What Is a Connecticut Money Transmitter Bond?
If you’d like to launch a Connecticut money transmitter business, you need to get a state license which allows you to run your operations. As a part of this procedure, you need to submit a money transmitter bond.
Unlike insurance, this bond protects the state and your customers rather than your company. This means that it ensures you will comply with applicable laws and regulations.
The money transmitter bond that you obtain to get licensed is a three-party contract. Your money transmitting business is the principal. The Connecticut Department of Banking is the obligee that requires the bond. The surety is the provider of the bond.
Questions about Money Transmitter Bonds in Connecticut
When I am required to obtain this bond?
You are required to get a Connecticut money transmitter license for operating as a transmitter in the state.
The licensing process is done via the website of the Nationwide Multistate Licensing System and Registry (NMLS). The requirements are set by the Connecticut Department of Banking. They include posting a surety bond in an amount between $300,000 and $1 million in the official bond form.
If you are transmitting virtual currencies, the bond amount is set by the Department on a case-by-case basis. The bond that you provide ensures that you will follow the Connecticut Money Transmission Act.
How much do I have to pay for a Connecticut money transmitter bond?
The bond amounts for Connecticut money transmitters are $300,000, $500,000 and $1 million. The bond amount that you will have to post depends on the average weekly amount of transmissions in the state for the most recent 12-month period ending on June 30th. If it is below $300,000, the bond you have to post is $300,000, and respectively for the two other amounts.
The surety bond cost is only a few percents of this amount and is called the bond premium. It is typically between 1% and 5% for applicants with stable finances.
Your surety needs to make a careful examination of your personal and business financials. It has to take a look at your personal credit score and often needs to review your audited business financials since the bond amounts are considerable.
You may also have to demonstrate your personal financial statement or provide cash verification.
What happens if I have bad credit?
While it may be possible to get a Connecticut money transmitter bond with problematic finances, it may be difficult. Surety underwriters have to see enough stability in your finances to be able to extend a bond coverage of up to $1 million.
You will have to provide your audited business financials and showcase as much of your financial strength as possible.
How do I apply for this bond?
Ready to dive into the nitty-gritty details of bonding? Make sure to check out our How to Get Bonded page, which is an extensive resource on the topic.
Lance Surety Bonds experts are here to help you. For any questions, you can contact us at (877) 514-5146.
What is the process in case of a bond claim?
The purpose of your bonding is to safeguard the interests of the state and of your customers. That’s why if you transgress from your legal obligations, you can end up with a claim against your bond. This is how harmed parties can seek a fair reimbursement.
The financial compensation that claimants can demand is up to the penal sum of your bond. Since the bond amounts are considerable, this means that proven claims can harm your business in a serious way. Although your surety may cover the costs initially, it is your responsibility to repay it fully as per the bond indemnity language.