, and 140.120, F.A.C., to update references to revised rules, statutes, and forms, update cites in the rules’ rulemaking authority and law implemented sections, revise language of current rules to create consistency with proposed new rules, and clean-up superfluous language.

SUMMARY: The OFR proposes to amend Chapter 69U-140, F.A.C., which governs the regulation of licensed offices of International Banking Corporations.

SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COSTS AND LEGISLATIVE RATIFICATION:

The Agency has determined that this will not have an adverse impact on small business or likely increase directly or indirectly regulatory costs in excess of $200,000 in the aggregate within one year after the implementation of the rule. A SERC has not been prepared by the Agency.

The Agency has determined that the proposed rule is not expected to require legislative ratification based on the statement of estimated regulatory costs or if no SERC is required, the information expressly relied upon and described herein: Pursuant to Section 663.13, F.S., no statement of estimated regulatory costs is required for the proposed rule.

Any person who wishes to provide information regarding a statement of estimated regulatory costs, or provide a proposal for a lower cost regulatory alternative must do so in writing within 21 days of this notice.

RULEMAKING AUTHORITY: 655.012(2), 655.045(3), 663.05(4), 663.05(5), 663.05(6), 663.05(9), 663.055(4), 663.06(2), 663.06(4), 663.0601(2), 663.061(3), 663.07(1), 663.083(1), 663.09, 663.11(1)(b)2., 663.12(3), 663.13 FS.

LAW IMPLEMENTED: 48.081, 48.181, 48.193, 119.071(5)(a), 655.045(3), 658.95, 658.96, 663.02(1), 663.04, 663.05, 663.055, 663.06, 663.0601, 663.061, 663.07, 663.08, 663.083(1), 663.09, 663.10, 663.11, 663.12, 663.13 FS.

IF REQUESTED WITHIN 21 DAYS OF THE DATE OF THIS NOTICE, A HEARING WILL BE SCHEDULED AND ANNOUNCED IN THE FAR.

THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE IS: Jodi-Ann V. Livingstone, Chief Counsel, Division of Financial Institutions, [phone], [e-mail]

 

THE FULL TEXT OF THE PROPOSED RULE IS:

 

69U-140.002 Applications.

(1) The application for authority to establish an international branch, or international bank agency, shall be filed on Form OFR-U-20, Application for the Establishment of an International Banking Branch or International Bank Agency in the State of Florida, effective 01/2018, herein incorporated by reference and available at https://www.flrules.org/XXXXX revised 3/2003. The application for authority to establish an international representative office or international administrative office shall be filed on Form OFR-U-20A, Application for the Establishment of an International Representative Office or International Administrative Office in the State of Florida, effective 01/2018 8/97, revised 3/2003, herein incorporated by reference and available at https://www.flrules.org/XXXXX. The application to convert an international bank agency office to an international branch office shall be filed on Form OFR-U-20B, Application for Authority to Convert an International Bank Agency to an a International Branch Office, effective 01/2018 11/01, revised 3/2003, herein incorporated by reference and available at https://www.flrules.org/XXXXX. The application for authority to organize an international development bank shall be filed on Form OFR-U-20C, Application for Authority to Organize an International Development Bank, effective 01/2018, herein incorporated by reference and available at https://www.flrules.org/XXXXX. The application for authority to convert a currently licensed international banking office to an

office of a different type shall be filed on Form OFR-U-20E, Application for Authority to Convert a Licensed International Banking Office to an Office of a Different Type, effective 01/2018, herein incorporated by reference and available at https://www.flrules.org/XXXXX.  The application for authority to establish an international trust company representative office shall be filed on Form OFR-U-20D, Application for the Establishment of an International Trust Company Representative Office in the State of Florida, new 08/2016, herein incorporated by reference and available at https://www.flrules.org/Gateway/reference.asp?No=Ref-07394. The application shall be submitted with a nonrefundable filing fee in the amount prescribed by Section 663.12, F.S., which is made payable to the Office of Financial Regulation (OFR).

(2) through (3) No change.

(4) After the Fact Licensure In the Event of Acquisition, Merger, or Consolidation.  Pursuant to Section 663.0601, F.S., if an international banking corporation proposes to acquire, merge, or consolidate with an international banking corporation that presently operates an international branch, international bank agency, international administrative office, or international representative office licensed in the State of Florida, the OFR may allow the currently licensed office to remain open and in operation after the consumation of a proposed acquisition, merger, or consolidation subject to certain conditions.  An after-the-fact application for authority to establish an international branch or international bank agency shall be filed on Form OFR-U-20, Application for the Establishment of an International Branch or International BankAgency in the State of Florida, effective 01/2018, which is hereby incorporated by reference and available at https://www.flrules.org/XXXXX. The application shall be submitted with a nonrefundable filing fee in the amount prescribed by Section 663.12(1), F.S., which is made payable to the OFR.  An after-the-fact application for authority to establish an international administrative office or an international representative office shall be filed on Form OFR-U-20A, Application for the Establishment of an International Representative Office or International Administrative Office in the State of Florida, effective 01/2018, which is hereby incorporated by reference and available at https://www.flrules.org/XXXXX.  The application shall be submitted with a nonrefundable filing fee in the amount prescribed by Section 663.12(1), F.S., which is made payable to the OFR.

