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How much does a money transmitter bond cost in South Dakota?
The South Dakota Department of Labor and Regulation requires money transmission professionals to post surety bonds to legally work within the state. Before beginning the bonding process, applicants should verify their required bond amount with the state in which they choose to do business. This bond must have $100,000 coverage.
This specific bond type is subject to underwriting, meaning the amount you’ll pay depends on a review of your personal credit report, as well as your required bond amount. Don’t worry about bad credit affecting your chance of posting a bond. The experts at SuretyBonds.com make the bonding process fast and easy for all applicants. Request your free bond quote now!
If you’re ready to become bonded quickly, easily, and accurately, call SuretyBonds.com at 1 (800) 308-4358 or submit a bond request. We can typically provide your free, no-obligation bond quote within one business day of submitting an application.
Why do I need a South Dakota money transmitter bond?
South Dakota defines a money transmitter as any business entity that sells or issues payment instruments or stored value or receives money for transmission from the public.
A surety bond is made to protect the public. A money transmitter bond guarantees your business will adhere to all laws and requirements in your industry in compliance with Chapter 51A-17 of the Codified Laws in the South Dakota Statutes and all other laws applicable to the business of money transmission. In the event that your business conducts unlawful acts, a consumer of your services may file a claim on the bond. If fraudulent activity occurs as a result of malpractice conducted by the principal, consumers will not face any financial harm. Acts of malpractice include:
- The licensee violates any material provision of Chapter 51A-17
- The licensee conducts its business in an unsafe or unsound manner
- The licensee applies for an adjudication of bankruptcy
While this bond does not protect the business owner, it offers proof that your business handles clients’ money responsibly.
South Dakota Codified Law (SDCL) Chapter 51A-17 exempts certain entities from the licensing requirements, including:
- Authorized delegates of a licensee who have a contract with a license
- The U.S. government
- The U.S. Postal Service
- The state or any political subdivision
- Credit unions
- Savings associations
- Bank holding companies
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Considerations for South Dakota money transmitter bonds
South Dakota money transmitter surety bonds remain in effect for one year after purchase and can be renewed each year with an $800 fee. The applicant must have a minimum net worth of $100,000 to apply for this bond.
How to obtain a money transmitter license in South Dakota
South Dakota statute 51A-17-4 requires all money transmitters operating in the state to obtain a license with the Division of Banking. In order to obtain licensure, applicants can refer to the general steps below based on the NMLS’ application guidelines and requirements.
Step 1: Post a surety bond
Within the steps to obtain licensure in the state of South Dakota, applicants must purchase and maintain a surety bond. The money transmitter bond must be in the amount of $100,000.
Step 2: Complete the background check
A key part of the application is to undergo a background check. To do so, two sets of completed fingerprint cards must be submitted, along with a signed waiver to authorize the division to conduct a criminal background investigation of the applicant.
Applicants can access South Dakota requirements for background checks here. A payment of $43.25 via check or money order must be submitted with each request to cover both the state and federal background check.
Step 3: Meet the net worth requirements
Applicants in the state of South Dakota must maintain a minimum net worth to be eligible for a money transmitter license. The amount, stated by the South Dakota Division of Banking, must be at least $100,000. To submit proof of net worth, applicants of money transmitters should provide audited company financial statements that are prepared by a Certified Public Accountant.
Step 4: Establish an NMLS account
To submit your financial documents to prove net worth, you must create an NMLS account to do so electronically. The Nationwide Mulitstate Licensing System (NMLS) is the registry for all documents, including the submission of an applicant’s South Dakota Money Transmitter License Application.
Applicants can request an NMLS account here. The fee for creating an account with NMLS is $100.
Step 4: Compile your documents and submit the application
All South Dakota Money Transmitter License Applications are submitted through the NMLS licensing system. The following items must be prepared for completed for submission:
Audited company financial statements indicating a net worth of at least $100,000
Bank account information for the company’s letter/line of credit, operating, and/or trust primary account(s)
Personal financial statements for all company owners
Certificate of Good Standing
List of the company’s permissible investments
Locations of all company authorized agents
Company contact information
Company’s FinCEN registration confirmation number and filing date
Company’s independently reviewed AML/BSA policy
Company staffing and internal policies
Detailed résumés for all control persons
- Disclosure questions
- Trust account authorization
- The following samples:
An authorized agent contract
Form of payment instrument
Virtual currency kiosk agreement
- Company formation documents:
Company business plan containing products, target market, marketing strategies, operating structure, and fee schedules
Company management and organizational charts
Money transmitters must pay the following fees when submitting their application:
- $1,000 license fee
- $500 application fee
- $15 credit report fee (per person)
South Dakota money transmitter license renewal
Because the first application to become a licensed money transmitter was completed and submitted online, the same process is followed for renewing. Money transmitter licenses expire on December 31 of each year and must be renewed before the expiration date issued.
Money transmitters can renew their license online through the NMLS. License holders need to simply log in to their account to access their renewal application. The South Dakota money transmitter bond must be renewed each year before the expiration date.