Applications, Principles of Adequate Supervision of an International Banking Corporation's Foreign Establishments, Interim Operational Plans, Surrender of Agency License, Investment Services, Permissible Activities for an Agency, Capital Equivalency ...

Notice of Change/Withdrawal

 

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-140.0045              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-140.023                            Reciprocity

69U-140.120                            Examination Fees

NOTICE OF CHANGE

Notice is hereby given that the following changes have been made to the proposed rule in accordance with subparagraph 120.54(3)(d)1., F.S., published in Vol. 43 No. 161, August 18, 2017 issue of the Florida Administrative Register.

The following changes are made to the proposed rules following comments made by the Joint Aministrative Procedures Committee:

69U-140.002 Applications.

(1) 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 Bank Agency 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. No change.

2. The effective date of the proposed transaction. 

3. through 6. No change.

(5) No change.

(a) For the purposes of this subsection, “safe and sound manner” means operating without violating any prior agreement in writing with, or order issued by, of a state or federal regulatory agency, or engaging in any practice, conduct, or violation found by the OFR to be contrary to Title XXXVIII, Florida Statutes 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 branch administrative office or international bank agency 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 administrative office branch or international representative office 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 international internationl branch, international bank agency, international administrative office, or international representative office.

(a) The original and one copy 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) through (i) No change.

(7) No change.

Rulemaking Authority 655.012(2), 663.05(4), 663.05(5), 663.05(6), 663.05(9), 663.0601(2), 663.10, 663.304, 663.13 FS. Law Implemented 119.071(5)(a), 663.04, 663.05, 663.0601, 663.10, 663.304 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) No change.

(2) Section 663.05(9), F.S., requires OFR to establish general principles to evaluate the adequacy of supervision of an international banking corporation's foreign establishments. These principles must be based upon the need for cooperative supervisory efforts and consistent regulatory guidelines and shall address, at a minimum, the capital adequacy, asset quality, management, earnings, liquidity, internal controls, audits and foreign exchange operations and positions of the international banking corporation.

(2)(3) An international banking corporation with foreign establishments is considered adequately supervised if it is subject to consolidated supervision. Consolidated supervision is supervision which enables the central bank or bank regulatory agency of the home country (home country supervisor) to evaluate:

(a) through (b) No change.

(3)(4) An international banking corporation with no foreign establishments is considered adequately supervised if the home country supervisor can evaluate the safety and soundness of the international banking corporation's operations through its offices or subsidiaries located in the home country.

(4)(5) The home country supervisor is deemed to be able to evaluate the safety and soundness of the international banking corporation, including its offices or subsidiaries, if the home country supervisor maintains information on the following regulatory components:

(a) through (d) No change.

(e) The capital adequacy of the international banking corporation, its offices or subsidiaries as specified by the capital adequacy guidelines in the home country or the capital adequacy guidelines established by the Basel Committee on Banking Supervision, Basel III: A global regulatory framework for more resilient banks and banking systems Basle Committee on Bank Supervision (May 1983),  which is incorporated by reference and available by mail from the Office of Financial Regulation, 200 East Gaines Street, Tallahassee, Florida 32399-0371;

(f) through (h) No change.

(5)(6) Adequate supervision as described in subsections (2) (3) and (3) (4) does not necessarily require supervision of companies which control the international banking corporation or require supervision of companies under common control with the international banking corporation but not in the international banking corporation’s chain of control. However, in cases where a holding company is the only controlling element in a banking group, holding company supervision by a home country supervisor shall be required when it is needed to ensure consolidated supervision of all banking entities in the group.

(6)(7) In cases where a holding company is not supervised, adequate supervision shall be considered to exist if the home country supervisor regulates transactions between the international banking corporation and controlling persons or entities under common control.

(7)(8) An international banking corporation, its offices or subsidiaries, shall be considered adequately supervised if it is subject to comprehensive supervision. Comprehensive supervision is supervision which ensures that the supervisory processes and procedures are designed to inform the home country supervisor about the international banking corporation’s: financial condition, including capital position; asset quality; and the capability of management.

