Meeting Packet - Insurance & Banking Subcommittee, HB 123 and HB 273 (December 1, 2021)
Summary
Meeting packet of the Florida House of Representatives Commerce Committee Insurance & Banking Subcommittee for Wednesday, December 1, 2021, with an agenda listing HB 123 Consumer Finance Loans by Stevenson and HB 273 Money Services Businesses by Aloupis. The HB 123 staff analysis says the Florida Consumer Finance Act permits licensed lenders to make loans up to $25,000 at a tiered maximum annual interest rate that starts at 30 percent on the first $3,000. The bill provides an express prohibition on prepayment penalties. The HB 273 amendment summary says Amendment 1 by Representative Aloupis amends the definition of "virtual currency" to clarify the exclusion of consumer affinity or rewards programs.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
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Insurance & Banking Subcommittee
Wednesday, December 1, 2021
11:00 AM - 12:30 PM
Morris Hall (17 HOB)
Meeting Packet
Chris Sprowls Nick DiCeglie
Speaker Chair
The Florida House of Representatives
Commerce Committee
Insurance & Banking Subcommittee
Chris Sprowls Nick DiCeglie
Speaker Chair
Meeting Agenda
Wednesday, December 1, 2021
11:00 AM – 12:30 PM
Morris Hall (17 HOB)
I. Call to Order
II. Roll Call
III. Welcome and Opening Remarks
IV. Consideration of the following bill(s):
• HB 123 Consumer Finance Loans by Stevenson
• HB 273 Money Services Businesses by Aloupis
V. Closing Remarks
VI. Adjournment
303 House Office Building, 402 South Monroe Street, Tallahassee, FL 32399-1300
(850) 717-4870
HB 123
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: HB 123 Consumer Finance Loans
SPONSOR(S): Stevenson
TIED BILLS: IDEN./SIM. BILLS: SB 546
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Insurance & Banking Subcommittee Hinshelwood Luczynski
2) Commerce Committee
SUMMARY ANALYSIS
The Florida Consumer Finance Act, ch. 516, F.S., permits licensed lenders to make secured or unsecured
loans up to $25,000 with a tiered interest rate structure such that the maximum annual interest rate allowed on
each tier decreases as principle amounts increase:
30 percent on the first $3,000.
24 percent on principal above $3,000 and up to $4,000.
18 percent on principal above $4,000 and up to $25,000.
Consumer finance lenders must maintain liquid assets of at least $25,000 per location. The bill authorizes
consumer finance lenders to provide a surety bond, certificate of deposit, or letter of credit of a specified amount
in lieu of maintaining liquid assets.
Consumer finance lenders are permitted to charge a borrower certain fees, including up to $25 for investigating
the credit and character of the borrower. The exclusion of “prepayment penalties” from the list of permissible
fees implies that consumer finance lenders are prohibited from charging prepayment penalties. The bill provides
an express prohibition on prepayment penalties for consumer finance loans.
The bill has no fiscal impact on state or local governments and an indeterminate but likely positive impact on the
private sector.
The bill provides an effective date of October 1, 2022.
This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives .
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FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Consumer Finance Loans
The Office of Financial Regulation’s (OFR’s) Division of Consumer Finance is responsible for the
licensing and regulation of non-depository financial service entities and individuals, and conducts
examinations and complaint investigations for licensed entities to determine compliance with Florida
law.
One of the loan products regulated by the OFR’s Division of Consumer Finance is the Florida
Consumer Finance Act, ch. 516, F.S. (“the Act”). Loans permitted under the Act are commonly referred
to as “consumer finance loans”, which are “loan[s] of money, credit, goods, or choses in action,1
including, except as otherwise specifically indicated, provision of a line of credit, in an amount or to a
value of $25,000 or less for which the lender charges, contracts for, collects, or receives interest at a
rate greater than 18 percent per annum.”2 Although consumer finance loans may be secured or
unsecured, the Act prohibits lenders from taking a security interest in certain types of collateral.3
Consumer finance loans made pursuant to the Act must be repaid in periodic installments as nearly
equal as mathematically practicable, except that the final payment may be less than the amount of the
prior installments.4 Installments may be due every two weeks, semimonthly, or monthly.5 There is no
minimum or maximum loan term under the Act. Consumer finance loans have a tiered interest rate
structure such that the maximum annual interest rate allowed on each tier decreases as principle
amounts increase:
30 percent on the first $3,000.
24 percent on principal above $3,000 and up to $4,000.
18 percent on principal above $4,000 and up to $25,000. 6
The original principal amount is the amount financed, as defined by the federal Truth in Lending Act
(TILA)7 and TILA’s federal implementing regulations.8 For the purpose of determining compliance with
these statutory maximum interest rates, the interest rate computations used must be simple interest.9 In
the event that two or more interest rates are applied to the principal amount of a loan, 10 a lender may
charge interest at a single annual percentage rate (APR) which would produce at maturity the total
amount of interest as permitted by the tiered interest rate structure above.11 The APR charged by a
lender may not exceed the APR that must be computed and disclosed according to TILA and its
1 “Chose in action” is defined as “1. A property right in personam, such as a debt owed by another person . . . 2. The right
to bring an action to recover a debt, money, or thing. 3. Personal property that one person owns but another person
possesses, the owner being able to regain possession through a lawsuit.” BLACK’S LAW DICTIONARY 101 (3d ed. 1996).
2 S. 516.01(2), F.S.
3 See s. 516.031(1), F.S. (prohibition on taking a security interest in land for a loan less than $1,000); s. 516.17, F.S.
(prohibition on assignment of, or order for payment of, wages given to secure a loan).
4 S. 516.36, F.S. This section does not apply to lines of credit.
5 Id.
6 S. 516.031(1), F.S.
7 Codified at 15 U.S.C. § 1601 et seq.
8 Currently, the statute references TILA’s implementing regulations as “Regulation Z of the Board of Governors of the
Federal Reserve System.” s. 516.031(1), F.S. However, the Dodd-Frank Wall Street Reform and Consumer Protection
Act, Pub. L. No. 111-203, H.R. 4173, 124 Stat. 1376-2223, 111th Cong. (July 21, 2010), commonly referred to as the
“Dodd-Frank Act”, transferred rulemaking authority for TILA to the Bureau of Consumer Financial Protection, effective July
21, 2011. See also Truth in Lending (Regulation Z), 76 Fed. Reg. 79768 (Dec. 22, 2011).
9 Id.
10 For example, on a principle amount of $3,500, an interest rate of 30 percent per annum may be applied to $3,000 of the
principle amount, and an interest rate of 24 percent per annum may be applied to the remaining $500 of the principal
amount.
11 S. 516.031(1), F.S.
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implementing regulations.12 A licensee may not induce or permit a borrower to divide a loan and may
not induce or permit a person to become obligated to the licensee under more than one loan contract
for the purpose of obtaining a greater finance charge than would otherwise be permitted under the
parameters described above.13
If consideration for a new loan contract includes the unpaid principal balance of a prior loan with the
licensee, then the principal amount of the new loan contract may not include more than 60 days’ unpaid
interest accrued on the prior loan.14
The Act prohibits lenders from directly or indirectly charging borrowers additional fees as a condition to
the grant of a loan, except for the following allowable fees:
Up to $25 for investigating the credit and character of the borrower;
A $25 annual fee on the anniversary date of each line-of-credit account;
Brokerage fees for certain loans, title insurance, and appraisals of real property offered as
security;
Intangible personal property tax on the loan note or obligation if secured by a lien on real
property;
Documentary excise tax and lawful fees for filing, recording, or releasing an instrument securing
the loan;
The premium for any insurance in lieu of perfecting a security interest otherwise required by the
licensee in connection with the loan;
Actual and reasonable attorney fees and court costs;
Actual and commercially reasonable expenses for repossession, storing, repairing and placing
in condition for sale, and selling of any property pledged as security;
Depending on the frequency of payments, a delinquency charge of up to $15 for each payment
in default for at least 10 days, if agreed upon in writing before the charge is imposed; and
A bad check charge of up to $20.15
The exclusion of “prepayment penalties” from the list of permissible fees implies that consumer finance
lenders are prohibited from charging prepayment penalties.16
Optional credit property, credit life, and disability insurance may be provided at the borrower’s expense
via a deduction from the principal amount of the loan.17
Licenses granted under the Act are for a single place of business 18 and must be renewed every two
years.19 As of October 28, 2021, there are 188 licensed consumer finance loan companies operating
across a total of 389 locations in Florida.20
The historical yearly licensing data for ch. 516, F.S., is contained in the charts below.
Chapter 516, F.S., Licenses by Year
00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10
Applications Received 318 44 136 82 48 72 192 30 52 32
Applications Approved 228 136 125 76 43 64 95 29 18 19
Active Licenses 589 607 568 609 532 584 626 600 390 386
12 S. 516.031(2), F.S.
13 S. 516.031(4), F.S.
14 S. 516.031(5), F.S.
15 S. 516.031(3), F.S.
16 Id.; Office of Financial Regulation, Agency Analysis of 2022 Senate Bill 546, pp. 2-3 (Nov. 19, 2021).
17 S. 516.35(2), F.S.
18 Ss. 516.01(1) and 516.05(3), F.S.
19 Ss. 516.03(1) and 516.05(1) & (2), F.S.
20 Office of Financial Regulation, supra note 16 at p. 2.
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Renewals & Reactivations 496 1 542 0 523 1 569 0 388 0
Chapter 516, F.S., Licenses by Year (Cont'd)
10-11 11-12 12-13 13-14 14-15 15-16 16-17 17-18 18-19 19-20
Applications Received 175 41 82 116 66 102 55 96 109 100
Applications Approved 137 37 53 113 37 81 36 83 104 98
Active Licenses 347 303 293 349 331 349 338 373 348 390
Renewals & Reactivations 226 0 258 0 312 0 326 0 342 0
An application to become a consumer finance lender must be accompanied by a nonrefundable
application fee of $625 and a nonrefundable investigation fee of $200. 21 Licenses must be renewed
biennially, at which time the licensee must pay a nonrefundable biennial license fee of $625. 22 At the
time of application, the applicant must provide evidence of liquid assets of at least $25,000, and a
licensee must at all times maintain such liquid assets. 23 Each location of a consumer finance lender
must be separately licensed.24
The Act does not apply to persons doing business under state or federal laws governing banks, savings
banks, trust companies, building and loan associations, credit unions, or industrial loan and investment
companies.25
Deferred Presentment Transactions (Payday Loans)
Although the bill relates only to consumer finance loans under ch. 516, F.S., questions often arise as to
how consumer finance loans compare to other consumer loans authorized in statute, particularly
payday loans. Deferred presentment transactions, commonly referred to as “payday loans”, are a small-
dollar loan product under the OFR’s regulatory authority. These transactions are governed by ch. 560,
part IV, F.S.
