Georgia House Bill HB15 Latest Draft

                            25 LC 62 0051/AP
House Bill 15 (AS PASSED HOUSE AND SENATE)
By: Representatives Williamson of the 112
th
, Williams of the 148
th
, Douglas of the 78
th
,
Dickey of the 134
th
, Ridley of the 6
th
, and others 
A BILL TO BE ENTITLED
AN ACT
To amend Title 7 of the Official Code of Georgia Annotated, relating to banking and finance,
1
so as to update terminology; to revise procedures concerning incorporators of credit unions;2
to revise requirements of articles of incorporation of credit unions; to revise licensure3
requirements for money transmissions, cashing payment instruments, mortgage lenders and4
mortgage brokers, foreign banking institutions, and installment loans; to provide for revised5
auditing procedures for mortgage lenders and mortgage brokers; to provide for corporate6
governance requirements for mortgage lenders and mortgage brokers; to provide for liquidity7
requirements for mortgage lenders and mortgage brokers; to revise requirements for8
applications to relocate for foreign banking institutions; to revise background check9
procedures for merchant acquirer limited purpose banks; to provide for regulation by the10
Department of Banking and Finance of installment loans and merchant acquirer limited11
purpose banks; to revise deposit requirements for merchant acquirer limited purpose banks;12
to provide for definitions; to revise cross-references; to provide for related matters; to repeal13
conflicting laws; and for other purposes.14
BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:15
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SECTION 1.
16
Title 7 of the Official Code of Georgia Annotated, relating to banking and finance, is17
amended in Article 1 of Chapter 1, relating to department of banking and finance and18
financial institutions generally, by revising Code Section 7-1-235, relating to part19
inapplicable to bank holding company transactions, as follows:20
"7-1-235.21
Except for the provisions of Code Sections 7-1-231 and 7-1-232, this
 This part shall not22
apply to a transaction subject to Code Sections 7-1-605 through 7-1-608, relating to bank23
holding companies."24
SECTION 2.25
Said title is further amended in Article 2 of Chapter 1, relating to banks and trust companies,26
by revising subsection (c) of Code Section 7-1-392, relating to articles of incorporation,27
advertisement of articles or notice of application, and naming registered agent, as follows:28
"(c)  The incorporators shall file with the department the articles, together with the fee29
required by Code Section 7-1-862. Such filing shall constitute an application for a30
certificate of incorporation.  Immediately upon the filing of the articles, the department31
shall certify a copy thereof and return it to the applicants, who shall, in conformity with32
Code Section 7-1-7 and on no later than the next business day following the filing of the33
articles, transmit for publication a copy of the articles or, in lieu thereof, a statement in34
substantially the following form:35
'An application for a certificate of incorporation of a (bank, trust company, or bank36
and trust company) to be known as the _______________________ and to be located37
at _______________________ in __________ County, Georgia, will be made to the38
Secretary of State of Georgia by (names and addresses counties of residence of39
incorporators) in accordance with Chapter 1 of Title 7 of the Official Code of Georgia40
Annotated, the "Financial Institutions Code of Georgia." A copy of the articles of41
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incorporation of such proposed (bank, trust company, or bank and trust company) and
42
the application have been filed with the Department of Banking and Finance.  The43
following persons have been proposed as the initial directors: (names and addresses
44
counties of residence of proposed directors).'45
to the newspaper which is the official organ of the county where the main office will be46
located.  The articles or statement must be published once a week for two consecutive47
weeks with the first publication occurring within ten days of receipt by the newspaper of48
the articles or statement."49
SECTION 3.50
Said title is further amended by revising paragraph (2) of subsection (b) of Code Section51
7-1-606, relating to prohibited activities of bank holding company or subsidiary and52
exceptions, as follows:53
"(2) In every case, the department shall take into consideration the financial and54
managerial resources, including the competence, character, and experience of55
management, and future prospects of the company or companies and the banks56
concerned."57
SECTION 4.58
Said title is further amended in Article 3 of Chapter 1, relating to credit unions, by revising59
Code Section 7-1-630, relating to subscribers, articles, filings, fee, and directors, as follows:60
"7-1-630.61
(a)  Any number of persons, not less than eight, having a common bond, as defined in62
subsection (b) of this Code section, may incorporate for the purpose of organizing a credit63
union in accordance with this article.  The persons so desiring to become incorporated shall64
execute articles which shall set forth the following:65
(1)  The name of the proposed credit union;66
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(2)  The territory in which it will operate;
67
(3)  The location where its initial registered office will be located;68
(4)  The names and addresses
 counties of residence of the subscribers, their occupation,69
length of service, and that each has subscribed to one share and paid for same;70
(5)  The names and addresses counties of residence of the original directors;71
(6)  The proposed field of membership specified in detail and having the same common72
bond as the subscribers;73
(7)  That the purpose and nature of the business are to conduct a credit union with the74
rights and powers granted by this article; and75
(8)  The term of the existence of the credit union, which shall be perpetual unless76
otherwise limited.77
(b) For purposes of this article, 'common bond' means that specific relationship of78
occupation, association, or interest; residence or employment within a well-defined79
neighborhood, community, or rural district; employees of a common employer; or members80
of a bona fide cooperative, educational, fraternal, professional, religious, rural, or similar81
organization which tends to create a mutual interest between persons sharing the82
relationship.  Persons related by blood, adoption, or marriage to or living in the same83
household with a person within such common bond and the surviving spouses of deceased84
members shall also be considered within the common bond.85
(c) The subscribers shall file the articles with the department together with the fee86
specified in Code Section 7-1-862.  The department shall certify a copy of the articles and87
return it to the subscribers. Such filing shall constitute an application for a certificate of88
incorporation.  Immediately upon the filing of the articles, the department shall certify a89
copy of the articles and return it to the subscribers, who shall, in conformity with Code90
Section 7-1-7 and no later than the next business day following the filing of the articles,91
transmit for publication a copy of the articles or, in lieu thereof, a statement in substantially92
the following form:93
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'An application for a certificate of incorporation of a credit union to be known as the94
_______________________ and to be located at _______________________ in95
__________ County, Georgia, will be made to the Secretary of State of Georgia by96
(names and counties of residence of subscribers) in accordance with Chapter 1 of97
Title 7 of the Official Code of Georgia Annotated, the "Financial Institutions Code98
of Georgia."  A copy of the articles of incorporation of such proposed credit union and99
the application have been filed with the Department of Banking and Finance.  The100
following persons have been proposed as the initial directors: (names and counties of101
residence of proposed directors).'102
to the newspaper which is the official organ of the county where the main office will be103
located.  The articles or statement must be published once a week for two consecutive104
weeks with the first publication occurring within ten days of receipt by the newspaper of105
the articles or statement.106
(d)  The subscriber shall file with the department a certificate from the Secretary of State107
attesting that the name of the proposed credit union has been reserved as authorized by108
Code Section 7-1-131.109
(e)  The subscriber shall file with the department a copy of the proposed bylaws setting110
forth the following:111
(1)  The date of the annual meeting, the manner of conducting the same, the number of112
members constituting a quorum and regulations as to voting, and the manner of113
notification of the meeting, which shall comply with Code Section 7-1-6;114
(2)  The number of directors, which shall be not less than five nor more than 25, all of115
whom shall be members, and their powers and duties, together with the duties of the116
executive officers elected by the board of directors;117
(3)  The qualifications for membership of those coming within the initial common bond118
as required by this article;119
(4)  The conditions under which deposits are received and withdrawn; and120
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(5)  The charges which shall be made, if any, for failure to meet obligations punctually;
121
whether or not the credit union shall have the power to borrow; and such other matters122
consistent with this article as may be requisite to the organization and operation of the123
proposed credit union.124
(f) The subscriber shall pay such fee as shall be established by regulation of the125
department to defray the cost of the investigation required by Code Section 7-1-632,126
provided that the department shall not be required to set such fee if in its judgment the fee127
would discourage the organization of credit unions under this article.128
(g)  The subscriber shall select at least five qualified persons who agree to serve on the129
board of directors.  A signed agreement to serve in these capacities until the first annual130
meeting or until the election of their successors, whichever is later, shall be executed by131
those who so agree and filed with the department along with the proposed bylaws.132
(h)  For the purposes of this article, the term 'executive officer' means an individual who133
performs significant managerial, supervisory, or policy-making functions on behalf of a134
credit union, including, but not limited to, the chief executive officer, president, chief135
financial officer, chief operating officer, and other individuals who perform such136
functions."137
SECTION 5.138
Said title is further amended in said article by revising Code Section 7-1-632, relating to139
approval or disapproval by department and certificate of incorporation, as follows:140