(a) At least 30 days prior to the consumation of the acquisition, merger, or consolidation, the international banking corporation currently licensed to operate an international branch, international bank agency, international administrative office, or international representative office in Florida must provide the OFR a written notice.  This written notice shall contain the following:

1. The name, home jurisdiction, and home country supervisor of each party to the transaction.

2. The date of the proposed transaction. 

3. The type and terms of the transaction.  The written notice must indicate whether the proposed transaction is an aqcuisition, merger, or consolidation, and give a brief description of the terms of the proposed transaction, including the names of the current and resulting entities, any reasons for engaging in the proposed transaction, and any proposed change to the board of directors. 

4. If the proposed transaction will result in a change of home country supervisor, the written notice must include the name and home country jurisdiction of the new home country supervisor. 

5. Certification that the international branch, international bank agency, international administrative office, or international representative office will not engage in any new lines of business or otherwise expand its activities until final disposition of the after-the-fact application. 

6. Certification that the proposed transaction will not result in violation of subsection (1) of Section 663.0601, F.S. 

(5) Pursuant to Section 663.05(4), F.S., an international banking corporation that has operated an international branch, international bank agency, international administrative office, or international representative office in this state for at least three years in a safe and sound manner, as defined by commission rule, and that is otherwise eligible to establish an additional office may establish one or more additional international branches, international bank agencies, international administrative offices, or international representative offices by providing an abbreviated application.  An international banking corporation may not use an abbreviated application to seek licensure for any license type whose permissible activities are broader than those in which the international banking corporation is currently authorized to engage.

(a) For the purposes of this subsection, “safe and sound manner” means operating without violating any prior agreement or order of a state or federal regulatory agency, or engaging in any practice, conduct, or violation found by the OFR to be contrary to generally accepted standards applicable to a financial institution, or that otherwise creates the likelihood of loss, insolvency, or dissipation of assets or otherwise prejudices the interest of the international banking corporation or its customers.              

(b) The abbreviated application for authority to establish an additional international administrative office or international representative office shall be filed on Form OFR-U-20 ABR, Abbreviated Application for the Establishment of an Additional International Branch or International Bank Agency in the State of Florida, effective 01/2018, herein incorporated by reference and available at https://www.flrules.org/XXXXX.  This abbreviated application shall be submitted with the appropriate nonrefundable filing fee in the amount prescribed by Section 663.12(1), F.S.  The abbreviated application for authority to establish an additional international branch or international bank agency shall be filed on Form OFR-U-20A ABR, Abbreviated Application for the Establishment of an Additional International Administrative Office or International Representative Office in the State of Florida, effective 01/2018, herein incorporated by reference and available at https://www.flrules.org/XXXXX.  This abbreviated application shall be submitted with the appropriate nonrefundable filing fee in the amount prescribed by Section 663.12(1), F.S. 

(6) For applications filed on or after January 1, 2018, the timelines contained in this subsection will apply to each application for authority to establish an internationl branch, international bank agency, international administrative office, or international representative office.

(a) The original and two copies of the application in the format required by OFR, accompanied by the prescribed fee, shall be filed with the Office of Financial Regulation, Division of Financial Institutions, 200 East Gaines Street, Tallahassee, Florida 32399-0371. No application will be deemed filed or received for publication unless accompanied by the proper filing fee. All filing fees for any license action covered by these rules are nonrefundable. Upon receipt of the application and the accompanying fee, the applicant shall be so notified by OFR.

(b) The OFR shall have published in the Florida Administrative Register notice of the application within 21 days after receipt.

(c) Within 21 days after publication of notice, any person may request a hearing. Failure to request a hearing within 21 days after notice constitutes a waiver of any right to a hearing. The OFR or an applicant may request a hearing at any time prior to the issuance of a final order. Hearings shall be conducted pursuant to Sections 120.569 and 120.57, F.S.

(d) Should a hearing be requested as provided by subsection (c), the applicant or licensee shall publish at its own cost a notice of the hearing in a newspaper of general circulation in the area affected by the application.

(e) All information the applicant wants to present to support the application should be submitted with the original filing. The required exhibits in the application forms are not intended to limit the applicant's presentation of any of the requirements, but merely represent the minimum information required to be filed. All additional information and/or complete correction of all errors or omissions must be submitted within 60 days after requested by OFR. Applicant's failure to respond to such request within 60 days after the date of the request shall be construed by OFR as grounds for denial of an application in accordance with the provisions of Section 120.60(1), F.S., and the file shall be closed, unless good cause is shown that it remain open. Should the file be closed pursuant to these provisions, the applicant shall be duly notified.

