The OFR proposes to substantially amend Rule 69U-100.005, F.A.C., to conform to and implement legislative amendments to Section 655.50, Florida Statutes (“F.S.”), the Florida Control of Money Laundering and Terrorist Financing in Financial ...

 

DEPARTMENT OF FINANCIAL SERVICES

FSC - Financial Institution Regulation

RULE NOS.:RULE TITLES:

69U-100.005Florida Control of Money Laundering in Financial Institutions

69U-100.03852Disapproval of Directors or Executive Officers

69U-100.045Examination Manuals and Referenced Standards

69U-100.948Reporting of Significant Events or Conditions

PURPOSE AND EFFECT: The OFR proposes to substantially amend Rule 69U-100.005, F.A.C., to conform to and implement legislative amendments to Section 655.50, Florida Statutes (“F.S.”), the Florida Control of Money Laundering and Terrorist Financing in Financial Institutions Act. In particular, the proposed amendment updates the rule’s title, the currency transaction reporting process and forms, and citations to federal regulations, and adds a new subsection regarding requirements and forms for reporting suspicious activity.

The OFR also proposes to amend Rule 69U-100.03852, F.A.C., to conform to recent legislative changes to Sections 658.21 and 658.33, F.S., which governs the qualification requirements for officers and directors of banks and trust companies; Rule 69U-100.045, F.A.C., to incorporate the most recent Federal examination manuals, which have been updated since they were last incorporated; and Rule 69U-100.948, F.A.C., which governs Reporting of Significant Events or Conditions, to delete references to, and requirements of, Section 658.68, F.S., and Rule 69U-120.680, F.A.C., as this statute and rule no longer exist. In addition, the OFR proposes to make amendments to each rule for consistency and clarity.

SUMMARY: The OFR proposes to substantially amend Rule 69U-100.005, F.A.C., to conform to and implement legislative amendments to Section 655.50, Florida Statutes (“F.S.”), the Florida Control of Money Laundering and Terrorist Financing in Financial Institutions Act; Rule 69U-100.03852, F.A.C., to conform to recent legislative changes to Sections 658.21 and 658.33, F.S.; Rule 69U-100.045, F.A.C., to incorporate the most recent Federal examination manuals; and Rule 69U-100.948, F.A.C., which governs Reporting of Significant Events or Conditions, to delete references to, and requirements of, a repealed rule and statute. In addition, the OFR proposes to make amendments to each rule for consistency and clarity.

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.

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), 655.0385(4), 655.50(5) FS.

LAW IMPLEMENTED: 655.045, 655.948, 655.0385, 658.21, 658.33, 665.013, 655.50 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-100.005 Florida Control of Money Laundering and Terrorist Financing in Financial Institutions.

(1) Refer to Section 655.50(3), F.S., for the meaning of the following terms used in this rule: “currency,” “financial institution,” “financial transaction,” “monetary instruments,” “report,” “specified unlawful activity,” “suspicious activity,” and “transaction.” 

(2)(1) Requirement to Report Currency Transactions:

(a) As required by Section 655.50, F.S., Eevery financial institution shall keep a record and file a report with the Office of Financial Regulation (OFR) of each financial transaction occurring in this state known to the financial institution it which to involves involve currency or other monetary instrument that: of a value in excess of $10,000 or to involve the proceeds of specified unlawful activity. 

1. has a value greater than $10,000;

2. involves the proceeds of racketeering activity as that term is defined in Section 895.02, F.S.; or

3. is designed to evade the reporting requirements of Section 655.50, F.S., Chapter 896, F.S., or similar state or federal law. 

(b) The report shall be filed on Form OFR-U-CTR Currency Transaction Report (___/2018), which is incorporated herein by reference and available at http://www.flrules.org/Gateway/reference.asp?No=Ref-XXXXX. Multiple currency transactions shall be treated as a single transaction if the financial institution has knowledge that they are made by or on behalf of any person, and result in either cash in or cash out totalling more than $10,000 during any one banking day as defined in Section 658.70, F.S.

(c) Any financial institution may keep a record and file a report with OFR of any financial transaction, regardless of the value of the property involved, if it suspects the transaction to involve the proceeds of specified unlawful activity. The report shall also be filed on Form OFR-U-CTR and include as much of the information that is reasonably available at the time the report is made.

(d) Reports of currency transactions shall be filed with OFR no later than the 15th day after the date of the transaction. The reports required by paragraphs (1)(a) and (b) above, shall include all the information listed below. The reports referenced to in paragraph (1)(c), shall include as much of the following information which is reasonably available at the time the report is made.

