On November 10, the Georgia Department of Banking and Finance (DBF) proposed a package of amendments to its rules governing money transmitters, residential mortgage licensees, and merchant acquirer limited purpose banks (MALPBs). Under the proposal, licensed money transmitters could count as permissible investments cash held at a foreign bank that the Fed has approved to conduct banking business in the U.S. and that has a branch or agency located in the U.S., regardless of whether the cash is held in the United States. Under the proposed amendments, such holdings may make up no more than 10 percent of a licensee’s total permissible investments, and only if the licensee received a satisfactory rating in its most recent examination. For mortgage loan originators, the amendments would clarify when applicants and licensees must have a sponsor, provide that an application may be denied at any time, remove the requirement that the DBF accept sponsorship requests, and require originators to surrender their licenses when they leave the employ of a licensed broker or lender or begin working as a loan officer for an exempt entity, changes the DBF said would not create any new compliance burden.

For MALPBs, the proposal would reduce minimum risk capital, which is calculated as two times average monthly chargebacks, by the amount of contractually required merchant reserves the MALPB holds, as reported in a new monthly activity report due within seven days of month end. An MALPB could also ask the DBF to modify its risk capital requirement based on the financial strength of a holding company or affiliate that provides contractual loss-absorbing capacity. The commissioner would have sole discretion to approve such a request, conditionally or otherwise. If the request is approved, under no circumstances may the minimum requirement be less than the greater of: (i) the average monthly chargebacks over the previous 6-month period less the amount of contractually required merchant reserves held by the MALPB; or (ii) the average monthly forecast dollar volume of chargebacks for the upcoming 6-month period less the amount of contractually required merchant reserves held by the MALPB. According to the DBF, the reduced risk capital requirements would have a positive economic impact on MALPBs, while compiling the monthly reports would impose a de minimis cost. The amendments would also clarify when a merchant exercises control over an MALPB, its holding company, or an affiliate. Comments are due December 15, and the DBF will consider adopting the rules at a December 18 meeting.