Florida bills aimed at preventing ‘bad faith’ de-banking pass through committees

TALLAHASSEE, Fla. – Florida legislation by Rep. Bob Rommel, R-Naples, aimed at protecting residents from “bad faith” bank account terminations passed through committees this week.

Financial institutions are required, under HB 585, to file a report with the Office of Financial Regulation whenever the financial institution suspends, terminates, or takes similar action restricting access to a customer’s or member’s account.

The Florida House State Administration and Technology Appropriations Subcommittee unanimously passed HB 585 on Thursday, 10-0.

A bad faith determination, or suspicious activity report, is to be notified to the Department of Financial Services, the attorney general, and the customer or member.

Consequently, financial institutions are subject to a fine if no legitimate reason is detected. The bill also allows customers to sue a bank if they believe their rights were taken away.

Rep. Cyndi Stevenson, R-St. Johns, asked what information could be shared to the federal government.

“When a bank suspects somebody of doing something suspicious, whether it’s money laundering, selling arms, or drugs or something like that, they have an obligation to tell the federal agency that they believe something fishy is happening, and then at times, they will suspend their account,” Rommel said.

Anthony DiMarco, executive vice president of the Florida Banker’s Association, expressed opposition to the bill during public comment.

“I don’t see anywhere in the bill it talks about suspicious activity reports,” DiMarco said. “If you close an account, restrict access, you have to file a report with OFR [Office of Financial Regulation].”

DiMarco called the bill a “giant intrusion” to report in bad faith without it defined.

“I believe this bill could only apply to state charter community banks,” DiMarco said. “It cannot apply apply to national banks because then federal law would preempt that. Banks file SARS [Suspicious Activity Reports] all the time for a variety of reasons.”

HB 585 now moves to the Florida House Commerce Committee for approval. It will take effect if passed on July 1.

Rommel also filed a linked bill allowing for a public records exception to keep the information private.

Sen. Jonathan Martin, R-Fort Myers, filed a companion bill to HB 585.

The Florida House Committee on Ethics, Elections, and Open Government Subcommittee also unanimously passed the linked bill 14-0 on Wednesday.

“HB 587 will key create a public exemption of private information that division of financial services have about any bank that issues a cease and desist or suspicious activity,” Rommel said to the committee.

HB 587 now moves to the House Commerce Committee for approval. It will take effect if passed on the same date as HB 585, if both are fully approved.