What Is a Colorado Money Transmitter Bond?
In order to obtain a Colorado money transmitter license that allows you to operate legally in the state, you are required to post a money transmitter bond.
The bond that you obtain serves as an additional layer of security for the state and for your customers. It guarantees that you will follow the law in your work as a money transmitter.
Surety bonds function as a contract between three entities. The principal is your money transmitting company. The Colorado Division of Banking is the obligee requiring the bond. The third party, which is the bond provider, is the surety.
Questions about Money Transmitter Bonds in Colorado
In which cases do I have to get this surety bond?
Every money transmitter licensed in Colorado by the state Division of Banking is required to obtain a transmitter bond.
The amount is set between $250,000 and $2 million. You should provide the bond in the official form. The bond aims to ensure your compliance with the Colorado Money Transmitter Statutes (Title 12, Article 52).
How much does the Colorado money transmitter bond cost?
Obtaining your Colorado money transmitter license entails posting a surety bond between $250,000 and $2 million.
The exact bond amount is set by the Division of Banking on the basis of the strength of your finances. The bond premium that you have to pay also depends on that. It is often between 1% and 5% for applicants with solid finances.
Your surety bond cost is determined on the basis of numerous personal and business financial factors.
Your personal credit score as the business owner is the most important one.
Since the Colorado money transmitter bond amounts are considerable, a review of your audited business financials is also likely to be needed. You may also have to provide a personal financial statement or cash verification.
The purpose of the overall assessment is to judge the level of bonding risk involved. For money transmitters, the currency type that you work with is also of significance.
Is it possible to get bonded with bad credit?
Due to the larger bond amount of money transmitter bonds in Colorado, it may be difficult to get bonded with problematic finances. You would still need to demonstrate a good level of stability of your personal and business finances.
A review of your audited business financials will be necessary, as well as showcasing as much of your additional assets and liquidity as possible.
How do I get my Colorado money transmitter bond?
Do you want to dive in the nitty-gritty details of the bonding process? Here is our extensive How to Get Bonded page that you can consult.
For further questions or help with your application, you can call us at (877) 514-5146. Our bonding experts will happily help you out.
What if I get a surety bond claim?
As it does not function like insurance, your Colorado money transmitter bond is not a protection mechanism for your company. Its purpose is to guarantee a fair compensation to harmed parties who have suffered damages due to potential illegal activities on your side.
That’s why if you transgress from your legal obligations, you can get a claim against your bond. The claimants can seek a reimbursement of up to the penal sum of your bond. In the case of Colorado, the money transmitter bond amounts are considerable - up to $2 million. While the surety may step up to cover the costs at first, you are fully liable for them.
This means that bond claims can cause heavy financial damage to your business, so it’s best to avoid them.