Money Transmitter Surety Bond
A money transmitter is a business which offers money transfer services also referred to as a money transfer service.
A money transmitter bond is a bond of surety which is meant to guarantee the professional and honest rendering of services by businesses which offer money transmitting services. The money transmitter bond is a surety bond in which all money transmitters should comply to according to state regulations.
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The bond helps in protecting the state in which the bond is issued and the public from any money transmitters who may have fraudulent goals such as withholding, stealing or misuse of funds.
Money transmitter surety bonds are a requirement in most states. Federal law requires all money transmitter businesses to acquire a monetary transmitter license to operate legally.
The Department of Finance or Business Licensing Bureau is the authority in your state which can provide information as to whether when you are applying for a license, you may need a bond. Bonds usually have three parties involved.
The principal who is the money transmitter, the obligee who is the public or state bureau and the surety bond company that supports the bond. When a claim is made against a money transmitter the surety bond is legally obliged to compensate the people who filed the claim. The principal is later required to reimburse the surety bond because it supported them. Contact NFP Surety to learn more about money transmitter license requirements, and how to get properly bonded.
Who needs a monetary transmitter surety bond?
Businesses which offer money transferring or transmitting services are required to acquire a bond as part of the licensing process.
Businesses which also offer payments from one business or person to another are required to have bonds for them to acquire licenses. These forms of business may include online merchants, wire transfer services, and money service businesses.
Money Transmitter License Bonds
How they differ by state
Money transmitter bonds sometimes differ and do not differ from state to state. There are some states which refer to money transmitter bonds using other names but they all serve the same purpose.
The businesses which need these bonds also differentiate from state to state. A good example is businesses which deal in virtual currencies. In some states, these businesses may need to get bonds to operate while in other states they do not.
Discussion of state requirements
In various states, there have been businesses which are engaged in fraudulent business practices. The practices are being curbed by these states through enforcement of regulations that are more tight on them.
In Connecticut, the HB 6800 bill is in place to address surety bonds for money transmitters that deal with virtual currencies. The commissioner under this bill has the power to set the bond amount for money transmitters.
The transmitters can also be charged additional bonds. In Utah, the SB 24 bill was introduced to regulate money transmitters in that state. The bill states that a $50,000 minimum surety bond should be imposed on all money transmitters.
The surety bonds should also be maintained for a period of three years after the business stops operating in the money transmitting business. Kansas also revised their money transmission guidelines through the HB 2216 bill which increased the bond amount imposed on money transmitters from a maximum of $500,000 to $1,000,000.
Call us today, and learn about money transmitter license requirements, and how to get bonded.
Importance of money transmitter surety bonds by the commissioner
The money transmitter bond is important because it protects the state where it is issued and the public from any problems or liabilities that may occur.
The monetary transmitter surety bonds protect the state and public from misuse, stealing or withholding of funds by money transmitters. The bond acts as an assurance that money will be handled in an appropriate manner and the company will be law-abiding in all their operations.
If a problem occurs while money is being transmitted the bond will be used to compensate the individual or entity whose money was misused or handled in an inappropriate way.
Ramifications of not being bonded
There would be a lot of problems and issues that can come up if there were no money transmitter surety bonds. Money is something that is valuable to individuals since it is used as a form of payment in buying of goods and paying for services.
Money being transmitted can be risky because if a problem arises the owners of the money will need to be compensated.
The money transmitter might not be an honest party and may refuse to compensate the owner of the money. All the issues that may come up during money transmission are too volatile and that is why some states cover themselves by requiring money transmitters to have surety bonds.
The bonds ensure that the interests of the public and the state are protected Learn more about how you can get a money transmitter license surety bond today! You are going to appreciate our easy bonding process… we’re sure of it!