A deferred presentment transaction means providing currency or a payment instrument in exchange for
a drawer’s (borrower’s) check and agreeing to hold the check for a number of days until depositing,
presenting, or redeeming the payment instrument.26 The only persons who may engage in deferred
presentment transactions are financial institutions as defined in s. 655.005, F.S.,27 and money services
business licensed under ch. 560, part II28 or part III,29 F.S.
There are two types of payday loan products permitted in Florida:
21 S. 516.03(1), F.S.
22 Id.; s. 516.05(1),F.S.
23 Ss. 516.03(1) and 516.07(1)(b), F.S.
24 S. 516.05(3), F.S.
25 S. 516.02(4), F.S.
26 S. 560.402(2) & (3), F.S.
27 Section 655.005, F.S., defines a “financial institution” to mean a state or federal savings or thrift association, bank,
savings back, trust company, international bank agency, international banking corporation, international branch,
international representative office, international administrative office, international trust entity, international trust com pany
representative office, qualified limited service affiliate, credit union, or an agreement corporat ion 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.
28 Licensure as a money transmitter. A money transmitter is defined by s. 560.103(23), F.S., as a corporation, limited
liability company, limited liability partnership, or foreign entity qualified to do business in this state which receives
currency, monetary value, or payment instruments for the purpose of transmitt ing the same by any means, including
transmission by wire, facsimile, electronic transfer, courier, the Internet, or through bill payment services or other
businesses that facilitate such transfer within this country, or to or from this country. Money transmitters may engage in
check cashing under ch. 560, part III, F.S.
29 Licensure as a check casher. A check casher is defined by s. 560.103(6), F.S., as a person who sells currency in
exchange for payment instruments received, except travelers checks.
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Deferred presentment transaction not repayable in installments: The face amount of a check
taken for deferred presentment may not exceed $500, exclusive of fees. 30 Fees may not exceed
10 percent of the payment provided to the drawer plus a verification fee of up to $5.31 The term
of a deferred presentment agreement may not be less than seven days or greater than 31
days.32
Deferred presentment installment transaction: A deferred presentment installment transaction is
repayable in installments, has a term of 60 to 90 days, and may have an outstanding transaction
balance (exclusive of fees) of up to $1,000.33 The permissible fees are a verification fee of up to
$5 and up to 8 percent of the outstanding transaction balance on a biweekly basis. 34 The
installment periods must be 13 days to one calendar month, except that the first installment
period may be longer than the remaining installment periods by not more than 15 days. 35
Prepayment penalties are prohibited.36
A deferred presentment provider may not enter into a deferred presentment transaction with a drawer
who has an outstanding deferred presentment transaction with any provider or within 24 hours of the
termination of a previous transaction.37 In order to enforce this restriction, the OFR maintains a
database against which a deferred presentment provider must verify each transaction before entering
into the deferred presentment agreement.38 A deferred presentment provider may not engage in the
rollover of a deferred presentment agreement and may not redeem, extend, or otherwise consolidate a
deferred presentment agreement with the proceeds of another deferred presentment transaction made
by it or an affiliate.39
For deferred presentment transactions not repayable in installments, if the drawer, by the end of the
deferment period, informs the deferred presentment provider in person that the drawer cannot redeem
or pay in full in cash the amount due, the drawer must be given a grace period that extends the term of
the agreement for 60 additional days.40 As a condition of receiving the grace period, the drawer must
make an appointment with a consumer credit counseling agency within seven days after the end of the
deferment period and complete counseling by the end of the grace period. 41
If the drawer in a deferred presentment installment transaction informs the deferred presentment
provider in writing or in person by noon of the business day before a scheduled payment that the
drawer cannot pay in full the scheduled payment, the provider must give the drawer one opportunity to
defer a scheduled payment for no additional fee or charge. 42 The deferred payment is due after the last
scheduled installment payment, at an interval which is no shorter than the intervals between the
originally scheduled payments.43 Thus, for a deferred presentment installment transaction in which
payments are due once every two weeks, the deferred payment would be due at least two weeks after
the final installment payment is due.
A deferred presentment provider may not include in the agreement a hold harmless clause, a
confession of judgment clause, an assignment of or order for payment of wages or other compensation
for services, or a provision in which the drawer waives any claim or defense arising out of the
agreement or any provision of ch. 560, part IV, F.S.44 A deferred presentment provider must comply
30 S. 560.404(5), F.S.
31 S. 560.404(6), F.S.
32 S. 560.404(8), F.S.
33 S. 560.404(5) & (8), F.S.
34 S. 560.404(6), F.S.
35 S. 560.404(26), F.S.
36 S. 560.404(6)(c), F.S.
37 S. 560.404(19), F.S.
38 S. 560.404(19)(a) & (23), F.S.
39 S. 560.404(18), F.S.
40 S. 560.404(22), F.S.
41 Id.
42 S. 560.404, F.S.
43 Id.
44 S. 560.404(10), F.S.
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with state and federal disclosure requirements.45
Effect of the Bill
The bill amends various provisions related to consumer finance loans under ch. 516, F.S.
Surety Bond, Certificate of Deposit, or Letter of Credit in Lieu of Liquid Assets
The bill authorizes consumer finance lenders to provide the OFR a surety bond, certificate of deposit, or
irrevocable letter of credit in lieu of maintaining liquid assets. The surety bond must be issued by a
bonding company or insurance company authorized to do business in this state. The certificate of
deposit must be deposited in a financial institution.46
The surety bond, certificate of deposit, or letter of credit must be in the amount of at least $25,000.
However, a company with multiple licensed locations is authorized to provide a rider or surety bond,
certificate of deposit, or letter of credit in the amount of at least $5,000 for each additional license after
the first. The aggregate amount of the surety bond, certificate of deposit, or letter of credit required for a
company with multiple licenses is capped at $100,000.
The surety bond, certificate of deposit, or letter of credit must name the OFR as beneficiary and must
be for the use and benefit of any borrower who is injured by acts of a licensee involving fraud,
misrepresentation, or deceit, including willful imposition of illegal or excessive charges; or
misrepresentation, circumvention, or concealment of any matter required to be stated or furnished to a
borrower, where such acts are in connection with making a consumer finance loan. The OFR, or any
claimant, may bring an action in a court of competent jurisdiction on the surety bond, certificate of
deposit, or letter of credit. The surety bond, certificate of deposit, or letter of credit must be payable on
a pro rata basis, but the aggregate amount may not exceed the amount of the surety bond, certificate of
deposit, or letter of credit.
The surety bond, certificate of deposit, or letter of credit may not be canceled by the licensee, bonding
or insurance company, or financial institution except upon notice to the OFR by certified mail. A
cancellation may not take effect until 30 calendar days after receipt by the OFR of the written notice.
If the bonding or insurance company or financial institution pays a claim, it must give written notice by
certified mail to the OFR within 10 calendar days after it pays the claim. The notice must contain details
sufficient to identify the claimant and the claim or judgment paid. If the principal sum of the surety bond,
certificate of deposit, or letter of credit is reduced by one or more recoveries or payments, the
consumer finance lender must furnish to the OFR a new or additional surety bond, certificate of deposit,
or letter of credit so that the total or aggregate principal sum equals the required amount. Alternatively,
a licensee may furnish an endorsement executed by the bonding or insurance company or financial
institution reinstating the required principal amount.
The required surety bond, certificate of deposit, or letter of credit must remain in place for two years
after the consumer finance lender ceases licensed operations in this state. During the two-year period,
the OFR may allow for a reduction or elimination of the surety bond, certificate of deposit, or letter of
credit to the extent the consumer finance lender’s outstanding consumer finance loans in this state are
reduced.
Failure to maintain the existing liquid asset requirement or the proposed alternatives of the surety bond,
certificate of deposit, or letter of credit in the required amount is grounds for denial of license application
and grounds for disciplinary action against a consumer finance lender.
The bill makes conforming changes under the Financial Technology Sandbox in s. 559.952, F.S.
45 S. 560.404(13) & (20), F.S.
46 As defined in s. 655.005(1)(i), F.S.
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Express Prohibition on Prepayment Penalties
The bill provides an express prohibition on prepayment penalties for consumer finance loans.
Effective Date
The bill provides an effective date of October 1, 2022.
Comparison Chart
Below is a chart comparing existing law regarding payday loans and consumer finance loans with the
changes proposed by the bill.
Payday Loans Consumer Finance Loans
(Ch. 560, Part IV, F.S.) (Ch. 516, F.S.)
Payday Loans Payday Loans HB 123
Current Law
(Non-Installment) (Installment) Proposed Changes
Loan
$500 (max) $1,000 (max) $25,000 (max) (No change)
Amount
Length of
7 - 31 days 60 - 90 days No min. or max. (No change)
Term
Lump sum at end Installments with Installments due
of loan term 13 days to 1 month monthly, semi-
in between each, monthly, or every 2
except that the first weeks
installment period
Payments (No change)
may be longer than
the remaining
installment periods
by a maximum of 15
days
APR equivalent 8% biweekly on 30% per year on
(assuming $500 loan the outstanding the first $3,000 of
amount and $5 transaction balance principal
verification fee): APR equivalent: 24% per year on
129.52% for a 31 day approx. 208% (will be principal above
Interest Rate loan, 573.57% for a 7 slightly higher as a $3,000 and up to (No change)
day loan result of the $5 $4,000
verification fee) 18% per year on
principal above
$4,000 and up to
$25,000
10% of loan $5 verification fee Fees specified in s. Adds express
amount No additional fees 516.031(3), F.S., prohibition on
$5 verification fee permitted including up to $25 prepayment
Other No additional fees for investigating the penalties
Upfront Fees credit and character
permitted
Permitted of the borrower
No additional fees
permitted
B. SECTION DIRECTORY:
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Section 1. Amends s. 516.03, F.S., relating to application for license; fees; etc.
