The Florida Senate
BILL ANALYSIS AND FISCAL IMPACT STATEMENT
(This document is based on the provisions contained in the legislation as of the latest date listed below.)
Prepared By: The Professional Staff of the Committee on Rules
BILL: CS/SB 1680
INTRODUCER: Rules Committee and Senator Gruters
SUBJECT: Financial Institutions
DATE: February 10, 2022 REVISED:
ANALYST STAFF DIRECTOR REFERENCE ACTION
1. Schrader Knudson BI Favorable
2. Sanders Sadberry AP Favorable
3. Schrader Phelps RC Fav/CS
Please see Section IX. for Additional Information:
COMMITTEE SUBSTITUTE - Substantial Changes
I. Summary:
CS/SB 1680 makes a number of revisions to Florida law relating to financial institutions. The
bill:
 Allows foreign nationals proposing to own 10 percent or more of any class of voting
securities of a proposed or established bank to appear by video during the public hearing
considering approval of the application;
 Revises the required scheduling dates for examination of financial institutions;
 Allows the Office of Financial Regulation (OFR) 90 additional days to meet its statutory
obligation to periodically examine a financial institution when a federal agency suspends or
cancels a previously scheduled examination;
 Changes from “all or substantially all” assets to 50 percent of assets, liabilities, or a
combination of assets and liabilities, the limit of assets that a mutual financial institution may
sell to a stock financial institution, absent first converting to a capital stock financial
institution;
 Revises the definition of “financial institution” for the Florida Control of Money Laundering
and Terrorist Financing in Financial Institutions Act;
 Requires credit unions, within 30 days following a meeting where any director, officer,
member of the supervisory or audit committee, member of the credit committee, or credit
manager is elected or appointed, to notify the OFR;
 Revises the scope of the OFR’s investigation of applicants seeking authority to start a bank
or trust company to include the need for bank and trust facilities in a target market as well as
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in the primary service area, and the ability of the target market to support the proposed bank
or trust company;
 Revises a requirement that the proposed president or chief executive officer of a proposed
banking corporation have at least one year of direct experience as an executive officer,
director, or regulator of a financial institution within the last five years to allow the OFR to
waive the five year requirement after considering specified factors;
 Requires persons acquiring a controlling interest in a state bank or state trust company
through probate or trust notify the OFR within 90 days after acquiring such interest;
 Defines a “de novo branch” for the purposes of an existing de novo interstate branching
provision;
 Authorizes a family trust company, licensed family trust company, or foreign licensed family
trust company to maintain the deposit account, required under current law, with any bank that
is insured by the Federal Deposit Insurance Corporation, or with any credit union insured by
the National Credit Union Administration, either of which must be located within the United
States;
 Revises when family trust companies, licensed family trust companies, or foreign licensed
family trust companies must file a required annual renewal application;
 Allows international bank agencies and international branches to maintain a required deposit
in banks outside of Florida, provided the deposit is in a bank within the United States; and
 Requires qualified limited service affiliates to suspend otherwise permissible activities if the
jurisdiction of an international trust entity served by the qualified limited service affiliate is
identified on the Financial Action Task Force’s list of High-Risk Jurisdictions subject to a
Call for Action (black list) or on the list of Jurisdictions Under Increased Monitoring (grey
list).
 Updates cross-references and makes conforming changes.
The bill does not impact state revenues or expenditures.
The bill is effective July 1, 2022.
II. Present Situation:
Regulation of Financial Institutions
Florida law defines the term “financial institution” broadly; the term includes “state or federal
savings or thrift association, bank, savings bank, trust company, international bank agency,
international banking corporation, international branch, international representative office,
international administrative office, international trust entity, international trust company
representative office, qualified limited service affiliate, credit union, or an agreement corporation
operating pursuant to s. 25 of the Federal Reserve Act, 12 U.S.C. ss. 601 et seq. or Edge Act
corporation organized pursuant to s. 25(a) of the Federal Reserve Act, 12 U.S.C. ss. 611 et seq.”1
1
Section 655.005(1)(i), F.S.