(f) An applicant may amend the application as to those factors generally within the control or selection of the applicant once, as a matter of course, at any time within 30 days from its receipt for filing. Otherwise, the application may only be amended with permission from OFR.  Requests to make material changes filed at any time after the application has been received shall be deemed by OFR to be grounds for denial, and upon such denial a new application accompanied by the appropriate filing fee shall be required. If OFR grants a request to make material changes in the application, the amended application will be treated as a new application with respect to the applicable rules of this chapter, except that no additional filing fee shall be required. When an application is denied on the grounds set forth above, the applicant shall be duly notified.

(g) Upon a request from an applicant, OFR shall permit the filing of supplemental information external to the application which sets forth evidence of changing economic conditions and transactions, occurrences, or events having a bearing on the application and which have taken place since the application was filed. Such supplemental information must be filed within a reasonable time after the information is known by the applicants but in no event later than 10 days before the hearing, if one has been requested.

(h) An application for authority to establish an international branch, an international bank agency, an international administrative office, or an international representative office must be approved or denied within 180 days after receipt of the original application, or receipt of the timely requested additional information or correction of errors or omissions. An application for such a license which is not approved or denied within the 180-day period or within 30 days after conclusion of a public hearing on the application, whichever is later, shall be deemed approved subject to the satisfactory completion of conditions required by statute as a prerequisite to license.

(i) The applicant may withdraw the application at any time by filing a written notice of withdrawal from the correspondent as designated on the application form with OFR. OFR shall publish notice of the withdrawal within 21 days of its receipt, if the original application required public notice.

(4) Forms OFR-U-20, OFR-U-20A, and OFR-U-20B, which are incorporated herein by reference, may be obtained online at http://www.flofr.com/StaticPages/DivisionOfFinancialInstitutions.htm. Forms may also be obtained at no cost by request to the Office of Financial Regulation, Division of Financial Institutions, 200 East Gaines Street, Tallahassee, Florida 32399-0371.

(7)(5) Notice Regarding Collection and Use of Social Security Numbers. The forms incorporated by reference in this rule request that the applicant provide his or her social security number. In accordance with Sections 119.071(5)(a)2.a. and b., F.S., the OFR gives the following notice to applicants regarding the OFR’s collection and use of social security numbers:

(a) The OFR’s collection of social security numbers is not expressly authorized by or mandatory under federal or state law, but it is imperative for the performance of the OFR’s duties and responsibilities as prescribed by Sections 663.05(5) and (8), F.S., to ensure the safe and sound management and operations of offices of international banking corporations the international trust company representative office in this state.

(b) through (d) No change.

Rulemaking Authority 655.012(2), 663.05(4), 663.05(5), 663.05(6), 663.05(9) (8), 663.0601(2), 663.13 FS. Law Implemented 119.071(5)(a), 663.04, 663.05, 663.0601, 663.10 FS. History–New 7-21-81, Amended 12-20-82, 3-8-84, Formerly 3C-15.09, Amended 2-9-87, 10-1-87, 10-10-88, 1-24-89, Formerly 3C-15.009, Amended 3-22-93, 9-5-94, Formerly 3C-140.050, Amended 11-5-97, 3-11-02, Formerly 3C-140.002, Amended 8-28-16,       .

 

69U-140.003 Principles of Adequate Supervision of an International Banking Corporation’s Foreign Establishments.

(1) Section 663.05(8)(a)3. 663.05(7)(c), F.S., states a license shall not be issued to an international banking corporation for the purpose of operating an international bank agency or an international branch in this state unless the international banking corporation is adequately supervised by the central bank or bank regulatory agency in the foreign country in which it is organized and chartered. Section 663.05(8)(b)2. 663.05(8)(b), F.S., also states that a license shall not be issued to an international banking corporation for the purpose of operating an international representative office or an international administrative office in this state unless the international banking corporation is adequately supervised by the central bank or bank regulatory agency in the foreign country in which it is organized and chartered.

(2) through (8) No change.

(9) Comprehensive supervision does not require the home country supervisor to conduct on-site examinations of the international banking corporation or its offices or subsidiaries. However, at a minimum, it requires that the home country supervisor:

(a) Determine that the international banking corporation, and its offices and subsidiaries, have adequate procedures for monitoring and controlling its domestic and foreign operations; and

(b) Receives information (by examination, audits or by other means) on the domestic and foreign operations of the international banking corporation, including its offices and subsidiaries; and also receives financial reports which permit analysis of the consolidated condition of the international banking corporation.;

(c) Has the ability to obtain information on the dealings and relationships between the international banking corporation, its offices and subsidiaries wherever located; and

(d) Is empowered by the home country’s banking laws with the authority and ability to ensure the safety and soundness of the international banking corporation and its offices and subsidiaries.