"7-1-632.141
(a)  The department shall make an appropriate investigation of the articles and bylaws for142
the purpose of determining:143
(1)  Whether the articles and bylaws conform to this article;144
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(2)  The general character and qualifications of the subscribers, the proposed directors,145
and the executive officers and the financial stability and future prospects of the146
sponsoring company, if any;147
(3)  The economic advisability of establishing the proposed credit union and such other148
facts and circumstances bearing on the proposed credit union as in the opinion of the149
department may be relevant;150
(4)  That a common bond exists in accordance with Code Section 7-1-630; and151
(5)  That the subscribers and person or corporation sponsoring the credit union are in152
agreement as to the services, if any, that the sponsor will provide;153
(6)  Whether the convenience and needs of the public will be served by the proposed154
credit union; and155
(7)  Whether the capital structure of the proposed credit union is adequate in relation to156
the amount and character of the anticipated business of the credit union and the safety of157
prospective members.158
(b)  If the department determines to its satisfaction that the proposed credit union meets the159
criteria set forth above, it shall, within 90 days from receipt of the articles and in160
compliance with Code Section 7-1-630, send a copy of the articles and written approval of161
the articles to the Secretary of State after making such changes in the articles or bylaws162
consistent with this article and with the consent of the subscribers that it deems appropriate;163
provided, however, that, if the approval of a federal public body is also required with164
respect to the proposed credit union, then the department may elect to not act on the165
application until after such approval is given.  Such approval shall indicate any changes166
made to the articles including changes from the proposed field of membership.  If the167
department shall disapprove the articles, the procedures of subsection (b) of Code Section168
7-1-635 shall be followed.169
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(c)  Upon receipt of the approval of the department, the Secretary of State shall thereupon
170
issue a certificate attesting to the incorporation of the credit union.  The credit union shall,171
however, confine itself to organizational activities until it receives a permit to do business."172
SECTION 6.173
Said title is further amended in said article by revising paragraph (3) of subsection (b) of174
Code Section 7-1-658, relating to loans, as follows:175
"(3)  In lieu of a credit committee, the board of directors may appoint one or more loan176
officers and delegate to such persons the power to approve or disapprove loans to a177
borrower that do not in the aggregate exceed 5 percent of the net worth of the credit union178
subject to such limitations or conditions set forth in this Code section for loans generally179
and such further limitations and conditions as the board may prescribe.  All other duties180
of the credit committee as described in this article shall become the duties of the board181
of directors.  Records of loans approved shall be maintained by the loan officers in such182
form as the board shall prescribe and a listing of all loans made, including the name of
183
the borrower and the amount of the loan, shall be submitted to the board at each meeting184
shall be made available to the board upon request; and"185
SECTION 7.186
Said title is further amended in Article 4 of Chapter 1, relating to money transmission, by187
adding a new paragraph to Code Section 7-1-680, relating to definitions, to read as follows:188
"(8.1)  'Disqualifying crime' means any felony, as defined in Code Section 16-1-3,189
involving conversion, theft, money laundering, bribery, dishonesty, false statements or190
omissions, perjury, extortion, breach of trust, forgery, counterfeiting, embezzlement,191
insider trading, tax evasion, kickbacks, identity theft, cyber attacks, social engineering,192
fraud, including but not limited to check fraud, credit card fraud, mortgage fraud, medical193
fraud, corporate fraud, bank account fraud, payment (point of sale) fraud, currency fraud,194
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bank fraud, and securities fraud or a felony directly related to the financial services195
business."196
SECTION 8.197
Said title is further amended in said article by adding a new subsection to Code Section198
7-1-683, relating to requirements for licensure, fees, and rules and regulations, to read as199
follows:200
"(e) The department may issue a notice of intent to administratively withdraw an201
application for a license under this article if an applicant submits a deficient license202
application by failing to provide any information required by the department.  If the203
applicant fails to provide the requested information within 30 days of the date of issuance204
of such notice, the application may be administratively withdrawn.  The notice shall be205
deemed provided to the applicant when:206
(1)  Sent via email to the applicant's email address, as provided on the application; or207
(2)  Posted by the department on the Nationwide Multistate Licensing System and208
Registry."209
SECTION 9.210
Said title is further amended in said article by revising subsection (c) of Code Section211
7-1-684, relating to investigation of applicants for licensure and background checks on212
employees and others, as follows:213
"(c)  The department shall not issue a license or may revoke a license if it finds that the214
applicant, licensee, or authorized agent; any person who is a director, officer, partner,215
covered employee, or ultimate equitable owner of the applicant, licensee, or authorized216
agent; or any individual who directs the affairs of or controls or establishes policy for the217
applicant, licensee, or authorized agent has been convicted of a felony in any jurisdiction218
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or of a crime which, if committed within this state, would constitute a felony under the
219
laws of this state:
220
(1)  Within the previous seven years; or221
(2)  At any time, if such felony is a disqualifying crime.222
For the purposes of this article, a person shall be deemed to have been convicted of a crime223
if such person shall have pleaded guilty or nolo contendere to a charge thereof before a224
court or federal magistrate or shall have been found guilty thereof by the decision or225
judgment of a court or federal magistrate or by the verdict of a jury, irrespective of the226
pronouncement of sentence or the suspension thereof and regardless of whether first227
offender treatment without adjudication of guilt pursuant to the charge was entered or an228
adjudication or sentence was otherwise withheld or not entered on that charge, unless and229
until such plea of guilty or such decision, judgment, or verdict shall have been set aside,230
reversed, or otherwise abrogated by lawful judicial process or until probation, sentence, or231
both probation and sentence of a first offender without adjudication of guilt have been232
successfully completed and documented or unless the person convicted of the crime shall233
have received a pardon therefor from the President of the United States or the governor or234
other pardoning authority in the jurisdiction where the conviction occurred."235
SECTION 10.236
Said title is further amended in Article 4A of Chapter 1, relating to cashing of payment237
instruments, by adding a new paragraph to Code Section 7-1-700, relating to definitions, to238
read as follows:239
"(8.1)  'Disqualifying crime' means any felony, as defined in Code Section 16-1-3,240
involving conversion, theft, money laundering, bribery, dishonesty, false statements or241
omissions, perjury, extortion, breach of trust, forgery, counterfeiting, embezzlement,242
insider trading, tax evasion, kickbacks, identity theft, cyber attacks, social engineering,243
fraud, including but not limited to check fraud, credit card fraud, mortgage fraud, medical244
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fraud, corporate fraud, bank account fraud, currency fraud, bank fraud, and securities245
fraud or a felony directly related to the financial services business."246
SECTION 11.247
Said title is further amended in said article by adding a new subsection to Code Section248
7-1-702, relating to requirements for licensure, to read as follows:249
"(e) The department may issue a notice of intent to administratively withdraw an250
application for a license under this article if an applicant submits a deficient license251
application by failing to provide any information required by the department.  If the252
applicant fails to provide the requested information within 30 days of the date of issuance253
of such notice, the application may be administratively withdrawn.  The notice shall be254
deemed provided to the applicant when:255
(1)  Sent via email to the applicant's email address, as provided on the application; or256
(2)  Posted by the department on the Nationwide Multistage Licensing System and257
Registry."258
SECTION 12.259
Said title is further amended in said article by revising subsection (c) of Code Section260
7-1-703, relating to investigation of applicants and background checks of employees and261
others, as follows:262
"(c)  The department shall not issue a license or may revoke a license if it finds that the263
applicant or licensee; any person who is a director, officer, partner, covered employee, or264
ultimate equitable owner of the applicant or licensee; or any individual who directs the265
affairs of or controls or establishes policy for the applicant or licensee has been convicted266
of a felony in any jurisdiction or of a crime which, if committed within this state, would267
constitute a felony under the laws of this state:268
(1)  Within the previous seven years; or269
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(2)  At any time, if such felony is a disqualifying crime.270
For the purposes of this article, a person shall be deemed to have been convicted of a crime271
if such person shall have pleaded guilty or nolo contendere to a charge thereof before a272
court or federal magistrate or shall have been found guilty thereof by the decision or273
judgment of a court or federal magistrate or by the verdict of a jury, irrespective of the274
pronouncement of sentence or the suspension thereof and regardless of whether first275
offender treatment without adjudication of guilt pursuant to the charge was entered or an276
adjudication or sentence was otherwise withheld or not entered on that charge, unless and277
until such plea of guilty or such decision, judgment, or verdict shall have been set aside,278
reversed, or otherwise abrogated by lawful judicial process or until probation, sentence, or279
both probation and sentence of a first offender without adjudication of guilt have been280
