Georgia Banking Brief: All The Notable Legal Updates In Q2

Originally published in Law360

The second quarter of 2025 has seen a great deal of activity on the legislative and regulatory fronts, with a number of impactful bills passing through the Georgia General Assembly, and new and amended rules and regulations being adopted by the Georgia Department of Banking and Finance.

The Georgia General Assembly adjourned the 2025 legislative session at the beginning of the quarter — the first of two sessions in the two-year legislative term — and will reconvene in January 2026.

This article will highlight legislation that passed through the General Assembly this session and was signed into law by Gov. Brian Kemp. We wrap the discussion with developments that are not specific to Georgia but certainly relevant to Georgia banking — the Consumer Financial Protection Bureau's withdrawal of 67 guidance documents during the quarter while it completes a comprehensive review of all guidance materials.

Legislative Update

Intangible Recording Tax Bill

One of the more significant pieces of legislation passed through the General Assembly this session, H.B. 586, extends Georgia's intangibles tax exemption for short-term notes from 36-month terms to 62-month terms. The legislation revises the statutory definition of "long-term note secured by real estate" consistent with the new 62-month term threshold, and requires security instruments to clearly state that the underlying note matures within the 62-month period.

This legislation, which was sponsored in the House by Rep. Bruce Williamson, R-Monroe, and carried in the Senate by Sen. Mike Hodges, R-Brunswick, offers direct and recognizable benefit to Georgia banks and borrowers as it will reduce the cost of borrowing through tax savings, offer more flexibility with regard to loan terms, and provide refinancing opportunity with lower-cost, longer-term financing.

This legislation was signed into law by Kemp on May 9 and became effective on July 1.

Georgia Department of Banking and Finance Housekeeping Bill

H.B. 15, which was signed by Kemp on May 14 and took effect on July 1, represents the annual update to the provisions of Title 7 of the Official Code of Georgia, and affects all entities regulated by the Georgia Department of Banking and Finance.

As noted in the General Assembly's summary, the purpose of the legislation is to modernize regulatory provisions and practices, enhance regulatory oversight, and improve institutional transparency. Among other things, it updates terminology; revises procedures for incorporation of credit unions; and revises licensure requirements for parties making money transmissions, cashing payment instruments and making installment loans, and for mortgage lenders, mortgage brokers and foreign banking institutions.[1]

The legislation also revises auditing procedures, provides corporate governance requirements, and provides liquidity requirements for mortgage lenders and mortgage brokers, and revises requirements for relocation applications for foreign banking institutions.[2] As noted by the Georgia Bankers Association in a statement, of particular interest to banks are the provisions concerning filing and publishing articles of incorporation for banks and trust companies, and revised considerations for the Department of Banking and Finance when evaluating bank holding companies.[3]

Specifically with regard to credit unions, the legislation mandates that applications for incorporation demonstrate public need and adequate capital structure and, in certain circumstances, permits department deferral of applications pending federal approval.

For mortgage lenders and brokers, the legislation requires submission of annual unaudited financials with an option for the department to require audited financials. It also sets tailored capital, net worth and liquidity requirements. Certain criminal background check requirements were also revised to allow use of commercially available checks in place of Georgia Crime Information Center checks and fingerprints.               

Trigger Leads Bill

Kemp signed H.B. 240 on May 13, and it became effective the same date. The legislation was designed to prohibit unfair and deceptive trade practices in consumer loan transactions using mortgage trigger leads. A trigger lead is generated and sold by the credit reporting agencies when one lender requests a consumer credit report during the loan underwriting process. The sale of the lead results in unsolicited — and often confusing and misleading — communications from other mortgage lenders and brokers.

While the legislation does not outright prohibit the sale of trigger leads by the credit reporting agencies, the intention is to put guardrails in place, including requirements that solicitors disclose they are not affiliated with the consumers originating lender, comply with prescreened solicitation laws, and honor consumer opt-out/opt-in preferences concerning prescreened credit solicitation and the federal do-not-call registry. The legislation also expressly prohibits bait-and-switch sales tactics.

The legislation was sponsored by Rep. Noel Williams, R-Cordele, and Sen. Matt Brass, R-Newnan.

Study Committee, Artificial Intelligence and Digital Currency

S.R. 391, sponsored by Sen. John Albers, R-Roswell, was adopted on April 2 and establishes the Senate Study Committee on Artificial Intelligence and Digital Currency. The Senate committee will study these topics and make recommendations concerning future action and legislation.

Certain other legislation concerning AI was introduced this session and was not passed but will be taken up again next session. This included S.B. 37, also introduced by Albers, which would require governmental entities to develop written plans for use of AI, and would create a state board for artificial intelligence. The bill has been assigned to the Senate Economic Development and Tourism Committee and will be taken up in the 2026 session.

Sen. Nikki Merritt, D-Grayson, also introduced AI-related legislation that would regulate its use in business to prevent discrimination.[4] This legislation has also been assigned to the Senate Economic Development and Tourism Committee and will likewise be taken up in the 2026 session.

H.B. 715 was introduced by Rep. Bryce Berry, D-Atlanta, to amend Georgia's fair housing laws to regulate the use of AI relative to housing decisions and to require human oversight. This bill was assigned to the House Judiciary Committee for consideration.

