What Is an Indiana Money Transmitter Bond?
Launching an Indiana money transmitter business means obtaining a state license that authorizes your operations. One of the most important requirements you have to meet in this process is posting a money transmitter bond.
The surety bond protects the state and your customers against fraud and misuse you may engage in while acting as a money transmitter. In such cases, the bond can provide a financial compensation.
Your bond is, in essence, a three-party contract. Your money transmitting company is the principal that has to get bonded. The Indiana Department of Financial Institutions is the obligee imposing the requirement. The surety is the third party that provides you with the necessary bond backing.
Questions about Money Transmitter Bonds in Indiana
When do I need to post this bond?
Obtaining an Indiana money transmitter license is obligatory for all such professionals in the state.
The Nationwide Multistate Licensing System and Registry (NMLS) handles the actual licensing process, but the criteria are set byby the Indiana Department of Financial Institutions. The required bond amount is $300,000.
What is the price tag for an Indiana money transmitter bond?
The bond amount that you have to provide as an Indiana money transmitter is $300,000. The surety bond cost that you have to pay, however, is only a few percents of this amount. It is referred to as the bond premium and often is between 1% and 5% if your overall finances are in good shape.
The bond price is determined after a careful consideration of your personal and business papers. The most important factor is your personal credit score, but for larger bonds like money transmitter bonds, a review of your audited business financials may be necessary as well. Your surety may also ask for your personal financial statement or cash verification. The type of currency you are working with may also influence the cost.
What happens if my finances are not perfect?
In some cases, you may be able to obtain a Indiana money transmitter bond with problematic finances, but in general, it is more difficult. The reason is that the bond amount is considerable, so surety underwriters have to feel confident enough to extend that surety credit to your business without too high of a risk.
When applying for a bad credit bond, you will have to provide your audited business financials and demonstrate any finances that you have at your disposal in all forms possible.
How do I apply to get bonded?
Would you like to get the insider’s details about the bonding process? You can refer to our in-depth How to Get Bonded page, which is an extensive resource.
Lance Surety Bonds specialists are here to assist you with any questions you may have. Just contact us at (877) 514-5146.
What happens in case of a bond claim?
The surety bond that you post ensures your compliance with the Indiana Code and other applicable laws and regulations. If you fail to follow your obligations, you can end up with a claim against the bond. This is how harmed parties can seek a fair reimbursement.
The maximum compensation that claimants can demand is the penal sum of your bond, which is $300,000 in the case of Indiana money transmitter bonds. The surety that provided your bond may cover the costs initially, but according to the bond indemnity language, you are full liable to repay it. Bond claims can thus lead to major financial losses, so it’s best to stay away from situations that can give rise to them.
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