What Is an Ohio Money Transmitter Bond?
Launching an Ohio money transmitter business entails obtaining a state license from the Superintendent of Financial Institutions at the Department of Commerce. Among the main licensing requirements is obtaining a money transmitter bond.
Why get bonded? This security mechanism is required by state authorities in order to ensure an extra level of protection for your customers. The bond ensures your legal compliance and thus safeguards their interests.
Your money transmitter bond represents a three-party contract. The principal is your money transmitting business that has to get a bond. The Superintendent of the Ohio Division of Financial Institutions is the obligee that requires the bond. The surety is the bond provider.
Questions about Money Transmitter Bonds in Ohio
Who has to obtain this surety bond?
Obtaining an Ohio money transmitter license is obligatory if you want to start such a business in the state. You have to go through the process via the Nationwide Multistate Licensing System and Registry (NMLS). The required bond amount is between $300,000 and $2,000,000. Money transmitters have to use the official bond form provided by the Superintendent. The bond guarantees that you will follow all applicable laws, such as Chapter 1315 of the Ohio Revised Code.
What will the bond cost be?
The required bond amount for Ohio money transmitters is between $300,000 and $2,000,000. This is different from your bond premium, which is a small percentage of that amount. If you can demonstrate strong finances, it can be between 1% and 5%.
When you apply with a surety, it determines your surety bond cost by considering a number of factors. Some of the most important ones are your personal credit score as the business owner. It may want to see your audited business financials as well, since the bond amounts are considerable. You may also have to provide your personal financial statement or allow cash verification.
For money transmitters, the currency you are working with also matters in the cost formation. With this detailed examination, the surety aims to measure the level of bonding risk that you pose. The lower it is, the smaller your bond premium can get.
What if I have problematic finances?
Since the bond amounts for Ohio money transmitters are large, it’s more difficult to get bonded with bad credit. In some cases, it may be possible if you showcase solid audited business financials, which will be the main factor for the bond decision. Overall, your business and personal financial statements will have to be sufficiently strong, so that the underwriter would be willing to extend surety credit of up to $2,000,000.
How do I get bonded?
For further information, don’t miss out our How to Get Bonded page. It contains all important details about the bonding process.
Have more questions or need help with your application? You can contact us at (877) 514-5146. Lance Surety Bonds’ experts are here to assist you.
How are bond claims handled for money transmitters?
Unlike insurance, your Ohio money transmitter bond does not protect your business. Instead it is there to ensure your customers can get a fair compensation in case you transgress from your legal obligations.
In such cases, a harmed party can file a claim against your surety bond. They can seek a reimbursement up to the penal sum of your bond, which is a considerable amount. If the claim is proven, the surety that bonded you can cover the costs initially to ensure a quick payment. As per the bond indemnity agreement, however, you have to repay it in full. This makes bond claims a financial threat that shouldn’t be overlooked, so it’s best to avoid situations that can cause them.