(8)(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) through (b) No change.

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

 

69U-140.0045 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)1. – 3., F.S. 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) through (h) No change.

(i) If there are any changes to the officer or manager overseeing the operations of the international branch or , international bank agency, international administrative office, or international representative office as part of the interim operational plan, the international branch or , international bank agency, international administrative office, or international representative office shall submit Attachments 4(a) Biographical Report and 4(b) Authorization for Release of Confidential Information to the Form OFR-U-20, Application For the Establishment of an International Branch or International Bank Agency in the State of Florida, which is incorporated by reference in Rule 69U-140.002(1), F.A.C., 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. 

(j) If there are any changes to the officer or manager overseeing the operations of the international administrative office or international representative office as part of the interim operational plan, the international administrative office or international representative office shall submit Attachments 4(a) Biographical Information and 4(b) Authorization for Release of Confidential Information to the Form OFR-U-20A, Application For the Establishment of an International Administrative Office or International Representative Office in the State of Florida, which is incorporated by reference in Rule 69U-140.002(1), F.A.C., for each newly proposed officer or manager.    

(3) through (6) No change.

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

 

69U-140.005 Surrender of License.

(1) through (6) No change.

Rulemaking Authority 655.012(2, 663.06(2), 663.06(4), 663.13 FS. Law Implemented 658.95, 658.96, 663.02(1), 663.06, 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) through (3) No change.

Rulemaking Authority 655.012(2), 663.061(1), 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 International Bank Agency.

(1) No change.

(2) 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), 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 international bank 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 international bank 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) through (4) No change.

(5) An international bank 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 international bank 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 international bank banking agency.

(6) through (7) No change.

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) 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) through (3) No change.

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), 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) through (3) No change.

(4) To satisfy the requirements of this section, each internal audit shall:

(a) No change.

(b) Be conducted in accordance with generally accepted auditing standards principles as set forth in the 1996 GAAS Guide and shall include an assessment of each of the following areas:

1. Asset accounts;

2. Liability accounts;

3. Regulatory capital;

4. Income and expense accounts; and

5. Contingent liabilities and off-balance sheet activities.

(5) through (7) No change.

Rulemaking Authority 655.012(2), 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 655.012(2), 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-140.023 Reciprocity.

No change.

Rulemaking Authority 655.012(2), 663.13 FS. Law Implemented 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), 663.12(3) FS. Law Implemented 663.12(3) FS. History–New 6-1-97, Formerly 3C-140.120, Amended     .

PROPOSED RULE EFFECTIVE DATE: JANUARY 1, 2018

 

Following comments made by the Joint Administrative Procedures Committee, changes were also made to material incorporated by reference as set forth below:

Form OFR-U-20: Changed references to Addendums 1 and 2 to Attachments 4(a) and 4(b). On page 10, number 19 was revised to replace Chapter 607 with Section 607.1503, Florida Statutes.

Form OFR-U-20E: On page 2, number 1 was revised to delete requirement to submit a supplemental Interagency Biographical Report.  Instead, the Form has been revised to incorporate the questions from the Interagency Biographical Report as Attachment 1(a) and an Authorization for Release of Confidential Information as Attachment 1(b). Further, a request to provide the information requested in the biographical forms (Attachments 1(a) and 1(b)) for the manager of the proposed office was added to the Instructions to the Form.

Form OFR-U-20A: On page 8, number 14 was revised to replace Chapter 607 with Section 607.1503, Florida Statutes.  On Attachment 4(b), references to “international trust company” and “international trust company representative office” were corrected to “international banking corporation” and “international administrative office or international representative office,” respectively. 

Form OFR-U-20A ABR: On Attachment 4(b), references to “international trust company” and “international trust company representative office” were corrected to “international banking corporation” and “international administrative office or international representative office,” respectively. 

Form OFR-U-20B: The Form has been revised to incorporate Attachments 4(a) (Biographical Information) and 4(b) (Authorization for Release of Confidential Information) as referenced on page 2, number 1.