The New Mexico Uniform Money Services Act will go into effect on January 1, 2017. The legislation requires New Mexico money transmitters to post a surety bond.
Money transmitters engage in the sale or issuance of payment instruments, stored value or receiving money or monetary value. Money transmitters must post a bond that is at least:
- 1% of the total annual dollar volume of business in New Mexico
- projected total volume of business in New Mexico for the first year in which the applicant is licensed
The bond cannot be more than $2,000,000 unless the money transmitter company is in inadequate financial condition, in which case a bond up to $5,000,000 may be mandated. Previously, the Financial Institutions Division required only a license from those selling, registering, and/or issuing checks and money orders. Money transmitters also have the option of posting a letter of credit or another form of financial security approved by the Director of the Financial Institutions Division.
The money transmitter surety bond protects consumers against fraudulent activity and any mishandling of funds by the money transmitter. If the transmitter does not adhere to the provisions of the Uniform Money Services Act—for example, by committing fraud, engaging in unsafe practices or becoming insolvent—consumers can seek reimbursement by filing a claim against the money transmitter’s surety bond. Penalties for violating the Act include suspension or revocation of license, issuance of a cease and desist order, civil penalties of up to $1,000 per violation per day, and criminal penalties congruent with state penalties for money laundering.