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Money Transmitter Surety Bond

Most states require a money transmitter bond before issuing a business license. The bond protects against the theft, withholding, or misuse of funds. Any business that provides money orders or traveler's checks or transfers money for clients or other companies is subject to this surety bond.

What is a Money Transmitter Surety Bond?

A money transmitter bond is a type of surety bond that guarantees that money transmitters abide by all applicable laws and regulations when conducting business. The bond provides a financial incentive to do business ethically and a mechanism for enforcement.

A money transmitter bond is a risk management tool. The government recognizes the immense benefits financial transmitters afford their clients. But wary of the significant potential harm they could do, the government requires a surety bond to guarantee that individual money-transferring businesses will abide by industry regulations.

How Does a Money Transmitter Bond Work?

Like any surety bond, a money transfer bond is a legal contract entered into by three essential parties:

  • The Principal – The bonded money transferring company is the bond principal.
  • The Obligee – The state government agency that requires the bond is the obligee.
  • The Surety – The insurance company that underwrites the bond is the surety.

If someone alleges that a money transferer defrauded them, they can file a claim against the money transmitting license bond. The surety will then conduct a thorough investigation of the claim. If they find that fraud or theft has been committed, the surety promptly pays the claim up to the total bond value. However, if the surety finds the claim has no merit, they will dismiss the claim.

The bond principal is responsible for repaying the surety for all claims paid.

Who Needs a Money Transmitter License Bond?

All businesses providing money transferring or transmitting services must acquire a money transmitter license bond, except those operating in Montana. All other states require a company to secure a surety bond before being licensed to conduct money transfers. However, the required bond amounts and other qualifications vary widely from one state to the next. Our surety experts at Viking Bond Service will guide you through the bonding process to ensure you meet all of your state's requirements.

How Much Does a Money Transmitter Surety Bond Cost?

The cost for the money transmitter bond is based on the bond amount which can vary from state to state. For example, in California, a money transmitter bond is set at a minimum of $250,000 up to a maximum of $7,000,000. However, the minimum bond amount in Idaho is $10,000, with another $5,000 required for each additional location.

The cost of any surety bond is generally a tiny fraction of the bond's value. Typically, the bond premium is 1-5% of the bond value, set by the surety that underwrites the bond. Applicants with better credit scores pay a lower premium than those with problematic credit. We work with our clients to help them get bonded for the lowest prices.

How Can I Get a Money Transmitter Bond?

At Viking Bond Service, obtaining a surety bond is straightforward. Just complete our online bond application, and we will get you a competitive money transmitter bond quote ASAP. You are welcome to contact us online or to call us at 1-888-2-SURETY (1-888-278-7389). Let us help you get ready for business.

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