TALLAHASSEE, Fla. (AP) -- Florida is tightening its regulation of check cashing and other money service businesses after a critical grand jury report, a top state financial official said Tuesday.
Financial Regulation Commissioner Don Saxon told Gov. Charlie Crist and the Florida Cabinet that his office and the Legislature are taking steps to root out money laundering and other criminal activity.
Money service businesses also include currency exchanges, money transfer companies and pay day lenders. They don't get the same scrutiny as banks, credit unions and other financial institutions, which makes them an attractive conduit for criminals.
"This is a billion dollar criminal activity going on in our state," said Chief Financial Officer Alex Sink. "We definitely need to have a lot more teeth into our enforcement activities."
Sink is a member of the Cabinet, which oversees Saxon's office jointly with the governor.
A statewide grand jury in March issued a report saying the state's lax enforcement has "inadvertently created a shadow banking industry" virtually free of regulation.
Criminals use it to launder profits from a variety of illicit activities including Medicaid, Medicare and workers compensation fraud. In some cases construction companies have used check cashing businesses to avoid paying taxes and conceal the employment of illegal immigrants.
The report blames weak laws and a failure by regulators to use the tools they already have.
"As much as you don't like to be criticized, that grand jury report actually helped us as far as getting the attention of the Legislature," Saxon said. He said work on legislation, though, began long before the panel issued its report.
A bill (SB 2158) awaiting action by Crist would tighten licensing requirements, make it easier to revoke licenses, let Saxon's office hire outside examiners to supplement his staff and require money services businesses to report suspicious transactions as banks must.
It also would require regulators to audit each business every five years. Sink said that may not be often enough, noting banks are examined every year.
If problems are found, Saxon said his office will go back in three to six months. New businesses will be examined during their first six months, he said.
Saxon said his regulators also are working closer with law enforcement agencies, increasing their training and developing administrative rules to implement the new legislation.