Idaho Money Transmitter Bond: A Comprehensive Guide

April 30, 2021

Idaho Money Transmitter Bond

This guide provides information for insurance agents to help Money Transmitters obtain Idaho Money Transmitter Bonds

At a Glance:

  • Average Cost: Between 1.5% to 7.5% of the bond amount per year based on the applicant’s credit
  • Bond Amount: $10,000 plus an additional $5,000 per branch location to a maximum limit  of $500,000
  • Who Needs it: All money transmitters seeking to obtain a license in Idaho
  • Purpose: To ensure the public will receive compensation for any damages should the money transmitter fail to comply with licensing law
  • Who Regulates Money Transmitters in Idaho: The Idaho Department of Finance

Background

Idaho Statute 26-2903 requires all money transmitters operating in the state to obtain a license with the Department of Finance. The Idaho legislature enacted the licensing laws and regulations to ensure that money transmitters engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law money transmitters must purchase and maintain a surety bond to be eligible for licensure.

What is the Purpose of the Idaho Money Transmitter Bond?

Idaho requires money transmitters to purchase a surety bond as part of the application process to obtain a business license. The bond ensures that the public will receive compensation for financial harm if the money transmitter fails to comply with the licensing regulations. In short, the bond is a type of insurance that protects the public if the money transmitter breaks licensing laws.

Idaho Money Transmitter Bond Form

Idaho Money Transmitter Bond Form

How Can an Insurance Agent Obtain an Idaho Money Transmitter Surety Bond?

BondExchange makes obtaining an Idaho Money Transmitter Bond easy. Simply login to your account and use our keyword search to find the “money” bond in our database. Don’t have a login? Enroll now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone (800) 438-1162, email or chat from 7:30 AM to 7:00 PM EST to assist you.

At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.

Is a Credit Check Required for the Idaho Money Transmitter Bond?

Surety companies will run a credit check on the owners of the money transmission company to determine eligibility and pricing for the Idaho Money Transmitter Bond. Owner’s with excellent credit and work experience can expect to receive the best rates. Owners with poor credit may be declined by some surety companies or pay higher rates. The credit check is a “soft hit”, meaning that the credit check will not affect the owner’s credit.

How Much Does the Idaho Money Transmitter Bond Cost?

The Idaho Money Transmitter surety bond can cost anywhere between 1.5% to 7.5% of the bond amount per year. Insurance companies determine the rate based on a number of factors including your customer’s credit score and experience. The chart below offers a quick reference for the approximate bond cost on a $10,000 bond requirement.

$10,000 Money Transmitter Bond Cost

Credit Score Bond Cost (1 year)
800+ $150
650 – 799 $200
600 – 649 $400
550 – 599 $750

*The credit score ranges do not include other factors that may result in a change to the annual premium offered to your customers, including but not limited to, years of experience and underlying credit factors contained within the business owner’s credit report.

How Does Iowa Define “Money Transmitter?”

To paraphrase Iowa statute 26-2902, a money transmitter is any business entity who sells or issues payment instruments or transmits money through means such as payment instruments, wire facsimiles, or electronic transfers.

How do Money Transmitters Apply for a License in Idaho?

Money transmitters in Idaho must navigate several steps to secure their license. Below are the general guidelines, but applicants should refer to the NMLS’s application guidelines for details on the process.

License Period All Idaho Money Transmitter Licenses expire on June 13 of every year and must be renewed before the expiration date

Step 1 – Meet the Net Worth Requirements

Applicants for the Idaho Money Transmitter License must have a company net worth (assets – liabilities) of at least $50,000 plus an additional $25,000 per branch location to a maximum requirement of $250,000. Applicants must submit an audited financial statement verifying their net worth when submitting their license application.

Step 2 – Purchase a Surety Bond

Money transmitter license applicants must purchase and maintain a $10,000 surety bond plus an additional $5,000 per branch location to a maximum of $500,000

Step 3 – Request a NMLS Account

The Idaho Money Transmitter License application is submitted electronically through the Nationwide Multistate Licensing System (NMLS). To submit a license application, applicants must first request to obtain an NMLS account.

Step 4 – Complete the Application

All Idaho Money Transmitter License applications can be completed online through the NMLS. Applicants must complete the entire application, and submit the following items:

    • Company FinCen registration confirmation number and filing date
    • Account information for a bank accounts associated with the applicant’s business
    • Audited company financial statements
    • Company business plan detailing the following information:
      • How money will be collected
      • How money will be transmitted
      • Records collection and retention, and use of authorized delegates/additional locations (if applicable)
      • Specific products and services you offered in Idaho
    • Organizational chart detailing the company ownership structure
    • Complete list of all company business locations and authorized agents
    • The total dollar amount of all remittances, payment instruments or prepaid access transactions sold/issued by the licensee during the twelve months ending June 30th of the current year
    • The total outstanding dollar amount of all remittances, payment instruments or prepaid access transactions sold/issued by the licensee during the twelve months ending June 30th of the current year
    • Complete list of all the company’s permissible investments

Applicants for the Idaho Money Transmitter License are not required to pay any fees when submitting their application.

How Do Idaho Money Transmitters Renew Their License?

Money Transmitters can renew their license online through the NMLS. License holders need to simply login to their account to access their renewal application. All Idaho Money Transmitter Licenses expire on June 13 of every year and must be renewed before the expiration date.

What Are the Insurance Requirements for the Idaho Money Transmitter License?

The State of Idaho does not require Money Transmitters to obtain any form of liability insurance as a prerequisite to obtaining a license. Money transmitter license applicants must purchase and maintain a $10,000 surety bond plus an additional $5,000 per branch location to a maximum of $500,000.

How Do Idaho Money Transmitters File Their Bond?

Money Transmitters should submit the completed bond form, including the power of attorney, electronically through the NMLS. The surety bond requires signatures from both the surety company that issues the bond and a representative from the money transmission company. The surety company should include the following information on the bond form:

  • Legal name of entity/individual(s) buying the bond
  • Surety company’s name
  • Bond amount

What Can Idaho Money Transmitters Do to Avoid Claims Against Their Bond?

In order to avoid claims made against their bond, Money Transmitters in Idaho must follow all license regulations in the state. Including some of the most important issues below that tend to cause claims:

  • Properly account for all funds received
  • Promptly pay all funds owed to consumers

What Other Insurance Products Can Agents Offer Money Transmitters in Idaho?

Idaho does not require money transmitters to obtain any form of liability insurance as a prerequisite to obtaining a business license. However, many reputable businesses will seek to obtain this insurance anyway. Bonds are our only business at BondExchange, so we do not issue liability insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.

How Can Insurance Agents Prospect for Idaho Money Transmitter Customers?

The NMLS conveniently provides a public database to search for active money transmitters in Idaho. The database can be accessed here. Contact BondExchange for help developing a marketing piece. Agents can also leverage our print-mail relationships for discounted mailing services.

2021-04-30T19:18:32+00:00

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