successfully completed and documented or unless the person convicted of the crime shall281
have received a pardon therefor from the President of the United States or the governor or282
other pardoning authority in the jurisdiction where the conviction occurred."283
SECTION 13.284
Said title is further amended in Article 13 of Chapter 1, relating to foreign banking285
institutions, by revising Code Section 7-1-1000, relating to definitions, as follows:286
"7-1-1000.287
As used in this article, the term:288
(1)  'Affiliate' or 'person affiliated with' means, when used with reference to a specified289
person, a person who directly, indirectly, or through one or more intermediaries controls,290
is controlled by, or is under common control with the person specified.  Any beneficial291
owner of 10 percent or more of the securities of a person or any executive officer,292
director, trustee, joint venturer, or general partner of a person is an affiliate of such person293
unless the shareholder, executive officer, director, trustee, joint venturer, or general294
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partner shall prove that he or she in fact does not control, is not controlled by, or is not
295
under common control with such person.296
(1.1)  'Allowable assets for liquidity' means:
297
(A)  Unrestricted cash and cash equivalents; and298
(B)  Unencumbered investment grade assets held for sale or trade; mortgage-backed299
securities or other obligations of government sponsored entities and obligations of the300
United States Department of Treasury.301
(2)  'Audited financial statement' means the product of the examination of financial302
statements in accordance with generally accepted auditing standards by an independent303
certified public accountant, which product consists of an opinion on the financial304
statements indicating their conformity with generally accepted accounting principles.305
(2.1) 'Board of directors' means the formal body established by a licensee that is306
responsible for corporate governance and compliance with this article.307
(3)  'Commissioner' means the commissioner of banking and finance.308
(4)  'Commitment' or 'commitment agreement' means a statement by a lender required to309
be licensed under this article that sets forth the terms and conditions upon which the310
lender is willing to make a particular mortgage loan to a particular borrower.311
(5)  'Control,' including 'controlling,' 'controlled by,' and 'under common control with,'312
means the direct or indirect possession of the power to direct or cause the direction of the313
management and policies of a person, whether through the ownership of voting or314
nonvoting securities, by contract, or otherwise.315
(5.1)  'Corporate governance' means the structure of a licensee and how it is managed316
including the corporate rules, policies, processes, and practices used to oversee and317
manage the licensee.318
(5.2) 'Covered employee' means any employee of a mortgage lender or mortgage broker319
who is involved in residential mortgage loan related activities for property located in320
Georgia and includes, but is not limited to, a mortgage loan originator, processor, or321
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underwriter, or other employee who has access to residential mortgage loan origination,
322
processing, or underwriting information.323
(5.3)  'Covered servicer' means a mortgage lender with a servicing portfolio of 2,000 or
324
more residential mortgage serviced or subserviced loans as reported in the mortgage325
lender's Mortgage Call Report as of the most recent calendar year end, excluding whole326
loans owned, reverse mortgages that are serviced or subserviced for others, and loans327
being interim serviced prior to sale.328
(6)  'Department' means the Department of Banking and Finance.329
(7)  'Depository institution' has the same meaning as in Section 3 of the Federal Deposit330
Insurance Act, 12 U.S.C. Section 1813(c), and includes any credit union.331
(7.1) 'Disqualifying crime' means any felony, as defined in Code Section 16-1-3,332
involving conversion, theft, money laundering, bribery, dishonesty, false statements or333
omissions, perjury, extortion, breach of trust, forgery, counterfeiting, embezzlement,334
insider trading, tax evasion, kickbacks, identity theft, cyber attacks, social engineering,335
fraud, including but not limited to check fraud, credit card fraud, mortgage fraud, medical336
fraud, corporate fraud, bank account fraud, payment (point of sale) fraud, currency fraud,337
bank fraud, and securities fraud, or a felony directly related to the financial services338
business.339
(8)  'Dwelling' means a residential structure that contains one to four units, whether or not340
that structure is attached to real property pursuant to Regulation Z Section 226.2(a)(19). 341
The term includes an individual condominium unit, cooperative unit, mobile home, and342
trailer if it is used as a residence.343
(9)  'Executive officer' means the chief executive officer, the president, the principal344
financial officer, the principal operating officer, each vice president with responsibility345
involving policy-making functions for a significant aspect of a person's business, the346
secretary, the treasurer, or any other person performing similar managerial or supervisory347
functions with respect to any organization whether incorporated or unincorporated.348
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(9.1)  'External audit' means a formal report prepared by an independent certified public349
accountant expressing an opinion on whether a licensee's financial statements are350
presented fairly, in all material aspects, in accordance with the applicable financial351
reporting framework, and is inclusive of an evaluation of the adequacy of a licensee's352
internal control structure.353
(10)  'Extortionate means' means the use or the threat of violence or other criminal means354
to cause harm to the person, reputation of the person, or property of the person.355
(11)  'Federal banking agencies' means the Comptroller of the Currency, the National356
Credit Union Administration, and the Federal Deposit Insurance Corporation.  Such term357
shall also include the Board of Governors of the Federal Reserve System.358
(12)  'Georgia Residential Mortgage Act' means this article, which also includes certain359
provisions in order to implement the federal Secure and Fair Enforcement for Mortgage360
Licensing Act of 2008.361
(12.1)  'Government sponsored entity' means a quasi-public entity that facilitates credit362
access in the residential mortgage market, including but not limited to, the Federal363
National Mortgage Association, the Federal Home Loan Mortgage Corporation, and the364
Government National Mortgage Association.365
(13)  'Individual' means a natural person.366
(13.1)  'Interim serviced prior to sale' means the activity of collecting a limited number367
of contractual mortgage payments immediately after origination on loans held for sale but368
prior to the loans being sold into the secondary market.369
(13.2)  'Internal audit' means a licensee's internal activity of performing independent,370
objective assurance and consulting to evaluate and improve the effectiveness of the371
licensee's processes related to operations, risk management, internal controls, and372
governance.373
(14)  'License' means a license issued by the department under this article to act as a374
mortgage loan originator, mortgage lender, or mortgage broker.375
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(14.1)  'Liquidity' means access to unrestricted cash and cash equivalents, capacity to376
obtain funds at a reasonable cost, and the ability to meet obligations as they become due. 377
In the case of a licensee that services mortgage loans, such term encompasses the378
financial resources necessary to manage liquidity risk arising from servicing functions379
required in acquiring and financing mortgage servicing rights; hedging costs, including380
margin calls, associated with the mortgage servicing rights and financing facilities; and381
advances or costs of advance financing for principal, interest, taxes, insurance, and any382
other servicing related advances.383
(15)  'Loan processor or underwriter' means an individual who performs clerical or384
support duties as an employee at the direction of and subject to the supervision and385
instruction of a person licensed or exempt from licensing.  For purposes of this paragraph,386
the term 'clerical or support duties' may include, subsequent to the receipt of an387
application, the receipt, collection, distribution, and analysis of information common for388
the processing or underwriting of a residential mortgage loan; and communicating with389
a consumer to obtain the information necessary for the processing or underwriting of a390
loan, to the extent that such communication does not include offering or negotiating loan391
rates or terms or counseling consumers about residential mortgage loan rates or terms. 392
An individual engaging solely in loan processor or underwriter activities shall not393
represent to the public, through advertising or other means of communicating or394
providing information, including the use of business cards, stationery, brochures, signs,395
rate lists, or other promotional items, that such individual can or will perform any of the396
activities of a mortgage loan originator.397
(16)  'Lock-in agreement' means a written agreement whereby a lender or a broker398
required to be licensed under this article guarantees for a specified number of days or399
until a specified date the availability of a specified rate of interest for a mortgage loan,400
a specified formula by which the rate of interest will be determined, or a specific number401
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of discount points if the mortgage loan is approved and closed within the stated period
402
of time.403
(17)  'Makes a mortgage loan' means to advance funds, offer to advance funds, or make404
a commitment to advance funds to an applicant for a mortgage loan.405
(18)  'Misrepresent' means to make a false statement of a substantive fact.  Misrepresent406
may also mean to intentionally engage in any conduct which leads to a false belief which407
is material to the transaction.408
(18.1)  'Mortgage-backed security' means a financial instrument, including, but not
409
limited to, an asset backed security, that is secured by residential property.410
(19)(A) 'Mortgage broker' means any person who directly or indirectly solicits,411
processes, places, or negotiates mortgage loans for others; offers to solicit, process,412
place, or negotiate mortgage loans for others; or closes mortgage loans which may be413
in the mortgage broker's own name with funds provided by others, and which loans are414
assigned to the mortgage lenders providing the funding of such loans within 24 hours415
of the funding.416
(B)  The term does not include a retailer or retail broker of a manufactured or mobile417
home as defined in Code Section 8-2-131 or a residential industrialized building as418