Section 2. Amends s. 516.031, F.S., relating to finance charge; maximum rates.
Section 3. Amends s. 516.05, F.S., relating to license.
Section 4. Amends s. 516.07, F.S., relating to grounds for denial of license or for disciplinary action.
Section 5. Amends s. 559.952, F.S., relating to Financial Technology Sandbox.
Section 6. Provides an effective date of October 1, 2022.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
None.
2. Expenditures:
None. The bill will require minimal changes to the OFR’s Regulatory Enforcement and Licensing
(REAL) system, but the cost of such changes can be implemented as part of the OFR’s existing
budget resources.47
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
None.
2. Expenditures:
None.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
The bill’s provisions that would allow a consumer finance lender to provide a surety bond, certificate of
deposit, or letter of credit in lieu of liquid assets may have a positive impact on consumer finance
lenders and consumers. Shifting from maintaining liquid assets will free up capital for lending activity. In
the event that consumer harm coincides with a consumer finance lender’s bankruptcy, the surety bond,
certificate of deposit, or letter of credit may provide consumers greater means of compensation as
compared to the liquid assets. The bill’s overall impact on the private sector, while likely positive, is
indeterminate.
D. FISCAL COMMENTS:
None.
III. COMMENTS
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
Not applicable. The bill does not appear to affect county or municipal governments.
2. Other:
47 Office of Financial Regulation, supra note 16 at p. 5.
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None.
B. RULE-MAKING AUTHORITY:
The bill expressly grants the Financial Services Commission48 authority to prescribe by rule forms and
procedures to implement the provisions relating to a consumer finance lender providing a surety bond,
certificate of deposit, or letter of credit in lieu of liquid assets.
C. DRAFTING ISSUES OR OTHER COMMENTS:
The bill should be amended to clarify that the letter of credit must be issued by a financial institution.
IV. AMENDMENTS/ COMMITTEE SUBSTITUTE CHANGES
48 The Financial ServicesCommission (commission) is composed of the Governor, Attorney General, Chief Financial
Officer, and Commissioner of Agriculture. S. 20.121(3), F.S. The commission members are the OFR’s agency head for
the purpose of rulemaking. S. 20.121(3)(c), F.S.
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F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
HB 123 2022
1 A bill to be entitled
2 An act relating to consumer finance loans; amending s.
3 516.03, F.S.; authorizing an applicant for a license
4 to make and collect loans under the Florida Consumer
5 Finance Act to provide a surety bond, certificate of
6 deposit, or letter of credit in lieu of liquid assets;
7 amending s. 516.031, F.S.; prohibiting a person
8 licensed to make and collect consumer finance loans
9 from charging prepayment penalties for loans; amending
10 s. 516.05, F.S.; authorizing an applicant for a
11 license to make and collect consumer finance loans or
12 a licensee to provide a surety bond, certificate of
13 deposit, or letter of credit in lieu of liquid assets;
14 providing requirements for such bonds, certificates of
15 deposit, and letters of credit; providing rulemaking
16 authority; amending s. 516.07, F.S.; revising grounds
17 for denial of license or disciplinary action; amending
18 s. 559.952, F.S.; revising exceptions for a licensee
19 during the Financial Technology Sandbox period;
20 providing an effective date.
21
22 Be It Enacted by the Legislature of the State of Florida:
23
24 Section 1. Subsection (1) of section 516.03, Florida
25 Statutes, is amended to read:
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HB 123 2022
26 516.03 Application for license; fees; assets, bonds,
27 certificates of deposit, or letters of credit; etc.—
28 (1) APPLICATION.—Application for a license to make loans
29 under this chapter shall be in the form prescribed by rule of
30 the commission. The commission may require each applicant to
31 provide any information reasonably necessary to determine the
32 applicant's eligibility for licensure. The applicant shall also
33 provide information that the office requires concerning any
34 officer, director, control person, member, partner, or joint
35 venturer of the applicant or any person having the same or
36 substantially similar status or performing substantially similar
37 functions or concerning any individual who is the ultimate
38 equitable owner of a 10-percent or greater interest in the
39 applicant. The office may require information concerning any
40 such applicant or person, including, but not limited to, his or
41 her full name and any other names by which he or she may have
42 been known, age, social security number, residential history,
43 qualifications, educational and business history, and
44 disciplinary and criminal history. The applicant must provide
45 evidence of liquid assets of at least $25,000 or documents
46 satisfying the requirements in s. 516.05(10). At the time of
47 making such application the applicant shall pay to the office a
48 nonrefundable biennial license fee of $625. Applications, except
49 for applications to renew or reactivate a license, must also be
50 accompanied by a nonrefundable investigation fee of $200. An
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HB 123 2022
51 application is considered received for purposes of s. 120.60
52 upon receipt of a completed application form as prescribed by
53 commission rule, a nonrefundable application fee of $625, and
54 any other fee prescribed by law. The commission may adopt rules
55 requiring electronic submission of any form, document, or fee
56 required by this act if such rules reasonably accommodate
57 technological or financial hardship. The commission may
58 prescribe by rule requirements and procedures for obtaining an
59 exemption due to a technological or financial hardship.
60 Section 2. Subsection (6) is added to section 516.031,
61 Florida Statutes, to read:
62 516.031 Finance charge; maximum rates.—
63 (6) PREPAYMENT PENALTIES PROHIBITED.—A licensee may not
64 require a borrower to pay a prepayment penalty for paying all or
65 part of the loan principal before the date on which the payment
66 is due.
67 Section 3. Subsection (10) is added to section 516.05,
68 Florida Statutes, to read:
69 516.05 License.—
70 (10)(a) In lieu of the $25,000 liquid asset requirement in
71 s. 516.03(1):
72 1. An applicant or a licensee may provide to the office a
73 surety bond in the amount of at least $25,000, issued by a
74 bonding company or insurance company authorized to do business
75 in this state.
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76 2. A company with at least one currently licensed location
77 must provide to the office a rider or surety bond in the amount
78 of at least $5,000 for each additional license issued by a
79 bonding company or insurance company authorized to do business
80 in this state. However, in no event may the aggregate amount of
81 the surety bond required for a company with multiple licenses
82 exceed $100,000.
83 (b) In lieu of a surety bond, the applicant or the
84 licensee may provide evidence of a certificate of deposit or an
85 irrevocable letter of credit in the same amount of the surety
86 bond required under paragraph (a). The certificate of deposit
87 must be deposited in a financial institution, as defined in s.
88 655.005(1)(i).
89 (c) The original surety bond, certificate of deposit, or
90 letter of credit must be filed with the office, and the office
91 must be named as beneficiary. The surety bond, certificate of
92 deposit, or letter of credit must be for the use and benefit of
93 any borrower who is injured by acts of a licensee involving
94 fraud, misrepresentation, or deceit, including willful
95 imposition of illegal or excessive charges; or
96 misrepresentation, circumvention, or concealment of any matter
97 required to be stated or furnished to a borrower, where such
98 acts are in connection with a loan made under this chapter. The
99 office, or any claimant, may bring an action in a court of
100 competent jurisdiction on the surety bond, certificate of
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101 deposit, or letter of credit. The surety bond, certificate of
102 deposit, or letter of credit must be payable on a pro rata
103 basis, but the aggregate amount may not exceed the amount of the
104 surety bond, certificate of deposit, or letter of credit.
105 (d) The surety bond, certificate of deposit, or letter of
106 credit may not be canceled by the licensee, bonding or insurance
107 company, or financial institution except upon notice to the
108 office by certified mail. A cancellation may not take effect
109 until 30 calendar days after receipt by the office of the
110 notice.
111 (e) The bonding or insurance company or financial
112 institution must, within 10 calendar days after it pays a claim,
113 give notice to the office by certified mail of such payment with
114 details sufficient to identify the claimant and the claim or
115 judgment paid.
116 (f) If the principal sum of the surety bond, certificate
117 of deposit, or letter of credit is reduced by one or more
118 recoveries or payments, the licensee must furnish to the office
119 a new or additional surety bond, certificate of deposit, or
120 letter of credit so that the total or aggregate principal sum
121 equals the amount required under this subsection. Alternatively,
122 a licensee may furnish an endorsement executed by the bonding or
123 insurance company or financial institution reinstating the
124 required principal amount.
125 (g) The required surety bond, certificate of deposit, or
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126 letter of credit must remain in place for 2 years after the
127 licensee ceases licensed operations in this state. During the 2 -
128 year period, the office may allow for a reduction or elimination
129 of the surety bond, certificate of deposit, or letter of credit
130 to the extent the licensee's outstanding consumer finance loans
131 in the state are reduced.
132 (h) The commission may prescribe by rule forms and
133 procedures to implement this subsection.
134 Section 4. Paragraph (b) of subsection (1) of section
135 516.07, Florida Statutes, is amended to read:
136 516.07 Grounds for denial of license or for disciplinary
137 action.—
138 (1) The following acts are violations of this chapter and
139 constitute grounds for denial of an application for a license to
140 make consumer finance loans and grounds for any of the
141 disciplinary actions specified in subsection (2):
142 (b) Failure to maintain liquid assets of at least $25,000
143 or a surety bond, certificate of deposit, or letter of credit in
144 the amount required by s. 516.05(10) at all times for the
145 operation of business at a licensed location or proposed
146 location.
147 Section 5. Paragraph (a) of subsection (4) of section
148 559.952, Florida Statutes, is amended to read:
149 559.952 Financial Technology Sandbox.—
150 (4) EXCEPTIONS TO GENERAL LAW AND WAIVERS OF RULE
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151 REQUIREMENTS.—
152 (a) Notwithstanding any other law, upon approval of a
153 Financial Technology Sandbox application, the following
154 provisions and corresponding rule requirements are not
155 applicable to the licensee during the sandbox period:
156 1. Section 516.03(1), except for the application fee, the
157 investigation fee, the requirement to provide the social
158 security numbers of control persons, evidence of liquid assets
159 of at least $25,000 or documents satisfying the requirements in
160 s. 516.05(10), and the office's authority to investigate the
161 applicant's background. The office may prorate the license
162 renewal fee for an extension granted under subsection (7).
