Money Transmitter Bonds

Why is a Money Transmitter Bond Required?

There are many businesses that are classified as money transmitters. Examples include:

• Marketplace platforms
• Payment processors
• Payment facilitators
• Payroll services
• Writers of money orders or traveler checks
• Bill payment services
• Currency exchanges including digital currencies
• Plus other money services

Licensing vs The Surety Bond Requirement

The licensing process for money transmitters exists to ensure:

• Businesses have the appropriate working capital amounts
• All finances have been audited for accuracy
• Business owners and authorized agents have clean criminal backgrounds
• Proper business structures are registered
• All owners and authorized agents are outlined

While licensing standards are set by the individual states, the licensing process is manage by the National Multi-State Licensing System, called the NMLS.

Bottom line, each state wants to ensure any business conducting money transmission services is capable of serving their population and keeping their promises as a legal entity.

However, despite this licensing process, every year there are a few businesses who commit money transmission or exchange fraud to make more money.

This surety bond requirement is the primary way states licensing agencies can hold businesses accountable in their states.

Examples of Money Transmission Fraud

Here are some examples of fraudulent actions business can commit:

• Stealing money from customers
• Charging exorbitant fees
• Falsifying and using deceptive fees
• Participating in money laundering schemes
• Funning illicit activities like drug funding or terrorist activities
• Currency manipulation

If a business is found guilty of these or similar actions, the customer who was victimized can make a claim against the businesses surety bond for full or partial financial compensation.

However, the total financial compensation only extends to the bond amount the business is required to purchase.

This bond amount directly affects the price you must pay to purchase your money transmitter bond.

What Is The Money Transmitter Bond Amount?

How To Find Your Surety Bond Amount

Nearly every state has a different bond amount depending on:

• How and where your business is operating
• The total dollar amount of currency transmission or exchange

Here are some examples:

• Texas ranges from $2,500 to $1,000,000
• California ranges from $250,000 up to $7,000,000
• Wisconsin ranges from $250,000 up to $500,000

The Model Money Transmission Modernization Act

The Model Act is a new initiative created by the Conference of State Bank Supervisors (CSBS). The Model Act is intended to standardize the regulation of companies subject to state specific money transmission laws.

So far there are 22 states who've passed laws based on this act. One of the standardizations this act facilitates is the surety bond requirement, though not every state will follow this act to the letter.

According to the Model Act, there is a $100,000 bond minimum that goes up to $500,000 maximum.

How Do You Find Your Bond Amount?

We can help you find your bond amount and you can also use the NMLS Checklist Compiler to find the rules that will dictate your bond amount.

Remember, in most cases the amount will depend on the the average daily, monthly, or yearly money transmission amount (or liability).

So make sure you have this figure.

If you're a new business, you will be subject to the bond minimums.

Click here and request your price quote.

Fill out the quote form with as much information as you can and we will price shop for you to find the lowest possible price.

If you prefer to speak with a bond specialist, call 1-800-608-9950.

What Is The Money Transmitter Bond Cost?

Once you have your bond amount, you can get your exact pricing.

Your price will depend on a rate quoted from a surety. A surety is a special insurance company that chooses to underwrite money transmitter bonds.

Every surety is different in their assessment of the applicant, but they will primarily use factors such as:

• Personal credit of the business owner or owners
• Industry and experience
• Business history including prior bond claims if owners have been licensed before

Why You Should Use Surety Bonds Direct

We are your specialized surety agency. We work with a network of A rated sureties.

This allows us to price shop for you. We collect multiple rates and deliver the lowest rate, and lowest price, so you can purchase your surety bond.

Let's look at a pricing example.

Here's example pricing using an assumed bond amount of $200,000. Pay attention to how one to two percentage points can drastically change the price you pay.

Click here and complete our online quote form.

We will find you the lowest price possible. You are under no obligation to purchase when you get your pricing. It's vital information to help you get through the licensing process.

If you prefer to speak with a bond specialist, call 1-800-608-9950.

How Long Does a Money Transmitter Bond Last?

All money transmitter surety bonds have a bond term. The term is the length of time the bond remains active before it must be renewed for another term.

Money transmitter bonds have a 12 month bond term from the effective date. The effective date is chosen by you when you purchase the bond.

This is another great reason to work with Surety Bonds Direct. We manage this process for you.

As your bond expiration date approaches, your bond specialist will reach out to you 30 to 40 days in advance to make renewing your bond fast and easy.

What Happens After You Purchase Your Money Transmitter Bond?

Once you complete your purchase, our bond issuance team will get to work to prepare your bond with the:

• Correct bond form
• Necessary signatures
• Seals
• Power of Attorney

In most cases will will help file the bond for you with the NMLS. This makes the process easier and faster for you.

Once your bond is filed with the NMLS, you just need to complete the rest of the licensing requirements.

Getting Your Money Transmitter License

The requirements for obtaining a money transmitter or currency exchange license are set at the state level.

However, the NMLS has a Checklist Compiler that is a great resource for helping you understand all the requirements to complete your license.

At a high level, these requirements include:

• Uploading audited financial statements
• Delegating authorized agent locations
• The locations of any branches, ATMS, or kiosks
• Your business registration and origination documents
• Primary and non-primary employee contact details
• Criminal background check for all owners and agents
• The surety bond requirement
• Business plans and business activities
• Management chart and investor disclosures
• Plus other requirements depending on the state