(10) Comprehensive supervision includes the ability and willingness of the home country supervisor to provide OFR early notice of any financial weaknesses being experienced by the international banking corporation, including its offices or subsidiaries wherever located. Comprehensive supervision also includes the ability of the home country supervisor to provide OFR assurance of cooperation by both the international banking corporation and the home country supervisor.

Rulemaking Authority 120.53(1)(b), 655.012(2) 655.012 (3), 663.05(9) FS. Law Implemented 663.05(9) FS. History–New 8-24-93, Formerly 3C-140.051, 3C-140.003, Amended      .

 

69U-140.004 Application for the Establishment of Separate Florida Offices International Banking Agencies by a Qualified International Banking Corporation.

In accordance with Chapter 663, F.S., a qualified international banking corporation may establish separately licensed offices in the State of Florida international banking agencies by application for authority to establish an international branch, an international bank agency, an international administrative office, or an international representative office banking agency as provided in subsection 69U-140.002(1) 69U-15.009(1), F.A.C. Each such separately licensed international branch, international bank agency, international administrative office, or international representative office banking agency shall meet the criteria specified in Section 663.05, F.S., and rules promulgated thereunder, and shall be fully subject to all applicable restrictions and limitations imposed by Chapter 663, F.S., and the rules promulgated thereunder.

Rulemaking Authority 655.012(2) 663.06(6), 663.13 FS. Law Implemented 663.04, 663.05(5) 663.05(4), 663.06(1) 663.06(6) FS. History–New 12-20-82, Formerly 3C-15.081, 3C-15.0081, 3C-140.004, Amended      .

 

69U-140.0045 Interim Operational Plans.

(1) Pursuant to Section 663.11, F.S., an international banking corporation that is licensed to maintain an international branch, international bank agency, international administrative office, or international representative office may not continue to conduct its licensed business in this state if the international banking corporation is experiencing any of the statuses outlined in Section 663.11(1)(a) 2. – 3., F.S.  However, subject to OFR approval, the OFR may permit an international branch, international bank agency, international administrative office, or international representative office to remain open and in operation if the international banking corporation is experiencing any of the statuses outlined in Section 663.11(1)(a) 2. – 3., F.S., if, within the 30 days after the occurrence of such event, the international branch, international bank agency, international administrative office, or international representative office provides the OFR with either a plan to wind down its affairs and business within the subsequent 90 days, or an interim operational plan to the OFR within 30 days after the occurrence of any such event.

(2) The interim operational plan submitted to the OFR must contain the following:

(a) The international banking corporation’s operational requirements, restrictions, written agreements, or other documents provided by its home country supervisor based on its current status; 

(b) A business continuity and strategic plan of the international branch, international bank agency, international administrative office, or international representative office and international banking based on the status of international banking corporation.  The plans must include projected timelines and impact on business continuity based on the status of the international banking corporation.

(c) A description of the technical competence and administrative ability of the management of the international banking corporation and its offices or subsidiaries to manage and address requirements and operations based on its status;

(d) A description of the technical competence and administrative ability of the management of the international branch, international bank agency, international administrative office, or international representative office based on the status of the international banking corporation;

(e) A description of the adequacy of the accounting and internal control systems of the international banking corporation, particularly the international banking corporation’s ability to monitor and supervise the activities of its offices or subsidiaries, wherever located, based on its status; 

(f) A description of any updates to internal systems, processes, policies, and procedures of the international branch, international bank agency, international administrative office, or international representative office and the international banking corporation due to the status of the international banking corporation;

(g) The name and contact information of the international banking corporation’s home country supervisor;

(h) The name and contact information of any supervisory authorities monitoring and overseeing the international banking corporation based on its status; and

(i) If there are any changes to the officer or manager overseeing the operations of the international branch, international bank agency, international administrative office, or international representative office as part of the interim operational plan, the international branch, international bank agency, international administrative office, or international representative office shall submit a Form OFR-U-10, Interagency Biographical and Financial Form, effective 3/2003, which is hereby incorporated by reference and available at https://www.flrules.org/XXXXX and Form OFR-U-10A, Addendum to Form OFR-U-10, Confidential Release of Information Supplement to the Interagency Biographical and Financial Form, effective 01/2018, which is hereby incorporated by reference and available at https://www.flrules.org/XXXXX, for each newly proposed officer or manager.   