H.B. 478, introduced by Rep. Dar'shun Kendrick, D-Lithonia, would have required any AI-generated content used in commerce or trade to include a disclaimer indicating it was created using AI.[5] The bill has been assigned to the House Technology and Infrastructure Innovation Committee for consideration next session.

Finally, H.B. 147, sponsored by Rep. Brad Thomas, R-Holly Springs, would have required the Georgia Technology Authority to conduct an annual inventory of AI usage by state agencies, provide reports of its findings, and develop certain policies and procedures.[6] This bill passed the House and was reported favorably by the Senate Science and Technology Committee. Albers is sponsoring the bill in the Senate, and it will be taken up next session.  

There were also several bills concerning digital currency that were introduced this session that did not pass and will be back up for consideration next year. S.B. 178, sponsored by Sen. Greg Dolezal, R- Cumming, would have authorized the State Depository Board to allow the state treasurer to invest in bitcoin. The Senate Banking and Financial Institutions Committee has taken up the bill for consideration next session.

Likewise, S.B. 228, sponsored by Sen. Jason Esteves, D-Atlanta, would also have authorized the State Depository Board to allow the state treasurer to invest in bitcoin. The bill would have also required the state treasurer to develop and implement certain security policies and procedures for the acceptance and trading of bitcoin. This bill has also been assigned to the Senate Banking and Financial Institutions Committee and will be taken up again next session.

Comprehensive Civil Litigation Reform

Although not directly related to banking, but certainly worthy of note, are two pieces of legislation Kemp signed into law on April 21 and effective July 1.

S.B. 68 introduces major changes to premises liability claims in Georgia by raising the burden of proof, limiting certain damages and attorney fees, and allowing trials to be bifurcated between fault and damages phases.

Meanwhile, S.B. 69 targets third-party litigation funding and foreign influence in civil litigation by requiring litigation funders to apply with the Georgia Department of Banking and Finance and authorizing the department to deny applications subject to an appeals process.[7]

The intention of the legislation's sponsor, Sen. John Kennedy, R-Macon, was to enhance transparency and reduce frivolous lawsuits, thus improving the business environment in Georgia.[8]

Georgia Department of Banking and Finance Rules and Regulations Update

On June 18, the Department of Banking and Finance published a notice of final rulemaking covering myriad topics.[9] Prior to adoption of the final rules, on May 15, the department published the proposed rules and a synopsis, along with an invitation for public comment.[10] Four comments were received and considered by the department in its adoption of the final rules. The final rules became effective on July 7.

The newly adopted rules cover topics including fidelity insurance coverage for banks and credit unions, internal audit programs, allowed investments, fines, application fees, corporate filings, maintenance of books and records, licensee authority for money transmitters, credit union applications, mortgage lender licensure, background checks, ownership of merchant acquirer limited purpose banks, and convenience fees.

Many of the rules relate directly to provisions of the department's banking housekeeping bill, H.B. 15, which Kemp signed on May 14 and came into effect July 1. Several highlights from the rules are noted below.

Fidelity Coverage

Rules 80-1-3-.05 and 80-2-5-.01 now require the board of directors of any bank or credit union to conduct an annual review of their institution's fidelity insurance coverage to ascertain its adequacy based upon the institution's exposure to theft by any insider. The department may require additional coverage, which must be obtained within 30 days of written notice unless additional time is allowed by the department after a detailed written request from the institution.

Permissible Investments

Banks are now allowed some additional flexibility with regard to its investment portfolios under Rule 80-1-4-.01, whereby banks may "invest in securities issued by political subdivisions of the United States other than those that are specifically identified in the rule."[11] The amended rule revises terminology to clarify authorized investments. Further, the rule allows banks to invest in securities authorized for a national bank, subject to the department's approval.[12]

Internal Audits

The amendments to Rules 80-1-14-.02 and 80-2-6-.05 provide that liaisons to internal auditors must be employees or independent directors and not officers of the bank or credit union. Continuing with the independence theme, internal audit reports must be sent directly from the internal auditor to either all the independent directors, all the independent directors serving on the audit committee, or an independent director serving as chair of the committee.

Material Service Providers for Licensed Money Transmitters

Rule 80-3-1-.06 provides guidance to licensed money transmitters concerning the engagement and contracting with third-party service providers or affiliates to perform "material services," which are defined in the rule. The rule also sets out limitations on the material services providers and clarifies obligations for licensed money transmitters with regard to their material services providers.

Amended or Restated Articles of Incorporation

Pursuant to Rule 80-6-1-.12, within five days of filing, a bank holding company must provide the department with a copy of any amendment or restatement of its articles of incorporation filed with the secretary of state under Georgia Code Sections 14-2-1106 or 1107.

Consumer Financial Protection Bureau Withdrawal

One federal-level item of note, which directly affects the Georgia banking environment, concerns the CFPB's recent withdrawal of guidance. On May 12, the CFPB rescinded 67 guidance documents while it reviews all existing guidance documents to determine whether such guidance is necessary and reduces compliance burdens.[13] The rescinded guidance includes certain policy statements, advisory opinions, interpretive rules and other similar guidance materials.

The CFPB may decide to reissue certain guidance following its review, but in the meantime, the rescinded guidance will not be enforced or relied upon by the CFPB in its regulatory and enforcement actions while its review is ongoing. Going forward, the CFPB intends to avoid issuing new guidance unless such guidance is necessary and decreases compliance burdens.