New Mexico Money Transmitter Bonds Explained
Any entity that wants to operate as a money transmitter in New Mexico has to go through a procedure to get a state money services business license. It involves providing a money transmitter bond.
The surety bond licensing requirement aims to protect the state and the general public. If you fail to follow the law and a party is harmed by your actions, the bond serves as a mechanism to provide a fair reimbursement.
The money transmitter bond works like a contractual agreement in which the principal is your company. The New Mexico Regulation and Licensing Department is the obligee that requires you to get the bond, while the surety is the bond provider that backs your business.
Questions about Money Transmitter Bonds in New Mexico
When is this money transmitter bond required?
In order to obtain a New Mexico money transmitter license, you have to get a surety bond in an amount between $300,000 and $2 million. It is one of the indispensable requirements that you have to satisfy and is also known as a New Mexico money services business bond. The bond guarantees that you will follow the state Uniform Money Services Act and all other applicable legislation.
The Regulation and Licensing Department is the licensing body that imposes the criteria. However, the procedure is handled via the Nationwide Multistate Licensing System and Registry (NMLS).
What are the surety bond costs?
The surety bond cost which you need to pay for your bonding is formulated on the basis of the bond amount that you have to provide. For New Mexico money transmitters, the amount is $300,000, or one percent of your actual or projected annual dollar volume of money transmission business in the state, whichever is greater. The maximum amount is capped at $2 million.
Your bond premium is the actual price that you have to pay, and it is a percentage of the required amount. The surety that you apply with determines it by assessing your personal credit score as the most important indicator for the strength of your finances. You may also have to showcase your audited business financials, personal financial statements, and any available liquidity. The bond premium is lower when your overall finances are in good shape.
Is it possible to get bonded with bad credit?
Obtaining a New Mexico money transmitter bond with bad credit is difficult. It may be possible if you can demonstrate a good level of financial stability. This is necessary for the surety, as the bonding amounts are considerable. Thus, the bonding decision will depend on the strength of your finances, so that the bond provider can extend the backing without facing substantial risk.
How do I get bonded?
Launching your bonding process entails simply filling out our online application form (it takes 5min). You need to provide all the relevant information and paperwork, so that we can determine your bond price. If you are satisfied with the quote, you can purchase the bond straight away. We will then send you both a paper and a digital version of your bond.
Would you like to learn more about the bonding process? You can obtain in-depth information on our How to Get Bonded page.
Our bonding experts are here to assist you with any queries. You can call us at (877) 514-5146.
How are money transmitter bond claims handled?
The surety bond that you obtain as a New Mexico money transmitter protects the interests of your customers against potential illegal activities you may engage in. If they are harmed by such actions on your side, they can file a claim against your bond.
Then the case has to be examined. If the claim is proven, you have to pay compensation to the claimants. The sum can be up to the bond amount that you have provided when getting licensed. Thus, the costs can be considerable, and they are fully your liability. The surety may cover them at first, but you have to repay it soon after. This makes claims a serious financial threat to your money servicing business.