1. Conductor – The identity of the individual who conducted the transaction, including first and last name, and middle initial; number and street address; city, state and zip code, or country, if not U.S.; social security number; business, occupation or profession; date of birth and method of verification of identity; or indicate reason if not complete, if applicable.

2. Beneficiary – The identity of the individual(s) or organization(s) for whom the transaction was completed, if different from the individual(s) who conducted the transaction, including first and last name and middle initial of the individual(s), or the organization’s name if a business; social security number or employer identification number; number and street address; city, state and zip code or country, if not U.S.; and date of birth, if an individual(s).

3. Account Information – The customer’s account number(s) and type(s) of account(s) affected by the transaction.

4. Description of Transaction:

a. Nature of transaction – deposit, withdrawal, check cashed, check purchased, currency exchange, for or from wire transfer, security purchased or redeemed, CD/money market purchased or redeemed, shipped to or received from abroad, mail/night deposit, or other; and,

b. Whether U.S. currency involved or currency of another nation (and name of nation); and,

c. Amount of cash in and amount of cash out; amount of cash in and cash out in U.S. $100 bills or higher; date of transaction; and,

d. Number of negotiable instruments involved and number of wire transfers involved; the total amount of all negotiable instruments and all wire transfers in U.S. dollar equivalent.

5. The identity of the financial institution reporting the financial transaction; including the name of the financial institution, the street address, city, state, and zip code where the transaction occurred; and employer identifying number.

6. The preparer’s name, approval date and telephone number.

(2) Requirements for Filing Reports:

(a) Paper Filing – The information listed in paragraph (1)(d) above, or a legible paper duplicate of a completed Internal Revenue Service Form 4789, Currency Transaction Report, shall be received by OFR no later than the 15th day after the date of the reportable transaction.

(b) Electronic Filing – Reportable transactions may be filed with OFR on magnetic media in the same format as required by the Specifications for Magnetic Media Filing of Currency Transaction Reports (Form 4789) published by the Internal Revenue Service, U.S. Department of the Treasury, or as otherwise required by OFR.

(c) To be accepted into the OFR’S CTR Electronic Filing Program, a copy of Form OFR-U-69, Application for Magnetic Media Reporting of Cash Transactions, which is hereby incorporated by reference, may be obtained from OFR. The completed application and test tape must be submitted to OFR.

When the application has been approved by OFR, an initial receipt date for electronic submissions shall be established. All electronic reports of currency transactions shall be received by OFR within 45 days from the date of the transaction and not more than 20 days after receipt of the information by the Internal Revenue Service. Form OFR-U-70, Transmittal of Currency Transaction Reports on Magnetic Media, which is hereby incorporated by reference, must be submitted with each electronic filing to OFR. For multiple filers, Form OFR-U-71, Transmittal of Currency Transaction Reports on Magnetic Media for Multiple Filers, which is hereby incorporated by reference, must also be submitted with Form OFR-U-70. A copy of the forms may be obtained from OFR.

(3) Exemptions Allowed for Currency Transactions: and Records Required to be Maintained:

(a) Financial institutions are not required to file reports on transactions with exempt persons as provided in 31 C.F.R. § 1020.315. Federal Reserve Banks, with Federal Home Loan Banks, or with other domestic financial institutions as allowed by 31 C.F.R., s. 103.22(b)(1)(i) and (ii). However, financial institutions shall maintain the name and address of each financial institution providing correspondent services to the financial institution.

(b) Except for any of the twelve Federal Reserve Banks or any exempt person as described in 31 C.F.R. § 1020.315(b)(1) to (3), a financial institution shall designate an exempt person by filing a completed Form OFR-U-EP Designation of Exempt Person (___/2018), which is incorporated herein by reference and available at http://www.flrules.org/Gateway/reference.asp?No=Ref-XXXXX. Such designation must occur by the close of the 30-calendar day period beginning after the day of the first reportable transaction in currency with that person sought to be exempted. Every financial institution may exempt from the reporting requirements of Section 655.50, F.S., those transactions which are exempted from the reporting requirements of 31 U.S.C., s. 5313 and 31 C.F.R., s. 103.22(b)(2). The transactions exempted must be in amounts which the financial institution may reasonably conclude do not exceed amounts commensurate with the customary conduct of the lawful, domestic business of that customer, as required by 31 C.F.R., s. 103.22(c).

