Effective August 1, 2017, every Alabama money transmitter will be required to post a surety bond of at least $100,000 with the Alabama Securities Commission to be in compliance with Alabama House Bill 215. Currently, the maximum Alabama money transmitter bond amount is only $50,000, and the minimum bond amount is $10,000, plus $5,000 per location.
The legislation also creates a minimum five year tail after the bond has been canceled during which a claim may be made against the bond.
How is the required bond amount determined?
Though the bond has a minimum requirement of $100,000, some transmitters will be required to submit a larger bond. If the amount of the bond exceeds $100,000, the amount is based on the specific Alabama money transmitter’s outstanding obligations, payment instruments and stored value obligations, whichever amount is higher. The legislation mandates that in no event shall the bond amount exceed $5,000,000.
How much will the surety bond cost?
The amount that is paid on the bond is a premium that is determined by an underwriter based on the applicant’s qualifications. The underwriter will review all individuals with 10% or more ownership in the business prior to providing a quote in order to assess the risk of issuing the bond. The actual amount paid will be a percentage of the bond amount—typically between 1-15%. Find out more about surety bond costs by visiting our website.
When do Alabama money transmitter licenses expire?
Alabama money transmitter licenses will expire annually on March 31. Licensees will need to pay an annual renewal fee to the Alabama Securities Commission no later than March 15 in order to maintain their license. The initial license fee will be at least $500, with a smaller fee due at the time of renewal.
If the license is not renewed by March 31 of the calendar year, the licensee will have 20 days to submit a renewal fee along with a late fee of $100 for each day between expiration of the license and submission of an application for renewal.
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