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However, not all financial institutions are expressly authorized to accept or hold deposits or
certificates of deposits.2
Dual Regulatory System
Banks and credit unions may be either state or federally chartered. The Office of Financial
Regulation (OFR) is responsible for chartering and supervising state financial institutions,
including state-chartered banks and state-chartered credit unions.3
National banks are chartered pursuant to the National Bank Act and supervised by the Office of
the Comptroller of the Currency.4 National banks are required to be members of the Federal
Reserve System; state banks may apply for membership.5 The Federal Reserve is the primary
federal regulator of state member banks, and also serves as the primary regulator of bank holding
companies and financial holding companies.6
Federally chartered credit unions are chartered and supervised by the National Credit Union
Administration (NCUA).7 Both state- and federally chartered credit unions must obtain insurance
of their accounts and are subject to examination by the NCUA.8
Examination of Financial Institutions
Pursuant to s. 655.045(1), F.S., the OFR is required to conduct an examination of each state
financial institution at least every 18 months. The OFR is authorized to accept an examination
from an appropriate federal regulatory agency or conduct a joint or concurrent examination of
the institution with the federal agency. However, at least once every 36 months, the OFR must
conduct an examination of each state financial institution in a manner that allows the preparation
of a complete examination report not subject to the right of a federal or other non-Florida entity
to limit access to the information contained therein. The alternating, joint, or concurrent
examination authorized by this provision reduces regulatory burden on the financial institutions
subject to dual regulation, and the OFR works in coordination with these federal agencies when
possible.9
According to the OFR, many of the documents it must analyze in these examinations are paper
files with digital copies not available. As such, examiners must be physically present at an
institution to perform examinations. The COVID-19 pandemic has created issues in adhering to
examination schedules. Additionally, other natural disasters (such as hurricanes) can create
problematic examination environments.10
2
For instance, holding a deposit does not fall within the enumerated permissible activities of an international representative
office, an international administrative office, an international trust company representative office, or a qualified limited
service affiliate. See ss. 663.062, 663.063, 663.409, and 663.531, F.S.
3
Section 655.012(1)(a), F.S.
4
12 U.S.C. s. 481.
5
12 U.S.C. s. 208.3 and 222.
6
12 U.S.C. s. 248.
7
See 12 U.S.C. s. 1751, et. seq.
8
Section 657.033, F.S.; 12 U.S.C. s. 1784.
9
Office of Financial Regulation (OFR), SB 1680 Analysis (Jan. 12, 2022) (on file with the Senate Committee on Banking and
Insurance).
10
Id.
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Financial Institution Acquisition of Assets and Assumption of Liabilities
Current law allows a financial entity, under s. 655.414, F.S., to acquire “all or substantially all”
of the assets of, or assume all or any part of the liabilities of, any other financial institution
subject to certain conditions. Similarly, subsection (6) of the statute states that a mutual financial
institution may not sell “all or substantially all” of its assets to a stock financial institution,
subject to certain conditions. For both of these provisions, the term “substantially all” is not
defined and may be subject to some conjecture. According to the OFR, this undefined term has
caused some confusion in the financial industry.11
Money Laundering and Terrorist Financing in Financial Institutions Act
The Florida Control of Money Laundering and Terrorist Financing in Financial Institutions Act,
under s. 655.50, F.S., was created to require the submission certain reports to the OFR and the
maintenance of certain records involving currency or monetary instruments or suspicious
activities where such reports and records deter the use of financial institutions to conceal, move,
or provide proceeds relating to criminal or terrorist activities and if such reports and records have
a high degree of usefulness in criminal, tax, or regulatory investigations or proceedings.
Subsection (3) of the act defines “financial institutions” a financial institution, as defined in
31 U.S.C. s. 5312, as amended, including a credit card bank, located in this state. This definition
is quite broad, and includes a number of entities over which the OFR generally does not have
regulatory authority—such as the United States Postal Service, casinos, travel agencies—or are
obsolete—such as telegraph companies.12
Credit Union Boards of Directors
Section 657.021(1)-(6), F.S., specifies the minimum requirements for boards of directors for
credit unions, including the filling of vacancies, meeting requirements, and conduct
requirements. As part of these requirements, subsection (2) requires directors assuming office in
a credit union make a prescribed oath, and a signed copy of the oath must be filed with the OFR
within 30 days after election. According to the OFR, at the Federal-level, the NCUA historically
required credit unions to submit a record of the names and addresses of the members of the board
of directors, members of the committees on a particular form called “Report of Officials.” The
OFR had access to these documents through agreements with the NCUA. However, in 2009, the
NCUA moved to a web-based system to collect this data and the forms were no longer
collected.13 At present, Florida law does not require state-chartered credit unions to submit a
similar report.