defined in Code Section 8-2-111:419
(i) Whose residential mortgage loan activities are limited to compiling and420
transmitting residential mortgage loan applications along with related supporting421
documentation to mortgage lenders who are licensed or exempt from the licensing422
provisions of this article or communicating with residential mortgage loan applicants423
as necessary to obtain additional documents that complete the residential mortgage424
loan application to those licensed or exempt mortgage lenders; and425
(ii)  Who does not receive any payment or fee from any person for assisting the426
applicant to apply for or obtain financing to purchase the manufactured home, mobile427
home, or residential industrialized building.428
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(C) The term does not include an employee of a retailer or retail broker of a
429
manufactured or mobile home as defined in Code Section 8-2-131 or a residential430
industrialized building as defined in Code Section 8-2-111 who:431
(i)  Satisfies the requirements set forth in paragraph (B) of this paragraph;432
(ii)  Is acting within the scope of employment and under the supervision of the retailer433
or retail broker as an employee and not as an independent contractor;434
(iii)  Is employed by only one such retailer or retail broker and shall be at all times435
eligible for employment in compliance with the provisions and prohibitions of Code436
Section 7-1-1004;437
(iv)  Has not been issued a cease and desist order in the past five years if such order438
was based on a violation of Code Section 7-1-1002 or 7-1-1013; and439
(v)  Has not had a mortgage lender, mortgage broker, or mortgage loan originator440
license revoked within the past five years.441
(19.1) 'Mortgage Call Report' means the quarterly or annual report of residential
442
mortgage loan origination, servicing, and financial information completed by licensees443
pursuant to subsection (b) of Code Section 7-1-1004.1.444
(20)  'Mortgage lender' means any person who directly or indirectly makes, originates,445
underwrites, holds, or purchases mortgage loans or who services mortgage loans.446
(21)  'Mortgage loan' means a loan or agreement to extend credit made to a natural447
person, which loan is secured by a deed to secure debt, security deed, mortgage, security448
instrument, deed of trust, or other document representing a security interest or lien upon449
any interest in one-to-four family residential property located in Georgia, regardless of450
where made, including the renewal or refinancing of any such loan.451
(22)  'Mortgage loan originator' means an individual who for compensation or gain or in452
the expectation of compensation or gain takes a residential mortgage loan application or453
offers or negotiates terms of a residential mortgage loan.  Generally, this does not include454
an individual engaged solely as a loan processor or underwriter except as otherwise455
H. B. 15
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provided in subsection (a.1) of Code Section 7-1-1002; a person or entity that only
456
performs real estate brokerage activities and is licensed in accordance with Georgia law457
unless the person or entity is compensated by a mortgage lender, mortgage broker, or458
other mortgage loan originator or by any agent of such mortgage lender, mortgage broker,459
or other mortgage loan originator; and does not include a person or entity solely involved460
in extensions of credit relating to time-share plans, as that term is defined in 11 U.S.C.461
Section 101(53D).462
(22.1)  'Mortgage servicing rights' means the contractual right to service mortgage loans
463
on behalf of the owner of the associated mortgage in exchange for specified464
compensation in accordance with the servicing contract.465
(22.2)  'Mortgage servicing rights investor' or 'master servicer' means a person that invests466
in and owns mortgage servicing rights and relies on subservicers to administer the loans467
on such person's behalf.468
(23)  'Nationwide Multistate Licensing System and Registry' means a mortgage licensing469
system developed and maintained by the Conference of State Bank Supervisors and the470
American Association of Residential Mortgage Regulators for the licensing and471
registration of licensed mortgage loan originators, mortgage loan brokers, and mortgage472
loan lenders, or its successor.473
(23.1)  'Net worth' means:474
(A)  With respect to a mortgage broker or a mortgage lender that is not a covered475
servicer, the total equity less receivables due from related entities less goodwill and476
other intangibles less pledged assets; and477
(B)  With respect to a mortgage lender that is a covered servicer, shall have the same478
meaning as provided in Federal Housing Finance Agency's Eligibility Requirements for479
Enterprise Single-Family Seller/Servicer.480
(24)  'Nontraditional mortgage product' means any mortgage product other than a 30 year481
fixed rate mortgage.482
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(25)  'Person' means any individual, sole proprietorship, corporation, limited liability
483
company, partnership, trust, or any other group of individuals, however organized.484
(26) 'Real estate brokerage activity' means any activity that involves offering or485
providing real estate brokerage services to the public, including acting as a real estate486
agent or real estate broker for a buyer, seller, lessor, or lessee of real property; bringing487
together parties interested in the sale, purchase, lease, rental, or exchange of real488
property; negotiating, on behalf of any party, any portion of a contract relating to the sale,489
purchase, lease, rental, or exchange of real property, other than in connection with490
providing financing with respect to any such transaction; engaging in any activity for491
which a person engaged in the activity is required to be registered or licensed as a real492
estate agent or real estate broker under any applicable law; and offering to engage in any493
activity or act in any capacity described herein.494
(27)  'Registered mortgage loan originator' means any individual who meets the definition495
of mortgage loan originator, is registered with and maintains a unique identifier through496
the Nationwide Multistate Licensing System and Registry, and is an employee of:497
(A)  A depository institution;498
(B)  A subsidiary that is:499
(i)  Owned and controlled by a depository institution; and500
(ii)  Regulated by a federal banking agency; or501
(C)  An institution regulated by the Farm Credit Administration.502
(28)  Reserved.503
(29)  'Residential property' means improved real property used or occupied, or intended504
to be used or occupied, as the primary residence of a natural person.  Such term does not505
include rental property or second homes.  A natural person can have only one primary506
residence.507
(30)  'Residential mortgage loan' means any loan primarily for personal, family, or508
household use that is secured by a mortgage, deed of trust, or other equivalent consensual509
H. B. 15
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security interest on a dwelling, as defined in 15 U.S.C. Section 1602 of the Truth in
510
Lending Act, or residential real estate upon which is constructed or intended to be511
constructed a dwelling.512
(31)  'Residential real estate' means any real property located in Georgia upon which is513
constructed or intended to be constructed a dwelling.514
(31.1)  'Reverse mortgage' means a loan collateralized by residential real estate, typically
515
made to borrowers over 55 years of age, that does not require contractual monthly516
payments and is typically repaid upon the death of the borrower through the sale of the517
real estate or through refinancing of the loan by the borrower's heirs.518
(31.2)  'Risk management assessment' means the functional evaluations of a licensee519
performed under a risk management program and the corresponding reports provided to520
the licensee's board of directors under the relevant governance framework.521
(31.3)  'Risk management program' means the policies and procedures of a licensee that522
are designed to identify, measure, monitor, and mitigate risk and that are sufficient for523
the level of sophistication of the licensee.524
(32)  'Service a mortgage loan' means the collection or remittance or the right to collect525
or remit payments of principal, interest, trust items such as insurance and taxes, and any526
other payments pursuant to a mortgage loan.527
(32.1)  'Servicer' means a person that services a mortgage loan.528
(32.2)  'Servicing portfolio' means the specific portfolio or portfolios of mortgage loans529
for which a licensee is contractually responsible to the owner or owners of the mortgage530
loans for the defined servicing activities.531
(32.3)  'Subserviced for others' means the contractual activities performed by subservicers532
on behalf of a servicer or a mortgage servicing rights investor.533
(32.4)  'Subservicer' means a person performing routine administration of mortgage loans534
as an agent of a servicer or mortgage serving rights investor under the terms of a535
subservicing contract.536
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(33)  'Ultimate equitable owner' means a natural person who, directly or indirectly, owns
537
or controls an ownership interest in a corporation or any other form of business538
organization, regardless of whether such natural person owns or controls such ownership539
interest through one or more natural persons or one or more proxies, powers of attorney,540
nominees, corporations, associations, limited liability companies, partnerships, trusts,541
joint-stock companies, other entities or devices, or any combination thereof.542
(34) 'Unique identifier' means a number or other identifier assigned by protocols543
established by the Nationwide Multistate Licensing System and Registry.544
(35)  'Whole loans' mean those loans where a mortgage and the underlying credit risk is
545
owned and held on the balance sheet of the person with all ownership rights associated546
with the loans."547
SECTION 14.548
Said title is further amended in said article by adding a new subsection to Code Section549
7-1-1003, relating to applications for licenses, to read as follows:550
"(d) The department may issue a notice of intent to administratively withdraw an551
application for a license under this article if an applicant submits a deficient license552
application by failing to provide any information required by the department.  If the553
applicant fails to provide the requested information within 30 days of the date of issuance554
of such notice, the application may be administratively withdrawn.  The notice shall be555
deemed provided to the applicant when:556
(1)  Sent via email to the applicant's email address, as provided on the application; or557
(2)  Posted by the department on the Nationwide Multistage Licensing System and558
registry."559
H. B. 15
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SECTION 15.
