Restrictions on Engaging in Banking Business

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  2. Georgia Code
  3. Banking and Finance
  4. Financial Institutions
  5. Banks and Trust Companies
  6. General Matters
  7. Restrictions on Engaging in Banking Business

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  1. No person or corporation may lawfully engage in this state in the business of banking or receiving money for deposit or transmission or lawfully establish in this state a place of business for such purpose, except a bank, a national bank, a credit union to the extent provided in Article 3 of this chapter, a licensee engaged in selling payment instruments to the extent permitted by Article 4 of this chapter, an international banking agency to the extent provided in Article 5 of this chapter, or a savings and loan association to the extent provided by the laws of the United States.
  2. None of the following shall be deemed to be engaged in the business of receiving money for deposit or transmission within the meaning of subsection (a) of this Code section:
    1. A club or hotel to the extent it receives money from members or guests for temporary safekeeping;
    2. An express, steamship, or telegraph company to the extent it receives money for transmission;
    3. An attorney at law, real estate agent, fiscal agent, insurance company, utility company, or any other person or corporation to the extent he or she or it receives and transmits money solely as an incident to a business or profession not governed by this chapter;
    4. Persons or corporations engaged in the business of cashing checks, dispensing cash through credit or debit card activated electronic devices, or recording of financial transactions resulting from and initiated at the point of the sale of goods or services; provided, however, that no such person or corporation shall receive deposits except as provided in Code Section 7-1-603 or otherwise engage in the business of banking; or
    5. A securities broker or dealer registered pursuant to the provisions of 15 U.S.C. Section 78o or Chapter 5 of Title 10 to the extent that such securities broker or dealer:
      1. Sells certificates of deposit or interest in certificates of deposit or other deposit instruments issued by a bank or savings association, provided such securities broker or dealer fully and fairly discloses at the time of solicitation and confirmation whether or not federal deposit insurance is available for that deposit instrument;
      2. Purchases certificates of deposit or other deposit instruments issued by a bank or savings association for the account of the customer of such securities broker or dealer, provided that such instruments are registered in the name of the customer or the custodian of such customer on the books or other records of the issuing bank or savings association; or
      3. Holds customer funds incidental to the purchase and sale of securities on behalf of such customer.
  3. The department is authorized to promulgate regulations and establish policy, consistent with the objectives of this chapter, which objectives include for the purposes of this Code section providing for appropriate competition between financial institutions and other financial organizations and protection of the interests of depositors, and to further define, restrict, or require registration of entities which provide financial products and services to the citizens of this state via the Internet, other online access to financial products and services, or alternate methods of delivery which differ from geographically based banking.

(Ga. L. 1919, p. 135, art. 1, § 4; Code 1933, § 13-204; Ga. L. 1960, p. 1170, § 1; Ga. L. 1966, p. 691, § 1; Code 1933, § 41A-1102, enacted by Ga. L. 1974, p. 705, § 1; Ga. L. 1985, p. 258, § 3; Ga. L. 1986, p. 458, § 4; Ga. L. 1990, p. 301, § 1; Ga. L. 1997, p. 485, § 10; Ga. L. 2004, p. 631, § 7; Ga. L. 2008, p. 381, § 2/SB 358; Ga. L. 2016, p. 390, § 7-5/HB 811; Ga. L. 2017, p. 774, § 7/HB 323; Ga. L. 2018, p. 1112, § 7/SB 365; Ga. L. 2019, p. 1056, § 7/SB 52.)

The 2018 amendment, effective May 8, 2018, part of an Act to revise, modernize, and correct the Code, substituted "15 U.S.C. Section 78o" for "15 U.S.C. Section 780" in paragraph (b)(5).

The 2019 amendment, effective May 12, 2019, part of an Act to revise, modernize, and correct the Code, substituted "online" for "on-line" near the end of subsection (c).

OPINIONS OF THE ATTORNEY GENERAL

Foreign state savings and loan association may not offer and sell certificates of deposit in Georgia through one or more broker-dealers located in Georgia. 1983 Op. Att'y Gen. No. 83-23.

