Illinois Community Currency Exchange Bond: A Comprehensive Guide
This guide provides information for insurance agents to their customers obtain Illinois Community Currency Exchange Bonds
At a Glance:
- Lowest Cost: $350 per year based on the applicant’s credit
- Bond Amount: $25,000 per licensed location up to a maximum limit of $350,000
- Who Needs it: All businesses seeking to obtain a community currency exchange license in Illinois
- Purpose: To ensure the public will receive compensation for any damages should the community currency exchange business fail to comply with licensing law
- Who Regulates Community Currency Exchange Businesses in Illinois: The Illinois Department of Financial and Professional Regulation
Background
The Illinois Currency Exchange Act requires all community currency exchange businesses operating in the state to obtain a license with the Department of Financial and Professional Regulation. The Illinois legislature enacted the licensing laws and regulations to ensure that community currency exchange businesses engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law, currency exchangers must purchase and maintain a $25,000 surety bond (per licensed location up to a maximum of $350,000) to be eligible for licensure.
What is the Purpose of the Illinois Community Currency Exchange Bond?
Illinois requires community currency exchange businesses 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 currency exchanger fails to comply with the licensing regulations set forth in the Currency Exchange Act. Specifically, the bond protects consumers from any liability incurred if the currency exchanger fails to adequately perform their duties relating to the exchange of currency. In short, the bond is a type of insurance that protects the public if the community currency exchange business breaks licensing laws.
How Can an Insurance Agent Obtain an Illinois Community Currency Exchange Surety Bond?
BondExchange makes obtaining an Illinois Community Currency Exchange Bond easy. Simply login to your account and use our keyword search to find the “currency” bond in our database. Don’t have a login? Gain access 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.
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Is a Credit Check Required for the Illinois Community Currency Exchange Bond?
Surety companies will run a credit check on the owners of the community currency exchange company to determine eligibility and pricing for the Illinois Community Currency Exchange 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 Illinois Community Currency Exchange Bond Cost?
The Illinois Community Currency Exchange 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 $25,000 bond requirement.
$25,000 Community Currency Exchange Bond Cost
| Credit Score | Bond Cost (1 year) |
|---|---|
| 800+ | $375 |
| 650 – 799 | $500 |
| 600 – 649 | $1,000 |
| 550 – 599 | $1,875 |
*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 Illinois Define “Community Currency Exchange Business?”
The Illinois Currency Exchange Act defines a community currency exchange business as any business entity who takes cash or any other type of currency and exchanges it for any type of community currency or sells money orders in his/hers own name.
How do Community Currency Exchange Businesses Apply for a License in Illinois?
Community currency exchange businesses in Illinois must navigate several steps to secure their license. Below are the general guidelines, but applicants should refer to the application checklist for details on the process.
License Period – The Illinois Community Currency Exchange License expires on December 31 of each year and must be renewed before the expiration date
Step 1 – Purchase a Surety Bond
Applicants for the Illinois Community Currency Exchange License must purchase and maintain $25,000 surety bond per licensed location up to a maximum limit of $350,000
Step 2 – Complete a Personal Financial Statement
Currency exchangers are required to complete a Personal Financial Statement and submit it with their license application
Step 3 – Complete the Applicant Questionnaire
License applicants must complete the Applicant Questionnaire and submit it with their license application
Step 4 – Complete the Application Affidavit
All community currency exchange license applicants must complete the Application Affidavit and submit it with their license application
Step 5 – Complete the Application
All regulatory community currency exchange license applications should be mailed to the following address:
Illinois Department of Financial and Professional Regulation
320 W Washington St #3
Springfield, IL 62786
Currency exchangers must complete the application in its entirety, and pay a $1,000 fee when submitting their license application.
How do Illinois Community Currency Exchange Businesses Renew Their License?
Community currency exchange businesses should mail their completed renewal application to the following address:
Illinois Department of Financial and Professional Regulation
320 W Washington St #3
Springfield, IL 62786
The Illinois Community Currency Exchange License expires on December 31 of each year and must be renewed before the expiration date.
What Are the Insurance Requirements for the Illinois Community Currency Exchange License?
The State of Illinois does not require community currency exchange businesses to obtain any form of liability insurance as a prerequisite to obtaining a business license. Applicants for the Illinois Community Currency Exchange License must purchase and maintain $25,000 surety bond per licensed location up to a maximum limit of $350,000.
How Do Illinois Community Currency Exchange Businesses File Their Bond ?
Community currency exchange businesses should mail the completed bond form, including the power of attorney, to the following address:
Illinois Department of Financial and Professional Regulation
320 W Washington St #3
Springfield, IL 62786
The community currency exchange surety bond requires signatures from both the surety company that issues the bond and a representative from the community currency exchange company. The surety company should include the following information on the bond form:
- Legal name and address of entity/individual(s) buying the bond
- Surety company’s name, state, and county
- Bond term
- Bond amount
- Date the bond is signed
- License term
What Can Illinois Community Currency Exchange Businesses Do to Avoid Claims Against Their Bond?
In order to avoid claims made against their bond, community currency exchange businesses in Illinois must follow all license regulations in the state. Including some of the most important issues below that tend to cause claims:
- Do not return any money orders unpaid
- Do not incur any liability on any currency resulting in losses to a consumer
What Other Insurance Products Can Agents Offer Community Currency Exchange Businesses in Illinois?
Illinois does not require community currency exchange businesses to purchase any form of liability insurance as a prerequisite to obtaining a license. However, most 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 Illinois Community Currency Exchange Business Customers?
Illinois conveniently provides a public database to search for active community currency exchange businesses in Illinois. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.