69U-130.105. Principles of Adequate Supervision of an International Trust Entity’s Foreign Establishments

(1) Section 663.406(8)(c), F.S., states a license shall not be issued to an international trust entity for the purpose of operating an international trust company representative office in this state unless the international trust entity is adequately supervised by the appropriate regulatory agency of its home country.

(2) Section 663.406(9), F.S., requires the commission to establish general principles to evaluate the adequacy of supervision of an international trust entity’s foreign establishments. These principles must be based upon the need for cooperative supervisory efforts and consistent regulatory guidelines and must address, at a minimum, the capital adequacy, asset quality, management, earnings, liquidity, internal controls, audits and foreign exchange operations and positions of the international trust entity.

(3) An international trust entity with foreign establishments is considered adequately supervised if it is subject to consolidated supervision. Consolidated supervision is supervision which enables the home country supervisor to evaluate:

(a) The safety and soundness of the international trust entity’s operations located within the home country supervisor’s primary jurisdiction; and,

(b) The safety and soundness of the operations performed by the international trust entity’s offices, or subsidiaries, or any affiliates that are directly involved in or facilitate the financial services functions, or fiduciary activities of the international trust entity, wherever located.

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

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

(a) The technical competence and administrative ability of the management of the international trust entity;

(b) The adequacy of the operational, accounting, and internal control systems of the international trust entity, particularly the international trust entity’s ability to monitor and supervise the activities of its offices or subsidiaries wherever located;

(c) The adequacy of asset management and asset administration policies and procedures;

(d) The capital adequacy of the international trust entity, its offices or subsidiaries as specified by any capital adequacy guidelines in the home country;

(e) The earnings and liquidity of the international trust entity; and,

(f) The external and internal auditors’ reports as well as any management comment letters or any documented corrective action by management.

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

(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 trust entity and controlling persons or entities under common control.

(8) An international trust entity, 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 trust entity’s financial condition, including capital position; asset quality; and the capability of management.

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

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

(b) Is authorized to obtain information, by examination, audits or by other means, on the domestic and foreign operations of the international trust entity, including its offices and subsidiaries, and the authority to demand financial reports which permit analysis of the consolidated condition of the international trust entity.

Rulemaking Authority 655.012(2), 663.406(9), 663.414 FS. Law Implemented 663.406(9), 663.414 FS. History–New 1-1-18.