560
Said title is further amended in said article by revising subsections (e) and (i) of Code Section561
7-1-1004, relating to investigation of applicant, requirements for applicant, and denial and562
revocation of license, as follows:563
"(e)  Upon receipt of an application for a mortgage loan originator license, the department564
shall conduct such investigation as it deems necessary to determine that the mortgage loan565
originator applicant:566
(1)  Has never had a mortgage loan originator license revoked in any governmental567
jurisdiction, except that a subsequent formal vacation of such revocation shall not be568
deemed a revocation;569
(2)  Has not been convicted of, or pleaded guilty or nolo contendere to, a felony in a570
domestic, foreign, or military court, regardless of whether first offender treatment without
571
adjudication of guilt was entered:572
(A)  Within the previous seven years; or573
(B)  At any time, if such felony is a disqualifying crime;574
provided, however, that any pardon of a conviction shall not be a conviction for purposes575
of this subsection;576
(3)  Has demonstrated financial responsibility, character, and general fitness such as to577
command the confidence of the community and to warrant a determination that the578
mortgage loan originator will operate honestly, fairly, and efficiently within the purposes579
of this article;580
(4)  Has completed the prelicensing education requirement described in subsection (f) of581
this Code section; and582
(5)  Has passed a written test that meets the test requirement described in subsection (h)583
of this Code section."584
"(i)  The department shall not issue or may revoke a license if it finds that the mortgage585
loan originator, mortgage broker, or mortgage lender applicant or licensee, or any person586
H. B. 15
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who is a director, officer, partner, covered employee, or ultimate equitable owner of 10
587
percent or more of the mortgage broker or mortgage lender applicant or licensee or any588
individual who directs the affairs or establishes policy for the mortgage broker or mortgage589
lender applicant or licensee, has been convicted of a felony in any jurisdiction or of a crime590
which, if committed within this state, would constitute a felony under the laws of this state. 591
Other than a mortgage loan originator, for the purposes of this article, a person shall be592
deemed to have been convicted of a crime if such person shall have pleaded guilty or nolo593
contendere to a charge thereof before a court or federal magistrate or shall have been found594
guilty thereof by the decision or judgment of a court or federal magistrate or by the verdict595
of a jury,
 within the previous seven years or at any time, if such felony is a disqualifying596
crime, irrespective of the pronouncement of sentence or the suspension thereof, and597
regardless of whether first offender treatment without adjudication of guilt pursuant to the598
charge was entered, or an adjudication or sentence was otherwise withheld or not entered599
on the charge, unless and until such plea of guilty, or such decision, judgment, or verdict,600
shall have been set aside, reversed, or otherwise abrogated by lawful judicial process or601
until probation, sentence, or both probation and sentence of a first offender without602
adjudication of guilt have been successfully completed and documented, or unless the603
person convicted of the crime shall have received a pardon therefor from the President of604
the United States or the governor or other pardoning authority in the jurisdiction where the605
conviction occurred.  For purposes of this article subsection (e) of this Code section, a606
mortgage loan originator shall be deemed to have been convicted of a crime if he or she has607
pleaded guilty to, been found guilty of, or entered a first offender or nolo contendere plea608
to a felony in a domestic, foreign, or military court; provided, however, that any pardon of609
a conviction shall not be a conviction."610
H. B. 15
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SECTION 16.
611
Said title is further amended in said article by revising Code Section 7-1-1004.1, relating to612
reports of condition, as follows:613
"7-1-1004.1.614
Each mortgage broker and mortgage lender shall submit to the Nationwide Multistate615
Licensing System and Registry:
616
(1) Reports reports of condition, which shall be in such form and shall contain such617
information as the department and the Nationwide Multistate Licensing System and618
Registry may require; and619
(2)  Quarterly and annual reports of residential mortgage loan origination, servicing, and620
financial information in such form as required by the department and the Nationwide621
Multistate Licensing System and Registry."622
SECTION 17.623
Said title is further amended in said article by revising Code Section 7-1-1010, relating to624
annual financial statements, as follows:625
"7-1-1010.626
(a) If a mortgage broker is a United States Department of Housing and Urban627
Development loan correspondent, such broker shall also submit to the department the audit628
that is required for the United States Department of Housing and Urban Development. 629
Mortgage brokers shall, at least once each year, submit to the department a financial630
statement that is unaudited and prepared in accordance with generally accepted accounting631
principles and certified by the licensee; provided, however, that mortgage brokers may632
elect to submit to the department an audited financial statement to satisfy this requirement. 633
In the event that the mortgage broker submits to the department an unaudited financial634
statement prepared in accordance with generally accepted accounting principles in lieu of635
an audited financial statement, the The department may require the mortgage broker to636
H. B. 15
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have made an audit of the books and affairs of the licensed business and submit to the637
department an audited financial statement if the department finds that such an audit is638
necessary to determine whether the mortgage broker is complying with the provisions of639
this article and the rules and regulations adopted in furtherance of this article.640
(b)(1) Each mortgage lender licensed under this article shall, at least once each year,641
have made an external audit of the books and affairs of the licensed business, including642
and submit to the department at renewal an audited financial statement, except that a643
mortgage lender licensed under this article which is a subsidiary shall comply with this644
provision by annually providing a consolidated audited financial statement of its parent645
company and a financial statement, which may be unaudited, of the licensee which that646
is prepared in accordance with generally accepted accounting principles.  The external647
audit and audited financial statement shall be made available to the department as648
required by the department except as provided in paragraph (2) of this subsection. A649
lender who utilizes a bond in lieu of an audit need not supply such audit, unless specially650
required by the department.  An audit shall be less than 15 months old to be acceptable.651
(2)  Based on the total assets of the mortgage lender, the complexity of the mortgage652
lender, the number of loans made by the mortgage lender, or other factors, the department653
may enact rules and regulations authorizing certain mortgage lenders to provide financial654
statements under paragraph (1) of this subsection that are unaudited.655
(c) The department may by regulation establish additional minimum standards for audits656
and reports under this Code section."657
SECTION 18.658
Said title is further amended in said article by revising subparagraph (1)(B) of Code Section659
7-1-1016, relating to regulations relative to advertising, as follows:660
"(B)  An advertisement shall not include an individual's loan number, loan amount, or661
other publicly available information unless it is clearly and conspicuously stated in662
H. B. 15
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boldface type at the beginning of the advertisement that the person disseminating it is
663
not authorized by, in sponsorship with, or otherwise affiliated with the individual's664
lender, which shall be identified by name
.  Such an advertisement shall also state that665
the loan information contained therein was not provided by the recipient's lender; and"666
SECTION 19.667
Said title is further amended in said article by adding a new Code section to read as follows:668
"7-1-1022.669
(a)  Mortgage lenders and mortgage brokers must maintain capital, net worth, and liquidity670
in compliance with this Code section.  For entities within a holding company or affiliated671
group of companies, compliance with these requirements shall be measured solely at the672
licensee level.673
(b)  For the purposes of complying with the capital, net worth, and liquidity requirements674
of this Code section, all financial data must be reported in accordance with generally675
accepted accounting principles.676
(c) Capital, minimum net worth, and liquidity, to the extent applicable, shall be677
continuously maintained by licensees in the following amounts:678
(1)  If the licensee is a mortgage broker, then it shall maintain a net worth of at least679
$50,000.00;680
(2)  If the licensee is a mortgage lender that is not a covered servicer, then it shall681
maintain a net worth of at least $100,000.00 and evidence of liquidity of $1 million which682
may include a warehouse line of credit; and683
(3)  If the licensee is a mortgage lender that is a covered servicer, then it shall maintain684
capital, net worth, and liquidity that meets the Federal Housing Finance Agency685
Eligibility Requirements for Enterprise Single-Family Seller/Servicer, regardless of686
whether the covered servicer is approved for government sponsored enterprise servicing.687
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(d)  Mortgage lenders and mortgage brokers shall maintain written policies and procedures688
implementing the applicable capital, net worth, and liquidity requirements of this Code689
section.  Such policies and procedures shall include a sustainable written methodology for690
satisfying the requirements of subsection (c) of this Code section and be made available to691
the department upon request.692
(e)  In addition to the amounts required for liquidity under subsection (c) of this Code693
section, covered servicers shall maintain sufficient liquidity to cover normal business694
operations.695
(f)  Mortgage lenders shall have in place sound cash management and business operating696
plans that match the size and sophistication of the mortgage lender to ensure normal697
business operations.  Management shall develop, establish, and implement plans, policies,698
and procedures for maintaining liquidity sufficient for the ongoing operational needs of the699
mortgage lender.  Such plans, policies, and procedures shall contain sustainable, written700
methodologies for maintaining sufficient liquidity for operations of the licensee and be701
made available to the department upon request."702
SECTION 20.703
Said title is further amended in said article by adding a new Code section to read as follows:704
"7-1-1023.705
(a)  Mortgage brokers and mortgage lenders shall establish and maintain a board of706
directors.707
(b) Except for covered servicers that are approved to service loans by government708
sponsored entities and that have not been granted approval by such federal agencies for the709
creation of an alternative body to that of a board of directors, mortgage lenders and710