(3) Pursuant to Section 663.11(1)(b)1.a., if the OFR finds that the interim operational plan does not allow for the conduct of business in a safe and sound manner, the OFR shall revoke the license.  In making its determination of the acceptability of the interim operational plan, the OFR shall consider the following criteria:

(a) The international banking corporation is authorized by the foreign country in which it is organized and licensed to address the affairs of the international branch, international bank agency, international administrative office, or international representative office in this state;

(b) The international branch, international bank agency, international administrative office, or international representative office will not engage in any new lines of business or otherwise expand its activities in this state;

(c) Allowing the international branch, international bank agency, international administrative office, or international representative office to remain open furthers domestic and foreign supervisory cooperation;

(d) Allowing the international branch, international bank agency, international administrative office, or international representative office to remain open is in the public’s interest and does not present an immediate or serious danger to the public health, safety, or welfare;

(e) Management of the international branch, international bank agency, international administrative office, or international representative office has the ability to operate the office in a safe and sound manner;

(f) The capital adequacy of the international banking corporation, its offices or subsidiaries as specified by the capital adequacy guidelines in the home country and in the United States, based on the status of the international banking corporation;

(g) The liquidity and funds management practices of the international banking corporation, its offices or subsidiaries, based on the status of the international banking corporation; and

(h) Any supervisory information from the home country regulator or supervisory authority of the international banking corporation, based on its status.

(4) The OFR may conduct an onsite examination or investigation of an international branch, international bank agency, international administrative office, or international representative office to confirm information provided to the OFR in the interim operational plan.

(5) The OFR shall process requests for approval of an interim operational plan as follows:

(a) Upon receipt of any request for approval of an interim operational plan, the OFR shall review the information contained therein, and request any additional information to complete the request within 15 days after receipt.  The international banking corporation shall provide the requested additional information within 15 days after the receipt of the notice from the OFR.  Failure to respond within the timeframe required is grounds for denial of the interim operational plan, and will result in the subsequent revocation of the license in accordance with Section 663.11(1)(a), F.S.

(b) Within 10 days after receipt of any additional information requested, the OFR shall deem the request for approval of an interim operational plan complete or provide notification that the information provided does not satisfy the OFR’s request or requests.

(c) Within 10 days after receipt of a completed request for approval of an interim operational plan, the OFR shall approve or deny the interim operational plan.

(d) Approval an interim operational plan will be granted for no more than 120 days.  Should the international banking corporation require an interim period of longer than 120 days, a new interim operational plan must be submitted to the OFR for approval prior at least 15 days prior to the expiration of the original approval.  If a new interim operational plan is not provided within 15 days prior to the expiration of the prior plan, the OFR shall revoke the license in accordance with Section 663.11(1)(a), F.S.

2. If the OFR denies the interim operational plan, the OFR shall revoke the license in accordance with Section 663.11(1)(a), F.S.

3.  No more than 2 consecutive interim operational plans may be approved.

(6) Reporting. The OFR may request periodic reporting as part of the ongoing monitoring of an international branch, international bank agency, international administrative office, or international representative office that is operating under an interim operational plan.

Rulemaking Authority 663.11(1)(b)2. FS. Law Implemented 663.11 FS. History–New         .

 

69U-140.005 Surrender of Agency License.

(1) General. An international banking corporation proposing to terminate the operation of its international branch, international administrative office, international representative office, or international bank agency by closure or by nonrenewal of the international branch, international administrative office, international representative office, or international bank agency license shall surrender such license in the manner prescribed by this rule.

(2) Preliminary Notice to OFR. An international banking corporation shall provide to OFR written notice of its intention to terminate the operation of its licensed office agency at least sixty (60) days prior to the proposed date of termination. The notice shall state that the proposed termination has been approved by the board of directors of the international banking corporation, or a committee or executive officer duly authorized by such board of directors, and shall include the proposed date of termination and the name of the officer in charge of the termination procedures, which officer may be the general manager or any other officer of the agency.

(3) The An international banking corporation shall provide to the depositors and other creditors of its licensed office agency a written notice of termination in a newspaper of general circulation in the county in which its agency is located for a period of two months, running on a weekly basis, prior to the proposed date of termination and shall provide OFR with an affidavit of publication showing that the requirement of publication has been satisfied. The international banking corporation shall, in addition, send a notice directly to the customers of the international branch, international administrative office, international representative office, or international bank agency, at least thirty (30) days prior to the proposed date of termination, and shall provide a sample copy of the notice to the OFR.

(4) Reports to OFR.

(a) At the time of its filing the notice required by subsection (2) of this rule, an international banking corporation shall file with OFR a report of the licensed office’s agency’s assets and liabilities together with attached schedules fully describing the amount and maturity of each of the licensed office’s agency’s actual and contingent liabilities, including any pending litigation.

(b) Within thirty (30) days after the date on which the notice required by subsection (2) of this rule is given to OFR, an international banking corporation shall file with OFR a report of the licensed office’s agency’s assets and liabilities, which report shall reflect the settlement of the licensed office’s agency’s aggregate liabilities as defined in Section 663.07(1), F.S. Any such liability shall be deemed settled if it is either discharged by payment or assumed by another office of the international banking corporation.

(c) Within sixty (60) days after the date on which the notice required by subsection (2) of this rule is given to OFR, an international banking corporation shall file with OFR a statement certified by an appropriate officer of such corporation that all the licensed office’s agency’s assets, except any assets, including dollar deposits maintained with other banks or investment securities, held in satisfaction of the agency’s asset maintenance or capital equivalency requirements, have been transferred to another office of the international banking corporation and that all the licensed office’s agency’s liabilities have been settled.

