West Virginia Money Transmitter Bond: A Comprehensive Guide

September 10, 2021

West Virginia Money Transmitter Bond

This guide provides information for insurance agents to help their customers obtain a West Virginia Money Transmitter Bond

At a Glance:

  • Average Cost: Between 1% to 12.5% of the bond amount per year based on the applicant’s credit
  • Bond Amount: 
    • $100,000 for businesses licensed for currency exchange, sale of checks or money orders, or check cashing
    • $300,000 for businesses licensed as money transmitters
  • Who Needs it: All money transmitters operating in West Virginia
  • 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 West Virginia: The West Virginia Division of Financial Institutions

Background

West Virginia statute 32A-2-2 requires all Money Transmitters operating in the state to obtain a license with the Division of Financial Institutions. The West Virginia 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 West Virginia Money Transmitter Bond?

West Virginia 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 regulations set forth in West Virginia code Chapter 32A. Specifically, the bond protects the public in the event the money transmitter engages in any acts of fraud or fails to transmit funds owed to consumers. In short, the bond is a type of insurance that protects the public if the money transmitter breaks licensing laws.

West Virginia Money Transmitter Bond Form

West Virginia Money Transmitter Bond Form

How Can an Insurance Agent Obtain a West Virginia Money Transmitter Bond?

BondExchange makes obtaining a West Virginia 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.

How is the Bond Amount Determined?

West Virginia statute 32A-2-10 dictates that the limit on the money transmitter bond must be the following:

  • $100,000 for businesses licensed for currency exchange, sale of checks or money orders, or check cashing
  • $300,000 for businesses licensed as money transmitters

When renewing their license, money transmitters must increase their bond amount by 1% of the annual volume of business conducted in West Virginia exceeding $10 million (rounded to the nearest thousand). The bond amount may not exceed $10 million.

Is a Credit Check Required for the West Virginia 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 West Virginia 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 West Virginia Money Transmitter Cost?

The West Virginia Money Transmitter surety bond can cost anywhere between 1% to 12.5% 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 both the $100,000 and $300,000 bond requirements.

$100,000 Money Transmitter Bond Cost

Credit Score Bond Cost (1 year)
720+ $1,000
680 – 719 $1,500
650 – 679 $2,000
600 – 649 $4,000
550 – 599 $7,500
500 – 549 $12,500

$300,000 Money Transmitter Bond Cost

Credit Score Bond Cost (1 year)
720+ $3,000
680 – 719 $4,500
650 – 679 $6,000
600 – 649 $12,000
550 – 599 $22,500
500 – 549 $37,500

Who is Required to Obtain a License?

West Virginia statute 32A-2-2 requires all business entities who engage in one or more of the following activities to obtain a money transmitter license:

  • Sells or issues checks
  • Receives money for transmission
  • Transmits funds through the issuance and sale of stored value
  • Exchanges currency
  • Physically transports money from one location to another

How do Money Transmitters Apply for a License in West Virginia?

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

License Period – The West Virginia Money Transmitters License expires on December 31st of each year and must be renewed before the expiration date

Step 1 – Purchase a Surety Bond

Money transmitters must purchase and maintain a surety bond with the following limit:

    • $100,000 for businesses licensed for currency exchange, sale of checks or money orders, or check cashing
    • $300,000 for businesses licensed as money transmitters

Step 2 – Purchase Insurance

West Virginia requires all businesses with employees to purchase workers’ compensation insurance

Step 3 – Meet the Net Worth Requirements

Applicants for the West Virginia Money Transmitter License must maintain a net worth (assets – liabilities) of at least $50,000 plus an additional $25,000 per authorized agent to a maximum requirement of $1 million. Applicants must submit audited financial statements, prepared by a CPA, verifying their net worth when submitting their license application.

Step 4 – Register With the State Tax Department

All West Virginia businesses must register with the State Tax Department. To register, money transmitters simply need to follow the steps contained within the registration portal and pay a $30 fee.

Step 5 – Request a NMLS Account

The West Virginia 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 6 – Complete the Application

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

    • Locations of all company authorized agents
    • Certificate of Good Standing
    • Contact information for the company’s examination and compliance officers
    • Bank account information for all company clearing and depository accounts
    • Company financial statements
    • Company business plan containing the following information:
      • Marketing strategies
      • Products
      • Target markets
      • Fee schedule
      • Operating structure
    • Company management and organizational charts

Money transmitters must pay the following fees when submitting their license application:

    • $1,000 license fee
    • $100 NMLS processing fee
    • $36.25 background check fee (per person)
    • $20 fee per authorized agent
    • $15 credit report fee (per person)

How Do West Virginia 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 West Virginia Money Transmitter License shall expire on December 31 of each year and must be renewed before the expiration date.

What Are the Insurance Requirements for the West Virginia Money Transmitter License?

West Virginia requires all businesses with employees to purchase workers’ compensation insurance. Money transmitters must purchase and maintain a surety bond with the following limit:

  • $100,000 for businesses licensed for currency exchange, sale of checks or money orders, or check cashing
  • $300,000 for businesses licensed as money transmitters

How Do West Virginia 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
  • Date the bond is signed

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

To avoid claims made against their bond, money transmitters in West Virginia must follow all license regulations in the state. Including some of the most important issues below that tend to cause claims:

  • Faithfully account for all consumer funds received
  • Transmit all funds owed to consumers
  • Do not engage in any acts of fraud

What Other Insurance Products Can Agents Offer Money Transmitters in West Virginia?

West Virginia requires all businesses with employees to purchase workers’ compensation insurance. Bonds are our only business at BondExchange, so we do not issue other types of 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 West Virginia Money Transmitter Customers?

The NMLS conveniently provides a public database to search for active money transmitters in West Virginia. 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.

2021-09-13T13:29:29+00:00

Leave A Comment