mortgage brokers may establish a similar body to that of the board of directors for the711
purpose of exercising oversight and fulfilling the board of directors' responsibilities set712
forth in subsection (c) of this Code section.713
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(c)  The board of directors shall be responsible for:714
(1)  Establishing a written corporate governance framework appropriate for the size,715
complexity, and risk profile of the mortgage lender or mortgage broker, including internal716
controls designed to monitor corporate governance and assess compliance with the717
corporate governance framework, and making such framework available to the718
department upon request;719
(2) Monitoring and ensuring licensee's compliance with the corporate governance720
framework and with the provisions of this article; and721
(3)  Accurate and timely regulatory reporting, including the requirements for filing the722
Mortgage Call Report.723
(d)  The board of directors shall establish internal audit requirements that are appropriate724
for the size, complexity, and risk profile of the mortgage lender or mortgage broker, with725
appropriate independence to provide a reliable evaluation of the licensee's internal control726
structure, risk management, and corporate governance.  Such internal audit requirements727
and the results of internal audits shall be made available to the department upon request.728
(e)  Mortgage lenders and mortgage brokers shall establish a risk management program729
appropriate for the size, complexity, and risk profile of the licensee that identifies,730
measures, monitors, and controls risk sufficient for the level of sophistication of the731
licensee.  Such risk management program shall have appropriate processes and models in732
place to measure, monitor, and mitigate financial risks and changes to the risk profile of733
the licensee; be under the oversight of the board of directors; and be available to the734
department upon request.735
(f)  Mortgage lenders and mortgage brokers shall conduct a risk management assessment736
on an annual basis concluding with a formal report to the board of directors, which shall737
be made available to the department upon request.  Evidence of risk management activities738
throughout the year must be maintained and made part of the report, including findings of739
issues and the response to address such findings.740
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(g)  The department shall have the following authority to address risk in mortgage lenders741
and mortgage brokers as necessary:742
(1)  Where risk is determined by a formal review of a specific mortgage lender or743
mortgage broker to be extremely high, the department may order or direct the mortgage744
lender or mortgage broker to satisfy additional conditions necessary to ensure that the745
mortgage lender or mortgage broker will continue to operate in a safe and sound manner746
and remain in compliance with state and federal law, including applicable state and747
federal regulations;748
(2)  Where risk is determined by a formal review of a particular or multiple mortgage749
lenders or mortgage brokers to be extremely low, the department may provide notice that750
all or part of this Code section and related rules are not applicable to those mortgage751
lenders or mortgage brokers; and752
(3)  Where economic, environmental, or societal events are determined to be of such753
severity to warrant a temporary suspension of all or certain sections of this Code section754
and related rules, the department may provide public notice of such temporary755
suspension.756
(h) Mortgage brokers and mortgage lenders may utilize a third party to assist with757
satisfying some or all of the requirements of this Code section."758
SECTION 21.759
Said title is further amended in Article 14, relating to foreign banking institutions, by revising760
paragraph (28) of Code Section 7-1-1100, relating to definitions, as follows:761
"(28)  'State' means a state of the United States or the District of Columbia."762
SECTION 22.763
Said title is further amended in said article by revising Code Section 7-1-1110, relating to764
service of process, as follows:765
H. B. 15
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"7-1-1110.
766
Except as provided in Code Sections 7-1-1109
 7-1-1108, 7-1-1112, 7-1-1127, and767
7-1-1135, a foreign bank operating in this state at a branch, agency, or representative office768
shall be subject to service of process at such location."769
SECTION 23.770
Said title is further amended in said article by revising subsection (b) of Code Section771
7-1-1111, relating to application procedures, as follows:772
"(b)  The department may adopt rules and regulations prescribing abbreviated application773
or notice procedures and standards applicable to applications by foreign banks to establish774
additional Georgia state branches or Georgia state agencies that have already established775
an initial Georgia state branch or Georgia state agency."776
SECTION 24.777
Said title is further amended in said article by revising subsection (b) of Code Section778
7-1-1118, relating to amending license and requirements, as follows:779
"(b)  The requirements with respect to the form and contents of an application or notice780
under subsection (a) of this Code section, the manner of its execution, the issuance of an781
amended license, and the effect of the amended license shall be the same as in the case of782
an initial application for a license to establish and maintain a Georgia state branch or783
Georgia state agency in the form and manner as required by the department."784
SECTION 25.785
Said title is further amended in said article by revising subsection (b) of Code Section786
7-1-1119, relating to act of relocating and notice, as follows:787
"(b) A foreign bank may shall submit a letter form application notification to the788
department of its intent to relocate an existing Georgia state branch or Georgia state agency789
H. B. 15
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no less than 30 days in advance of such relocation.  The department may require an790
application for such relocation if the notification raises supervisory concerns.  Unless the791
department denies the application, the approval to relocate an existing Georgia state branch792
or Georgia state agency under this Code section shall be effective at the earlier of:793
(1)  The date of an approval letter from the department; or794
(2)  Ten business days following the date of the department's acknowledged receipt of the795
application."796
SECTION 26.797
Said title is further amended in said article by revising Code Section 7-1-1121, relating to798
notice of uninsured deposits, as follows:799
"7-1-1121.800
Each foreign bank licensed to establish and maintain a Georgia state branch or Georgia801
state agency shall give clear and conspicuous notice consistent with 12 C.F.R. 347.207 that802
deposits and credit balances in the Georgia state branch or Georgia state agency are not803
insured by the Federal Deposit Insurance Corporation."804
SECTION 27.805
Said title is further amended in said article by revising Code Section 7-1-1123, relating to806
value of assets and deposits, minimum requirements, and reporting, as follows:807
"7-1-1123.808
(a)  A foreign bank licensed to establish and maintain a Georgia state branch or Georgia809
state agency shall be required to keep dollar deposits or investment securities, with pledge810
assets that are held by unaffiliated banks in this state that the foreign bank designates and811
the department approves, or money and securities pledged to the department in an812
aggregate amount to be determined by the department, valued at the lower of principal813
amount or market value, consisting of:814
H. B. 15
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(1)  United States dollar deposits;
815
(2)  Bonds, notes, debentures, or other legally created, general obligations of a state, an816
agency or political subdivision of a state, the United States, or an instrumentality of the817
United States;818
(3)  Securities that this state, an agency or political subdivision of this state, the United819
States, or an instrumentality of the United States has unconditionally agreed to purchase,820
insure, or guarantee;821
(4)  Certificates of deposit, payable in the United States, and bankers' acceptances,822
provided that, in either case, the issuer has an adequate capacity to meet financial823
commitments, meaning the risk of default by the obligor is low and the full and timely824
repayment of principal and interest is expected, for the projected life of the asset or825
exposure expected;826
(5)  Repurchase agreements; or827
(6)  Other assets as may be permitted by rule.828
(b)  The aggregate amount of deposited investment securities and dollar deposits
 pledged829
assets for each Georgia state branch or Georgia state agency established and operating830
under this Code section shall be not less than the greater of:831
(1)  That amount of capital which would be required of a Georgia state bank under Code832
Section 7-1-410; or833
(2)  One percent of the total liabilities of such Georgia state branch or Georgia state834
agency, including acceptances, but excluding accrued expenses and amounts due and835
other liabilities to offices, branches, agencies, affiliates, and subsidiaries of such foreign836
bank.837
Notwithstanding the above deposit requirement subsection (b) of this Code section, the838
department is authorized to enact rules and regulations pursuant to this article to establish839
a maximum dollar amount of deposited investment securities and dollar deposits pledged840
assets for certain highly rated foreign banks.  For prudential or supervisory reasons, the841
H. B. 15
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department may require that a foreign bank has deposited investment securities and dollar842
deposits pledged assets above the minimum amount.843
(c)  The assets deposited pledged and the amount of the assets to be maintained under844
subsection (a) of this Code section are subject to the conditions and limitations the845
department considers necessary or desirable for the maintenance of a sound financial846
condition; the protection of depositors, creditors, and the public interest in this state; and847
the support of public confidence in the business of the Georgia state branch or Georgia848
state agency.849
(d)  A foreign bank shall require its depository bank to segregate its dollar deposits and850
deposited investment securities pledged assets on the depository bank's books and records.851
The funds deposited pledged and obligations referred to in subsection (a) of this Code852
section that are placed in safekeeping at a depository bank:853
(1)  Shall not be reduced in value below the minimum required for that Georgia state854
branch or Georgia state agency without the prior approval of the department, but in no855
event below the minimum amount required under Code Section 7-1-410;856
(2)  Shall be maintained pursuant to an agreement prescribed by the department that shall857
be a written agreement entered into with the department; and858
(3)  Shall be free from any lien, charge, right of setoff, credit, or preference in connection859
with any claim of the depository bank against the foreign bank.860
(e)  Each Georgia state branch or Georgia state agency shall file with the department such861
reports as required by rule or regulation to determine compliance with this Code section."862
SECTION 28.863
Said title is further amended in said article by revising Code Section 7-1-1132, relating to864
location and authority of offices and relocation, as follows:865
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"7-1-1132.