163 2. Section 516.05(1) and (2), except that the office shall
164 investigate the applicant's background.
165 3. Section 560.109, only to the extent that the section
166 requires the office to examine a licensee at least once every 5
167 years.
168 4. Section 560.118(2).
169 5. Section 560.125(1), only to the extent that the
170 subsection would prohibit a licensee from engaging in the
171 business of a money transmitter or payment instrument seller
172 during the sandbox period.
173 6. Section 560.125(2), only to the extent that the
174 subsection would prohibit a licensee from appointing an
175 authorized vendor during the sandbox period. Any authorized
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176 vendor of such a licensee during the sandbox period remains
177 liable to the holder or remitter.
178 7. Section 560.128.
179 8. Section 560.141, except for s. 560.141(1)(a)1., 3., 7. -
180 10. and (b), (c), and (d).
181 9. Section 560.142(1) and (2), except that the office may
182 prorate, but may not entirely eliminate, the license renewal
183 fees in s. 560.143 for an extension granted under subsection
184 (7).
185 10. Section 560.143(2), only to the extent necessary for
186 proration of the renewal fee under subparagraph 9.
187 11. Section 560.204(1), only to the extent that the
188 subsection would prohibit a licensee from engaging in, or
189 advertising that it engages in, the selling or issuing of
190 payment instruments or in the activity of a money transmitter
191 during the sandbox period.
192 12. Section 560.205(2).
193 13. Section 560.208(2).
194 14. Section 560.209, only to the extent that the office
195 may modify, but may not entirely eliminate, the net worth,
196 corporate surety bond, and collateral deposit amounts required
197 under that section. The modified amounts must be in such lower
198 amounts that the office determines to be commensurate with the
199 factors under paragraph (5)(c) and the maximum number of
200 consumers authorized to receive the financial product or service
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201 under this section.
202 Section 6. This act shall take effect October 1, 2022.
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INSURANCE & BANKING SUBCOMMITTEE
HB 123 by Rep. Stevenson
Consumer Finance Loans
AMENDMENT SUMMARY
December 1, 2021
Amendment 1 by Rep. Stevenson (Line 88): Whereas the bill authorizes a consumer finance
lender to provide a letter of credit in lieu of the current statutory requirement to maintain liquid
assets, the amendment clarifies that such letter of credit must be issued by a financial
institution.
COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 123 (2022)
Amendment No. 1
COMMITTEE/SUBCOMMITTEE ACTION
ADOPTED (Y/N)
ADOPTED AS AMENDED (Y/N)
ADOPTED W/O OBJECTION (Y/N)
FAILED TO ADOPT (Y/N)
WITHDRAWN (Y/N)
OTHER
1 Committee/Subcommittee hearing bill: Insurance & Banking
2 Subcommittee
3 Representative Stevenson offered the following:
4
5 Amendment
6 Remove line 88 and insert:
7 655.005(1)(i). The letter of credit must be issued by a
8 financial institution, as defined in s. 655.005(1)(i).
972423 - h123-line 88.docx
Published On: 11/30/2021 2:50:34 PM
Page 1 of 1
HB 273
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: HB 273 Money Services Businesses
SPONSOR(S): Aloupis
TIED BILLS: IDEN./SIM. BILLS: SB 486
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Insurance & Banking Subcommittee Hinshelwood Luczynski
2) State Administration & Technology
Appropriations Subcommittee
3) Commerce Committee
SUMMARY ANALYSIS
The Office of Financial Regulation’s (OFR) Division of Consumer Finance licenses and regulates various
aspects of the non-depository financial services industries, including money services businesses (MSBs)
regulated under ch. 560, F.S. Money transmitters and payment instrument sellers are two types of MSBs.
Currently, virtual currency is not expressly within ch. 560, F.S., though in the last 7 years OFR has received
over 70 petitions for declaratory statement relating to whether and how virtual currency is regulated under that
chapter.
Virtual currency is a digital representation of value that functions as a medium of exchange, a unit of account,
and/or a store of value. In some environments, it operates like “fiat” currency (i.e., the coin and paper money of
the United States or of any other country that is designated as legal tender, circulates, and is customarily used
and accepted as a medium of exchange in the country of issuance), but it does not have legal tender status in
any jurisdiction. Bitcoin is one example of a virtual currency.
In a recent case, the Third District Court of Appeal’s holdings related to bitcoin illustrate the need to expressly
provide whether and how virtual currency falls within ch. 560, F.S., as well as the need to clarify certain
definitions in that chapter. In particular, the court held that the definition of “money transmitter” requires
licensure for third-party intermediaries as well as for individuals in a two-party transaction.
Within ch. 560, F.S., the bill adds a definition for “virtual currency” and amends the definitions of “electronic
instrument”, “monetary value”, “money transmitter”, “payment instrument”, and “stored value”. The
amendments to these definitions provide clarity as to their meaning; make virtual currency expressly subject to
money transmitter regulations but not regulations for other types of licenses under ch. 560, F.S.; and clarify
that a money transmitter license is only required for a person acting as an intermediary between two parties,
meaning that neither person in a two-party transaction is required to be licensed. As a result of the addition of
virtual currency to ch. 560, F.S., the bill makes conforming changes to the prohibition on unlicensed activity,
adds rulemaking authority for recordkeeping requirements related to virtual currency, and amends the
permissible investments statute. Without a change to the permissible investments statute, the effect would be
to require a money transmitter that transmits virtual currency to not only have control over the virtual currency
being transmitted but also hold the equivalent value in cash or other enumerated assets. Instead, the bill would
only require that, during the period of transmission, the money transmitter must hold virtual currency of the
same type and amount owed or obligated to the other location or person on the receiving end of the
transmission. Lastly, the bill makes conforming changes under the Financial Technology Sandbox in s.
559.952, F.S., as well as other conforming changes within ch. 560, F.S., to reflect the addition of virtual
currency to money transmitter regulations.
The bill has no fiscal impact on local governments and an indeterminate fiscal impact on the private sector and
the state. See Fiscal Analysis & Economic Impact Statement.
The bill provides an effective date of January 1, 2023.
This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives .
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FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Background
Regulation of Money Transmitters and Payment Instrument Sellers
State Regulation
The Office of Financial Regulation (OFR) regulates banks, credit unions, other financial institutions,
finance companies, and the securities industry.1 The Division of Consumer Finance within OFR
licenses and regulates various aspects of the non-depository financial services industries, including
money services businesses (MSBs) regulated under ch. 560, F.S. Money transmitters and payment
instrument sellers are two types of MSBs, and both are regulated under part II of ch. 560, F.S.
A money transmitter receives currency,2 monetary value,3 or payment instruments 4 for the purpose of
transmitting the same by any means, including transmission by wire, facsimile, electronic transfer,
courier, the Internet, or through bill payment services or other businesses that facilitate such transfer
within this country, or to or from this country.5 A payment instrument seller sells, issues, provides, or
delivers a payment instrument.6 State and federally chartered depository institutions, such as banks
and credit unions, are exempt from licensure as an MSB.7 Currently, virtual currency is not expressly
within ch. 560, F.S., though in the last 7 years OFR has received over 70 petitions for declaratory
statement relating to whether and how virtual currency is regulated under that chapter.
An applicant for an MSB license under ch. 560, F.S., must file an application with OFR and pay an
application fee of $375.8 The license must be renewed every 2 years by paying a renewal fee of $750.9
Money transmitters and payment instrument sellers may operate through authorized vendors by
providing OFR with specified information about the authorized vendor and by paying a fee of $38 per
authorized vendor location at the time of application and renewal.10 A money transmitter or payment
instrument seller may also engage in the activities authorized for check cashers 11 and foreign currency
exchangers 12 without paying additional licensing fees.13
1 S. 20.121(3)(a)2., F.S.
2 The term “currency” means the coin and paper money of the United States or of any other country which is designated
as legal tender and which circulates and is customarily used and accepted as a medium of exchange in the country of
issuance. Currency includes United States silver certificates, United States notes, and Federal Reserve notes. Currency
also includes official foreign bank notes that are customarily used and accepted as a medium of exchange in a foreign
country. S. 560.103(11), F.S.
3 The term “monetary value” means a medium of exchange, whether or not redeemable in currency. S. 560.103(21), F.S.
4 The term “payment instrument” means a check, draft, warrant, money order, travelers check, electronic instrument, or
other instrument, payment of money, or monetary value whether or not negotiable. The term does not include an
instrument that is redeemable by the issuer in merchandise or service, a credit card voucher, or a letter of credit. S.
560.103(29), F.S.
5 S. 560.103(23), F.S.
6 S. 560.103(30) and (34), F.S.; definition of “payment instrument”, supra note 4.
7 S. 560.104, F.S.
8 Ss. 560.141 and 560.143, F.S.
9 Id.; s. 560.142, F.S.
10 Id.; ss. 560.203, 560.205, and 560.208, F.S.
11 The term “check casher” means a person who sells currency in exchange for payment instruments received, except
travelers checks. S. 560.103(6), F.S.
12 The term “foreign currency exchanger” means a person who exchanges, for compensation, currency of the United
States or a foreign government to currency of another government. S. 560.103(17), F.S.