(c) A financial institution may not place a customer on its exempt list without first preparing a written statement, signed by the customer, describing the customary conduct of the lawful domestic business of that customer and a detailed statement of reasons why such person is qualified for an exemption, as required by 31 C.F.R., s. 103.22(d), (e), and (f).

(d) All records maintained pursuant to this section shall be made available to OFR for inspection and copying and shall be submitted to OFR within 15 days of request. 

(4) Requirement to Report Suspicious Activity:

(a) Every financial institution shall file a report with OFR of any suspicious activity. The report shall be filed on Form OFR-U-SAR Suspicious Activity Report (__/2018), which is incorporated herein by reference and available at http://www.flrules.org/Gateway/reference.asp?No=Ref-XXXXX. 

(b) Any financial institution may file a report of suspicious activity for any transaction that it believes is relevant to the possible violation of any law or regulation. The report shall also be filed on Form OFR-U-SAR and include as much of the information that is reasonably available at the time the report is made. 

(c) A report of suspicious activity shall be filed with OFR no later than 30 calendar days after the date the financial institution initially detects facts that may constitute a basis for filing the report. If no suspect was identified on the date of the detection of the incident requiring the filing, a financial institution may delay filing a Form OFR-U-SAR for an additional 30 calendar days to identify a suspect. In no case shall reporting be delayed more than 60 calendar days after the date of initial detection of a reportable transaction. In situations involving violations that require immediate attention, such as, for example, ongoing money laundering schemes, the financial institution shall immediately notify, by telephone, an appropriate law enforcement authority in addition to filing timely a Form OFR-U-SAR. 

(5) All reports and designations filed pursuant to this rule shall be submitted electronically to the Director of the Division of Financial Institutions, Office of Financial Regulation at [e-mail]. The filing shall be deemed received on the date the OFR issues a confirmation of submission to the filer. 

(6) The timely filing of the reports required by 31 U.S.C. § 5313 and 31 C.F.R. Part 1020 with the appropriate federal agency is deemed compliance with the reporting requirements of this rule.

Rulemaking Authority 655.012(2)(3), 655.50(5)(3), (4) FS. Law Implemented 655.50 FS. History–New 1-22-85, Formerly 3C-1.22, Amended 10-18-90, Formerly 3C-1.022, 3C-100.005, Amended _________.

 

69U-100.03852 Disapproval of Directors or Executive Officers.

(1) through (4) No change.

(5) Regulatory Standards for Evaluating Requests for Proposed Directors or Executive Officers, or Equivalent Positions.

(a) through (b) No change.

(c) Unless OFR finds, in writing, that the proposed individual has shown rehabilitation, the proposed director or executive officer, or equivalent position, shall not be eligible for appointment or for permanent appointment or interim employment, if the individual:

1. through 3. No change.

4. Has been convicted or found guilty, regardless of adjudication, of a violation of Section 655.50, F.S., relating to the Florida Control of Money Laundering and Terrorist Financing in Financial Institutions Act; Chapter 896, F.S., relating to offenses related to financial transactions; or any similar state or federal law,

5. through 6. No change.

(d) No change.

(e) If an individual is proposed for the position of chief executive officer, president, or equivalent position, he or she shall have had at least 1 year of direct experience as an executive officer, financial institution regulator, or director of a financial institution within the last 5 3 years. A financial institution may request a waiver of this requirement by writing to the Deputy Director of the Division of Financial Institutions, Office of Financial Regulation detailing why the proposed officer’s overall experience and expertise compensates for the lack of recent, direct financial institution or financial institution regulator experience. OFR shall grant a request for a waiver only when it is clear that the proposed officer’s overall experience and expertise suggests he or she will perform satisfactorily in office.

(f) No change.

Rulemaking Authority 655.012(2) 655.012(3), 655.0385(4) FS. Law Implemented 655.0385, 658.21, 658.33, 665.013 FS. History–New 12-14-93, Amended 3-20-00, 12-28-00, 2-3-02, Formerly 3C-100.03852, Amended____.

 

69U-100.045 Examination Manuals and Referenced Standards.

The OFR uses the examination manuals referenced by this rule in the implementation of its examination responsibilities. The OFR examiners use these manuals as reference guidelines when conducting safety and soundness examinations of financial institutions. The material incorporated by reference in this rule may also be obtained from the Florida Office of Financial Regulation, Division of Financial Institution's website at http://www.flofr.com/StaticPages/DivisionOfFinancialInstitutions.htm. The following manuals are hereby incorporated by reference into the body of printed materials that the OFR uses for the purposes of conducting examinations of financial institutions to assess the performance and condition of such institutions:

(1) No change.