11
Supra note 16, p. 4.
12
The world’s last telegram was sent in 2013. Monica Sarkar, The Day Telegrams Came to a Final STOP, CNN (July 15,
2013).
13
National Credit Union Administration (NCUA), NCUA Supervisory Letter 09-CU-17, “Credit Union Online: Credit Union
Profile and 5300 Call Report,” available at https://www.ncua.gov/regulation-supervision/letters-credit-unions-other-
guidance/credit-union-online-credit-union-profile-and-5300-call-report (August 2009).
BILL: CS/SB 1680 Page 5
Target Markets
According to the American Bankers Association, nearly 75 percent of United States residents
most often access their bank accounts via electronic platforms (i.e., via mobile device or personal
computer).14 With this ever-growing trend, and branch traffic slowing, many banks have been
closing bank branches at a growing pace and making investments in electronic platforms.15
While the trend in banking has been to de-emphasize the local branch, a Florida application for
authority to organize a banking corporation or trust company must describe the community
where the principal office of the bank will be located16 and part of the OFR’s approval process
looks at the need for, and ability to support, the proposed bank or trust company in the entity’s
primary service area.17 In order for an application to be approved, the local conditions in the
primary service area must indicate a reasonable promise of successful operation.18 The OFR
evaluates the viability of the business plan in light of current conditions in the primary service
area and the metropolitan statistical area or county, as well as in the industry in general. 19
Applications for Authority to Organize a Banking Corporation or Trust Company
Section 658.19, F.S., specifies the requirements for an application for authority to organize a
banking corporation or trust company, which must be filed with the OFR by the proposed
directors, and what the application must include. Upon the submission of this application,
pursuant to s. 658.20, F.S., the OFR must investigate the:
 Character, reputation, financial standing, business experience, and business qualifications of
the proposed officers and directors;
 Need for bank or trust facilities or additional bank or trust facilities, as the case may be, in
the primary service area where the proposed bank or trust company is to be located; and
 Ability of the primary service area to support the proposed bank or trust company and all
other existing bank or trust facilities in the primary service area.
Section 658.20, F.S., also authorizes the OFR to obtain criminal record information from the
National Crime Information Center or from the Florida Department of Law Enforcement to
conduct the required investigation.
To approve an application, the OFR must find, in part, that:20
 Local conditions indicate reasonable promise of successful operation for the proposed state
bank or trust company;
 The proposed capitalization is in such amount as the OFR deems adequate;
 The proposed capital structure is in such form as the OFR may require;
14
American Bankers Association, Survey: Bank Customers Preference for Digital Channels Continues to Grow,
https://bankingjournal.aba.com/2019/11/aba-survey-customer-preference-for-digital-banking-continues-to-grow
(Nov. 5, 2019).
15
Id.
16
Section 658.19, F.S.
17
Section 658.20, F.S.
18
Rule 69U-105.206(2)(a), F.A.C.
19
Rule 69U-105.206(2)(a)1.-2., F.A.C.
20
Section 658.21, F.S.
BILL: CS/SB 1680 Page 6
 The proposed officers have sufficient financial institution experience, ability, standing, and
reputation in order to be approved. As part of this requirement, the proposed president or
chief executive officer must have at least one year of direct experience as an executive
officer, director, or regulator of a financial institution within the last five years;
 The corporate name of the proposed state bank or trust company is approved by the OFR;
and
 Provision has been made for suitable quarters at the location specified in the application.
In regards to the requirement that the proposed president or chief executive officer have at least
one year of direct experience as an executive officer, director, or regulator of a financial
institution within the last five years, the OFR has expressed a concern that this provision narrows
the pool of otherwise qualified potential executive officers who may serve in that capacity at a
new Florida-chartered bank. By comparison, proposed chief executive officers of proposed
nationally chartered banks are not subject to a similar restriction.21
Trust Representative Offices
According to 12 C.F.R. s. 9.2(k), a trust representative office is an office of a national bank,
other than a main office or a branch, at which the bank engages in certain activities relating to
their fiduciary business. Examples of such activities include advertising, marketing, and
soliciting