866
A Georgia state representative office may engage in the activities authorized by this article867
at each location registered with the department as a representative office.  A Georgia state868
representative office may change its location in this state by filing a letter form application
869
notification with the department containing the street address and mailing address of the870
new location no less than 30 days in advance of relocation.  The department may require871
an application for such relocation if the notification raises supervisor concerns.  Unless the872
department denies the application, the approval to relocate an existing Georgia state873
representative office under this Code section will be effective at the earlier of:874
(1)  The date of an approval letter from the department; or875
(2)  Ten business days following the date of the department's acknowledged receipt of the876
application.877
All relocations shall include a notice to customers posted in a conspicuous place of the878
affected location as well as on the bank's website at least 30 days before relocating."879
SECTION 29.880
Said title is further amended in said article by revising Code Section 7-1-1138, relating to881
continuing registration, as follows:882
"7-1-1138.883
Every Georgia state representative office registered with the department under the884
provisions of Code Section 7-1-721 as of June 30, 2023, shall remain registered and be885
allowed to conduct business in Georgia.  Such Georgia state representative offices shall886
comply with this part and Part 1 of this article. Reserved."887
SECTION 30.888
Said title is further amended in Article 1 of Chapter 3, relating to general provisions, by889
adding a new paragraph to Code Section 7-3-3, relating to definitions, as follows:890
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"(3.1) 'Disqualifying crime' means any felony, as defined in Code Section 16-1-3,891
involving conversion, theft, money laundering, bribery, dishonesty, false statements or892
omissions, perjury, extortion, breach of trust, forgery, counterfeiting, embezzlement,893
insider trading, tax evasion, kickbacks, identity theft, cyber attacks, social engineering,894
fraud, including but not limited to check fraud, credit, card fraud, mortgage fraud, medical895
fraud, corporate fraud, bank account fraud, payment (point of sale) fraud, currency fraud,896
bank fraud, and securities fraud or a felony directly related to the financial services897
business."898
SECTION 31.899
Said title is further amended in Article 3 of Chapter 3, relating to licensing, by adding a new900
subsection to Code Section 7-3-20, relating to licensing application and fee, to read as901
follows:902
"(c) The department may issue a notice of intent to administratively withdraw an903
application for a license under this article if an applicant submits a deficient license904
application by failing to provide any information required by the department.  If the905
applicant fails to provide the requested information within 30 days of the date of issuance906
of such notice, the application may be administratively withdrawn.  The notice shall be907
deemed provided to the applicant when:908
(1)  Sent via email to the applicant's email address, as provided on the application; or909
(2)  Posted by the department on the Nationwide Multistate Licensing System and910
Registry."911
SECTION 32.912
Said title is further amended in Article 5 of Chapter 3, relating to regulation by department,913
by revising subsection (a) of Code Section 7-3-42, relating to felony convictions and criminal914
background checks, as follows:915
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"7-3-42.
916
(a)  The department shall not issue a license and may revoke a license if it finds that the917
applicant or licensee or any director, trustee, owner, executive officer, or covered employee918
of the applicant or licensee has been convicted of a felony in any jurisdiction or of a crime919
which, if committed within this state, would constitute a felony under the laws of this state:
920
(1)  Within the previous seven years; or921
(2)  At any time, if such felony is a disqualifying crime.922
For the purposes of this article, a person shall be deemed to have been convicted of a crime923
if such person shall have pleaded guilty or nolo contendere to a charge thereof before a924
court or federal magistrate or shall have been found guilty thereof by the decision or925
judgment of a court or federal magistrate or by the verdict of a jury, irrespective of the926
pronouncement of sentence or the suspension thereof and regardless of whether first927
offender treatment without adjudication of guilt pursuant to the charge was entered or an928
adjudication or sentence was otherwise withheld or not entered on that charge, unless and929
until such plea of guilty or nolo contendere or such decision, judgment, or verdict shall930
have been set aside, reversed, or otherwise abrogated by lawful judicial process or until931
probation, sentence, or both probation and sentence of a first offender without adjudication932
of guilt have been successfully completed and documented or unless the person convicted933
of the crime shall have received a pardon therefor from the President of the United States934
or the governor or other pardoning authority in the jurisdiction where the conviction935
occurred."936
SECTION 33.937
Said title is further amended in Chapter 9, relating to Georgia merchant acquirer limited938
purpose bank, by revising Code Section 7-9-7, relating to investigation and requirements and939
procedure for background checks, as follows:940
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"7-9-7.
