Florida Senate - 2016 PROPOSED COMMITTEE SUBSTITUTE Bill No. SB 1106 Ì626078DÎ626078 576-04146-16 Proposed Committee Substitute by the Committee on Appropriations (Appropriations Subcommittee on General Government) 1 A bill to be entitled 2 An act relating to international trust entities; 3 amending s. 663.01, F.S.; defining the term 4 “international trust entity”; creating s. 663.041, 5 F.S.; providing for a moratorium for a specified 6 timeframe on enforcement by the Office of Financial 7 Regulation of certain licensure requirements for 8 certain organizations and entities providing services 9 to international trust companies; providing conditions 10 to apply the moratorium to specified persons of the 11 organization or entity; providing for construction; 12 specifying requirements for a letter to the office to 13 request qualification as a party to the moratorium; 14 requiring the office to confirm specified findings 15 when processing a request; specifying circumstances 16 for establishing adequate supervision; providing 17 procedures and timeframes for the office’s processing 18 of requests and the office’s requests for additional 19 information; providing timeframes for the office to 20 confirm with the organization or entity whether it has 21 been confirmed as a party to the moratorium; requiring 22 the office to issue a notice of denial if it 23 determines that an organization or entity is not a 24 party to the moratorium; providing that a denied 25 organization or entity may request a certain hearing 26 to contest the denial; providing for construction if 27 certain timeframes are not met; authorizing the office 28 to conduct an onsite visitation of an organization or 29 entity for a specified purpose until a specified time; 30 requiring the office to issue an immediate final order 31 disqualifying an organization or entity if it finds 32 that such organization or entity made a material false 33 statement in its request; providing for construction; 34 providing for future repeal; providing an effective 35 date. 36 37 Be It Enacted by the Legislature of the State of Florida: 38 39 Section 1. Present subsections (10) and (11) of section 40 663.01, Florida Statutes, are renumbered as subsections (11) and 41 (12), respectively, and a new subsection (10) is added to that 42 section, to read: 43 663.01 Definitions.—As used in this part, the term: 44 (10) “International trust entity” means an international 45 trust company, an international business, an international 46 business organization, or an affiliated or subsidiary entity 47 that is licensed, chartered, or similarly permitted to conduct 48 trust business in a foreign country or countries under the laws 49 of which it is organized and supervised. 50 Section 2. Section 663.041, Florida Statutes, is created to 51 read: 52 663.041 Moratorium on the office’s enforcement of licensing 53 requirements for an international trust entity or related 54 entities.— 55 (1) Until June 30, 2017, the office shall delay the 56 enforcement of the requirement under s. 663.04(4) relating to 57 licensure of an organization or entity in this state providing 58 services to an international trust entity that engages in the 59 activities described in s. 663.0625. This delay applies to any 60 person who manages or controls or is employed by such 61 organization or entity that: 62 (a) Has been organized to conduct business in this state 63 before October 1, 2013; 64 (b) Has not been fined or sanctioned as a result of any 65 complaint to the office or to any other state or federal 66 regulatory agency; 67 (c) Has not been convicted of a felony or ordered to pay a 68 fine or penalty in any proceeding initiated by any federal, 69 state, foreign, or local law enforcement agency or international 70 agency within the 10 years before the effective date of this 71 section; 72 (d) Has not had any of its directors, executive officers, 73 principal shareholders, managers, or employees arrested for, 74 charged with, convicted of, or plead guilty or nolo contendere 75 to, regardless of adjudication, any offense that is punishable 76 by imprisonment for 1 year or more, or to any offense that 77 involves money laundering, currency transaction reporting, tax 78 evasion, facilitating or furthering terrorism, fraud, or that is 79 otherwise related to the operation of a financial institution, 80 within the 10 years before the effective date of this section; 81 (e) Does not provide services for any international trust 82 entity that is in bankruptcy, conservatorship, receivership, 83 liquidation, or a similar status under the laws of any country; 84 (f) Does not provide banking services or promote or sell 85 investments or accept custody of assets; 86 (g) Does not act as a fiduciary, which includes, but is not 87 limited to, accepting the fiduciary appointment, executing the 88 fiduciary documents that create the fiduciary relationship, or 89 making discretionary decisions regarding the investment or 90 distribution of fiduciary accounts; and 91 (h) Conducts those activities permissible for an 92 international trust company representative office as described 93 in s. 663.0625. 94 (2) This moratorium does not prevent the office from 95 otherwise enforcing the financial institutions codes. 96 (3) An organization or entity that requests to qualify for 97 this moratorium shall notify the office in writing by letter on 98 official letterhead via United States Postal Service or 99 commercial mail delivery service by July 1, 2016, and shall 100 provide the following: 101 (a) Written proof that it has been organized to do business 102 in this state before October 1, 2013; 103 (b) The name or names under which it conducts business in 104 this state; 105 (c) The addresses of its locations from which it conducts 106 business; 107 (d) A detailed list and description of the activities being 108 conducted at the locations from which it conducts business. The 109 detailed description must include the types of consumers that 110 utilize those activities and an explanation of how those 111 activities serve the business purpose of an international trust 112 entity. 