The Florida legislature wants more oversight over financial institutions

by | Dec 21, 2023



  • The Florida Legislature is considering CS/HB 585, a bill requiring financial institutions to report to the Office of Financial Regulation (OFR) any actions taken to suspend, terminate, or restrict access to customer accounts.
  • The legislation falls in line with the federal Bank Secrecy Act and Florida’s financial reporting laws, focusing on anti-money laundering and counter-terrorism financing. It grants OFR the authority to investigate reported account restrictions and allows customers to seek damages for “bad faith” actions.
  • The Florida Bankers Association has criticized the bill, arguing that the legislative language oversimplifies the process financial institutions undergo in flagging suspicious accounts.

The Florida Legislature is considering a bill that would intensify scrutiny over financial institutions’ management of customer accounts.

The bill, CS/HB 585, sponsored by the Insurance and Banking Subcommittee and Rep. Bob Rommel, targets the practices of banks and other financial institutions in suspending, terminating, or otherwise restricting access to customer accounts.

Under the legislation, financial entities in Florida would be required to file a report with the Office of Financial Regulation (OFR) whenever they take action to suspend, terminate, or restrict access to a customer’s account, with certain exceptions like customer-initiated changes or inactivity.

“If the action was made in bad faith, the Department of Financial Services will be notified, the Attorney General will be notified, and the customer will be notified,” said Rommel, who filed House Bill 587, which the Committee Substitute is taking the place of. “Banks can de-bank people. But if they do it for suspicious activity, we want to know because that means they think one of our citizens is doing something illegal.”

If enacted, the bill would authorize OFR to investigate reports of account restrictions to determine if they were made in bad faith. Findings of bad faith actions would trigger mandatory reporting to the Department of Financial Services, the Attorney General, and the affected customer or member. It would additionally create a private right of action, allowing customers to seek damages from financial institutions found to have acted in bad faith.

The proposed measure aligns with the federal Bank Secrecy Act (BSA) and Florida’s existing statutes on financial institutions’ reporting obligations, particularly concerning anti-money laundering and counter-terrorism financing efforts.

The legislation also addresses the role and responsibilities of Qualified Public Depositories (QPDs), which handle public funds. QPDs found to have restricted account access in bad faith could face suspension, disqualification, or administrative penalties.

The Florida Bankers Association spoke against the bill, contending that the language used in the legislative draft vastly underscores the process a financial institution must go through to flag a suspicious account.

“Banks are in the business of taking in deposits, we lend them out, and that’s our business. We’re not arbitrarily closing accounts and we’re complying with the law,” said Anthony DiMarco, Executive Vice President of the organization. “If under the Bank Secrecy Act, we have to file a suspicious activity report, and there’s a variety of reasons why, that does not mean your account will be closed down. This notion that it’s just a few clicks on a keyboard and it goes out is incorrect.”

The bill was approved by the Insurance and Banking Subcommittee, though received three dissenting votes. The measure now moves to the State Administration & Technology Appropriations Subcommittee and the Commerce Committee.

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