(5) Review by OFR. OFR may conduct an examination of the books of an international branch, international administrative office, international representative office, or international bank agency at any time after its receipt of the report required by paragraph (4)(a) of this rule and shall conduct a final examination of such books within seven (7) days of its receipt of the statement required by paragraph (4)(c) of this rule.

(6) Effective Date of Termination. An international branch, international administrative office, international representative office, or international banking agency's operations shall be deemed terminated effective upon the expiration of thirty (30) days from the date of filing the statement required by paragraph (4)(c) of this rule unless, within such thirty (30) day period, OFR provides to the international banking corporation a written notice specifying the ground for denial of such proposed termination. OFR shall not deny a request to terminate unless it learns of the existence of any outstanding claim or claims, or any outstanding regulatory obligations which the international banking corporation has not met, or against the international bank agency or unless it deems that the requirements of this rule have not been satisfied.

Rulemaking Authority 120.53(1)(b), 655.012(2) 655.012 (3), 663.06(2), 663.06(4), 663.13 FS. Law Implemented 120.53(1)(b), 658.95, 658.96, 663.02(1) 663.02(2), 663.06 663.06(1), 663.07, 663.09, 663.13 FS. History–New 12-27-87, Formerly 3C-15.016, 3C-140.005, Amended      .

 

69U-140.006 Investment Services.

(1) Pursuant to Section 663.061(1), F.S., an international bank agency may provide investment management and investment advisory services to non-residents and may also provide such services to residents when such services relate to international or foreign, or domestic investments. For the purposes of this rule the term “non-residents” has the same meaning as that term is defined pursuant to Section 663.01(10) 663.01(11), F.S.

(2) through (3) No change.

Rulemaking Authority 120.53(1)(b), 655.012(2) 655.012 (3), 663.061(3), 663.13 FS. Law Implemented 663.06(5), 663.061(1) FS. History–New 1-30-84, Formerly 3C-15.14, 3C-15.014, Amended 8-2-93, Formerly 3C-140.061, 3C-140.006, Amended      .

 

69U-140.008 Permissible Activities for an Agency.

(1) Generally, permissible activities shall include those activities permissible for corporations engaged in international banking or financial operations under the Edge Act, 12 U.S.C. sections 611-631, except such of those activities that are contrary to or inconsistent with any of the provisions of Chapter 663, F.S., or these rules. An international bank agency may engage in any activity permissible for an international administrative office or international representative office.

(2) Credit Balances. An international bank agency may maintain for the account of others credit balances necessarily incidental to, or arising out of, the exercise of its lawful powers. Provided that such credit balances are disbursed in accordance with subsection (3) of this rule, they shall not be considered to be functionally equivalent to demand deposits for purposes of Section 663.061(2) 663.06(5), F.S. Credit balances may include proceeds of loans to customers where such proceeds are not immediately disbursed; proceeds of incoming remittances; proceeds of collections made for customers’ accounts; funds delivered by customers to settle letters of credit accounts with the banking agency prior to settlement date; proceeds of export bills negotiated (i.e., drafts drawn under letters of credit issued by and received from other financial institutions); cash collateral resulting from any permissible activity with a customer; undisbursed proceeds of a loan retained by the banking agency in the nature of a compensating balance from the borrowing customer; funds delivered prior to execution of money transfers undertaken on behalf of customers; funds delivered or received on account of the purchase or sale of securities for the account of customers; and funds received from customers to cover currency transactions or as the result of currency transactions on behalf of customers.

(3) Disbursement of Credit Balances. A credit balance may be fully or partially disbursed either to the customers for whose accounts it is maintained or to third parties designated by the customer. Such disbursements may be made by check, draft, pre-authorized transfer, or otherwise. Disbursements by the customer to third parties, however made, shall not exceed an average of twenty per day per calendar month. Disbursements to the customer maintaining the credit balance and disbursements by the international bank agency on behalf of the customer to third parties may be made without limitation.

(4) Compliance with Disbursement Limitations. To insure compliance with subsection (3) of this rule, an international bank agency which maintains credit balances for the account of customers shall adopt procedures to monitor credit balance disbursements to third parties and promptly notify customers who exceed the limitations established in subsection (3) of this rule. Customers who are notified as provided in this subsection and who subsequently exceed the limitations established in subsection (3) of this rule shall be prohibited by the international bank agency at which their accounts are maintained from making further credit balance disbursements to third parties.

(5) Lending. An agency may provide financing and banking services to foreign businesses and foreign individuals in their foreign operations, and also in their operations in the United States or elsewhere, where such operations are in the stream of international business and commerce. An agency may also provide financing and banking services to United States businesses and customers in their foreign operations and in their operations in Florida and elsewhere that are clearly related to international commerce, such as operations directly connected with the production, storage, transportation and sale of goods for export or import if the importation or exportation of the goods is financed by the banking agency.

