What Is a Pennsylvania Money Transmitter Bond?
Starting your Pennsylvania money transmitter business entails obtaining a state license from the Department of Banking and Securities. Among the requirements you need to meet to launch your company is obtaining a money transmitter bond.
Why do you need to get bonded? The state of Pennsylvania requires it in order to ensure that money transmitters will follow the law in their operations. The bond guarantees your customers can receive a fair compensation in case you transgress from your legal obligations.
Similarly to other types of surety bonds, the money transmitter bond represents a contract between three entities. The principal is your money transmitter business. The obligee is the Pennsylvania Department of Banking and Securities. The bond is provided by the surety, which backs your company.
Questions about Money Transmitter Bonds in Pennsylvania
In which cases do I need this surety bond?
If you want to operate as a money transmitter in the state, you have to obtain a Pennsylvania money transmitter license. The procedure is handled via the Nationwide Multistate Licensing System and Registry (NMLS), but the licensing body is the Department of Banking and Securities. The required bond amount is $1,000,000, but the Department may deem necessary in some cases to increase it. You need to use the official bond form. The bond ensures you will follow the rules set in the Pennsylvania Money Transmitter Act.
How much would I pay for a Pennsylvania money transmitter bond?
You are required to obtain a $1,000,000 surety bond in order to get licensed as a Pennsylvania money transmitter. This is the required bond amount, which is not the same as the bond premium that you have to pay. The actual bond price is a fraction of this amount. For applicants with stable finances, the premium is usually between 1% and 5%.
The exact surety bond cost depends on a number of factors that your surety needs to examine. One of the most important ones is the business owner’s personal credit score. You will also have to provide your audited business financials, as the bond amount is quite substantial. In some cases you may need to showcase also your personal financial statement or cash verification. For money transmitters, the type of currency you’re working with may also have importance in the bond cost formation.
What if my finances are problematic?
Bad credit doesn’t necessarily mean you cannot get bonded, but it is a strong impediment. If you can demonstrate stable business and personal financial statements, it may still be possible to obtain the bond you need. For a $1,000,000 bond, however, audited business financials will be the most important factor in determining the bonding decision.
How do I get a Pennsylvania money transmitter bond?
Would you like to learn the nitty-gritty details of how bonding works? Make sure to consult our How to Get Bonded page, where you can find all the facts you need to know.
For further questions, we’re here to assist you. Just call us at (877) 514-5146 to get in touch with Lance Surety Bonds’ experts.
What if I get a claim against my bond?
Getting bonded is different from obtaining insurance. Your money transmitter bond does not protect your business but rather safeguards the interests of your customers and the state. In case you engage in fraud or misuse that leads to negative consequences for a party, they may bring a claim against your bond.
The maximum penal sum that claimants can seek is the bond amount you’ve posted, which is $1,000,000 in this case. The surety that has backed you may cover the costa at first, but you have to reimburse it fully afterwards. This makes bond claims a serious financial threat for your business, so it’s best to avoid them altogether.