113 (e) As to each international trust entity the organization 114 or entity provides services for in this state, the following: 115 1. The name of the international trust entity; 116 2. A list of the current officers and directors of the 117 international trust entity; 118 3. The country or countries where the international trust 119 entity is organized; 120 4. The supervisory or regulatory authority, or equivalent 121 or other similarly sanctioned body, organization, governmental 122 entity, or recognized authority that has licensing, chartering, 123 oversight, or similar responsibilities over the international 124 trust entity; 125 5. Proof that the international trust entity has been 126 authorized by a charter, license, or similar authorization by 127 operation of law in its home country jurisdiction to engage in 128 trust business; 129 6. Proof that the international trust entity lawfully 130 exists and is in good standing under the laws of the 131 jurisdiction where it is chartered, licensed, organized, or 132 lawfully existing. The organization or entity shall submit a 133 certificate of good standing or equivalent document issued by 134 the supervisory or regulatory authority, or equivalent or other 135 similarly sanctioned body, organization, governmental entity, or 136 recognized authority that has similar responsibilities, of the 137 country where the international trust entity is licensed, 138 chartered, or has similar authorization by operation of law and 139 is duly organized and lawfully exists; 140 7. A statement that the international trust entity is not 141 in bankruptcy, conservatorship, receivership, liquidation, or in 142 a similar status under the laws of any country; and 143 8. Proof that the international trust entity is not 144 operating under the direct control of the government, 145 regulatory, or supervisory authority of the jurisdiction of its 146 incorporation, through government intervention or any other 147 extraordinary actions, and confirmation that it has not been in 148 such a status or under such control at any time within the 7 149 years before the date of notification to the office. 150 (f) A declaration under penalty of perjury signed by an 151 executive officer or managing member of the organization or 152 entity, declaring that the information provided to the office is 153 true and correct to the best of his or her knowledge. 154 (4) In processing the request to qualify for the 155 moratorium, the office shall confirm the following: 156 (a) That the international trust entity is adequately 157 supervised by the appropriate regulatory authority, or 158 equivalent or other similarly sanctioned body, organization, 159 governmental entity, or recognized authority that has similar 160 responsibilities in the foreign country where it is organized, 161 chartered, or licensed, or has similar authorization by 162 operation of law; and 163 (b) That the jurisdiction of the international trust entity 164 or its offices, subsidiaries, or any affiliates that are 165 directly involved in or facilitate the financial services 166 functions, banking, or fiduciary activities of the international 167 trust entity, is not listed on the Financial Action Task Force 168 Public Statement or on its list of jurisdictions with 169 deficiencies in anti-money laundering or counterterrorism. 170 (5) For purposes of establishing adequate supervision under 171 paragraph (4)(a): 172 (a) An international trust entity with foreign 173 establishments is considered adequately supervised if it is 174 subject to consolidated supervision. As used in this paragraph, 175 “consolidated supervision” means supervision that enables the 176 appropriate regulatory authority, or equivalent or other 177 similarly sanctioned body, organization, governmental entity, or 178 recognized authority that has similar responsibilities of the 179 home country (home country supervisor) to evaluate: 180 1. The safety and soundness of the international trust 181 entity’s operations located within the home country supervisor’s 182 primary jurisdiction; and 183 2. The safety and soundness of the operations performed by 184 the international trust entity’s offices, subsidiaries, or any 185 affiliates that are directly involved in or facilitate the 186 financial services functions, banking, or fiduciary activities 187 of the international trust entity, wherever located. 188 (b) An international trust entity with no foreign 189 establishments is considered adequately supervised if the home 190 country supervisor can evaluate the safety and soundness of the 191 international trust entity’s operations through its offices or 192 subsidiaries located in the home country. For purposes of this 193 paragraph, the home country supervisor is deemed to be able to 194 evaluate the safety and soundness of the international trust 195 entity if the home country supervisor has the authority to 196 collect and maintain information on the following regulatory 197 components: 198 1. The technical competence and administrative ability of 199 the management of the international trust entity; 200 2. The adequacy of the operational, accounting, and 201 internal control systems of the international trust entity, 202 particularly the international trust entity’s ability to monitor 203 and supervise the activities of its offices or subsidiaries 204 wherever located; 205 3. The adequacy of asset management and asset 206 administration policies and procedures; 207 4. The capital adequacy of the international trust entity, 208 its offices or subsidiaries as specified by any capital adequacy 209 guidelines in the home country; 210 5. The earnings of the international trust entity; and 211 6. The external and internal auditors’ reports as well as 212 any management comment letters or any documented corrective 213 action by management. 