(6) Deposits.

(a) An international bank agency licensed by this state may accept, pursuant to Section 663.061, F.S., only the following deposits:

1. through 3. No change.

4. International banking facility deposits, as defined by Rule 69U-100.003 69U-17.002, F.A.C.

(b) No change.

(7) Pursuant to the authority contained in subsections (6) and (7) of Section 663.061 663.06, F.S., and by virtue of the provisions of the federal International Banking Act of 1978 (Public Law 95-369, 92 Stat. 607) relating to federal agencies, as defined therein, and those provisions of the Code of Federal Regulations as adopted by the Comptroller of the Currency of the United States pursuant to said International Banking Act of 1978 relating to federal agencies (12 CFR Part 28; 44 Federal Register 65381, November 13, 1979), notwithstanding the limitations set forth above, the operations of an international banking corporation at its international bank agency licensed in Florida by OFR:

(a) No change.

(b) Shall be subject to all the same duties, restrictions, penalties, liabilities, conditions, and limitations that would apply under the Financial Institutions Codes Florida Banking Code to a state bank doing business in Florida.

Rulemaking Authority 655.012(2), 663.061(3), 663.13 FS. Law Implemented 663.061, 663.06(5) FS. History–New 5-4-78, Amended 2-24-80, 7-21-81, 12-2-85, Formerly 3C-15.03, Amended 5-27-87, 5-18-88, Formerly 3C-15.003, Amended 11-5-97, Formerly 3C-140.008, Amended 10-29-12,  .

 

69U-140.015 Capital Equivalency or Asset Maintenance.

(1) No change.

(2) Deposit Arrangements. The capital equivalency deposits shall be maintained pursuant to a deposit agreement between the international banking corporation and the depository bank on Form OFR-U-29, Capital Equivalency Deposit Agreement, which shall be available from OFR. Funds deposited in investment securities placed in safekeeping at the depository bank to satisfy the capital equivalency requirements shall: be segregated on the books and records of the depository bank; not be diminished in aggregate value, by withdrawal, without the prior approval of OFR; be pledged to OFR; and be free from any lien, charge, right of set off, credit or preference in connection with any claim of the depository bank against the international banking corporation. So long as it continues business in the ordinary course, the international banking corporation shall be permitted to collect income on the securities and the funds so deposited and will be allowed from time to time to exchange such securities. In the event of the voluntary closure of the international bank agency or international branch, OFR shall determine the time for the release of the capital equivalency dollar deposits and investment securities. The time for release shall be based upon a determination by OFR that satisfactory arrangements have been made by the international banking corporation for the payment of creditors and the settlement of depositors of the international bank agency or international branch.

(3) Maintenance of a Capital Equivalency Ledger Account. Each international bank agency or international branch shall maintain a capital equivalency account and shall record for each business day the amount of liabilities requiring capital equivalency coverage. On the last business day of each month, the average daily balance of such liabilities shall be computed. Based on this computation, any increase in the dollar deposits or investment securities that may be necessary to maintain the minimum capital equivalency amount or capital equivalency ratio shall be made within the first seven business days of the following month. If an international banking corporation has two or more international bank agencies or international branches, the capital equivalency deposits and the amount of liabilities requiring capital equivalency coverage shall be determined on an aggregate basis.

(4) through (11) No change.

Rulemaking Authority 655.012(2), 663.13, 663.07(1) FS. Law Implemented 663.07(1), (3), (5), (7), (9), 663.12(4) FS. History–New 3-10-82, Amended 11-21-85, Formerly 3C-15.10, Amended 10-5-89, Formerly 3C-15.010, Amended 8-24-93, Formerly 3C-140.007, 3C-140.015, Amended 10-29-12,     .

 

69U-140.016 Capital Accounts and Capital Ratio Standards.

(1) To qualify for a license to operate an international branch, international bank agency, international administrative office, or international representative office, an international banking corporation must have an average capital ratio of 5.0 percent or greater.  For the purposes of this section, “average capital ratio” means capital accounts divided by the average of the prior 4 quarters of average assets.

(2) In no case may the total capital accounts of the international banking corporation be less than the minimum required under s. 658.21(2) to establish a state bank. An international banking corporation that operates an international branch, international bank agency, international administrative office, or international representative office under this part must annually certify the total capital accounts of the international banking corporation.  Such certification must be submitted to the OFR on a Form OFR-U-57, Certificate of Capital, effective 01/2018, herein incorporated by reference and available at https://www.flrules.org/XXXXX.

(3) The OFR may not deem the proposed capitalization of the international banking corporation to be adequate unless the international banking corporation is considered well-capitalized in accordance with the capital adequacy standards of its home country.  An international banking corporation seeking licensure to operate an international branch, international bank agency, international administrative office, or international representative office under this part must certify that it is considered well-capitalized in accordance with the capital adequacy standards of its home country.

