What Is a Washington Money Transmitter Bond?
In order to start a Washington money transmitter business, you are legally required to get licensed in the state. Obtaining a money transmitter bond is one of the main criteria you need to satisfy during the process.
The goal of getting bonded is to provide an additional layer of security for the state and its citizens. The bond ensures your legal compliance and can protect your customers in case you transgress from your obligations under the applicable laws.
The money transmitter bond is similar to a contract between three entities. The principal is your money transmitting business. The Washington Department of Financial Institutions the obligee to which you have to present the bond. The bond provider is the surety.
Frequently Asked Questions
When do I have to obtain this bond?
Money transmitters in Washington are required to get licensed with the Department of Financial Institutions prior to starting their operations in the state. You have to follow the procedure via the website of the Nationwide Multistate Licensing System and Registry (NMLS). As a part of the process, you need to provide a surety bond between $10,000 and $550,000. The bond guarantees that you will adhere to the Washington Money Transmitter Law and similar applicable laws.
What is the Washington money transmitter bond cost?
In order to get your Washington money transmitter license, you have to get a bond between $10,000 and $550,000. The exact amount is set on the basis of the volume of transmitted money in the previous year. The price that you have to pay to get bonded is a small percentage of this bond amount. It is called the bond premium and often is between 1% and 5% for applicants with stable finances.
In order to determine your surety bond cost, your surety needs to examine a range of personal and business financials factors. Your personal credit score as business owner is essential, and a review of your audited business financials may also be necessary since the bonding amount is large. In some cases, your personal financial statement or cash verification may also be needed. The goal of the assessment is to establish the level of bonding risk and thus decide on the bond price. The cost of money transmitter bonds may also depend on the currency you’re transmitting.
Is it possible to get bonded with bad credit?
It’s more difficult to get a money transmitter bond with bad credit. In certain situations it may be possible, but you will have to demonstrate a certain level of business and personal finances. The surety underwriter should be ready to provide up to $550,000 in surety backing to your business on the basis of these statements. You will certainly need to showcase your,audited business financials, which will be the main factor in the bonding decision.
How do I get my bond?
Would you like to learn more about the bonding process? Here is our in-depth How to Get Bonded page, which provides an extensive overview.
Need help or have questions? You can call us at (877) 514-5146 to speak with one of our bonding experts.
What if I get a bond claim?
The Washington money transmitter bond works differently than insurance. It does not protect your company but rather your customers. In case you don’t follow your obligations under the law, and a party suffers damages as a result, they can file a bond claim against you.
The maximum penal sum of your bond is the amount that claimants can seek as a reimbursement. At first, your surety may step in to cover the costs quickly. However, you are fully liable to repay it according to the bond indemnity agreement. This makes bond claims potentially quite harmeful for your business, so it’s best to stay away from situations that can cause them.