What Is an Illinois Money Transmitter Bond?
If you’re planning on launching an Illinois money transmitter business, you will need to obtain a state license. Posting a money transmitter bond is one of the main requirements for getting an Illinois money transmitter license.
Why do you need the bonding? State authorities impose this criterion in order to ensure that money transmitters will follow the law in their operations. A party can seek a compensation via a bond claim if they have been harmed by your illegal or unethical actions.
Just like the rest of surety bonds, the money transmitter bond functions as a contract between three entities. The principal is your money transmitting business. The Department of Financial and Professional Regulation is the obligee that imposes the bond requirement. The surety is the third party that provides you with the bond.
Frequently Asked Questions
When do I need to obtain this bond?
All entities that want to operate as money transmitters in Illinois have to get licensed with the Department of Financial and Professional Regulation. The procedure is conducted via the Nationwide Multistate Licensing System and Registry (NMLS). As a part of the process, you have to get bonded. The amount that you have to post is between $100,000 and $2,000,000. It should be equal to the average outstanding payment instruments per day for the last 12 months or for your overall work history (whichever of the two is smaller).
How much will an Illinois money transmitter bond cost?
In order to get licensed as an Illinois money transmitter, you will need to post a bond in an amount between $100,000 and $2,000,000. This is the required bond amount, and it is different from your bond premium. If your finances are in good shape, you can expect a bond rate of about 1% to 5%.
A number of factors affect your surety bond cost. When you apply with a surety, it will examine your personal credit score as the business owner. You should also be prepared to show your company’s audited business financials. This is needed due to the considerable amount of the bond. You may also have to provide a personal financial statement or cash verification. In the case of money transmitter bonds, the currency you’re handling may also impact the bond price you will get.
Can I get bonded if I have bad credit?
It may be possible to get an Illinois money transmitter bond even with bad credit. You should be prepared to showcase strong audited business financials. Since the bond size is large - up to $2,000,000, the stronger your credit is, the easier it would be to get a bond approval.
How do I apply for a bond?
Do you need more information about the way bonding works? You can consult our in-depth How to Get Bonded page for further details.
Need help with your bond application? You can call us at (877) 514-5146. Lance Surety Bonds’ experts will assist you.
What happens if I get a bond claim?
If you engage in fraudulent activities, you may end up with a claim against you. The bond is designed to safeguard the interests of the state in which you operate and your customers. The claim is the mechanism through which harmed parties can seek a fair compensation.
The maximum penal sum that claimants can demand is the bond amount you have posted. When a claim gets proven, your surety needs to take care of paying it quickly. You are liable to repay all costs soon after. Thus, it is best to avoid situations that can lead to claims, as they can harm your business financially and reputationally.