(2) Federal Deposit Insurance Corporation, DSC Risk Management Manual of Examination Policies (4/2018 4/2015), accessible at https://www.flrules.org/XXXXX. https://www.flrules.org/gateway/reference.asp?No=Ref-06103.

(3) Federal Deposit Insurance Corporation, Trust Examination Manual (2018 2008), accessible at https://www.flrules.org/XXXXX. https://www.flrules.org/gateway/reference.asp?No=Ref-05583.

(4) National Credit Union Administration Examiner’s Guide (4/2018 6/2002), accessible at https://www.flrules.org/XXXXX. https://www.flrules.org/Gateway/reference.asp?No=Ref-05584.

(5) through (6) No change.

Rulemaking Authority 655.012(2) FS. Law Implemented 655.045 FS. History-New 10-24-93, Amended 1-2-95, 6-4-95, 5-22-96, Formerly 3C-100.045, Amended 9-2-10, 7-27-15, 12-9-15, _____.

 

69U-100.948 Reporting of Significant Events or Conditions.

(1) No change.

(2)(a) No change.

(b) Other financial institutions may request a determination that they are operating in a safe and sound manner by writing to the Deputy Director of the Division of Financial Institutions, Office of Financial Regulation OFR detailing why the institution believes it is operating in a safe and sound manner. Any such request must include supporting documentation of improvements in the institution and its operations. The request shall be approved only when OFR concludes that, because of the documented improvements, the institution would be rated "1", "2" or "3", with a management rating of "1" or "2" were a safety and soundness examination conducted on the date of the institution's request. For example, the Deputy Director of the Division of Financial Institutions, Office of Financial Regulation OFR may approve a request from an institution that was poorly rated in its last safety and soundness examination because of inadequate capital if the institution documents that it increased capital sufficiently to address the inadequacy.

(3) No change.

(4) All non-exempt state financial institutions shall disclose to OFR, within the timeframes specified in subsection (1), the following events or conditions:

(a) No change.

(b) The failure to meet the minimum daily liquidity requirement specified in Section 658.68, F.S., and Rule 69U-120.680, F.A.C., on any business day;

(b)(c) Any suspected criminal act perpetrated against the state financial institution, or any of its subsidiaries or service corporations. For purposes of this section, "suspected criminal act" shall mean that there is a reasonable basis for believing that a crime has occurred, is occurring, or may occur;

(c)(d) The addition, resignation or termination of a director, executive officer, independent internal auditor, or independent credit review officer;

(d)(e) The acquisition or divestiture of an asset or related or similar assets, which in the aggregate on any single business day totals 20 percent or more of the state financial institution's capital reported in the most recent Consolidated Report of Condition, quarterly Thrift Financial Report, or Call Report. Assets listed in Section 657.042(1) or 658.67(1), F.S., are exempted from this requirement;

(e)(f) Any change in the state financial institution's outside general counsel or outside independent auditor;

(f)(g) Any extension of credit to an executive officer or his related interests that, when aggregated with other extensions of credit to that executive officer or his related interests, exceeds 15 percent of the state financial institution's capital accounts as reported in the most recent Consolidated Report of Condition, quarterly Thrift Financial Report, or Call Report.

(g)(h) The acquisition or reclassification of any earning asset to "non-accrual" status which, when combined with other non-accrual assets, in the aggregate totals 15% or more of the state financial institution's assets as reported in the most recent Consolidated Report of Condition, quarterly Thrift Financial Report, or Call Report; or

(h)(i) The acquisition or divestiture of a wholly owned or majority-owned subsidiary or service corporation.

(5) All reportable conditions or events must be disclosed on official letterhead. However, an institution is in compliance with paragraph (4)(b) (4)(c), if it provides OFR with a copy of the federal "Suspicious Activity Report" filed with the appropriate federal regulatory or law enforcement agency. Such report shall constitute proper notice of any suspected criminal act perpetrated against a financial institution.

(6) No change.

Rulemaking Authority 655.012 FS. Law Implemented 655.948 FS. History-New 11-2-92, Amended 6-20-00, 12-28-00, Formerly 3C-100.948, 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: June 13, 2018

DATE NOTICE OF PROPOSED RULE DEVELOPMENT PUBLISHED IN FAR: April 5, 2018