Rule 80-12-7-.03 - Fidelity Coverage(1) Every MALPB shall obtain fidelity insurance coverage, such as a fidelity bond, to provide protection and indemnity against theft, defalcation, or other similar actions by officers and employees of the MALPB as well as agents and independent contractors of the MALPB, which includes, but is not limited to, employees of eligible organizations, support organizations, holding companies, subsidiaries, and affiliates, related to the merchant funds that are held by the MALPB pursuant to Rule 80-12-7-.02.(2) The fidelity coverage shall contain a provision that coverage will not be canceled, or not renewed, or allowed to lapse for any reason until at least sixty (60) days prior written notice has been given by the insurer to the Department. A certificate of insurance or similar documentation showing such fidelity coverage to be in force shall be provided to the Department prior to the MALPB engaging in any merchant acquiring activities. The fidelity coverage shall be obtained from an insurance company licensed to do business in Georgia that continuously maintains an A.M. Best Company rating of at least A: VII while the policy is in effect. Such fidelity coverage shall continuously remain in full force and effect subject to Department approved revisions to the amount of coverage.(3) The amount of the required fidelity coverage shall be the highest dollar amount of merchant transactions occurring in one day over the previous twelve (12) months for the MALPB or, if the MALPB does not have a twelve (12) month operating history, the highest projected merchant transaction dollar volume for one day. The amount of the initial fidelity coverage obtained by the MALPB, as well as subsequent amendments to the amount, shall be approved by the Department in writing prior to the MALPB obtaining the fidelity coverage or revising the amount of coverage.(4) At the time of the submission of an MALPB charter application or at any time thereafter, an MALPB can make a written request to the Department for a reduction in the amount of fidelity coverage required under Paragraph 3. Such request shall set forth in detail the rationale for a reduction in the required coverage and the safeguards or protections which will be employed to ensure the continuing sound operation of the MALPB, which shall include, but not be limited to, an evaluation of potential exposures under various stress scenarios that include intentional and unintentional failures in the MALPB's control environment and the sufficiency of the proposed fidelity coverage to mitigate such exposures. It shall be in the Commissioner's sole discretion to approve, conditionally or otherwise, or deny the request for a reduction in the amount of required fidelity coverage.Ga. Comp. R. & Regs. R. 80-12-7-.03
O.C.G.A. §§ 7-9-3, 7-9-13.
Original Rule entitled "Fidelity Coverage" adopted. F. Dec. 3, 2013; eff. Dec. 23, 2013.Amended: F. July 12, 2024; eff. Aug. 1, 2024.