13 S. 560.204(2), F.S.
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A money transmitter or payment instrument seller must at all times:
Have a net worth of at least $100,000 and an additional net worth of $10,000 per location in this
state, up to a maximum of $2 million.14
Have a corporate surety bond in an amount between $50,000 and $2 million depending on the
financial condition, number of locations, and anticipated volume of the licensee. 15 In lieu of a
corporate surety bond, the licensee may deposit collateral such as cash or interest-bearing
stocks and bonds with a federally insured financial institution. 16
Possess permissible investments, such as cash and certificates of deposit, with an aggregate
market value of at least the aggregate face amount of all outstanding money transmissions and
payment instruments issued or sold by the licensee or an authorized vendor in the United
States.17 OFR may waive the permissible investments requirement if the dollar value of a
licensee’s outstanding payment instruments and money transmitted do not exceed the bond or
collateral deposit.18
While MSBs are generally subject to federal anti-money laundering laws,19 Florida law contains many
of the same anti-money laundering reporting requirements and recordkeeping requirements with the
added benefit of state enforcement. An MSB applicant must have an anti-money laundering program
that meets the requirements of federal law.20
Pursuant to the Florida Control of Money Laundering in Money Services Business Act, an MSB must
maintain certain records of each transaction involving currency or payment instruments in order to deter
the use of a money services business to conceal proceeds from criminal activity and to ensure the
availability of such records for criminal, tax, or regulatory investigations or proceedings. 21 An MSB must
keep records of each transaction occurring in this state that it knows to involve currency or other
payment instruments having a greater value than $10,000; to involve the proceeds of specified unlawful
activity; or to be designed to evade the reporting requirements of ch. 896, F.S., or the Florida Control of
Money Laundering in Money Services Business Act.22 OFR may take administrative action against an
MSB for failure to maintain or produce documents required by ch. 560, F.S., or federal anti-money
laundering laws.23 OFR may also take administrative action against an MSB for other violations of
federal anti-money laundering laws such as failure to file suspicious activity reports. 24
A money transmitter or payment instrument seller must maintain specified records for at least 5 years,
including the following:25
A daily record of payment instruments sold and money transmitted.
A general ledger containing all asset, liability, capital, income, and expense accounts, which
must be posted at least monthly.
Daily settlement records received from authorized vendors.
Monthly financial institution statements and reconciliation records.
Records of outstanding payment instruments and money transmitted.
Records of each payment instrument paid and money transmission delivered.
A list of the names and addresses of the licensee’s authorized vendors.
Records that document the establishment, monitoring, and termination of relationships with
authorized vendors and foreign affiliates.
Any additional records, as prescribed by rule, designed to detect and prevent money
laundering.
14 S. 560.209, F.S.
15 Id.
16 Id.
17 S. 560.210, F.S.
18 Id.
19 31 C.F.R. pt. 1022.
20 S. 560.1401, F.S.
21 S. 560.123, F.S.
22 Id.
23 S. 560.114, F.S.
24 Id.
25 Ss. 560.1105 and 560.211, F.S.
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Recent Case Law: State v. Espinoza
Through an online directory of buyers and sellers of bitcoin, a detective with the Miami Beach Police
Department arranged to meet a person with the username Michelhack, which turned out to be the
defendant Michell Espinoza, in order to purchase bitcoin. 26 The detective arranged multiple
transactions with the defendant as follows:
During the course of the first transaction, the detective made clear his desire to remain
anonymous and implied that he was involved in illicit activity. 27 The detective paid Mr. Espinoza
$500 in cash and received a portion of a bitcoin valued at $416.12, thus earning Mr. Espinoza a
profit of $83.67.28
The detective arranged a second transaction with Mr. Espinoza during which he told Mr.
Espinoza that he needed the bitcoins to pay for stolen credit card numbers, since he was in the
business of buying and selling stolen credit card numbers from Russian sellers. 29 The detective
paid Mr. Espinoza $1,000 in cash and received one bitcoin, thus earning Mr. Espinoza a profit
of approximately $167.56.30
The detective then arranged a third transaction with Mr. Espinoza.31 The detective inquired how
fast the transaction could be completed because his “Russian buddies” would not send him his
“[stuff] until they get the coin.”32 The detective deposited $500 into Mr. Espinoza’s bank account,
and Mr. Espinoza transferred 0.54347826 bitcoins to the detective. 33
In the fourth and final transaction, the detective negotiated the transfer of bitcoins worth $30,000
and represented to Mr. Espinoza that it was to pay for a new batch of stolen credit card
numbers acquired from a recent data breach.34 Although Mr. Espinoza questioned the
authenticity of the $30,000 roll of money that the detective gave him, he otherwise remained
ready and willing to consummate the entire transaction.35 Mr. Espinoza was then taken into
custody.36
Mr. Espinoza was charged with: (1) one count of unlawfully engaging in the business of a money
transmitter and acting as a payment instrument seller as a result of not being licensed to conduct such
activity (Count one); and (2) two counts of money laundering (Counts two and three).37 Mr. Espinoza
filed a motion to dismiss as to all counts, which the trial court granted for the following reasons:
As to Count one, the trial court found that neither bitcoin nor Mr. Espinoza’s conduct fell within
the ambit of ch. 560, F.S., requiring registration as a money services business. 38 Regarding Mr.
Espinoza’s conduct, the trial court reasoned that a “money transmitter” would necessarily
operate like a middleman in a financial transaction, much like how Western Union accepts
money from person A, and at the direction of person A, transmits it to person or entity B. 39 Mr.
Espinoza was not acting as a middleman; rather the transactions with the detective were two-
party transactions in which Mr. Espinoza sold his own bitcoin to the detective and received U.S.
Dollars in return.
As to Counts two and three, the trial court found that the conduct at issue qualifies as a
“financial transaction” under the money laundering statutes but that Mr. Espinoza lacked the
requisite intent to be guilty of money laundering.40
26 State v. Espinoza, 264 So. 3d 1055, 1059-60 (Fla. 3d DCA 2019).
27 Id. at 1060.
28 Id.
29 Id.
30 Id.
31 Id.
32 Id.
33 Id.
34 Id. at 1060-61.
35 Id. at 1061.
36 Id.
37 Id. at 1057 and 1061.
38 Id. at 1057 and 1061.
39 Id. at 1065.
40 Id. at 1057 and 1061.
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The state then appealed the trial court’s dismissal of the information. 41 On appeal, the Third District
Court of Appeal (court) held that:
The trial court erred in dismissing Count one because Mr. Espinoza acted as both a money
transmitter and a payment instrument seller and, as such, was required to be licensed as a
money services business.42
The trial court erred in dismissing Counts two and three on the basis that Espinoza lacked the
requisite intent to be guilty of money laundering.43
In the reasoning as to Count one, the court determined that bitcoin is both “monetary value” and a
“payment instrument” under ch. 560, F.S.44 This interpretation illustrates the need to expressly provide
whether and how virtual currency falls within ch. 560, F.S. The court’s interpretation also illustrates the
need to clarify the definition of “payment instrument”. “Monetary value” is akin to “currency” within ch.
560, F.S. Conceptually, a payment instrument is an instrument denominated in currency (or monetary
value), but currency and monetary value should not in and of themselves be a payment instrument.
Another important aspect of the Espinoza case is that in determining that Mr. Espinoza acted as a
money transmitter, the court addressed whether the definition of “money transmitter” covers only third-
party intermediaries, in which case Mr. Espinoza selling his own bitcoins to the detective would not
have run afoul of the prohibition on unlicensed money transmission. 45 On this point, the court held that
“[t]he statute's plain language clearly contains no third party transmission requirement in order for an
individual's conduct to fall under the ‘money transmitter’ definition. As such, we decline to add any third
party or ‘middleman’ requirement to the money transmitter definition found in section 560.103(23).” 46
The court’s holding illustrates the need to clarify the definition of “money transmitter” such that a money
transmitter license is only required for a person acting an intermediary between two parties, but neither
person in a two-party transaction is required to be licensed.47
Virtual Currency
Virtual currency is a digital representation of value that functions as a medium of exchange, a unit of
account, and/or a store of value.48 In some environments, it operates like “real” currency49 (i.e., the coin
and paper money of the United States or of any other country that is designated as legal tender,
circulates, and is customarily used and accepted as a medium of exchange in the country of issuance),
but it does not have legal tender status in any jurisdiction. 50 Virtual currency that has an equivalent
value in real currency, or that acts as a substitute for real currency, is referred to as “convertible” virtual
currency.51 Bitcoin is one example of a convertible virtual currency, as it can be digitally traded between
users and can be purchased for, or exchanged into, U.S. dollars, Euros, and other real or virtual
currencies.52
Virtual currencies generally consist of computers operating the network software (nodes) that enable,
validate, and store transaction records on a distributed digital ledger (a blockchain).53 To transfer an
41 Id. at 1061.
42 Id. at 1057 and 1061-62.
43 Id.
44 Id. at 1064.
45 Id. at 1065.
46 Id. (citations omitted).
47 This is consistent with the historical interpretation of the money transmitter definition by OFR and industry, and it avoids
the untenable result of requiring persons in a two-party transaction to be licensed. Additionally, this is consistent with the
substance of the money transmitter regulations.
48 IRS, Virtual Currencies: What is virtual currency?, https://www.irs.gov/businesses/small-businesses-self-
employed/virtual-currencies (last visited Nov. 23, 2021).
49 Also often referred to as “fiat” currency.
50 IRS, supra note 48.
51 Id.
52 Id.
53 FinCEN, Notice of Proposed Rulemak ing: Requirements for Certain Transactions Involving Convertible Virtual Currency
or Digital Assets, https://www.govinfo.gov/content/pkg/FR-2020-12-23/pdf/2020-28437.pdf (last visited Nov. 23, 2021).
