Vermont Money Transmitter Bonds Explained
If you want to launch a money transmitting business in Vermont, you need to get a state license before you are allowed to operate. As a part of the legal procedure, you need to provide a money transmitter bond.
The bond protects the interests of the state and the general public against potentially unlawful actions that you may commit as a money transmitter. It ensures your legal compliance.
The surety bond works as a contract between three entities. Your money transmitting company is the principal. The Vermont Department of Financial Regulation is the obligee, and the surety is the party that backs your business with the bonding.
Questions about Money Transmitter Bonds in Vermont
Who has to obtain this money transmitter bond?
If you want to operate as a transmitter in the state, you will need a Vermont money transmitter license. Providing a surety bond is an indispensable requirement. The bond amount is $100,000, plus $10,000 for each additional registered location and authorized delegate location. The maximum amount cannot exceed $500,000. The bond guarantees you will adhere to the Vermont Statutes, Title 8, Chapter 39.
The bond is required by the Banking Division of the Vermont Department of Financial Regulation. However, as the licensing process is handled via the Nationwide Multistate Licensing System and Registry (NMLS), you have to provide the bond when you apply on its website.
What are the bonding costs?
The bond amount that you have to post as a Vermont money transmitter is between $100,000 and $500,000, depending on the number of locations that you want to run. Your bond premium is only a percentage of this amount. It is based on the strength of your personal and business finances.
The surety bond cost is set after a careful examination of your personal credit score. Other important factors that your surety may consider include your audited business financials, personal financial statements, and cash on hand. By assessing these indicators, it will assess the level of bonding risk and thus will set your bond premium.
Can I get bonded with problematic finances?
It is more difficult to get a money transmitter bond with bad credit due to the large bond amounts and the increased risk. You will need to demonstrate enough financial strength, so that the surety provider feels confident to back your business. You will need to provide your audited business financials and any other documents that prove your financial stability.
What is the bonding process like?
To get started with the bonding, you can fill out our online application form (it takes 5min). Whenever we have the full set of documents from you, we can assess your application and provide you with a bond quote. You can then purchase the bond online. We will send you both a digital and a hard copy of the bond.
Would you like to learn the intricacies about how bonding works? You can refer to our in-depth How to Get Bonded page.
Call us at (877) 514-5146 for further questions. Our bonding specialists will happily assist you.
How are bond claims handled?
The purpose of your money transmitter bond is to safeguard the interests of your customers. It does not protect your business. Thus, if you fail to follow applicable laws, you can end up with a claim against the bond. A harmed party can seek reimbursement for up to the full bond amount that you have posted.
As set in the bond indemnity agreement, you are liable for all costs on proven claims. At first, your surety may cover them, but you need to repay it soon after. This makes bond claims a serious financial threat for your business. They can also be an obstacle for getting bonded in the future.