New Mexico Money Transmitter Bond: A Comprehensive Guide
July 28, 2021
This guide provides information for insurance agents to help their customers obtain New Mexico Money Transmitter Bonds
At a Glance:
- Average Cost: Between 1% to 12.5% of the bond amount per year based on the applicant’s credit
- Bond Amount: Between $300,000 to $5 million (more on this later)
- Who Needs it: All money transmitters operating in New Mexico
- Purpose: To ensure the public will receive compensation for any damages should the money transmitter violate licensing law
- Who Regulates Money Transmitters in New Mexico: The New Mexico Financial Institutions Division
Background
New Mexico statute 58-32-201 requires all money transmitters operating in the state to obtain a license with the Financial Institutions Division. The New Mexico 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 New Mexico Money Transmitter Bond?
New Mexico 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 New Mexico statutes 58-32. Specifically, the bond protects the public in the event the money transmitter engages in any acts of fraud or fails to pay funds owed to consumers. 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 a New Mexico Money Transmitter Bond?
BondExchange makes obtaining a New Mexico 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?
New Jersey statute 58-32-203 dictates that the limit on the money transmitter bond must be equal to 1% of the company’s total yearly volume of money transmission business conducted in New Mexico. The bond may not be less than $300,000, and may not exceed $2 million. However, the Financial Institutions Divisions may increase the bond requirement to a maximum of $5 million if they have just cause to do so.
Is a Credit Check Required for the New Mexico 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 New Mexico Money Transmitter bond. Owners 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 New Mexico Money Transmitter Bond Cost?
The New Mexico Money Transmitter 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 a $300,000 bond requirement.
$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 |
How Does New Mexico Define “Money Transmitter?”
New Mexico statute 58-32-102 defines a money transmitter as any business entity who sells/issues payment instruments or stored value, or who receives money for transmission.
How do Money Transmitters Apply For a License in New Mexico?
Money transmitters in New Mexico 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 – The New Mexico 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 New Mexico Money Transmitter License must have a company net worth (assets – liabilities) of at least:
-
- $100,000 for money transmitters with 1-4 locations or authorized agents
- $500,000 for money transmitters with 5 or more locations or authorized agents
Applicants must submit an audited financial statement, prepared by a CPA, 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 New Mexico 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 New Mexico Money Transmitter License applications can be completed online through the NMLS. Applicants must complete the entire application, and submit the following items:
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- Audited company financial statements
- Names and locations of all company authorized agents
- Primary company and consumer complaint contacts
- Company’s FinCEN registration number and filing date
- Disclosure questions
- Company’s AML/BSA policy
- Company business plan containing the following information:
- Marketing strategies
- Products
- Target markets
- Fee schedule
- Operating structure
- Certificate of Good Standing
- Sample contract used with authorized agents (if applicable)
- Sample form of payment instrument(s) used (if applicable)
- Company formation documents
- Management chart detailing the company’s hierarchy
- Organizational chart detailing the company’s ownership structure
Money transmitters must pay the following fees when submitting their license application:
-
- $2,000 license fee
- $2,000 application fee
- $25 fee per authorized agent
- $15 credit report fee (per person)
- Annual fee of $0.25 per authorized agent (the first 100 agents are exempt)
How Do New Mexico 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 New Mexico 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 New Mexico Money Transmitter License?
New Mexico does not require money transmitters to purchase 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 New Mexico Money Transmitters File Their Bond?
New Mexico 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:
- Name and address of entity/individual(s) buying the bond
- Surety company’s name, address, and state of incorporation
- Date the bond goes into effect
- Bond amount
- Date the bond is signed
What Can New Mexico Money Transmitters Do to Avoid Claims Against Their Bond?
To avoid claims on their bond, money transmitters in New Mexico must follow all license regulations in the state, including some of the most important issues below that tend to cause claim
- Do not engage in any acts of fraud
- Pay all money owed to consumers
What Other Insurance Products Can Agents Offer Money Transmitters in New Mexico?
New Mexico does not require money transmitters to purchase any form of liability insurance as a prerequisite to obtaining a business 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 New Mexico Money Transmitter Customers?
The NMLS conveniently provides a public database to search for active money transmitters in New Mexico. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.