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asset on a blockchain, a person enters an alphanumeric code known only to the transferor (a private
key) into a cryptographic hash function enabled by the network software, which allows the transferor to
request that the network software validate a new entry on the ledger showing that control of an asset
has been assigned to the recipient.54 Once the network software has validated this transfer, the ledger
is altered and the recipient may transfer the asset to another recipient using their own private key.55
Ledger entries are cryptographically secured, and accounts are identified on a blockchain by
alphanumeric ‘‘public keys’’—not by the owner’s name.56
Some persons use the services of a third-party to acquire or transact in virtual currency.57 For example,
certain third-parties provide custody services for their customers’ virtual currency in so called ‘‘hosted
wallets.’’58 In such arrangements, the third-party wallet host may execute transactions on a blockchain
on behalf of a customer using a private key controlled by the third-party wallet host.59 Other persons do
not use the services of such a third-party, in which case they use the private key controlling their virtual
currency to transact directly on a blockchain.60 Such persons may store the private key in a software
program or written record, often referred to as an ‘‘unhosted wallet.’’61
Virtual currency networks present opportunities as well as risks.62 The G7 Finance Ministers and
Central Bank Governors recently noted that ‘‘[t]he widespread adoption of digital payments . . . has the
potential to address frictions in existing payment systems by improving access to financial services,
reducing inefficiencies, and lowering costs.’’63 At the same time, however, virtual currencies are used in
illicit financial activity that presents substantial national security concerns.64
Determining the true amount of illicit activity that is conducted in virtual currency is challenging.65 One
industry estimate is that approximately 1 percent of overall market transaction volume, or $10 billion, in
virtual currency activity conducted globally in 2019 was illicit.66 This figure, however, may
underestimate such illicit activity.67 Despite significant underreporting due to compliance challenges in
parts of the virtual currency sector, in 2019, FinCEN received approximately $119 billion in suspicious
activity reporting associated with virtual currency activity taking place wholly or in substantial part in the
United States.68 By industry measures, this would equate to approximately 11.9 percent of total virtual
currency market activity being relevant to a possible violation of law or regulation.69
Virtual Currency in Florida Statutes
Currently, Florida law includes virtual currency as a type of monetary instrument under the Florida
Money Laundering Act.70 Thus, Florida law criminalizes the use of virtual currency for illicit purposes in
the same manner that the law criminalizes use of fiat currency for illicit purposes. Under that act,
“‘virtual currency’ means a medium of exchange in electronic or digital format that is not a coin or
54 Id.
55 Id.
56 Id.
57 Id.
58 Id.
59 Id.
60 Id.
61 Id.
62 Id.
63 Id. (citing the G7 Finance Ministers and Central Bank Governors’ Statement on Digital Payments on Oct. 13, 2020).
64 FinCEN Notice of Proposed Rulemaking, supra note 53.
65 Id.
66 Id. (citing Chainalysis, 2020 Crypto Crime Report (Jan. 2020), https://go.chainalysis.com/2020-CryptoCrime-
Report.html).
67 FinCEN Notice of Proposed Rulemaking, supra note 53.
68 Id. FinCEN notes that a significant majority of this $119 billion related to suspicious activity that took place before 2019
based on subsequent lookbacks. Id. FinCEN anticipates that in the future it will receive additional suspicious activity
reporting for activity that took place in 2019 but that has not yet been recognized as suspicious. Id.
69 Id. Suspicious activity is not a clear indication of a crime but is activity that is potentially illicit. Id.
70 S. 896.101, F.S.
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currency of the United States or any other country.”71 This definition was added in 201772 and is the
only instance of “virtual currency” in Florida Statutes.
Federal Regulation of MSBs
The Financial Crimes Enforcement Network of the United States Department of Treasury (FinCEN)
serves as the nation’s financial intelligence unit and is charged with safeguarding the United States
financial system from the abuses of money laundering, terrorist financing, and other financial crimes.73
The basic concept underlying FinCEN's core activities is “follow the money” because criminals leave
financial trails as they try to launder the proceeds of crimes or attempt to spend their ill-gotten profits.74
To that end, FinCEN administers the Bank Secrecy Act (BSA).75 BSA regulations require banks and
other financial institutions, including MSBs, to take a number of precautions against financial crime.76
BSA regulations require financial institutions to establish an anti-money laundering program (such as
verifying customer identity), maintain certain records (such as transaction related data), and file reports
(such as suspicious activity reports and currency transaction reports) that have been determined to
have a high degree of usefulness in criminal, tax, and regulatory investigations, as well as in certain
intelligence and counter-terrorism matters.77
Generally, an MSB is required to register with FinCEN, regardless of whether the MSB is licensed with
the state, if it conducts more than $1,000 in business with one person in one or more transactions on
the same day, in one or more of the following services: money orders, traveler’s checks, check cashing,
currency dealing, or exchange.78 However, an MSB must register with FinCEN if it provides money
transfer services in any amount.79
BSA regulations define “money transmission services” as “the acceptance of currency, funds, or other
value that substitutes for currency from one person and the transmission of currency, funds, or other
value that substitutes for currency to another location or person by any means.”80 Depending on the
facts and circumstances surrounding a transaction, a person transmitting virtual currency may fall
under FinCEN’s BSA regulations.81
Federal law criminalizes money transmission if the money transmitting business: 82
Is operated without a license in a state where such unlicensed activity is subject to criminal
sanctions;
Fails to register with FinCEN; or
Otherwise involves the transportation or transmission of funds that are known to have been
derived from a criminal offense or are intended to be used to promote or support unlawful
activity.
Effect of the Bill
Definitions (Section 2)
71 Id.
72 Ch. 2017-155, Laws of Fla.
73 FinCEN, What We Do, https://www.fincen.gov/what -we-do (last visited Nov. 23, 2021).
74 Id.
75 Many of the federalprovisions of the BSA have been codified in ch. 560, F.S., which has provided OFR with additional
compliance and enforcement tools.
76 FinCEN, supra note 73.
77 Id.
78 31 C.F.R. §§ 1010.100 and 1022.380.
79 Id.
80 31 C.F.R. § 1010.100 (emphasis added).
81 FinCEN Guidance, Application of FinCEN’s Regulations to Certain Business Models Involving Convertible Virtual
Currencies, FIN-2019-G001 (May 9, 2019), https://www.fincen.gov/sites/default/files/2019 -
05/FinCEN%20Guidance%20CV C%20FINAL% 20508.pdf (last visited Nov. 23, 2021); FinCEN Notice of Proposed
Rulemaking, supra note 53.
82 31 U.S.C. § 1960.
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The bill makes the following changes to definitions in ch. 560, F.S.:
Amends the definition of “electronic instrument” to replace the undefined term “money” with the
defined term “currency”. Leaving an undefined term such as “money” in statute may lead to
confusion as to whether the term includes virtual currency. The definition of “electronic
instrument” is also reworded for clarity.
Excludes virtual currency from the definition of “monetary value” in order to narrow the
regulation of virtual currency to only regulations for money transmitters but not other types of
licenses under ch. 560, F.S.
Amends the definition of “money transmitter” to expressly include virtual currency and to clarify
that a money transmitter license is only required for a person acting an intermediary between
two parties if the intermediary has the ability to unilaterally execute or indefinitely prevent a
transaction; neither person in a two-party transaction is required to be licensed.
Amends the definition of “payment instrument” to replace the undefined term “money” with the
defined term “currency”. Leaving an undefined term such as “money” in statute may lead to
confusion as to whether the term includes virtual currency. The definition of “payment
instrument” is also amended to clarify that the term means an instrument that is used for the
transmission, exchange, or payment of currency or monetary value, but a payment instrument is
not the currency or monetary value itself.
Amends the definition of “stored value” to replace the undefined term “funds” with the defined
term “currency”. Leaving an undefined term such as “funds” in statute may lead to confusion as
to whether the term includes virtual currency.
Adds the following definition of “virtual currency” – Virtual currency means a medium of
exchange in electronic or digital format that is not currency. The term does not include a
medium of exchange in electronic or digital format that is used:
o Solely within online gaming platforms with no market or application outside such gaming
platforms; or
o Exclusively as part of a consumer affinity or rewards program and can be applied solely
as payment for purchases with the issuer or other designated merchants but cannot be
converted into or redeemed for currency, monetary value, or another medium of
exchange in electronic or digital format that is not currency and that is not used solely
within online gaming platforms.
Prohibition on Unlicensed Activity (Section 5)
The bill amends the prohibition on unlicensed money transmitter activity and payment instrument
selling in order to better align the wording with the definition of payment instrument seller. One element
of the prohibition is that a person is doing such activity for compensation, and “compensation” includes
profit or loss on the exchange of currency. The bill adds that “compensation” includes profit or loss on
the exchange of monetary value or virtual currency.
Permissible Investments (Section 8)
The bill amends the permissible investments statute in relation to virtual currency. Under current law, a
money transmitter must possess permissible investments, such as cash and certificates of deposit, with
an aggregate market value of at least the aggregate face amount of all outstanding money
transmissions. Without an amendment to this statute, the effect would be to require a money
transmitter that transmits virtual currency to not only have control over the virtual currency being
transmitted but also hold the equivalent value in cash or other enumerated assets. Instead, the bill
would only require that, during the period of transmission, the money transmitter must hold virtual
currency of the same type and amount owed or obligated to the other location or person on the
receiving end of the transmission.
Required Records (Section 9)
The bill adds rulemaking authority for recordkeeping requirements related to virtual currency.
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Conforming Changes (Sections 1, 3, 4, 6, 7, 9, 10)
The bill amends the Financial Technology Sandbox in s. 559.952, F.S., in order to conform to changes
made to s. 560.204, F.S. The bill also conforms portions of ss. 560.123, 560.125, 560.208, 560.2085,
560.211, 560.212, F.S., to reflect the addition of virtual currency to money transmitter regulations.
Effective Date (Section 11)
The bill provides an effective date of January 1, 2023.
B. SECTION DIRECTORY:
Section 1. Amends s. 559.952, F.S., relating to Financial Technology Sandbox.
Section 2. Amends s. 560.103, F.S., relating to definitions.
Section 3. Amends s. 560.123, F.S., relating to Florida Control of Money Laundering in Money
Services Business Act.
Section 4. Amends s. 560.125, F.S., relating to unlicensed activity; penalties.
Section 5. Amends s. 560.204, F.S., relating to license required.
Section 6. Amends s. 560.208, F.S., relating to conduct of business.
Section 7. Amends s. 560.2085, F.S., relating to authorized vendors.
Section 8. Amends s. 560.210, F.S., relating to permissible investments.
Section 9. Amends s. 560.211, F.S., relating to required records.
Section 10. Amends s. 560.212, F.S., relating to financial liability.
Section 11. Provides an effective date of January 1, 2023.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
See Fiscal Comments.
2. Expenditures:
See Fiscal Comments.
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
None.
2. Expenditures:
None.
