Revisions for Washington Money Transmitters’ Surety Bond Requirement

Washington Money Transmitters

With the passage of Senate Bill 5031, Washington money transmitters must post a surety bond to meet license bond requirements effective July 23, 2017. The bill eliminated all other forms of security that money transmitters were previously able to use.

How will the surety bond amount be calculated?

The surety bond amount will be based on the previous year’s money transmission dollar volume and the previous year’s payment instrument dollar volume. The bond must be between $10,000 and $550,000.

The surety bond will be continuous until cancelled by the surety with written notice. The cancellation is effective 30 days after the cancellation notice is received by the director of the Washington State Department of Financial Institutions.

The bond is considered a continuous obligation, no matter if it is renewed, continued, replaced, or modified, including increases or decreases in the penal sum. The surety isn’t liable to any aggregate or cumulative amount that is greater than the penal sum of the bond. The penal sum, or maximum amount of money that a surety may give to a claimant, is never to be added together from two or more points in time to determine the amount that the surety owes.

How long must the surety cover claims?

The surety must cover claims for at least five years following Washington money transmitters’ violation of this chapter or at least five years after the money transmitter stops providing services in Washington, whichever amount of time is greater. However, the director of the Washington State Department of Financial Institutions may allow the reduction or elimination of the surety bond amount before expiration of the required time to the extent that the transmitter’s outstanding obligations decrease.

If a money transmitter licensee doesn’t post a surety bond within the required amount, the director may issue a temporary cease and desist order.

The director may increase the amount of a bond required to a maximum of $1,000,000, based on the nature and volume of business activities, the financial health of a company and other criteria determined by the director.

Surety bonds for Washington currency exchangers

Senate Bill 5031 also requires that online Washington currency exchangers post a surety bond in connection with licensure.

The bond must be between $10,000 and $50,000, with the amount based on the currency exchange dollar volume from the previous year.

The surety bond will be continuous until cancelled by the surety with written notice. The cancellation is effective thirty days after the cancellation notice is received by the director of the Washington State Department of Financial Institutions.

If the bond is renewed, continued, replaced, or modified, including increases or decreases in the penal sum, it is considered a continuous obligation, and the surety on the bond isn’t liable in an aggregate or cumulative amount that exceeds the penal sum of the bond. The penal sum, or any portion of it, is never to be added together at two or more points in time to determine the surety’s liability.

How long must the surety cover claims?

The bond must cover claims for at least one year after a Washington online currency exchanger licensee violates this chapter, or at least one year after the exchanger stops providing online currency exchange services in Washington, whichever amount of time is greater. The director of the Washington State Department of Financial Institutions may allow the reduction or elimination of the surety bond amount prior to the expiration of that time to the extent that the transmitter’s outstanding obligations are reduced.

The director may increase the amount of the bond required to a maximum of one million dollars, based on the nature and volume of business activities, the financial health of the company and other criteria determined by the director.

How can I get a Washington money transmitter bond?

Our experts are ready to help you through the process of getting a bond. For questions on Washington money transmitter bonds, call 1 (800) 308-4358 or click below to request a free quote.

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About the Author

Lindsey Jenkins
Lindsey Jenkins is a member of the marketing team at SuretyBonds.com. She writes about new legislation pertaining to the surety bond industry along with other surety bond news.