"Business of banking" construed.

- As used in O.C.G.A § 7-1-241 "the business of banking" is not a separate concept perhaps extending into areas beyond the business of receiving money for deposit or transmission. Rather, it is the receipt of money for deposit or transmission which defines the business of banking for purposes of Georgia law. 1981 Op. Att'y Gen. No. 81-59.

Activities reserved exclusively to regulated financial institutions.

- Some activities, such as the lending of funds, while properly engaged in by banks and other regulated financial institutions, are not reserved exclusively to them. Under Georgia law, the only functions which are prohibited to persons and corporations in general are the receipt of deposits and the transmission of funds. 1981 Op. Att'y Gen. No. 81-59.

Automated teller operations limited to financial institutions.

- A nonfinancial institution may not establish and operate on its own behalf an unmanned automated teller facility which provides cash withdrawal services. 1985 Op. Att'y Gen. No. 85-2.

Restriction on renting of, or accepting deposits for, safe deposit boxes.

- No person or entity, other than those specifically excepted by former Code 1933, § 41A-1102 (see now O.C.G.A. § 7-1-241), may lawfully engage in the business of renting safe deposit boxes or receptacles for purpose of receiving money, or may accept deposits of money in such facilities. 1980 Op. Att'y Gen. No. 80-88.

Lockbox operations.

- An out-of-state bank may not use a lockbox operator as a conduit for deposit-taking in Georgia; however, the operation of a lockbox in and of itself does not constitute engaging in the business of banking. 1985 Op. Att'y Gen. No. 85-3.

Operation of a lockbox in compliance with Department of Banking and Finance Proposed Rule 80-7-1-.06 is permissible under Georgia law. 1985 Op. Att'y Gen. No. 85-43, affirming the validity of 1985 Op. Att'y Gen. No. 85-3.

Investment motive removes deposits from category of deposit which may be accepted pursuant to former Code 1933, § 41A-1102 (see now O.C.G.A. § 7-1-241). 1980 Op. Att'y Gen. No. 80-108.

Investment programs offered jointly by banks and brokerage firms.

- Brokerage firm is not prohibited, by virtue of O.C.G.A. T. 7, C. 1, Art. 2 and O.C.G.A. § 7-1-241, from offering, in conjunction with a bank, an investment program whereby the brokerage permits customers to maintain special accounts and receives and transmits money in connection with such accounts. 1981 Op. Att'y Gen. No. 81-59.

Actions of a bank, participating with a brokerage in offering a particular type of investment program, do not constitute the business of banking in violation of O.C.G.A. § 7-1-241 or O.C.G.A. § 7-1-604. 1981 Op. Att'y Gen. No. 81-59.

Programs proposed to be offered by a brokerage firm, which would be directly involved in soliciting funds from the public primarily for the purpose of facilitating the making of deposits and the earning of interest, would be prohibited by O.C.G.A. § 7-1-241(a). 1988 Op. Att'y Gen. No. 88-10.

Issuance by corporations of debt securities redeemable by check.

- Arrangement by which business corporation would receive money from individuals and in return issue to the individuals its debt securities redeemable by negotiable checks would involve "receiving deposits" within the meaning of O.C.G.A. § 7-1-4(7), and only persons or entities authorized to engage in the banking business by O.C.G.A. § 7-1-241 may lawfully engage in such arrangements. 1982 Op. Att'y Gen. No. 82-68.

RESEARCH REFERENCES

Am. Jur. 2d.

- 10 Am. Jur. 2d, Banks and Financial Institutions, § 19.

C.J.S.

- 9 C.J.S., Banks and Banking, § 5 et seq.

ALR.

- Power of banking corporation to loan money for others, 33 A.L.R. 597.

Duty and liability of bank under agreement to remit money or establish credit, 27 A.L.R. 1488; 45 A.L.R. 1052; 69 A.L.R. 673.

Licensing and regulation of business of transmitting funds to foreign countries, 94 A.L.R.2d 496.


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