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C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
The bill’s overall impact on the private sector, while likely positive, is indeterminate. The bill provides
regulatory clarity as to the way in which virtual currency is regulated under ch. 560, F.S. To the extent
that the Espinoza case may have caused some businesses to become licensed out of an abundance of
caution when buying and selling virtual currency in two-party transactions, the regulatory clarity
provided by the bill may result in such businesses foregoing licensure. Additionally, the bill may lead to
greater protection for consumers transacting in virtual currency through third-party intermediaries. The
regulatory clarity provided by the bill may lead to more money transmitter licensees, especially those
that deal in virtual currency. Businesses that apply for a money transmitter license would be subject to
fees for initial licensure ($375), biannual renewal ($750), fingerprinting of control persons
(approximately $65 per individual for initial fingerprinting plus $6 per individual biannually for fingerprint
retention), and examination expenses every 5 years (approximately $3,800).83
D. FISCAL COMMENTS:
The fiscal impact on OFR is indeterminate. The regulatory clarity provided by the bill may lead to more
money transmitter licensees, especially those that deal in virtual currency. This may increase revenues
in the Regulatory Trust Fund, though OFR would incur additional costs for examination expenses
associated with the new licensees. However, to the extent that the Espinoza case may have caused
some businesses to become licensed out of an abundance of caution when buying and selling virtual
currency in two-party transactions, the regulatory clarity provided by the bill may result in such
businesses foregoing licensure.
Since the potential number of additional licensees and corresponding expenses for oversight is
unknown, the fiscal impact on the Regulatory Trust Fund is indeterminate. OFR has noted that
additional staff and funding may be required in the future if the number of new licensees dealing in
virtual currency significantly increases beyond its capacity to absorb the additional workload.84
III. COMMENTS
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
Not applicable. The bill does not appear to affect county or municipal governments.
2. Other:
None.
B. RULE-MAKING AUTHORITY:
The bill adds rulemaking authority for recordkeeping requirements related to virtual currency. Other
changes made by the bill may necessitate amendment to current rules.
C. DRAFTING ISSUES OR OTHER COMMENTS:
None.
IV. AMENDMENTS/ COMMITTEE SUBSTITUTE CHANGES
83 Office of Financial Regulation (OFR), Agency Analysis of 2022 Senate Bill 486, pp. 9-10 (Nov. 19, 2021).
84 OFR, supra note 83, at p. 9.
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F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
HB 273 2022
1 A bill to be entitled
2 An act relating to money services businesses; amending
3 s. 559.952, F.S.; revising exceptions for a licensee
4 during the Financial Technology Sandbox period;
5 amending s. 560.103, F.S.; revising and providing
6 definitions; amending s. 560.123, F.S.; revising t he
7 purpose of the Florida Control of Money Laundering in
8 Money Services Business Act; revising duties of money
9 services businesses; revising provisions related to
10 violations of money services business activities and
11 penalties for such violations; amending s. 560.125,
12 F.S.; revising provisions related to violations of
13 money services business activities and penalties for
14 such violations; amending s. 560.204, F.S.; revising
15 provisions related to certain prohibited activities
16 without a license; revising the definition of the term
17 "compensation"; amending s. 560.208, F.S.; revising
18 requirements for a money transmitter or payment
19 instrument seller to conduct business; amending s.
20 560.2085, F.S.; revising requirements for a written
21 contract between a money transmitter or payment
22 instrument seller and an authorized vendor; amending
23 s. 560.210, F.S.; providing requirements for a money
24 transmitter that receives virtual currency; excluding
25 virtual currency in the calculation of permissible
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26 investments under certain circumstances; amending s.
27 560.211, F.S.; revising recordkeeping requirements for
28 a money transmitter or payment instrument seller;
29 amending s. 560.212, F.S.; revising financial
30 liability requirements for a money transmitter or
31 payment instrument seller; providing an effective
32 date.
33
34 Be It Enacted by the Legislature of the State of Florida:
35
36 Section 1. Paragraph (a) of subsection (4) of section
37 559.952, Florida Statutes, is amended to read:
38 559.952 Financial Technology Sandbox.—
39 (4) EXCEPTIONS TO GENERAL LAW AND WAIVERS OF RULE
40 REQUIREMENTS.—
41 (a) Notwithstanding any other law, upon approval of a
42 Financial Technology Sandbox application, the following
43 provisions and corresponding rule requirements are not
44 applicable to the licensee during the sandbox period:
45 1. Section 516.03(1), except for the application fee, the
46 investigation fee, the requirement to provide the social
47 security numbers of control persons, evidence of liquid assets
48 of at least $25,000, and the office's authority to investigate
49 the applicant's background. The office may prorate the license
50 renewal fee for an extension granted under subsection (7).
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51 2. Section 516.05(1) and (2), except that the office shall
52 investigate the applicant's background.
53 3. Section 560.109, only to the extent that the section
54 requires the office to examine a licensee at least once every 5
55 years.
56 4. Section 560.118(2).
57 5. Section 560.125(1), only to the extent that the
58 subsection would prohibit a licensee from engaging in the
59 business of a money transmitter or payment instrument seller
60 during the sandbox period.
61 6. Section 560.125(2), only to the extent that the
62 subsection would prohibit a licensee from appointing an
63 authorized vendor during the sandbox period. Any authorized
64 vendor of such a licensee during the sandbox period remains
65 liable to the holder or remitter.
66 7. Section 560.128.
67 8. Section 560.141, except for s. 560.141(1)(a)1., 3., 7. -
68 10. and (b), (c), and (d).
69 9. Section 560.142(1) and (2), except that the office may
70 prorate, but may not entirely eliminate, the license renewal
71 fees in s. 560.143 for an extension granted under subsection
72 (7).
73 10. Section 560.143(2), only to the extent necessary for
74 proration of the renewal fee under subparagraph 9.
75 11. Section 560.204(1), only to the extent that the
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76 subsection would prohibit a licensee from engaging in, or
77 advertising that it engages in, the selling or issuing of
78 payment instruments or in the activity of a payment instrument
79 seller or money transmitter during the sandbox period.
80 12. Section 560.205(2).
81 13. Section 560.208(2).
82 14. Section 560.209, only to the extent that the office
83 may modify, but may not entirely eliminate, the net worth,
84 corporate surety bond, and collateral deposit amounts required
85 under that section. The modified amounts must be in such lower
86 amounts that the office determines to be commensurate with the
87 factors under paragraph (5)(c) and the maximum number of
88 consumers authorized to receive the financial product or service
89 under this section.
90 Section 2. Subsections (14), (21), (23), (29), and (35) of
91 section 560.103, Florida Statutes, are amended, and subsection
92 (36) is added to that section, to read:
93 560.103 Definitions.—As used in this chapter, the term:
94 (14) "Electronic instrument" means a card, tangible
95 object, or other form of electronic payment used for the
96 transmission, or payment, of money or the exchange of currency
97 or monetary value, including a stored value card or device that
98 contains a microprocessor chip, magnetic stripe, or other means
99 for storing information; that is prefunded; and for which the
100 value is decremented upon each use.
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101 (21) "Monetary value" means a medium of exchange, other
102 than virtual currency, regardless of whether it is or not
103 redeemable in currency.
104 (23) "Money transmitter" means a corporation, limited
105 liability company, limited liability partnership, or foreign
106 entity qualified to do business in this state which receives
107 currency, monetary value, a or payment instrument, or virtual
108 currency instruments for the purpose of acting as an
109 intermediary to transmit currency, monetary value, a payment
110 instrument, or virtual currency from one person to another
111 location or person transmitting the same by any means, including
112 transmission by wire, facsimile, electronic transfer, courier,
113 the Internet, or through bill payment services or other
114 businesses that facilitate such transfer within this country, or
115 to or from this country. The term includes only an intermediary
116 that has the ability to unilaterally execute or indefinitely
117 prevent a transaction.
118 (29) "Payment instrument" means a check, draft, warrant,
119 money order, travelers check, electronic instrument, or other
120 instrument used for the transmission, exchange, or payment of
121 currency money, or monetary value, regardless of whether it is
122 or not negotiable. The term does not include an instrument that
123 is redeemable by the issuer in merchandise or service, a credit
124 card voucher, or a letter of credit.
125 (35) "Stored value" means currency funds or monetary value
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126 represented in digital electronic format, regardless of whether
127 it is or not specially encrypted, and stored or capable of
128 storage on electronic media in such a way as to be retrievable
129 and transferred electronically.
130 (36) "Virtual currency" means a medium of exchange in
131 electronic or digital format that is not currency. The term does
132 not include a medium of exchange in electronic or digital format
133 that is used:
134 (a) Solely within online gaming platforms with no market
135 or application outside such gaming platforms; or
136 (b) Exclusively as part of a consumer affinity or rewards
137 program and can be applied solely as payment for purchases with
138 the issuer or other designated merchants but cannot be converted
139 into or redeemed for currency, monetary value, or another medium
140 of exchange in electronic or digital format that is not currency
141 and that is not used solely within online gaming platforms.
142 Section 3. Subsections (2), (3), and (4) and paragraphs
143 (b), (c), and (d) of subsection (8) of section 560.123, Florida
144 Statutes, are amended to read:
145 560.123 Florida Control of Money Laundering in Money
146 Services Business Act.—
147 (2) The purpose of this section is to require the
148 maintenance of certain records of transactions involving
149 currency, monetary value, or payment instruments, or virtual
150 currency in order to deter the use of a money services business
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151 to conceal proceeds from criminal activity and to ensure the
152 availability of such records for criminal, tax, or regulatory
153 investigations or proceedings.
154 (3) A money services business shall keep a record, as
155 prescribed by the commission, of each financial transaction
156 occurring in this state which it knows to involve currency ,
157 monetary value, a or other payment instrument, or virtual
158 currency as prescribed by the commission, having a value greater
159 than $10,000; to involve the proceeds of specified unlawful
160 activity; or to be designed to evade the reporting requirements
161 of this section or chapter 896. The money services business must
162 maintain appropriate procedures to ensure compliance with this
163 section and chapter 896.
164 (a) Multiple financial transactions shall be treated as a
165 single transaction if the money services business has knowledge
166 that they are made by or on behalf of any one person and result
167 in value cash in or value cash out totaling a value of more than
168 $10,000 during any day.
169 (b) A money services business may keep a record of any
170 financial transaction occurring in this state, regardless of the
171 value, if it suspects that the transaction involves the proceeds
172 of unlawful activity.
