Overview of New York Money Transmitter Bond Requirements
The Banking Law of New York requires that anyone who wishes to engage in the business of selling or issuing checks, as well as receiving money for transmission is required to get a license and a money transmitter bond.
Unless otherwise required by the Department of Financial Services (DFS), the amount of this bond needs to be $500,000.
Why do I need this bond?
The purpose of this bond is to serve as financial security to the state of New York and any person who makes use of the services offered by a money transmitter. The bond guarantees that the transmitter will comply with the provisions of Article 13-B of the Banking Law.
If a transmitter violates the provisions of the law, anyone who suffers an injury due to such a violation can file a claim against their bond. When a claim is filed against the bond, the surety may extend compensation in an amount that covers the losses. Such compensation can be as high as the full bond amount.
To learn more about how bonds work and why you need one, see our ‘What is a surety bond' guide!
See the sections below for information about the cost of getting bonded, how bond claims occur, and how to apply for your bond.
If you have any questions about this bond, call us at 866.450.3412 anytime!
How Much Does the New York Money Transmitter Bond Cost?
Your bond premium, or bond cost, is a percentage of the total amount of your surety bond.
The total amount of your bond must be at least $500,000 unless otherwise determined by the New York State Superintendent of Financial Services.
Your premium is determined by the surety when you apply, and is influenced by several factors.
Factors that influence the bond premium
An applicant's personal credit score is the main factor considered by sureties when determining the bond premium.
In addition to credit score, sureties may also consider the following criteria in setting a bonding rate:
- Personal and business financial statements
- Fixed and liquid assets
- Work experience and record
Applicants who have a credit score of 700 or more, are typically offered a rate between 1% - 4% of the total amount of their bond.
Wondering how much your bond might cost? Try our bond calculator below to get an estimate!
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The ballpark estimate on your premium is: $100 - $167
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Can applicants with low credit get a bond?
Applicants with all types of credit scores can get bonded. The main difference between applicants with high and low scores is that the latter must pay slightly higher rates on their bonds.
Sureties require low credit applicants to pay higher rates due to an increased risk when issuing their bonds. Yet, by improving your credit score and other financials, you can improve your bond premium on a yearly basis.
Find out more about getting a bond with low credit at our Bad Credit Program page!
How Does a Bond Claim Occur?
Like any agreement, surety bonds have conditions which the bonded party must comply with. For example, money transmitters in NYS must comply with the Banking Law, and in particular with the provisions of Article 13-B.
If a transmitter violates the conditions of the bond and causes any damage to anyone, for example, by failing to carry out the terms of any instrument they have issued or sold, a claim can be filed against their bond.
When a claim is filed against a bond, the surety which backs the bond may step in to cover the claim and compensate claimants for as much as the full amount of the bond. But once a claim is settled by a surety, the bonded transmitter must reimburse the surety in full. This is because, under the bond agreement, transmitters are ultimately liable for any claims against the bond.
Given the high amount of this bond, it is best to comply with all of its conditions and not give rise to any claims!
Apply for Your Money Transmitter Bond Here!
Get started with your bond application by completing our form. We will contact you shortly with a free quote on your bond along with additional information about getting bonded.
If you want to know more about the bonding requirements for money transmitters in New York, call us at 866.450.3412!