What is a California Money Transmitter Bond?
In California, any companies or individuals who wish to open a money transfer service or become a money transmitter must receive proper licensing from the Money Transmitter Division of the California Department of Business Oversight. To receive that licensing, the applicant must post a California money transmitter bond.
Who Needs a California Money Transmitter Bond?
In the State of California, money transmitters are required to obtain a surety bond between $250,000 and $7,000,000, depending on the average daily outstanding obligations for money received by the service.
Why Do I Need a California Money Transmitter Bond?
Money transmitters are responsible for the movement of large sums of money, and they must be held accountable for maintaining ethical and responsible behaviors. California-based money transmitters are required to adhere to the California Financial Code (Division 1.2, Section 2000-2176). Under this code, the money transmitter is prohibited from the following actions, as well as others that are not listed:
- Failing to cooperate with examinations
- Engaging in fraud, intentional misrepresentation, or acts of gross negligence
- Participating in unsafe or unsound business practices
- Suspending payment of its obligations
- Failing to terminate or remove an agent after he or she is found to violate the law
If the money transmitter acts in violation of the industry regulations or relevant laws and causes financial loss, the harmed may make a claim against the bond. The principal is then responsible for reimbursing the surety for any damages that are paid.
How Much Does a California Money Transmitter Bond Cost?
The cost of a California money transmitter bond varies significantly based on the details of the operation and the credit rating of the applicant. The Money Transmitter Division of the California Department of Business Oversight requires money transfer services to maintain a minimum bond of $250,000 to a maximum of $7,000,000. The amount is dependent on the average daily outstanding obligations of the company. Additionally, it is subject to underwriting, which means the premium rate will vary based upon the credit history of the business owner.
Get Started Today!
To begin work as a money transmitter, you must first purchase a California money transmitter bond. Don’t delay your application.