Rulemaking Authority 663.055(4) FS. Law Implemented 663.04(5), 663.05, 663.055, 663.06, 663.08 FS. History-New       .

 

69U-140.017 Acceptances.

(1) through (4) No change.

Rulemaking Authority 655.012(2) 655.012 (3), 663.083(1), 663.13 FS. Law Implemented 120.53(1)(b), 663.083(1) FS. History–New 11-4-84, Formerly 3C-15.15, 3C-15.015, 3C-140.017, Amended     .

 

69U-140.018 Minimum Audit Procedures ‒ International Bank Agencies.

(1) Scope, Records in English. Each state licensed international bank agency shall keep a set of accounts and records in English, reflecting all transactions on a daily basis. The international banking corporation of each state licensed bank agency shall perform, or shall cause to be performed, an audit of the agency within each calendar year and within 15 months of the previous audit, in compliance with the following minimum audit requirements. If the audit is performed on a departmental or continuous basis, it should be initiated during the calendar year and within 15 months of the previous audit.

(2) Persons Qualified to Perform Audits. Persons who perform audits for the international bank agencies must be independent of any manager or employee in charge of operating the international agency and must qualify pursuant to one of the following classes:

(a) through (b) No change.

(3) through (7) No change.

Rulemaking Authority 655.012(2) 655.012 (3), 655.045(3), 663.09, 663.13 FS. Law Implemented 655.045(3), 663.09 FS. History–New 3-29-83, Formerly 3C-15.12, Amended 8-19-86, 5-22-90, 10-29-91, 2-17-92, Formerly 3C-15.012, Amended 3-11-01, Formerly 3C-140.018, Amended     .

 

69U-140.019 Financial Reports.

(1) through (8) No change.

Rulemaking Authority 120.53(1)(b), 655.012(2) 655.012 (3), 663.13 FS. Law Implemented 663.07, 663.09 FS. History–New 2-22-79, Amended 2-24-80, 7-21-81, 4-29-84, 8-15-85, Formerly 3C-15.06, Amended 8-19-86, 3-22-92, Formerly 3C-15.006, Amended 4-18-93, 1-31-96, Formerly 3C-140.009, 3C-140.019, Amended     .

 

69U-140.022 Service of Process.

An international banking corporation operating an international branch, an international bank agency, an international administrative office, or an international representative office a state-chartered agency in this state is subject to service of processing at the location of such office agency. Service of complaints, summonses, notices, orders, subpoenas and any other legal paper required to be served upon an international banking corporation at any such location may be made in accordance with the law and rules governing the court in which the action is, was, or is to be pending.

Rulemaking Authority 655.012(2) 655.012 (3), 663.13 FS. Law Implemented 48.081, 48.181, 48.193, 120.53(1)(c), 120.60(6), 663.06(6), 663.13 FS. History–New 2-24-80, Amended 7-21-81, Formerly 3C-15.07, 3C-15.00, 3C-140.022, Amended     .

69U-140.023 Reciprocity.

The applicant must establish to the satisfaction of the OFR, that the country in which the applicant is organized permits any financial institution licensed or chartered by any state or any federal bank regulatory agency in the United States Florida banks to establish similar facilities therein or exercise similar powers to those for which an application has been made. Similar facilities or the exercise of similar powers shall include the indirect maintenance of such facilities or exercise of such powers through the ownership of a subsidiary company. The information submitted may consist of data as to the existing activities of foreign banks in the country in which the applicant is organized, an opinion of a licensed member of the legal profession of the country in which the applicant is organized or a certificate of the appropriate bank supervisory authority thereof. In determining whether the requisite reciprocity exists, the criteria and terms and conditions of admission to the foreign country shall be considered sufficiently similar if, taken as a whole, with due regard to local banking practices, they are as favorable as the criteria and the terms and conditions existing in Florida.

Rulemaking Authority 655.012(2) 655.012 (3), 663.13 FS. Law Implemented 120.60(4), 663.04(2), 663.05(7)(a) FS. History–New 5-4-78, Amended 7-21-81, Formerly 3C-15.05, 3C-15.005, 3C-140.023, Amended     .

 

69U-140.120 Examination Fees.

(1) through (2) No change. 

Rulemaking Authority 655.012(2) 655.012 (3), 663.12(3) FS. Law Implemented 663.12(3) FS. History–New 6-1-97, Formerly 3C-140.120, Amended     .

 

NAME OF PERSON ORIGINATING PROPOSED RULE: Jeremy W. Smith, Director, Division of Financial Institutions

NAME OF AGENCY HEAD WHO APPROVED THE PROPOSED RULE: Financial Services Commission

DATE PROPOSED RULE APPROVED BY AGENCY HEAD: August 16, 2017

DATE NOTICE OF PROPOSED RULE DEVELOPMENT PUBLISHED IN FAR: June 30, 2017