Overview of Louisiana Money Transmitter Bond Requirements
Louisiana law requires applicants for a money transmitter license in the state to get a money transmitter bond as part of the application process.
The amount of this bond is determined by the state Commissioner of Financial Institutions, but the minimum post amount is $25,000.
Who requires this bond?
Anyone who wants to sell checks and/or transmit money for a fee, must obtain a money transmitter license and get bonded. Licenses are not issued to any applicants without them first securing the necessary transmitter bond.
Why do I need this bond?
Getting bonded is a licensing requirement for transmitters in Louisiana. The bond guarantees that you will comply with the obligations and responsibilities defined by the Sale of Checks and Money Transmission Act.
The bond is also a form of protection for the state as well as any creditor who makes use of a transmitter's services. If a transmitter violates the bond agreement and causes losses to a creditor, the petitioner can file a claim against the bond to request compensation. This compensation is extended by the surety that backs the bond and can be as high as the full amount of the bond.
Want to know more about bonds? Our ‘What is a surety bond' guide is a great resource for people who are new to bonds and need more information!
Continue reading for an explanation about the cost of this bond, how bond claims work, and how you can apply for a bond.
For any additional questions about this bond, call us at 866.450.3412 anytime!
What's the Cost of the Louisiana Money Transmitter Bond?
The cost of your bond is a fraction of its full amount as determined by the Commissioner.
- The bond amount for first-time license applicants is determined on the basis of “the applicant's business plan, for the initial year of licensure”. The minimum required amount of the bond is set to be $25,000 but can be increased by the Commissioner if required.
- For applicants who renew their license, the bond amount must be “one-half of the checks outstanding, or one percent of the annual volume of money transmitted rounded to the nearest thousand, as shown on the annual report of the licensee.” The bond cannot be less than $25,000, and more than $500,000.
Once your bond amount is determined, the surety you apply with will offer you a rate on the basis of several criteria.
Factors that influence your bond premium
The most important factor that determines your bond premium is your personal credit score. The higher an applicant's score is, the lower their premium usually is.
Along with your credit score, a surety company will often examine an applicant's:
- Personal and business financial statements
- Fixed and liquid assets
- Industry experience and professional record
Applicants with a credit score of 700 or above, can usually get bonded at a rate of between 1% - 4% of their bond amount.
Want to get an estimate of the cost of your bond? Try our free bond calculator below!
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Can applicants with low credit get bonded?
You can get bonded even if you have a low score. Rates for applicants with poor credit are higher because sureties perceive them as a greater risk in issuing such bonds. The exact bond rate is determined on a case-by-case scenario, depending on all of the above factors.
Since bond rates are adjusted every time you renew your bond, you can get increasingly better rates over time by improving your financial status.
Find out more about getting bonded with low credit at our Bad Credit Program page!
How Do Bond Claims Occur?
The purpose of this surety bond is to provide protection and financial security to the Louisiana Office of Financial Institutions, as well as to money transmitters' clients. This bond guarantees that transmitters will comply with its conditions and the obligations they have under the Louisiana Revised Statutes.
If a transmitter violates the bond agreement, causing any liabilities to one of their creditors, the creditor can file a claim against the bond to receive compensation. If the transmitter does not resolve the situation, the surety that backs the bond steps in to investigate the matter and compensate the claimant.
The compensation extended by the surety may be as high as the full amount of the bond. Once a bond claim is resolved by the surety, the bonded transmitter must reimburse the surety in full since they are responsible for any liabilities that arise under the bond agreement.
To avoid getting caught up in dealing with bond claims, it is advised to always comply with the conditions of your bond. This way, the bond premium is the only cost you will need to cover.
Apply For Your Bond Today!
Complete our bond application form to request a free and precise quote on your bond. We will be in touch with you shortly, and provide you with any further information about getting bonded.
If you have any further questions or require assistance with your application, call us at 866.450.3412!