What Is a Louisiana Money Transmitter Bond?
Thinking about starting a Louisiana money transmitter business? You will have to undergo a licensing procedure with the state Office of Financial Institutions. One of the requirements you have to meet is posting a money transmitter bond.
Why is the bond needed? It’s a security mechanism that protects your customers and the state against potential illegal and unethical actions on your side. The bond can be used to provide a reimbursement for suffered damages.
Similarly to other bonds, your Louisiana surety bond functions as a contract between three parties. Your money transmitting business is the principal. The Office of Financial Institutions is the obligee. The entity that provides the bond is the surety.
Questions about Money Transmitter Bonds in Louisiana
When do I need this bond?
The Office of Financial Institutions requires all parties that want to engage in money transmitting to get licensed. The licensing process is conducted via the Nationwide Multistate Licensing System and Registry (NMLS).
A major requirement you have to comply with is to post a surety bond. The Office sets the bond amount, which can be between $25,000 and $500,000. It has to be one percent of annual volume of money transmitted by your business. The purpose of your surety bond is to guarantee your compliance with Title 6, Chapter 13 of the Louisiana Revised Statutes, as well as any other relevant laws.
How much does a Louisiana money transmitter bond cost?
In order to get a Louisiana money transmitter license, you have to post a bond between $25,000 and $500,000. The exact bond amount is set on the basis of your annual volume of transmitted money. Your bond price is different from this amount and is called the bond premium. It is a few percents of the required amount, which are often between 1% and 5% for applicants with a good credit score.
|Surety bond name||Surety bond amount||Above 700||Between 650-699||Between 600-649||Below 599|
|Louisiana money transmitter bond||$25,000 to $500,000||$187.5-$375 to $3,750-$7,500||$250-$625 to $5,000-$12,500||$625-$1,250 to $12,500-$25,000||$1,250-$2,500 to $25,000-$50,000|
The surety bond cost is formulated on the basis of a couple of important factors. They include your personal credit score, business finances, assets and liquidity, and professional experience. By examining them, your surety aims to assess how risky it is to get you bonded. The more stable your finances are, the smaller your bond premium is likely to be.
Can I obtain this bond with bad credit?
We know that getting the bond you need with problematic finances can be a rough tide. If you have a low credit score, bankruptcies, tax liens, or civil judgements, you can benefit from our Bad Credit Surety Bonds program. It’s designed with you in mind.
The premiums that you can expect are in the range of 5% to 10%. The higher price is needed in order to compensate for the increased bonding risk. As we work with numerous A-rated, T-listed surety companies, we can still offer you a top bond rate, whatever your financial situation is.
How do I get started with the bonding process?
Our How to Get Bonded page is an extensive resource about the bonding process. If you want more details about it, make sure to check out this guide.
Have further questions? Just call us at (877) 514-5146. Lance Surety Bonds’ experts are here to help.
What happens in case of a claim against my bond?
The goal of the Louisiana money transmitter bond that you provide as a part of your licensing is to protect your customers. If you fail to comply with the applicable state statutes, you can face a claim against your bond. This is how a harmed party can demand a fair compensation for your illegal or unethical actions.
The penal sum that can be sought is the bond amount you have posted. The surety that provided you with the bonding may step in to cover the claim costs at first, so that the claimant receives a fast compensation. You are liable for all payments, however. Thus, it’s best to avoid problematic situations that can lead to claims, as they can harm your business financially and in terms of its reputation.