941
(a)(1)  Upon receipt of the articles of incorporation and the filings and fees from the942
applicant as required under this chapter, the department shall conduct such investigation943
as it may deem necessary to ascertain whether it should approve the proposed merchant944
acquirer limited purpose bank.  The department shall approve the charter of a merchant945
acquirer limited purpose bank if it determines in its discretion that:946
(A)  The articles of incorporation and supporting items satisfy the requirements of this947
chapter;948
(B)  The character and fitness of the applicant, directors, and proposed officers are such949
as to warrant the belief that the business of the proposed merchant acquirer limited950
purpose bank will be honestly and efficiently conducted; and951
(C)  The capital structure of the merchant acquirer limited purpose bank is adequate in952
relation to the amount and character of the anticipated business of the merchant acquirer953
limited purpose bank.954
(2)  Within 90 days after receipt of the articles of incorporation and the filings and fees955
from the applicant as required by this chapter, the department shall approve or disapprove956
the charter of the proposed merchant acquirer limited purpose bank.  The department may957
impose conditions to be satisfied prior to the issuance of its approval of the charter of a958
merchant acquirer limited purpose bank.  If the department, in its discretion, approves the959
charter of the proposed merchant acquirer limited purpose bank with or without960
conditions, it shall deliver its written approval of the articles of incorporation and charter961
to the Secretary of State and notify the applicant of its action.  If the department, in its962
discretion, disapproves the charter of the proposed merchant acquirer limited purpose963
bank, it shall notify the applicant of its disapproval of the charter and state generally the964
unfavorable factors influencing its decision.  The decision of the department shall be965
conclusive, except that it may be subject to judicial review as provided in Code Section966
7-1-90.967
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(b)  No charter shall be issued if the department finds that the applicant, or any holding
968
company, control person, director, officer, partner, or employee of the applicant, has been969
convicted of a felony in any jurisdiction or of a crime which, if committed within this state,970
would constitute a felony under the laws of this state.  No control person, director, officer,971
partner, or employee of a merchant acquirer limited purpose bank shall have been972
convicted of a felony in any jurisdiction or of a crime which, if committed within this state,973
would constitute a felony under the laws of this state.  For any merchant acquirer limited974
purpose bank that is transacting business under a charter approved by the department, the975
department shall have the suspension and removal powers provided for in Code Section976
7-1-71 with respect to any control person, director, officer, partner, or employee of the977
merchant acquirer limited purpose bank who has been convicted of a felony in any978
jurisdiction or of a crime which, if committed within this state, would constitute a felony979
under the laws of this state.  For the purposes of this article, a person shall be deemed to980
have been convicted of a crime if such person shall have pleaded guilty or nolo contendere981
to a charge thereof before a court or federal magistrate or shall have been found guilty982
thereof by the decision or judgment of a court or federal magistrate or by the verdict of a983
jury, irrespective of the pronouncement of sentence or the suspension thereof, and984
regardless of whether first offender treatment without adjudication of guilt pursuant to the985
charge was entered, or an adjudication or sentence was otherwise withheld or not entered986
on that charge, unless and until such plea of guilty or such decision, judgment, or verdict987
shall have been set aside, reversed, or otherwise abrogated by lawful judicial process or988
until probation, sentence, or both probation and sentence of a first offender have been989
successfully completed and documented, or unless the person convicted of the crime shall990
have received a pardon thereon from the President of the United States or the governor or991
other pardoning authority in the jurisdiction where the conviction occurred, or shall have
992
received an official certification of pardon granted by the state's pardoning body where the993
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conviction occurred which removes the legal disabilities resulting from such conviction and994
restores civil and political rights.995
(c)  As used in this Code section, the term 'conviction data' means a record of a finding,996
verdict, or plea of guilty or plea of nolo contendere with regard to any crime, regardless of997
whether an appeal of the conviction has been sought.  The department shall be authorized998
to obtain conviction data with respect to any applicant, holding company, merchant999
acquirer limited purpose bank, or person who is a control person, director, officer, partner,1000
or employee of the applicant or merchant acquirer limited purpose bank.  The department1001
may directly submit to the Georgia Crime Information Center two complete sets of1002
fingerprints of such person, together with the required records search fees and such other1003
information as may be required. Fees for background checks that the department1004
administers shall be sent to the department by applicants and merchant acquirer limited1005
purpose banks together with such fingerprints. Criminal history checks may be requested1006
by the department through the Georgia Crime Information Center and the Federal Bureau1007
of Investigation.  The department shall have the authority to receive the results of such1008
checks. Fees required for a criminal history record check by the Georgia Crime1009
Information Center or the Federal Bureau of Investigation shall be paid by the applicant or1010
the merchant acquirer limited purpose bank.1011
(d)  Upon request by the department, each applicant, holding company, or merchant1012
acquirer limited purpose bank or any person who is a control person, director, officer,1013
partner, or employee of the applicant or merchant acquirer limited purpose bank shall1014
submit to the department two complete sets of fingerprints, the required records search1015
fees, and such other information as may be required.  Fees for background checks that the1016
department administers shall be submitted to the department by applicants and merchant1017
acquirer limited purpose banks together with two complete sets of fingerprints, and the1018
department is authorized to net such fees to recover any costs incurred by the department1019
related to running the background checks.  Upon receipt of fingerprints, fees, and other1020
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required information from the department, the Georgia Crime Information Center shall1021
promptly transmit one set of fingerprints to the Federal Bureau of Investigation for a search1022
of bureau records and an appropriate report and shall retain the other set and promptly1023
conduct a search of its own records and records to which it has access.  The Georgia Crime1024
Information Center shall notify the department in writing of any derogatory finding,1025
including, but not limited to, any conviction data regarding the fingerprint records check,1026
or if there is no such finding.  All conviction data received by the department or by the1027
applicant or merchant acquirer limited purpose bank shall be used by the party requesting1028
such data department for the exclusive purpose of carrying out the responsibilities of this1029
article, shall not be a public record, shall be confidential, and shall not be disclosed to any1030
other person or agency except to any person or agency which otherwise has a legal right1031
to inspect the file. All such records shall be maintained by the department and the1032
applicant or merchant acquirer limited purpose bank pursuant to laws regarding such1033
records and the rules and regulations of the Federal Bureau of Investigation and the1034
Georgia Crime Information Center, as applicable.1035
(e)  Every applicant and merchant acquirer limited purpose bank shall be authorized and1036
required to obtain and maintain the results of criminal background checks on employees. 1037
Such criminal background checks shall be handled by the Georgia Crime Information1038
Center pursuant to Code Section 35-3-34 and the rules and regulations of the Georgia1039
Crime Information Center commercial background checks.  Applicants and merchant1040
acquirer limited purpose banks shall be responsible for any applicable fees charged by the1041
Georgia Crime Information Center company performing the background check.  An1042
applicant or merchant acquirer limited purpose bank may only employ a person whose1043
background data has been checked and been found to be in compliance with all lawful1044
requirements prior to the initial date of hire.  This provision does not apply to control1045
persons, directors, officers, or partners, whose backgrounds have been investigated through1046
the department before taking office, beginning employment, or securing ownership.  Upon1047
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receipt of information from the Georgia Crime Information Center that is incomplete or1048
that indicates an employee has a criminal record in any state other than Georgia, the1049
employer shall submit to the department two complete sets of fingerprints for such person,1050
together with the applicable fees and any other required information.  The department shall1051
submit such fingerprints as provided in subsection (d) of this Code section. The1052
department shall be entitled to review the files of any applicant or merchant acquirer1053
limited purpose bank to determine whether the required commercial background checks1054
have been conducted and whether all employees are qualified. Notwithstanding the1055
requirement that applicants and merchant acquirer limited purpose banks conduct such1056
commercial background checks, the department shall retain the right to obtain conviction1057
data of employees of applicants and merchant acquirer limited purpose banks.1058
(f)  Upon request by the department, an applicant or merchant acquirer limited purpose1059
bank must take all steps necessary to have an international criminal history background1060
check performed on any control person, director, officer, partner, or employee.  The results1061
of such international criminal history background check must be provided to the1062
department.1063
(g)  Applicants and merchant acquirer limited purpose banks shall have the primary1064
responsibility for obtaining background checks on employees.  The department shall be1065
entitled to review the files of any applicant or merchant acquirer limited purpose bank to1066
determine whether the required background checks have been run and whether all1067
employees are qualified.  The department shall be authorized to discuss the status of1068
employee background checks with applicants or merchant acquirer limited purpose banks.1069
Notwithstanding any other provisions in this article, the department shall retain the right1070
to obtain conviction data on employees of applicants and merchant acquirer limited1071
purpose banks Reserved.1072
(h)  In the event the department denies an application to charter a merchant acquirer limited1073
purpose bank or an application to own or control a merchant acquirer limited purpose bank,1074
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the applicant may submit a new application at any time following notice of final denial. 
1075
The applicant shall not be prejudiced by any prior denials by the department."1076
SECTION 34.1077
Said title is further amended in said chapter by revising subsection (b) of and adding a new1078
subsection to Code Section 7-9-12.1, relating to treatment of merchant funds, to read as1079
follows:1080
"(b)  All merchant funds shall be deposited immediately by the merchant acquirer limited
1081
purpose bank and shall remain in an account at a financial institution that is federally1082
insured and authorized to do business in this state until paid over to the individual1083
merchant; provided, however, that nothing in this Code section shall preclude a merchant1084
acquirer limited purpose bank from making appropriate deductions for chargebacks, fees,1085
reserves, and other costs related to providing authorized merchant acquiring services owed1086
by the individual merchant prior to remitting the net amount to the individual merchant. 1087
At the time of deposit into the account, the funds of the individual merchant in the account1088
shall be deemed to be the property of the individual merchant.  The merchant acquirer1089
limited purpose bank shall maintain or cause to be maintained account records that identify1090
individual merchants and the total amount held for each individual merchant.  Such records1091
shall be maintained in good faith and in the ordinary course of business and in a manner1092
that can be readily ascertained.1093
(c)  Notwithstanding subsection (b) of this Code section, the department may, by regulation1094
or otherwise, authorize the merchant acquirer limited purpose bank to receive and hold1095
merchant funds in accordance with alternative safeguarding arrangements designed to1096
protect merchant funds."1097
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SECTION 35.
1098
Said title is further amended in said chapter by revising subsection (a) of Code Section1099
7-9-13, relating to regulation and enforcement by department and rules and regulations, as1100
follows:1101
"(a)  All merchant acquirer limited purpose banks chartered by the department shall be1102
subject to supervision, regulation, and examination by the department, including, but not1103
limited to, the examination powers as provided in Code Sections 7-1-64 through 7-1-73,1104
and the department shall have all enforcement powers provided in this title, including, but
1105
not limited to, the enforcement powers provided in Code Section 7-1-92 and Part 7 of1106
Article 1 of Chapter 1 of this title."1107
SECTION 36.1108
All laws and parts of laws in conflict with this Act are repealed.1109
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