Virginia Money Transmitter Bond: A Comprehensive Guide

This guide provides information for insurance agents to help their customers obtain Virginia Money Transmitter Bonds

At a Glance:

• Lowest Cost: 1.5% of the bond amount per year based on the applicant’s credit
• Bond Amount: Between $25,000 to $1 million (more on this later)
• Who Needs it: All money transmitters operating 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 Virginia: The Virginia Bureau of Financial Institutions

Background

Virginia statute 6.2-1901 requires all money transmitters operating in the state to obtain a license with the Bureau of Financial Institutions. The Virginia legislature enacted the licensing laws and regulations to ensure that money transmitters engage in ethical business practices. In order to provide enforcement for the licensing law, money transmitters must purchase and maintain a surety bond to be eligible for licensure.

What is the Purpose of the Virginia Money Transmitter Bond?

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 business fails to comply with the licensing regulations set forth in Virginia statutes Title 6.2 Chapter 19. 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.

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

BondExchange makes obtaining a 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? 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 Determined?

Virginia statute 6.2-1904 dictates that the limit on the money transmitter bond must be between $25,000 and $1 million. When determining the bond limit, the Bureau of Financial Institutions will examine the total (or expected total) amount of funds transmitted by the applicant and their business’s financial responsibility.

Is a Credit Check Required for the 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 Virginia Money Transmitter Bond. Applicants with excellent credit and work experience can expect to receive the best rates. Applicants 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 applicant’s credit.

How Much Does the Virginia Money Transmitter Bond Cost?

The Virginia Money Transmitter Bond can cost anywhere between 1.5% to 7.5% of the bond amount per year. Insurance companies determine the rate based on several 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 Money Transmitter Bond Cost

Who is Required to Obtain a License?

Virginia statute 6.2-1900 requires all business entities who receive funds for transmission or who sell money orders to obtain a license.

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 Virginia?

Money transmitters in Virginia 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 Virginia Money Transmitter license expires on December 31 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 (limits outlined above)

Step 2 – Meet the Net Worth Requirements

Applicants for the Virginia Money Transmitter License must maintain a company net worth (assets – liabilities) of at least $200,000. Money transmitters must submit audited financial statements, prepared by a CPA, verifying their net worth when submitting their license application.

Step 3 – Request an NMLS Account

The 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 4 – Complete the Application

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

• • Audited company financial statements indicating a net worth of at least $200,000
  • Locations of all company authorized agents
  • The following company contacts:
    • Primary
    • Primary consumer complaint
    • Accounting
    • Exam Billing
    • Licensing
    • Consumer Complaint (Public)
    • Exam Delivery
    • Litigation
    • Consumer Complaint (Regulator)
    • Legal
    • Pre-Exam Contact
  • Company’s FinCEN confirmation number and filing date
  • Disclosure questions
  • Company’s independently reviewed AML/BSA policy
  • Detailed company business plan
  • Certificate of Good Standing
  • Copies of all money orders used (if applicable)
  • Copies of receipts provided to consumers (if applicable)
  • Company flow of funds structure
  • Company staffing and internal policies
  • Company formation documents
  • Management and organizational charts
  • Detailed resumes for all control persons

Money transmitters must mail the following documents to the Bureau of Financial Institutions:

• • Criminal history records check
  • Personal financial statements
  • Principal financial statements
  • Three business references
  • Bank references
  • Independent background report

The above documents should be mailed to the following address:

Bureau of Financial Institutions
Administration and Licensing Section
PO Box 640
Richmond, VA 23218-0640

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

• • $1,000 application fee
  • $36.25 background check fee (per person)
  • $27 fee for control persons without a background check
  • $15 credit report fee (per person)
  • $0.25 annual fee per authorized agent (the first 100 authorized agents are exempt)

How Do 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 Virginia 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 Virginia Money Transmitter License?

Virginia 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 Virginia Money Transmitters File Their Bond?

Money transmitters should submit the completed bond form, including the power of attorney,  electronically through the NMLS and mail it to the following address:

Bureau of Financial Institutions
Administration and Licensing Section
PO Box 640
Richmond, VA 23218-0640

The money transmitter 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 Virginia Money Transmitters Do to Avoid Claims Made Against Their Bond?

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

• Do not engage in any acts of fraud
• Transmit all funds owed to consumers

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

Virginia does not require money transmitters to obtain 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 Virginia Money Transmitter Customers?

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