214 (c) As used in paragraphs (4)(a), (5)(a), and (5)(b), 215 adequate supervision does not require supervision of companies 216 that control the international trust entity or supervision of 217 companies under common control with the international trust 218 entity but that are not in the international trust entity’s 219 chain of control. However, in cases where a holding company is 220 the only controlling element in a trust business group, holding 221 company supervision by a home country supervisor shall be 222 required when it is needed to ensure consolidated supervision of 223 all trust business entities in the group. 224 (d) If a holding company is not supervised, adequate 225 supervision is deemed to exist if the home country supervisor 226 regulates transactions between the international trust entity 227 and controlling persons or entities under common control. 228 (e) An international trust entity and its offices or 229 subsidiaries is deemed to be adequately supervised if it is 230 subject to comprehensive supervision. For purposes of this 231 paragraph, comprehensive supervision: 232 1. Means supervision that ensures that the supervisory 233 processes and procedures are designed to inform the home country 234 supervisor about the international trust entity’s financial 235 condition, including capital position; asset management and 236 asset administration; internal controls and audit; compliance 237 with existing laws and regulations; and capability of 238 management. 239 2. Does not require the home country supervisor to conduct 240 onsite examinations of the international trust entity or its 241 offices or subsidiaries. However, at a minimum, it requires that 242 the home country supervisor: 243 a. Is able to determine that the international trust entity 244 and its offices and subsidiaries have adequate procedures for 245 monitoring and controlling its domestic and foreign operations; 246 b. Is authorized to obtain information, by examination, 247 audits or by other means, on the domestic and foreign operations 248 of the international trust entity, including its offices and 249 subsidiaries, and the authority to demand financial reports 250 which permit analysis of the consolidated condition of the 251 international trust entity; 252 c. Is able to obtain information on the dealings and 253 relationships between the international trust entity and its 254 offices and subsidiaries, wherever located; and 255 d. Is authorized by the home country’s laws to ensure the 256 safety and soundness of the international trust entity and its 257 offices and subsidiaries. 258 3. Includes the ability and willingness of the home country 259 supervisor to provide the office early notice of any weaknesses 260 being experienced by the international trust entities, including 261 its offices or subsidiaries wherever located. 262 4. Includes the ability of the home country supervisor to 263 provide the office assurance of cooperation by both the 264 international trust entity and the home country supervisor. 265 (6) The office shall process requests made for inclusion 266 under the moratorium as follows: 267 (a) Upon receipt of any request, the office shall review 268 the information contained therein, and request any additional 269 information to complete the request to qualify for the 270 moratorium within 30 days after receipt. The organization or 271 entity shall provide the requested additional information within 272 45 days after the receipt of the notice from the office. If the 273 office does not make such request within 30 days after receipt, 274 the request to qualify for the moratorium is deemed complete as 275 of the date it was received. 276 (b) Within 20 days after receipt of any additional 277 information requested, the office shall deem the request to 278 qualify for the moratorium complete or provide notification to 279 the organization or entity that the information provided does 280 not satisfy the office’s request or requests. 281 (c) Within 90 days after receipt of a completed request to 282 qualify for the moratorium, the office shall confirm with the 283 organization or entity that they are or are not a party to the 284 moratorium. 285 1. If the office determines that an organization or entity 286 is not a party to the moratorium, the office shall issue a 287 notice of denial informing the organization or entity of its 288 determination. An organization or entity receiving a notice of 289 denial may request a hearing under chapter 120 to contest the 290 denial. 291 2. If the office fails to notify the organization or entity 292 within such time whether or not the organization or entity is a 293 party to the moratorium, then the organization or entity is 294 considered a party to the moratorium by operation of law. 295 (d) During the period of the moratorium, the office may 296 conduct an onsite visitation of an organization or entity to 297 confirm information provided to the office in deeming the 298 organization or entity qualified for the moratorium. If the 299 office finds that the organization or entity made a material 300 false statement in its request to qualify for the moratorium, 301 the office shall issue an immediate final order suspending the 302 organization’s or entity’s qualification and disqualifying the 303 organization or entity from participating in the moratorium. A 304 material false statement made in the request to qualify for the 305 moratorium constitutes an immediate and serious danger to the 306 public health, safety, and welfare. 307 Section 3. Section 663.041, Florida Statutes, and the 308 amendments to section 663.01, Florida Statutes, made by this 309 act, are repealed on July 1, 2017. 310 Section 4. This act shall take effect upon becoming a law.