Illinois Money Transmitter Bond: A Comprehensive Guide
This guide provides information for insurance agents to help money transmitters obtain Illinois Money Transmitter Bonds
At a Glance:
- Lowest Cost: $750 per year, based on the applicant’s credit
- Bond Amount: Between $50,000 to $2 million (more on this later)
- Who Needs it: All money transmitters seeking to obtain a license in Illinois
- 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 Illinois: The Illinois Department of Financial and Professional Regulation
Background
The Illinois Transmission of Money Act requires all money transmitters 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 money transmitters engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law, debt settlers must purchase and maintain a surety bond to be eligible for licensure.
What is the Purpose of the Illinois Money Transmitter Bond?
Illinois 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.
How Can an Insurance Agent Obtain an Illinois Money Transmitter Surety Bond?
BondExchange makes obtaining an Illinois 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? 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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How is The Bond Amount Determined?
The Illinois Transmission of Money Act dictates money transmitters must purchase a surety bond with a limit of $50,000 or 1% of all Illinois based money transmission activity, whichever is greater, to a maximum of $2 million. Money transmitters whose bond requirement exceeds $1 million have the option to post a $1 million bond plus a dollar for dollar increase in the transmitter’s net worth to a maximum of $2 million.
Is a Credit Check Required for the Illinois 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 Illinois 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 Illinois Money Transmitter Bond Cost?
The Illinois 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 $50,000 bond requirement.
$50,000 Money Transmitter Bond Cost
| Credit Score | Bond Cost (1 year) |
|---|---|
| 800+ | $750 |
| 650 – 799 | $1,000 |
| 600 – 649 | $2,000 |
| 550 – 599 | $3,750 |
*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 Illinois Define “Money Transmitter?”
The Illinois Transmitters of Money Act defines a money transmitter as any business entity who performs one or more of the following services:
- Sells or issues payment instruments
- Receives money for transmission
- Exchanges foreign currency for US dollars and vice versa
BondExchange now offers monthly pay-as-you-go subscriptions for surety bonds. Your customers are able to purchase their bonds on a monthly basis and cancel them anytime. Learn more here.
How do Money Transmitters Apply for a License in Illinois?
Money Transmitters in Illinois 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.
Registration Period – The Illinois Money Transmitter License expires on December 31 of each year and must be renewed before the expiration date
Step 1 – Meet the Net Worth Requirements
Applicants for the Illinois Money Transmitter License must have a company net worth (assets – liabilities) of an amount based on the number of branch locations the transmitter operates in Illinois:
| Number of Locations | Net Worth Requirement |
|---|---|
| 1 | $35,000 |
| 2 – 3 | $50,000 |
| 4 – 5 | $100,000 |
| 6 – 9 | $150,000 |
| 10 – 14 | $200,000 |
| 15 – 19 | $300,000 |
| 20 – 24 | $400,000 |
| 25+ | $500,000 |
Applicants must submit an audited financial statement verifying their net worth when submitting their license application.
Step 2 – Purchase a Surety Bond
Money transmitters must purchase and maintain a surety bond (limits outlined above)
Step 3 – Request a NMLS Account
The Illinois 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 Illinois Money Transmitter License applications can be completed online through the NMLS. Applicants must complete the entire application, and submit the following items:
-
- Audited company financial statements
- Full list of all authorized agents who perform money transmission services on behalf of the applicant
- The following company contact information
- Primary company contact
- Primary consumer complaint contact
- Exam Billing
- Licensing
- Legal
- Pre-Exam Contact
- Company FinCen registration number
- The account number, name address and telephone number for the company’s clearing bank account
- Company’s AML/BSA policy that has been independently reviewed
- Company business plan containing the following information:
- Marketing strategies
- Products
- Target markets
- Fee schedule
- Operating structure the applicant intends to employ
- Industry competition
- Certificate of Good Standing issued by the Illinois Secretary of State
- Sample licensee and authorized seller agreement
- Sample of receipt issued to consumers with IDFPR language concerning complaints/issues
- Company formation documents
- Organizational chart detailing the company’s ownership structure
Money transmitters must pay the following fees when submitting their license application:
-
- $2,500 application fee
- $400 investigation fee
- $0.25 annual processing fee for all company authorized agents (the first 100 agents are exempt from this fee)
How Do Illinois 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. The Illinois Money Transmitter License expires on December 31 of each year and must be renewed before the expiration date.
What Are the Insurance Requirements for the Illinois Money Transmitter License?
The State of Illinois does not require money transmitters to obtain any form of liability insurance as a prerequisite to obtaining a business license. Money transmitters must purchase and maintain a surety bond (limits outlined above).
How Do Illinois 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 and address of entity/individual(s) buying the bond
- Surety company’s name
- Bond amount
- Date the bond is signed
What Can Illinois Money Transmitters Do to Avoid Claims Against Their Bond?
In order to avoid claims made against their bond, money transmitters in Illinois 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 from consumers
- Promptly pay all money owed to consumers
What Other Insurance Products Can Agents Offer Money Transmitters in Illinois?
Illinois does not require money transmitters 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 Money Transmitter Customers?
The NMLS conveniently provides a public database to search for active money transmitters 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.