173 (c) The money services business must file a report with
174 the office of any records required by this subsection, at such
175 time and containing such information as required by rule. The
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176 timely filing of the report required by 31 U.S.C. s. 5313 with
177 the appropriate federal agency shall be deemed compliance with
178 the reporting requirements of this subsection unless the reports
179 are not regularly and comprehensively transmitted by the federal
180 agency to the office.
181 (d) A money services business, or officer, employee, or
182 agent thereof, that files a report in good faith pursuant to
183 this section is not liable to any person for loss or damage
184 caused in whole or in part by the making, filing, or
185 governmental use of the report, or any information conta ined
186 therein.
187 (4) A money services business must comply with the money
188 laundering, enforcement, and reporting provisions of s. 655.50
189 relating to reports of transactions involving currency
190 transactions and payment instruments, as applicable, and of
191 chapter 896 concerning offenses relating to financial
192 transactions.
193 (8)
194 (b) A person who willfully violates any provision of this
195 section, if the violation involves:
196 1. Currency, monetary value, or payment instruments, or
197 virtual currency of a value exceeding $300 but less than $20,000
198 in any 12-month period, commits a felony of the third degree,
199 punishable as provided in s. 775.082, s. 775.083, or s. 775.084.
200 2. Currency, monetary value, or payment instruments, or
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201 virtual currency of a value totaling or exceeding $20,000 but
202 less than $100,000 in any 12-month period, commits a felony of
203 the second degree, punishable as provided in s. 775.082, s.
204 775.083, or s. 775.084.
205 3. Currency, monetary value, or payment instruments, or
206 virtual currency of a value totaling or exceeding $100,000 in
207 any 12-month period, commits a felony of the first degree,
208 punishable as provided in s. 775.082, s. 775.083, or s. 775.084.
209 (c) In addition to the penalties authorized by s. 775.082,
210 s. 775.083, or s. 775.084, a person who has been convicted of,
211 or entered a plea of guilty or nolo contendere, regardless of
212 adjudication, to having violated paragraph (b) may be sentenced
213 to pay a fine of up to the greater of $250,000 or twice the
214 value of the currency, monetary value, or payment instruments,
215 or virtual currency whichever is greater, except that on a
216 second or subsequent conviction for or plea of guilty or nolo
217 contendere, regardless of adjudication, to a violation of
218 paragraph (b), the fine may be up to the greater of $500,000 or
219 quintuple the value of the currency, monetary value, or payment
220 instruments, or virtual currency whichever is greater.
221 (d) A person who violates this section is also liable for
222 a civil penalty of up to not more than the greater of the value
223 of the currency, monetary value, or payment instruments, or
224 virtual currency involved or $25,000.
225 Section 4. Subsections (5), (6), and (7) of section
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226 560.125, Florida Statutes, are amended to read:
227 560.125 Unlicensed activity; penalties.—
228 (5) A person who violates this section, if the violation
229 involves:
230 (a) Currency, monetary value, or payment instruments, or
231 virtual currency of a value exceeding $300 but less than $20,000
232 in any 12-month period, commits a felony of the third degree,
233 punishable as provided in s. 775.082, s. 775.083, or s. 775.084.
234 (b) Currency, monetary value, or payment instruments, or
235 virtual currency of a value totaling or exceeding $20,000 but
236 less than $100,000 in any 12-month period, commits a felony of
237 the second degree, punishable as provided in s. 775.082, s.
238 775.083, or s. 775.084.
239 (c) Currency, monetary value, or payment instruments, or
240 virtual currency of a value totaling or exceeding $100,000 in
241 any 12-month period, commits a felony of the first degree,
242 punishable as provided in s. 775.082, s. 775.083, or s. 775.084.
243 (6) In addition to the penalties authorized by s. 775.082,
244 s. 775.083, or s. 775.084, a person who has been convicted of,
245 or entered a plea of guilty or nolo contendere to, having
246 violated this section may be sentenced to pay a fine of up to
247 the greater of $250,000 or twice the value of the currency,
248 monetary value, or payment instruments, or virtual currency
249 whichever is greater, except that on a second or subsequent
250 violation of this section, the fine may be up to the greater of
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251 $500,000 or quintuple the value of the currency, monetary value,
252 or payment instruments, or virtual currency whichever is
253 greater.
254 (7) A person who violates this section is also liable for
255 a civil penalty of up to the greater of not more than the value
256 of the currency, monetary value, or payment instruments, or
257 virtual currency involved or $25,000, whichever is greater.
258 Section 5. Subsection (1) of section 560.204, Florida
259 Statutes, is amended to read:
260 560.204 License required.—
261 (1) Unless exempted, a person may not engage in, or in any
262 manner advertise that they engage in, the selling or issuing of
263 payment instruments or in the activity of a payment instrument
264 seller or money transmitter, for compensation, without first
265 obtaining a license under this part. For purposes of this
266 subsection section, the term "compensation" includes profit or
267 loss on the exchange of currency, monetary value, or virtual
268 currency.
269 Section 6. Subsections (5) and (6) of section 560 .208,
270 Florida Statutes, are amended to read:
271 560.208 Conduct of business.—In addition to the
272 requirements specified in s. 560.1401, a licensee under this
273 part:
274 (5) Shall, in the normal course of business, ensure that
275 currency, monetary value, payment instruments, or virtual
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276 currency money transmitted is available to the designated
277 recipient within 10 business days after receipt.
278 (6) Shall immediately upon receipt of currency, monetary
279 value, a or payment instrument, or virtual currency provide a
280 confirmation or sequence number to the customer verbally, by
281 paper, or electronically.
282 Section 7. Paragraph (b) of subsection (2) of section
283 560.2085, Florida Statutes, is amended to read:
284 560.2085 Authorized vendors.—A licensee under this part
285 shall:
286 (2) Enter into a written contract, signed by the licensee
287 and the authorized vendor, which:
288 (b) Includes contract provisions that require the
289 authorized vendor to:
290 1. Report to the licensee, immediately upon discovery, the
291 theft or loss of currency, monetary value, a payment instrument,
292 or virtual currency received for a transmission or for a payment
293 instrument sold;
294 2. Display a notice to the public, in such form as
295 prescribed by rule, that the vendor is the authorized vendor of
296 the licensee;
297 3. Remit all amounts owed to the licensee for all
298 transmissions accepted and all payment instruments sold in
299 accordance with the contract between the licensee and the
300 authorized vendor;
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301 4. Hold in trust all currency, monetary value, or payment
302 instruments, or virtual currency received for transmissions or
303 for the purchase of payment instruments from the time of receipt
304 by the licensee or authorized vendor until the time the
305 transmission obligation is completed;
306 5. Not commingle the currency, monetary value, payment
307 instruments, or virtual currency money received for
308 transmissions accepted or payment instruments sold on behalf of
309 the licensee with the assets money or property of the authorized
310 vendor, except for making change in the ordinary course of the
311 vendor's business;, and
312 6. Ensure that the currency, monetary value, payment
313 instruments, or virtual currency received for transmissions
314 accepted or payment instruments sold money is accounted for at
315 the end of the business day;
316 7.6. Consent to examination or investigation by the
317 office;
318 8.7. Adhere to the applicable state and federal laws and
319 rules pertaining to a money services business; and
320 9.8. Provide such other information or disclosure as may
321 be required by rule.
322 Section 8. Subsections (2) and (3) of section 560.210,
323 Florida Statutes, are renumbered as subsections (3) and (4),
324 respectively, and a new subsection (2) is added to that section
325 to read:
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326 560.210 Permissible investments.—
327 (2) Each money transmitter that receives virtual currency,
328 either directly or through an authorized vendor, for the purpose
329 of transmitting such virtual currency from one person to another
330 location or person must at all times, until the transmission
331 obligation is completed, hold virtual currency of the same type
332 and amount owed or obligated to the other location or person.
333 Virtual currency received and held under this subsection is not
334 included in the amount of outstanding money transmissions for
335 purposes of calculating the permissible investments required by
336 subsection (1).
337 Section 9. Paragraphs (a), (e), and (f) of subsection (1)
338 of section 560.211, Florida Statutes, are amended, and paragraph
339 (j) is added to subsection (1) of that section, to read:
340 560.211 Required records.—
341 (1) In addition to the record retention requirements under
342 s. 560.1105, each licensee under this part must make, keep, and
343 preserve the following books, accounts, records, and documents
344 for 5 years:
345 (a) A daily record of payment instruments sold and of
346 currency, monetary value, payment instruments, or virtual
347 currency money transmitted.
348 (e) Records of outstanding payment instruments and of
349 currency, monetary value, payment instruments, or virtual
350 currency money transmitted.
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351 (f) Records of each payment instrument paid and of
352 currency, monetary value, payment instruments, or virtual
353 currency transmitted money transmission delivered.
354 (j) Any additional records, as prescribed by rule, related
355 to virtual currency.
356 Section 10. Section 560.212, Florida Statutes, is amended
357 to read:
358 560.212 Financial liability.—A licensee under this part is
359 liable for the payment of all currency, monetary value, payment
360 instruments, or virtual currency money transmitted and payment
361 instruments that it sells, in whatever form and whether directly
362 or through an authorized vendor, as the maker, drawer, or
363 principal thereof, regardless of whether such items are item is
364 negotiable or nonnegotiable.
365 Section 11. This act shall take effect January 1, 2023.
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INSURANCE & BANKING SUBCOMMITTEE
HB 273 by Rep. Aloupis
Money Services Businesses
AMENDMENT SUMMARY
December 1, 2021
Amendment 1 by Rep. Aloupis (Line 139): Amends the definition of “virtual currency” to clarify
the exclusion of consumer affinity or rewards programs.
COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 273 (2022)
Amendment No. 1
COMMITTEE/SUBCOMMITTEE ACTION
ADOPTED (Y/N)
ADOPTED AS AMENDED (Y/N)
ADOPTED W/O OBJECTION (Y/N)
FAILED TO ADOPT (Y/N)
WITHDRAWN (Y/N)
OTHER
1 Committee/Subcommittee hearing bill: Insurance & Banking
2 Subcommittee
3 Representative Aloupis offered the following:
4
5 Amendment
6 Remove lines 139-141 and insert:
7 into or redeemed for currency or another medium of exchange.
305601 - h0273 - line 139.docx
Published On: 11/30/2021 2:54:50 PM
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