Date Enacted: April 15, 2014
Date Effective: July 1, 2014
The Georgia money transmission bond legislation, also known as HB 982, amends prior laws for money transmitters and check sellers. Specifically, it modifies Chapter 1 of Title 7 of the Official Code of Georgia Annotated as it relates to financial institutions, and repeals Article 4 and 4a with regard to the sale of checks and money orders as well as the cashing of checks, money orders and drafts. The Act provides new definitions, guidelines and penalties for entities who are governed by this law.
Who Does the Money Transmission Bond Law Affect?
These revisions to prior state laws impact money transmitters, check sellers and those who sell payment instruments. This includes businesses that cash checks, drafts, and money orders, as well as those that sell money orders and checks.
There are some institutions which don’t fall under this bill, primarily because they are covered by other laws. According to O.C.G.A. § 7-1-682, these entities are the U.S. Postal Service, federal and state agencies, departments, authorities, recognized agents or instrumentality. In addition to these particular institutions, federally chartered banks, credit unions, trust companies, savings and loan association, or savings banks (if they are federally insured) are exempt, as well as authorized agents of a licensee and individuals employed by a licensee or employees of an exempt entity when they are acting within the scope of their employment and under the oversight of a licensee or exempt organization (not as an independent contractor). Lastly, foreign banks that create a federal branch under International Bank Act, 12 U.S.C. Section 3102 are not subject to this law.
Changes in Detail
Georgia’s HB 982 stipulates that money transmitters, check sellers and individuals taking part in the sale of payment instruments must be licensed.
The revised law also changes the provisions regarding money transmission bonds. This bill sets a bond amount of $250,000 for payment instrument sellers and $100,000 for money transmitters. Previously, check sellers had a $100,000 bond obligation while money transmitters needed to post a transmission bond of $50,000.
The updated Georgia state law has also increased the requisite bond amount by $5,000 for each additional business location. If the daily pending transactions surpass the current bond amount, the Department of Banking and Finance may find that added bond coverage is necessary, but this supplemental coverage has a cap of $2,000,000 while the previous law put the cap at $1,500,000.
Do these amendments leave you wondering how to get your Georgia Sale of Payment Instruments or Money Transmission Bond?
Notable Administrative Info
If one of the entities requiring a bond or its agents commit an act of noncompliance according to HB 982, then all damages will be paid to the person injured. Any creditors or departments owed fines, fees and other damages will also be paid out of the money transmission bond. Claimants are allowed to bring all actions directly against the bond.
A licensee must give written notice to the Department of Banking and Finance by certified mail or registered mail if there is any action against the bond. This must be done within 30 days of the action. The licensee is obligated to provide enough details to the Department so that the action is identifiable. Licensees must also provide notice of judgements by certified or registered mail to the Department within 30 days of the judgement being entered.
The corporate surety or licensee can’t cancel the money transmission bond without providing proper notice. A notice must be sent to the Department by registered or certified mail or statutory overnight delivery. The sender must ask for a return receipt. The cancellation may not be effective any sooner than 30 days after the Department receives the notice and only in relation to breach of condition that happens after the effective cancellation date.
Read Georgia’s full text regarding money transmission bonds for details.
The new Georgia Money Transmission law changes several stipulations for bonding. What do you think about the new requirements?